Tom Campbell
University of California, Berkeley
Economics Department
Commencement Address
May 23, 2003

Fellow economists,

My speech today will be a random search for an answer to the question: Why was I asked to speak? Perhaps it is because I taught “economics for lawyers” for many years? No. The title of this course sounds too much like “ethics for congressmen.” Further, it’s hard to be proud of being enrolled in a course with the preposition "for" in it. And that suggests the next possible reason: I am to address the intersection of public service and economics. The value of a good knowledge of economics to one in public office cannot be overstated.

Consider the following letter, actually sent to one of our country’s greatest U.S. senators, Mark Hatfield:

Senator Mark O. Hatfield
US Senate Office Building
Washington, D.C. 20510

Dear Senator Hatfield,

My friend Carl Hoch back in Illinois received a $1000 check from the government this year for not raising hogs. So I am going into the not-raising-hogs business next year. What I want to know is in your opinion what is the best kind of hogs not to raise? I would prefer not to raise razorbacks, but, if there is no other good breed to not raise, I will just as gladly not raise berkshires or durocs. The hardest work in this business is going to be in keeping an inventory of how many hogs I haven’t raised. I plan to operate on a small scale at first, holding myself down to about 4000 hogs, which means I will have $80,000.

Now another thing: these hogs I will not raise will not eat 100,000 bushels of corn. I understand that you also pay farmers for not raising corn. So will you pay me anything for not raising 100,000 bushels of corn not to feed the hogs I am not raising? I want to get started as soon as possible as this seems to be a good time of the year for not raising hogs.

Yours truly,

[a constituent]

To have elicited such an eloquent analysis from an average citizen, American agricultural policy must, for that reason alone, be judged a tremendous success.

But is it the influence of economics, or the pure genius of public office holders, that underlies that contribution? I’m rather clear it’s not the latter. Indeed, I have maintained a file of outstanding statements by public office holders, and from one subfile, mayors of America’s great cities, this compendium suggests their best work is in the subject of crime, not economics:

“I haven’t committed a crime. What I did was fail to comply with the law.” Mayor Dinkins, New York

“The police are not there to cause disorder. They’re there to preserve disorder.” Mayor Daley, Chicago

“The streets are safe in Philadelphia. It’s only the people who make them less safe.” Mayor Rizzo, Philadelphia.

“Outside of the killings, Washington has one of the lowest crime rates in the country.” Mayor Barry, Washington, D.C.

But crime and economics do interact. When running for the senate in 2000, I observed that some cities might want to treat drug addiction through clinics rather than prisons. I noted that if an addict could obtain heroin from a public health facility rather than from the street, the price on the street might drop so far that there’d be no profit in pushing illegal drugs. My success in advancing this policy, it should be noted, was as great as my success in the overall campaign. Which is why I’m addressing you today as dean not senator.

Indeed, the danger with economics is that it explains so much, it is so powerful a tool, that economists run the risk of making themselves unwelcome in mixed company: where "mixed" refers to the presence of other social scientists. One thing I learned in my economics training: if the data don’t fit the theory ... then for heaven’s sake, toss out the data! The theory is too beautiful not to be true. Your measurements must be wrong. Or -- in another economist’s foible displaying the self-assuredness of one with only a small knowledge of evolution --“our economic model assumes utility maximization by individual consumers. Sure, some folks behave other than in their utility maximizing self-interest, but they won’t breed as much as others, so eventually they’ll die out -- so we don’t have to include them in our model!”

Nor are microeconomists the only ones guilty of such hubris. Indeed, the difficulty of selecting among an infinity of macroeconomics theories, each capable of predicting the last recession, and nothing of the future, is demonstrated clearest in Will Rogers’ aphorism that if you were to line up all government economists head to toe, it would be a good thing.

More eloquently, in the words of John Maynard Keynes, “Economists set themselves too useless a task if in the tempestuous seasons they can only tell us that when the storm is long past, the ocean will be flat.”

The reason economists come in for such humor, of course, is that it has been a singularly successful social science. In fact, there’s nothing like it. And despite the ability of presidential candidates to cite some economics scholar for virtually any policy position, there remains an outstanding level of consensus on the basic points, across both of our two major parties, and, I dare say, the candidate of the libertarian party as well:

1) Free trade creates wealth.
2) Government deficits will eventually drive up interest rates.
3) Incentives are more efficient than mandates.
4) Production of any good or service ought to proceed until marginal benefits equal marginal costs.
5) Social costs and social benefits should be internalized to the maximum extent possible.
6) It is useful in discussion not to ignore wealth distribution effects, but not to confuse them with wealth creation or diminution effects.
7) No centrally planned economy has yet outperformed the free market in wealth creation.
8) You can safely ignore Giffen goods for the rest of your life.
9) M times V equals P times Q.
10) (One of my own favorites) It’s hard to be charitable when you have no wealth yourself. Think about that for a moment when you’re with someone mindlessly attacking American capitalism, and saying all businesspeople are crooks. I’ll return to this at the end.

The largest temptation I see is from the tremendous success of neo-classical and post-classical economics. Because it has been such a useful discipline, some, even great economists, have forgotten that economics is only a discipline for analyzing the human condition, and not a prescription for moral behavior. It is the only serious point I have to convey today; indeed, it is the most important part of an economics education, and I view this commencement speech as the very last chance I, or any of your professors, will have to teach before you receive a license to practice economics on a vulnerable and trusting public.

The point is the limit of economic thinking, and the necessity for compassion. The point is humility, which is only necessary because our discipline is so powerful and has been so successful. The teacher of the lesson is a son of California, a winner of the Nobel Prize, though not in economics:

The spring is beautiful in California. Valleys in which the fruit blossoms are fragrant with pink and white waters in a shallow sea. Then the first tendrils of the grapes swelling from the old gnarled vines, cascade down to cover the trunks…. The men who work in the fields, the owners of the little orchards, watch and calculate. The year is heavy with produce. And the men are proud, for of their knowledge they can make the year heavy. They have transformed the world with their knowledge. The short, lean wheat has been made big and productive. Little sour apples have grown large and sweet. And that old grape that grew among the trees and fed the birds its tiny fruit has mothered a thousand varieties, red and black, green and pale pink, purple and yellow; and each variety with its own flavor.

The men who work in the experimental farms have made new fruits: nectarines and forty kinds of plums, walnuts with paper shells. And always they work, selecting, grafting, changing, driving themselves, driving the earth to produce. [But] the little farmers watched debt creep on them like the tide. They sprayed the trees and sold no crop. They pruned and grafted and could not pick the crop. And the men of knowledge have worked, have considered, and the fruit is rotting on the ground. …

The decay spreads over the state. And the sweet smell is a great sorrow on the land. Men who can graft the trees and make the seed fertile and big can find no way to let the hungry people eat their produce. Men who have created new fruits in the world cannot create a system whereby their fruits may be eaten. And the failure hangs over the state of California like a great sorrow.

The works of the roots of the vines, of the trees, must be destroyed to keep up the price, and this is the saddest, bitterest thing of all. Carloads of oranges dumped on the ground. The people came for miles to take the fruit, but this could not be. How would they buy oranges at twenty cents a dozen if they could drive out and pick them up? And men with hoses squirt kerosene on the oranges, and they are angry at the crime, angry at the people who have come to take the fruit - and kerosene sprayed over the golden mountains….

There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our successes. The fertile earth, the straight tree rows, the sturdy trunks, and the ripe fruit. And children dying of pellagra must die because a profit cannot be taken from an orange. And coroners must fill in the certificate, ‘died of malnutrition,’ because the food must rot, must be forced to rot. In the eyes of the people there is the failure. And in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.”

-- John Steinbeck, The Grapes of Wrath

I know it’s a heavy message. But just in case you hadn’t ever read it, or heard it before, I hope you can now understand why I felt obliged to share it with you before you were officially graduated. How can you graduate in economics from our university, the University of California, without having heard this passage from The Grapes of Wrath? That’s it. Your economics education is now complete. And this brings me back to why I was asked to speak today. I am privileged to be your colleague economist. Formerly, for some of you, I was your Congressional representative or your state senator. But I suspect it was not because of those things, but rather, because of my background as an attorney that I was really asked here today. Subtly, your dean understood the need for a cautionary note to the economics graduates to be careful when dealing with the law. Some of you will testify in court. Some of you will be expert witnesses. Some of you will be criminal defendants.… Sorry, I thought I was still talking to my colleagues in Congress.

So, to warn you about the law, let me conclude with the classic cross-examination from the collection of true stories in the book Disorderly Conduct by Charles Sevilla:

Q. Doctor, before you performed the autopsy, did you check for a pulse?
A. No.
Q. Did you check for blood pressure?
A. No.
Q. Did you check for breathing?
A. No.
Q. So, then, it is possible that the patient was alive when you began the autopsy?
A. No.
Q. How can you be so sure, doctor?
A. Because the brain was sitting on my desk in a jar.
Q. But could the patient have still been alive, nevertheless?
A. Yes, it is possible that he could have been alive and practicing law somewhere.

In such a world as this, there is need for those more able to take the hand of the rest of us. Go forth -- create knowledge and wealth, and, what is much more important, the means to share them with others.

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