What’s the importance of truth in economics? Has the presidency of Donald Trump taught us anything in that respect? By “us”, I mean we libertarians who have been tempted by populist enterprises. The Economist writes (“The Man Without a Plan: Donald Trump Suddenly Withdraws from Northern Syria,” October 10, 2019) that Trump’s advisers
are coping with a commander-in-chief who, according to his own former secretary of state, “is pretty undisciplined, doesn’t like to read, doesn’t read briefing reports, doesn’t like to get into the details of a lot of things, but rather just kind of says: ‘This is what I believe.’”
This characterization corresponds to what an observer can gather from listening to the President or reading his tweets. And it is independent of what one may think of the substantial issues in the withdrawal from Syria. It is at least as relevant to other issues, such as Trump’s total lack of understanding of trade and his disastrous trade policies.
In general, Trump will have taught us that rulers who just “believe” are dangerous. It is important to be able or try to justify what one believes. In matters of simple tastes, such as preferring Coke to Bordeaux, it is ok to just express one’s preferences (even if trying to cogently explain them to oneself can lead to useful discoveries and perhaps to some wisdom, but this is outside the domain of economics). Intuition and faith, however, are not sufficient in matters of ideas and values, especially when the believer has the power to impose his beliefs on those who don’t believe. In public policy, truth matters.
How truth matters in economics is a more complex question than it appears at first sight. At the epistemological level, economics needs to be based on true statements about the outside world if it is to be useful as a science. At another level, individuals act on the basis of what they believe to be true, so preferences and beliefs, whatever their relations to the truth, are essential to gain an understanding of individual behavior–a point made by F.A. Hayek in The Counter-Revolution of Science, notably Chapter 3 on “The Subjective Character of the Data of the Social Sciences.” And, of course, public policy must be consistent with physical and social reality. It is not sufficient for a ruler to just believe; at any rate, this should be obvious in a non-tribal society where individual preferences differ.
Frank Knight touched both the epistemological and the public-policy level when he wrote, in a 1944 article reproduced in his book Freedom and Reform:
Truth itself (where any question is at issue) is a value, a matter of what one “ought” to believe, of better and worse reasons for believing; and the obligation to believe what is true because it is true, rather than to believe anything else or for any other reason, is the universal and supreme imperative for the critical consciousness. [emphasis in original]
Of course, Trump is not the only politician to govern on the basis of uncritical beliefs, which, not coincidentally, often correspond to what he thinks will win elections. Public choice theory has derived useful results from the simple hypothesis that politicians are as self-interested and imperfect as ordinary individuals. Trump also illustrates that politicians are subject to the same cognitive limitations as ordinary individuals; behavioral economists, please take notice. But let’s admit that Trump is an extreme case. Hence the prudent necessity, from a classical liberal viewpoint, of strictly restricting government power.