How Economists Cause Harm Even as They Aspire to Do Good (with George DeMartino)

Episode Summary

Executive Summary: The episode features economist George DeMartino arguing that mainstream economics is ethically blind, overconfident, and often harmful. He says economists treat uncertain social systems like physics, rely on flawed forecasting and cost-benefit models, and underestimate long-term damage from policies such as trade liberalization and shock therapy. He calls for an economics grounded in humility, ethics, stakeholder participation, and robust policy under deep uncertainty.

Main Topics: Ethics as a missing foundation in economics (Priority: 5/5): DeMartino argues economists rarely receive formal training in professional ethics, unlike other professions, and this omission helps normalize harmful practices. Positive vs. normative economics (Priority: 4/5): He distinguishes value-free description from policy prescription, arguing that economics has privileged 'positive' models while ignoring the moral consequences of policy advice. Harm as a structural feature of policy (Priority: 5/5): DeMartino says economic interventions always create winners and losers, but economists wrongly assume harms are temporary ripples rather than potentially lasting avalanches. Failures of expert overconfidence and forecasting (Priority: 5/5): He criticizes economists for believing they can predict and control complex economies, and for issuing forecasts that shape behavior and can worsen outcomes. Case study: Russia’s shock therapy (Priority: 5/5): He cites the early-1990s Russian transition as a catastrophic example of economists applying drastic reforms with insufficient humility, contributing to mass deaths and social collapse. How to redesign economics (Priority: 4/5): DeMartino proposes training economists to lead with uncertainty, immerse themselves in communities, reduce reliance on forecasting, and use decision-making under deep uncertainty (DMDU). Demographics, power, and the profession (Priority: 3/5): The discussion notes economics’ historical whiteness and maleness, but DeMartino suggests the larger issue is the discipline’s inherited ideology of market fundamentalism and technocratic authority.

Key Arguments: Economics has treated itself as a value-free science, but policy advice always has ethical consequences and can cause real harm. Professional economics lacks the ethical training standard in medicine, law, and other fields, which makes harmful overreach more likely. Mainstream economics wrongly assumes long-run benefits outweigh short-run harms, even when harms become persistent and intergenerational. Economic forecasting is unreliable in complex social systems and becomes dangerous when people change behavior in response to forecasts. Orthodox theory can be culpable in crises because it often assumes away phenomena like bubbles until catastrophe occurs. Russia’s shock therapy shows how confident economic engineering can produce massive unintended destruction when economists mistake influence for control. A better economics would be participatory, humility-centered, and focused on robust policies rather than optimal but fragile ones. Decision-making under deep uncertainty offers a model for policy that acknowledges unknowability and involves affected communities directly. Economists often do not trust each other’s work privately, which undermines public confidence in the profession’s certainty claims. The profession should lead with what it does not know instead of presenting models as if they were definitive maps of reality.

Data Points: Years studying economists' ethics: 20-25 years - DeMartino describes the duration of his work on the ethical behavior and responsibilities of economists. PhD student composition in U.S. economics: 70% international students; about 30% from North America/United States - He notes the changing demographics of economics doctoral programs. Russia excess deaths estimate: 3 million to 10 million - Estimate cited for deaths associated with early-1990s shock therapy and social collapse in Russia. Time horizon for weather forecasting: 5 to 10 days - Used to contrast meteorology’s improving predictive power with economics’ weak forecasting record. Minimum wage experiment example: $15 minimum wage - Mentioned as an instance where policy skepticism was tempered by openness to empirical learning. Book title: The Tragic Science: How Economists Cause Harm, Even as They Aspire to Do Good - DeMartino’s latest book discussed during the interview. Ethics class requirement at Wharton: 1 ethics class - Personal anecdote about an uproar over requiring ethics education for business/economics students.

Pivotal Quotes: "we need to lead with what we don't know" — George DeMartino: He argues for humility and uncertainty as the starting point of economics training and policy advice. "Economists are not trained to think of economic harm as avalanches, we're trained to think of them as ripples on a pond." — George DeMartino: He contrasts mainstream assumptions about temporary adjustment with long-lasting structural damage. "don't ever trust an economic consultant" — Unidentified economist cited by George DeMartino: An interviewee’s candid admission illustrating the profession’s private distrust of its own applied work.

Implications: Listeners are urged to be skeptical of confident economic predictions and policy blueprints. For the field, the episode calls for ethics training, community engagement, and robust, uncertainty-aware policymaking rather than technocratic certainty.