It is wrong to consider economics a science. Of course it is possible to study economics in a scientific or mathematical or statistical way; and to use those methods to produce reasonable recommendations for policy. The problem is that it is not treated that way in public. The problem is that public discussion of economics engages people’s emotions, because it addresses and can affect how much money people – different people – have, or make, or are allowed to control. The problem then is that economics is contaminated with politics, as politics are contaminated by the money that economics purports to study.
A good example is Supply-Side Economics, which contends that the way to generate more economic activity, and therefore benefit all, is to allow those at the top of the economic pile – rich people and large corporations – to earn, keep, and control more money. This is a political idea, not an economic theory. Supply-side policy has been tried twice recently, during the Reagan administration, and again during the George W. Bush administration. (Reagan’s eventual vice president, George H. W. Bush, W’s father, famously called it “voodoo economics” during the primaries, before Reagan chose him as a running mate.) In both cases, the medium-term result was recession, and the long-term result was impoverishment of the federal government by steep increases in the federal deficit.
Meanwhile, much of that untaxed, uncollected money goes, not to actual production, but to increases in the apparent value of (unchanged) items with minimal or fixed intrinsic value, such as real estate, luxury goods such as fast cars, gold, and jewelry, and stocks. These increases in perceived value can lead to bubbles, which lead to recessions when they burst.
A better economic theory and policy is illustrated by the process of exiting the Great Depression. Many economists say that the Depression was only ended by World War Two. And what was that? Not supply-side. That was an extreme example of a contending policy – stimulus, the federal government spending money on actual production, rather than simply giving it away or failing to collect it. Huge amounts of federal spending were directed at manufacturing. And since the majority of the typical industrial workers were otherwise employed defending our country and attacking our enemies, this manufacturing also provided well-paid employment for previously-sidelined populations such as women and minorities. The money the federal government spent flowed throughout the economy, and not only created and enriched industrial corporations which went on to enrich the country after the war, but brought many individual citizens into the economy as active independent consumers, buying, investing (primarily in homes), enjoying life, and in turn employing others.
However, in a startling re-definition of self-interest to include others, the United States extended this stimulus effort to other countries, including our deadly enemies during the war, helping to rebuild Western Europe and Japan. This selfless support for these devastated countries rebounded into more post-war wealth and dominance for the United States.
Of course, world war also has many negative results; and the United States was very lucky to avoid extended destruction and negative impacts. And peacetime funding of excessive or unnecessary military hardware and capabilities can increase graft, corruption, and the consolidation of money and therefore power in a self-justifying military-industrial-governmental complex.
In non-wartime, the construction and repair of infrastructure is one type of stimulus that produces not only increased flows of money through the economy; it also improves the tools that the country, citizens, and companies use to create economic activity (roads, bridges, waterways, etc.). The increase in productive economic activity (as opposed to wealth for a limited number of players) is distributed widely across the country, geographically and socially, with little chance of the consolidation unavoidable in military spending. Other examples of productive stimulus include the improvement of the health and education of citizens. These healthy, educated citizens will enrich the country as a whole and raise the success and standing of the United States in the world.
Unfortunately, the previous experiments in supply-side economics have produced exactly the results that would be predicted by a scientific economics; and exactly the results desired by those who sold supply-side to the voters. Greater consolidation of wealth in fewer hands results in more corruption, and less democracy. Money and power always have and always will go together, and the concentration of money in fewer hands disempowers the vast majority of citizens and weakens not only our internal peace and productivity, but also our competitiveness and success in the international economy and geopolitical realm. Fortunately, we still have the vote (despite temporarily-successful efforts by the rich to limit that power), and we can still restore perspective, objective intelligence, and balance to that much-maligned “science” of economics.