It’s a Friday night in January, and I am searching for a free drink among 9,000 economists. Every year a sizable portion of the nation’s economists descend on some lucky city for the Allied Social Science Associations Annual Meeting, the economics field’s largest gathering, a kind of carnival of suits and supply curves. Most academic disciplines have a similar annual convention, but no other can boast the same influence on American politics and policy–after all, Presidents don’t appoint a council of anthropological advisers. It doesn’t take long for mainstream academic thinking to become the foundation for the government’s macroeconomic policy. In 1968 Milton Friedman, then president of the American Economics Association (AEA), devoted his presidential address to arguing against Keynesian meddling in the economy and for a monetary policy focused on restraining inflation. A decade later, his prescriptions would be largely adopted. In 2005 onetime Reagan adviser Martin Feldstein called for Social Security privatization just as Republicans in Washington were mobilizing (unsuccessfully) toward the same end.
This year’s conference attendees are packed into the mammoth glass-and-brick Chicago Hyatt. On the second evening, I come across two receptions facing off across a basement hallway. If you wanted to get a sense of the status hierarchies of the profession, this was a perfect tableau. On one side, a reception in honor of the impending rebroadcast of the late Milton Friedman’s famed miniseries Free to Choose, a wildly successful bit of laissez-faire propaganda now set to reach a new generation of unsuspecting blue-state audiences. The room is packed and festive, with several Nobel laureates milling about, chicken satay skewers available for noshing and an open bar. (A man behind me in line complains of the free drinks that “Milton wouldn’t approve! Because we’re not getting the true price of the drinks.”) Across the hall, a reception hosted by the Economic Policy Institute (EPI), a left-liberal Washington think tank that advocates policies–higher minimum wage, easier paths to unionization, social insurance–that are in almost every detail the opposite of everything that Friedman stood for. In that room, perhaps thirty people gather, picking at the cheese cubes and shelling out $6 a drink at the cash bar. The EPI’s Max Sawicky, an imposing presence with a long gray ponytail and growling voice, tells me the turnout is better than usual.
After grabbing a free drink in the Friedman reception, I strike up a conversation with economist Michael Perelman in the hallway. Balding, with long gray hair, he has the intense, unblinking mien of a self-published science fiction writer, or a former grad student of Timothy Leary’s. Perelman, who is there for the EPI reception, works at the margins of the discipline; he is one of a few hundred self-described “heterodox” economists at the conference. His last book, Railroading Economics, was about the creation of the “free market mythology,” and his next book is titled The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression. I ask him about how he relates to the so-called mainstream of his profession. “It’s a mafia,” he says quietly, his eyes roving over to the suits spilling out of the Freedom to Choose room.
Mafia is probably a tad hyperbolic, but there is undoubtedly something of a code of omertà within the discipline. Just ask Alan Blinder and David Card. Blinder, a renowned Princeton economist and former Clinton economic adviser, has long been a zealous advocate of trade liberalization. But this past March, the Wall Street Journal ran a front-page article on Blinder’s concerns about the massive dislocations that the current trade regime and outsourcing trends might bring for American workers. He suddenly found himself under fire from fellow economists for stepping out of line. Card, a highly esteemed economist at the University of California, Berkeley, caught flak for his heresy not on trade but on the minimum wage. In 1994 he conducted a study to see whether an increase in the minimum wage in New Jersey had the negative effect on employment that basic neoclassical theory would predict. He found it didn’t. In fact, his regression analysis showed that, controlling for other factors, New Jersey gained fast-food jobs after increasing its minimum wage, compared with Pennsylvania, which hadn’t raised wages. The paper attracted a tremendous amount of attention and criticism, and Card himself largely abandoned working on the minimum wage. In a 2006 interview, he explained his decision to leave the topic behind this way: “I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.”