Explaining spilled milk by saying the milk left the glass is no explanation for spilled milk. It’s a restatement of the question. When we ask why the milk spilled, we want to know why the milk left the glass—what did someone do, or not do, to bring this about.
While this is obvious even to a child, I can’t say the same for most economists.
For example, I recently participated in a classroom discussion regarding shifts in the federal regulatory climate since the 1970s. Back then, deregulation was the norm. Today, it’s anything but. What happened?
Theories varied, but most of us agreed that the voting public has come to value regulation more than they did in the past. The majority of people today care more about achieving some semblance of social justice than about maximizing economic efficiency (though, I suspect, only if a certain minimum level of efficiency is maintained). Stark few have any understanding of how the first of these goals depends on the latter. Politicians and regulators, seeking voter support, reflect this shifted attitude in their actions, which has led to more regulation all around.
But it struck me at the end of this discussion that citing changed voter preferences to explain why policies change doesn’t say much. In fact, it says nothing at all. In the context of a representative government, asking why certain types of policies have become more prevalent is asking why voters have come to support such policies. So simply asserting that they do now but did not before is like explaining spilled milk by saying the milk left the glass: It merely restates the question.
I’ve also noticed similar tendencies among economists when discussing the role of institutions (whatever those are…I’m still confused). In their award-winning book Why Nations Fail, MIT economist Darren Acemoglu and Harvard political scientist James Robinson write:
Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction.
While institutional analysis like this might be an improvement from the traditional neoclassical paradigm (which leaves theorists with virtually no explanation for variances in economic growth other than “variable factor accumulation rates)” it still fails to offer an actionable explanation. Yes, institutions matter. Bad institutions stifle development. But why are institutions so different from one society to the next? From the perspective of one truly concerned about development in poor countries, that’s the important question. Unfortunately, mainstream economists have yet to offer any substantial answer.
Of course, the idea of causality is confusing at a philosophical level. We really don’t explain anything, in a sense, without reference to something else that must be explained. All said and done, our explanations are circular. We can’t appeal to some first cause that needs no explaining.
But that doesn’t mean some explanations can’t be more useful than others. And too many economists’ explanations are simply pointless and unhelpful.
Or if it’s not the economists, but rather the politicians and pundits and average-Joe readers, who are too confident in the usefulness of their explanations, then economists could do a better job delimiting the explanatory reach of their science in a way the average-Joe reader can understand.