In Why Can’t America Be Sweden?, Thomas Edsall points to a growing debate in economics: If some countries can have strong growth while also having strong supports for workers and their families, why can’t all countries grow that way? In the post, he focuses on a working paper by MIT economist Daron Acemoglu and his co-authors, James A. Robinson (Harvard), and Verdier Thierry (Paris School of Economics) where they argue that “in an interconnected world, it may be precisely the more cut-throat American society, with its extant inequalities, that makes possible the existence of more cuddly Nordic societies.” They base this finding on their research where they “consider a canonical dynamic model of endogenous technological change at the world level.”
As Acemoglu and Robinson point out on their blog, for them, this research was an academic modeling exercise, not a paper that they seemed to believe would garner a good deal of public debate. They make a fairly impassioned argument that there is a difference between this effort and the kind of engagement economists usually do in the public sphere:
When one writes a blog, a newspaper column or a general commentary on economic and policy matters, this often distills well-understood and broadly-accepted notions in economics and draws its implications for a particular topic. In original academic research (especially theoretical research), the point is not so much to apply already accepted notions in a slightly different context or draw their implications for recent policy debates, but to draw new parallels between apparently disparate topics or propositions, and potentially ask new questions in a way that changes some part of an academic debate.
When I read Acemoglu, Robinson, and Thierry’s paper, I was struck by many of the same reactions to the model that many others have commented on, such as whether high inequality really does lead to innovation, whether how they measure patents really gets at whether a country is innovative, and whether characterizing Sweden as entirely equal and non-innovative was a useful model, but I think that, ultimately, what is most interesting about this debate is the role of economic modeling and theorizing in policy debates. Many quickly commented on the working paper because the authors have a widely-read blog and because they are dipping their toes into policy debates, giving advice on what makes countries grow. So, people who care about these questions are paying attention to what they say.
I think we should take them at their word: When economists write for academic audiences (or for each other), this is not work that should be lifted up wholesale as doctrines for economic policy making. As the past few months have shown, giving too much credibility to economists before their research has been found to fit the evidence doesn’t make good policy. It’s great that we have academics trying to sort out what makes economies grow and we need to give them room to find answers that make sense in the real world. But, let’s not pretend that an untested model actually has anything to do with the real world.