 So what if it's a father who can't afford to buy medicine to keep his child alive? What if he loses access to that good? Is there going to be some other good that he can be compensated for, such that he can be compensated for the loss of his child? Is there some amount of money he can be given, such that he's just as well off after the fact with the money but without the child than he was before with the child but without the money? Well, here's the strange thing. That's exactly how welfareism operates. As if there's always some other good, often money, that can be given to someone who's been harmed to make them just as well off as they were before. This isn't just wrong-headed. This is ethically irresponsible. I'm George D. Martino and I'm at the Corbell School of International Studies at the University of Denver. Of all the major professions that have a large impact on people's lives, economics is the only one that's never pursued the idea of creating a body of professional ethics. That is to say, never inaugurating a conversation about what it means to be an ethical economist or how economics as a profession should engage in the world. Every other profession did that. Economists were explicit about not having that conversation because of a fear that that would mean a code of conduct that was legislative where economists could be bounced from the profession if they didn't behave properly and economists were not interested in having that kind of oversight. In the early 2000s, I became aware that there never been a book written about the question of, do we need professional ethics? If so, what should it look like? And what might be some of its principles? And so I wrote the book, The Economist Oath, to try to bring home the argument that, okay, it's time for us to have this conversation that we've never wanted to have. Economists have enormous influence in the world. If I asked you to list the top 10 most influential professions in the world, you would certainly list the medical profession because we wouldn't be here without them. You might list the legal profession. You would list the engineering profession because the building we're sitting in couldn't exist without it. You wouldn't list the economics profession. Most people would not. And yet I think that's a mistake. Economists have enormous influence over the live chances of people the world over. The issue is that that influence is indirect. You don't see it. You don't have a family economist the way you have a family doctor. And so it happens in the background. But the world we confront, the opportunities, the constraints, are all shaped by what economists do. Well, the point is this. When you have that kind of influence in the world, you have ethical responsibilities and duties whether you recognize them or not. In my view, the profession hasn't done nearly enough to recognize those obligations and duties. When I finished the book, The Economist Oath, within a year or two, I came to realize that I'd fallen into the same trap that I think most economists fall into, which is to oversimplify harm. I had this notion that harm was a pretty simple concept. You know when you're being harmed, it doesn't take rocket science to determine whether someone's been harmed and how badly. But of course, as soon as you start thinking about it, you realize that that argument is wrong. Harm isn't an extraordinarily complex concept. It has many different facets. There are lots of intellectual debates and normative debates and philosophy around this, also in other fields like medical ethics. And I started to explore this much more deeply and decided that I would write the new book, The Tragic Science, where I explore much more systematically the nature of economic harm and the complexities of how people are harmed in the economy and the complexities regarding how economists cause harm. So the book is a compliment to the last, trying to really explore this much more carefully. The mainstream of our profession has always been aware of this problem that economic interventions cause harm. That recognition goes back at least to the early 1900s. And that creates a problem for economists who want to promote social betterment. Because what do you do if you become aware that the policy you want to promote at the same time causes harm? The profession early on, going back to the early 1900s, but especially the 1930s, kind of latched onto what I call in the book, moral geometry. Moral geometry is the strategy by which really daunting, difficult, ethical dilemmas are reduced to simple math problems. So I'm thinking of the Caldor-Hicks compensation test, cost-benefit analysis, the use of social welfare functions. What do all those have in common? All those have in common, the effort to take really difficult, mind-bendingly difficult, ethical questions and converting them into simple, simple math problems so that the economist can pronounce on a policy as being good or bad, simply by doing the math. That's not good enough, in my view. It's far too dangerous. It doesn't give due respect to those who will be harmed by economists' interventions. When we think about the weaknesses of moral geometry, besides the fact that it situates the economist as society's harm accountants and gives to the economist the authority to make decisions that won't bear on the economist but that have profound impact on the lives of others, which I find to be deeply distressing. It's deeply paternalistic. Besides that, in order to reduce complex ethical issues down to simple math problems, one has to do all kinds of simplifications, for example. One has to treat all the diverse kinds of harms that people might suffer in the economy. One's got to reduce them all down to a common denominator. And that common denominator in economics is welfare, utility, historically, now, welfare. The problem is that when you start treating the different kinds of harm as all reducible down to one, you treat them as all as commensurable. You then start to treat them all as compensable. That is to say, if all harms that we suffer are just diminution in the welfare or utility, then we are led to believe that there's always some compensation in the form of, so if I lose access to one good, like apples, there's always gonna be some number of pairs that I can be given to bring me back to where I was before, made whole. Because on a welfare calculus, all these harms are commensurable. The problem is not all harms are commensurable. You know, the apples oranges, or the apples pairs example I just gave you, that's what appears in the textbook. And it makes perfect sense, I lose access to apples, but I'm made whole by getting access to more pairs. But what if it's a father who can't afford to buy medicine to keep his child alive? What if he loses access to that good? Is there gonna be some other good that he can be compensated for, and such that he can be compensated for the loss of his child? Is there some amount of money he can be given such that he's just as well off after the fact with the money, but without the child than he was before with the child, but without the money? Well, here's the strange thing, that's exactly how welfareism operates. As if there's always some other good, thin money, that can be given to someone who's been harmed to make them just as well off as they were before. This isn't just wrong headed. This is ethically irresponsible to teach this kind of thinking. The traditional way that economists have thought about unemployment is this. People don't like to go to work. They therefore have to earn a wage to go to work. When they become unemployed, what have they lost? The only thing they've lost is their income, and so they can easily be compensated through unemployment compensation that makes them whole because after all, that's all they were getting out of their job in the first place. But you know, more recent research by anthropologists, sociologists, and economists find that when people lose their job, they become unemployed, they suffer a whole range of other harms beyond the loss of income. They lose their identity. They lose their sense of themselves often as a productive member of society. They often lose social standing. They often suffer social exclusion. In communities that are hit by high rates of unemployment, we see increasing rates of preventable morbidity and even mortality. We see a political exclusion. We see a whole range of harms that you can't responsibly reduce down to welfare and then compensate with a check from the welfare administration. That's a perfect example of what I mean when I say that harm is far more complex than we have recognized. In professions where ethicists have thought long and hard about the harm that's induced by practitioners, there tends to be a concept to think about it. For example, in medicine, there's the concept of eatrogenic harm from the Greek physician-induced harm. In economics, we don't even have a word to describe it. That's how little we've talked about, economist-induced harm. And so in parallel with the eatrogenic harm, I offer the term econogenic harm, economist-induced harm. Economic harm refers to all the diverse ways that people may be harmed in the economy and also by economic policy decisions. One of the reasons that economists cause harm is because any economic policy that affects large numbers of people will benefit some and damage others. We saw this even during the pandemic in COVID repression policies, such as required masking. Many people experience this as a harm, as a violation of their personal liberties. But there's another reason why economists cause so much harm, and it's because of the knowledge problem. There's too much about the social world that economists don't know today and in fact won't ever be able to know that is unknowable in principle. And this means that when we think about designing policy and advocating and consulting, we're making best guesses about the future, but the future is forever unknowable. Now the problem in economics is that we train our students to believe that they have economic time travel machines, that those models that they use to predict the future impacts of policy will actually let them know today the impact 20 years from now of a policy implemented today. But of course, that's impossible. There are no economic time travel machines. And so we send young economists out into the world advocating policies with the belief that the economist knows more than it is possible for the economist to know. And as a consequence of that mistake, it's an epistemic mistake. It has to do with knowledge. As a consequence of that mistake, that hubris, we generate tremendous damage because when decision makers listen to economists thinking that economists can really know what the future will bring and they implement those policies, they are then woefully unprepared when things don't go the way the economist had predicted. All of this raises the question, how should economists operate differently? If, as I'm suggesting, we need to get rid of moral geometry because in fact it's not for us to decide who should bear what harms. It should be up to those who are actually being affected by the risk of harm to make their own decisions. And if I'm right in arguing that we can't know what we need to do moral geometry anyways, we can't know the future impact 20 years out, then what do we do? And I think that this is a stumbling block for the profession. I think this is one of the reasons why we don't engage the question of uncertainty because it seems to be the case that if we can't predict the future, we have nothing to offer. But in fact, that's not true. And so what I've tried to do in the end of the book is explore how the profession would operate differently, were it to take seriously the ethical concerns that I raise in the book. One example that I give is the community of scholars that are now doing what is now called decision making under deep uncertainty. The principal ideas are, well, are two. One, we can't know the future. So rather than trying to project or to forecast future impacts of policy, we should just presume that we can't make sense of how the world's gonna go in the future. And therefore, rather than trying to find optimal policy that'll work great if the world goes exactly as we wanted to, we instead need policies that have a relatively good chance of doing well enough under innumerable possible futures. That is to say, we need to move away from efficiency toward robustness, policies that have a chance of doing well. That's point one. Point two is equally important. DMDU takes the view that it should be the stakeholders who are the primary decision makers when it comes to figuring out what risks to take in furtherance of what social objectives. So if there's a public policy issue, like from my part of the world, Colorado River is, excuse me, the water in the Colorado River Basin is dropping dramatically because reduced snowfall and other climate change. It's a crisis that's gonna affect 40 million people, seven states, many Native American reservations and the country of Mexico. It's an enormous, it's an existential problem. The DMDU approaches to say, let's figure out who are the key stakeholders who are gonna be affected by this. Let's not do a cost benefit analysis, asking what if we build another reservoir? Will the benefits be greater than the costs? Instead, let's get the stakeholders into the room, find out what they need, what they can live with, with respect to the Colorado River and then we start to work with them to explore policy options that have a reasonable chance of doing well enough against 10,000, 20,000 potential futures. It's done in a computationally rich way where policies are tested over and over and over, tens of thousands of times against potential futures. But all the critical decisions, here's the key, are made by the decision makers, I'm sorry, by the stakeholders, by the stakeholders in partnership with economists. It's not the isolated economist in his or her office generating cost benefit analysis telling the state of Colorado and the other states what to do with the Colorado River. Is there any chance of the profession moving in this direction? And I think the answer is yes. And here's some evidence I'd give you. Two of the key architects of DMDU strategies come from the Rand Corporation and are themselves in fact economists. This strategy, DMDU and other strategies like it that empower stakeholders are now taking root across the professions, less so in economics than others. But there are more and more economists from the World Bank to leading research institutions to the Rand as I've indicated around the world. Economists who are increasingly engaging with these strategies that fundamentally move away from trying to predict and control the future to working with stakeholders cooperatively, productively in a collaboration in order to empower stakeholders to decide what risks to take. So the change is already underway. Climate change of course is speeding up the process because we all understand that that's a wicked problem where we really cannot know what the future holds and so we had better come up with new methodologies that are more appropriate than the old fashioned world geometry. Now, of course, all of this raises the question of what about the state of economic science as opposed to policymaking? Because the policy economists who are trained to engage policy have their grounding in economic theory and they carry that baggage with them into the world of applied economics. Fortunately, we're seeing all kinds of developments today in the field of economic theory. I'm thinking, for example, just to give you one of complexity theory, which really calls into question the whole notion that we can make predictions about the future. If one takes the complexity theory insights or the methods seriously, one quickly comes to see that we live in a world of ceaseless change and we can't predict those changes and that therefore we can't do the old fashioned world geometry to the degree that these new approaches to economics are starting to take root in the academy and are starting to be taught and researched. To that degree, we should expect improvements in the world of applied economics, which of course draws so closely on economic theory. So in fact, it's actually quite optimistic that economics is at a watershed moment where we are moving away from the old, the moral geometry of the 20th century into new kinds of economics of the 21st century that have a chance of doing much better when it comes to serving those we purport to help.