That is the question Jean Pisani-Ferry asks at Project Syndicate. In the wake of the Brexit vote there is a veritable chorus of experts and economists asking the same question. One explanation I don’t expect to see very often is that the supposed experts systematically ignore their own critical literature. Hubris.
Professor Pisani-Ferry inadvertently presents an example when he suggests that economists should “move beyond the (generally correct) observation” that “if a policy decision leads to aggregate gains, losers can in principle be compensated.” This is not a “generally correct” observation. It is, in the words of I. M. D. Little “unacceptable nonsense.”
This “compensation principle” — also known as the Kaldor-Hicks criterion — has been thoroughly refuted. I have documented the embarrassing career of this supposed principle in several posts over the last two years at EconoSpeak. Here are links to four of those posts:
Public Works, Economic Stabilization and Cost-Benefit Sophistry
#NUM!éraire, Shmoo-méraire: Nature doesn’t truck and barter
For the Euthanasia of Kaldor-Hicks/Cost-Benefit Pseudo-Science
Cost-benefit analysis as “unacceptable nonsense”
Opposed to the critical literature is simply a game of make believe. Let’s pretend those fatal criticisms don’t exist or that we didn’t see them or that they’re not all that important or that we can continue to use the fundamentally flawed criterion “until something better comes along.” This is not good enough. For a single economist to not know about the invalidity of the compensation principle would be malpractice. For the professional consensus to tolerate and even promote such malpractice is malfeasance.
People ignore experts because the experts have been systematically misleading them about what the benefits of policies are likely to be.