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It was amusing to see Dani drawing on Keynes and polemics against the dreaded "classicals" to support his case because the attack missed the target by a wide margin. As thought the classicals could not understand that free trade could be corrupted by interventions of various kinds.

See Larry White's very insightful comments on this issue posted at Division of Labor.

There is a third alternative to the simplistic first and second best approach, that is to adopt a more or less sophisticated situational analysis to weigh up the downstream consequences of various policies, not just a supply and demand analysis but an appraisal of the institutional forces in place and the comparative strengths of the different interests. Bill Hutt got hold of this, the responsible economist can give advice on the best option and can also provide a second option if the politician thinks it is too hard to do the right thing - as Keynes thought it was too hard to take on the trade unions in the 1930s.

In Politically Impossible: An Essay on the Supposed Electoral Obstacles Impeding the Translation of Economic Analysis into Policy Hutt proposed a "dual formula" for economists to deal with the problem of unpopular policies. He quoted Milton Friedman on the duty of economists to prescribe what should be done, without courting political approval. He then noted that Friedman had departed from his own advice on occasions.

"Friedman's maxim implies that the economist's role is to do this (the ideal) and not to do that (the expedient). I suggest it is the economist's role and duty (in public policy discussions) to do both. Why should not advice proferred typically take the form of saying to the politicians (and indirectly to electorates) with complete candour, something like the following?"

'In our judgement, the best you will be able to get away with is programme A along the following lines; but if you could find a convincing way of really explaining the issues to the electorate, our advice would have to be quite different. We should have to recommend programme B along the following lines'."

"I am not suggesting that economists ought ever close their eyes to political realities. On the contrary, when they are concerned with the practical applications of their science, they ought in every instance to bring voting prospects into the picture - but explicitly."

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