The Political Economy of Inequality And Climate Change

Larry Summers responds to two prominent political scientists who argue that political dysfunction is our major problem and that he should stick to economics.  He agrees with them that our political situation could be better, but he argues that the economic problems that we face are complex and that they would be difficult to solve even in a better political climate.  He does not believe that there are easy ways to deal with rising inequality and climate change which are among the most difficult economic problems for which we must find solutions.  He even argues that our system of government, with its checks and balances, does keep us from making better economic decisions but it also makes it more difficult for politicians to make stupid decisions. 

This debate illustrates the difficulty of thinking about politics and economics in isolation from each other.  They are necessarily intertwined.  Economists like to pretend that it is a positive science that is devoid of value judgements.  They pretend that efficiency is its only objective, but it is a mistake to believe that efficiency is an end in itself.  An efficient economy does not necessarily maximize well being.  Moreover, a political system that attempts to maximize well being must also be cognizant of economic means and outcomes.  We need more political economy rather than less.