Elizabeth Warren Freak Out, 1: So-called “Ideologue”

. She writes that she offers “a dirty, complex, elastic, interconnected view of bankruptcy from which I cannot predict outcomes nor even necessarily fully articulate all the factors relevant to a policy decision.” Warren contrasts her approach to the clean and rational conclusions offered by her opponent in the scholarly exchange, but defends her approach as “more realistic and more likely to yield useful analysis.”

Although this article is written in the context of a specific debate about bankruptcy law, it is illustrative of a pragmatic approach to policy questions that is skeptical of claims about foundational truths and generally anti-dogmatic. If you want a head of the CFPB who will hew to a particular ideology–on either side of the issues–then Warren is not your person. She is a person who goes where the facts lead her and will change her mind based on new evidence. Indeed, I sometimes wonder whether her popularity stems from an electorate who is looking for less ideology and more leadership from their public officials.

I like this because it is also my approach. Some have pointed out that her work on bankruptcy couldn’t be published in an economic journal, and that’s because she doesn’t start off with the “assume you approach life like a sociopathic bellman equation traveling backwards through infinite time.” And that’s supposed to be a bad thing! What we are seeing right now is proof that ideological assumptions about how applicable gaussian copulas are under efficient markets or how ruthlessly consumers behave in housing are completely off the mark. Using these models to close off critical thinking is exactly the kind of thing that allowed economists and financial engineers to implode the financial sector, and as such I am very sensitive to this.

But it is not everyone’s approach. This is what people like Karl Smith means when they say she has strong priors, or when e21 calls her an ideologue. She doesn’t assume that economic models have all the answers; she embraces them, but treats them as the start of a conversation instead of the pre-conceived conclusion. To someone who likes to use economics as a way to close off debate or prove-by-reassuming economic 101 stories this pragmatism looks dangerously ideological.

Those who use economic analysis as a tool for greater discovery instead of a circular exercises in proving the ideology of economic theory are the dangerous ideologues. How cool is that?

Matt Stoller, discussing Summers and job growth, put it perfectly: “Ideologies are like accents. Other people have them, you just talk normal.”