Economists shouldn't be making public policy.
There is a curious discussion going on among economists. It's about whether the lessons of a basic economics class are useful in crafting public policy. And it's a sad statement about the field of economics, because the conversation is entirely missing the point.
The conversation started when one economist declared that "Most of what's in [introductory economics textbooks] is probably wrong." Another economist made a related point that even when Econ 101 is correct, it's probably not on an important issue. A third economist stepped in to defend basic economics, pointing out that simple models are generally more useful than empirical studies that contradict each other. A fourth economist critiqued the third's defense of models, saying, "The problem is that many people believe (or act as if they believe) that those models are a complete description of reality from which you can draw policy conclusions." A fifth weighed in with, "Sure, it’s entirely obvious that we shouldn’t be designing public policy on the basis of what econ 101 tells us. But all too many people take that to mean that we should be designing public policy in entire violation of what econ 101 tells us."
These economists, intelligent people all, are missing the more essential truth here. We shouldn't be designing public policy on the basis of what basic economics tells us (or even what advanced economics tells us). This isn't about economic principles. We should be designing public policy on the basis of our political philosophy - our moral principles. Economics might help with the details, but morality should always come first.
For example, when deciding whether to regulate an industry, moral principles should be used to determine whether the regulation is necessary. Only then should economics be applied, to determine the prudent extent of the regulation. If the industry is not harming anyone, the moral justification for regulation is lacking regardless of the economic analysis.
Perhaps a better example is the minimum wage. If it is immoral to interfere in private contracts and put people out of work, then we don't need to bother calculating how much interference the market can bear, and how many people will become jobless. Economics is not useless in this case, it's simply unnecessary.
We need to reinvigorate the tradition of the philosopher-economist, best personified in the modern era by Milton Friedman. While Mr. Friedman was an excellent economist, his true power - and the reason he became the most beloved economist in America - was philosophy. This power allowed him to cut through many tangled economic issues and expose their truths. It also allowed him to stand on a moral high ground that most modern economists can hardly imagine, mired as they are in various ethical swamps.
The economics profession is becoming increasingly hostile to philosophers. This is a byproduct, and in some cases an explicit theme, of the profession's otherwise admirable efforts toward a more consistent and rigorous use of the scientific method. The "mathematical philosopher" has come to be disparaged among this new breed of empirical economists. These new economists seem to believe that philosophy and empiricism are somehow antithetical. That's not true - they simply don't mix well. So let's not mix them. Morality and reality are measured with different yardsticks. If we are mindful not to let one interfere with the judgement of the other, why can't we use one in each hand?
When economists lose sight of the fact that they should put moral principles before economic theories, they become dangerous to the social well-being they hope to maximize. Let's stop talking about the usefulness of our Economics classes, and instead consider a refresher course on Philosophy.