Liang Hongfu

Economists should repair the damage

By Liang Hongfu (China Daily)
Updated: 2006-04-11 06:06

In a recent televised talk show, the host posed this question to two guest economic professors: Why have economists in China become so maligned by the public when they should have been revered as champions of the nation's economic success?

Instead of defending his colleagues, one professor said that many Chinese economists, motivated by greed, have "betrayed" their profession by masquerading as corporate consultants, offering unworkable solutions to specific business problems. Economists, he said, are particularly ill-equipped to play that role because they are trained in looking at the "big picture" rather than solving specific problems.

In the past, many corporate leaders in China wrongly believed that economists could help them manage their enterprises, streamline their production processes, or promote sales, the professor said. Over time, these corporate leaders have come to realize that the economists they hired as consultants were giving them advice that didn't work as expected.

"Feeling cheated, these corporate leaders have been spreading the word that economists are nothing more than just a bunch of fast-talking snake-oil salesmen offering useless advice to whoever is dumb enough to pay," the professor said. And subsequently, "we are all tarred by the same brush," he said.

The other professor, from a different university, offered a different, but equally unflattering, answer to the host's question. Economists, he said, have lost their way and have become too "cold blooded" in their obsession with mathematical solutions to economic problems. In their relentless pursuit to maximize efficiency, as expressed in cold numbers, many economists have ignored the "human side" of the equation, he said.

To these economists, the professor said, laid-off workers are seen as collateral damage and the hardships that befall their families are a small sacrifice the society has to make to achieve rapid economic growth. "They (the economists) have lost their conscience," he said. "As such, they have also lost the respect and trust of the public."

Both professors agreed that Chinese economists have made tremendous contributions to the nation's spectacular economic progress, particularly during the early stages in the 1980s. Much of the advice of the country's leading economists was incorporated into many important government economic policies that underline the rapid pace of industrialization over the past 25 years, according to these experts.

Their subsequent fall from grace in the eyes of many people is lamentable. There is a clear need for economists in China to consider it their urgent task to repair the damage that was done to the credibility of their discipline.

The professional expertise of economists is still needed to help chart the future direction of the country's economic progress. But they require the trust of the public to ensure that their advice is heeded by policy-makers.

Some economists, like the two professors, are taking advantage of speaking opportunities at public forums and business seminars to educate the public, especially the business community, on where exactly their knowledge and expertise lie. That could help clarify much of the misunderstanding about the discipline that seems to be widespread among the business community.

For sure, business people can benefit a great deal from the knowledge and advice given by economists. But such benefits are limited to helping them understand the business and economic environment in which they operate. If they want advice on, say, corporate restructuring or project management, they should hire a management consultant.

More economists around the world are beginning to pay greater attention to the social cost of economic growth. Such a "softer and kinder" approach is shaping up to be a predominant influence on future economic policies of both developed and developing countries.

Many of the unfortunate side effects of rapid economic growth, including the widening wealth gap between rich and poor, rising unemployment resulting from massive layoffs, deteriorating social services and worsening environmental problems, need to be addressed. The difficulty lies in striking a balance to ensure that the benefits of economic progress can be shared fairly and equitably by the vast majority of the people.

That's the most challenging and potentially the most rewarding task facing our economists.

Email: jamesleung@chinadaily.com.cn

(China Daily 04/11/2006 page4)