'Economics for the Common Good'
Jean Tirole, Princeton University Press, 576 pages, $29.95.
Nobel Prize winner Jean Tirole's book "Economics for the Common Good," published in 2016 and just released in English, tries to rescue economists' reputation.
He spends much of his book reminding readers of what economics is for. It is supposed to serve society and to offer rigor where gut instincts go wrong. Debates on whether to weaken protections for permanent employees, for example, pit managers against workers who want security. The economist is there to point out the victim hidden by this dichotomy: The person who has no job, or only a short-term contract, because companies are afraid to hire hard-to-fire staff on full contracts.
Whatever the individual answer, policymakers should make decisions from "behind the veil of ignorance," not knowing whether any one person, including the policymakers themselves, would be a winner or loser from a particular policy.
Tirole applies this type of reasoning to topics ranging from carbon taxes to industrial policy, from competition to the digital economy. He presents economists as detectives, sniffing out abuse of market power and identifying trade-offs where populists make empty promises.
He also depicts economists as ill-equipped to deal with the dirty reality of politics. He warns that academic economists like himself will be quickly put into political pigeonholes. Though populists revel in simplicity, his aim is to make economics context-specific and point out its complexities. This is his strength, but his discipline's limitation. He is economists' defender, but not their savior.
THE ECONOMIST
