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November 2020, No. 95


Trade & Business

Lying Is a Betrayal of Science


No expert should lie to people in any way and say in public, for example, that the economic situation is very good and not as worrying as you think.


Dr. Mousa Ghaninejad, economist, believes that economists in the public arena should address policymakers with their advice and warnings, not the general public. If an economist wants to reach out to ordinary people and give them advice, it is better to do so in the form of consulting firms rather than in the public arena, because giving public advice may have dangerous consequences for experts, individuals and the society.

Ghaninejad warns: When an economist makes forecasts in the public arena about the future of prices and the future of the economy, there is a danger that the masses may believe his/her prediction and act upon it, in which case the economy may become more turbulent and even collapse. 

In the face of macroeconomic instability, some public sector experts and economists offer economic advice to people about buying and selling assets. How do these recommendations relate to the social responsibility of economists?

Economists need to pay close attention to the far-reaching effects of these recommendations, especially in situations such as Iranian society, which from time to time suffers severe economic fluctuations, foreign currency fluctuations, and inflationary turmoil. In a situation where the macro economy is turbulent and people are confused, the words of economists working in the public sphere can be very influential. Many people would probably expect to receive practical guidance from these experts, but economists in the public arena should address policy-makers on their advice and warnings, not the general public.

If an economist wants to reach out to ordinary people and give them advice, it is better to do so in the form of consulting firms rather than in the public arena, because giving public advice may have dangerous consequences for experts, individuals and the society.

Of course, an economist, like the rest of the society, naturally pursues his own interests, but when he speaks as an expert or scholar, he must also consider his social responsibility and not only personal interests, as a physician does when treating patients. Although he pursues his own interests, where his personal interests are not in line with the interests of the patient, he prefers the interests of clients to his own interests as a matter of human commitment and social responsibility.

If an economist or financial expert wants to give advice to the people, he should do so in the form of economic consulting firms and for his specific clients, and be accountable for his predictions and recommendations. It should not be the case for an economist to make a general statement in public and when people follow that advice and end up in losses he would not be accountable.

In the foreign currency turmoil of early 1397 (2018), some “experts”, made strange predictions that, for example, the rate of the US dollar would reach 400,000 rials (for one USD) by the end of the year. It is completely irresponsible to make such forecasts. Those predictions were not correct, but I believe that even if these people believed that their projection was true and scientific they should still not have made these predictions public. Because such predictions make people anxious and inflames the society. Experts, even if they want to give advice or suggestions to ordinary people, family, friends and acquaintances, should do so in the form of a consulting contract for which they are accountable. Even someone who advises a friend or relative to buy a stake in the capital market should be held accountable later.

Therefore, an economist or expert should in no way address people in the public arena on economic and financial advice. Of course, it is the duty of every scholar to analyze the existing facts and express his opinion, but announcing what it is better for people to do with their possessions should not be done in the form of a speech or writing or an article in the public arena. Economists should only make recommendations in the field of policy-making and addressing the government. Certainly, in these cases, the economists who advise the policymaker must also be responsible. That is, to explain as a policy adviser what scientific evidence and theory they are making a prediction on, and if it later becomes clear that this prediction is wrong, apologize and be fined. Of course, the most important penalty for an economist is to lose credit. In the turbulent context of macroeconomics, it is better for economists in the public arena to explain the policies that have caused the turmoil and offer solutions and advice to change them, rather than to suggest to individuals about the management of personal assets. 

Why has the economic policy climate shifted to a point where some economists, like the general public, are frustrated with reform and have turned to individual salvation instead of emphasizing structural reform? In this situation, can we hope that collective benefit will be achieved by providing individual advantage?

In the context of macroeconomic variables, economic issues become very sensitive. Let me illustrate this with an example to make it clearer. Suppose in a large auditorium with a big crowd, you suddenly see a corner of the auditorium on fire, and there is a serious danger that the fire will soon engulf the entire auditorium and endanger people’s lives. In this situation, if you shout fire, all the people rush to the exit doors and a large number of people will probably be trampled and die.

Therefore, instead of shouting out of excitement, it is better to inform the hall officials about what happened and advise them to calmly lead the people out and empty the hall and extinguish the fire without creating panic. The responsible way is the second method. The same is true in the field of economics. When fear occurs, the fact that everyone wants to save themselves is not in the pursuit of personal interests, because in such a struggle, one may even harm one’s own interests; A person who is frightened and wants to leave the hall by paddling as soon as possible may lose his life under the limbs and even act against his interests. The same is true in economics. Moreover, when fear arises and people pursue their own interests in terror, their individual interests coincide with those of the common good, and we can no longer say that the general rule of economics, that is, the alignment of individual interests with the common good, applies here. In fact, a special situation has occurred here and a special measure is needed. Here, each person must prevent fear, or not fear himself, at least for the sake of his personal interests; otherwise the wrong decision will be made. An expert who wants to give advice in the public must consider all these delicate and important points. 

Given that economists and experts alike may be accused of lying by the public in a turbulent economic environment, how can they move on the line between refusing to inflame the society and being accused of dishonesty with the people?

Lying is a betrayal of science. No expert should lie to people in any way and say in public, for example, that the economic situation is very good and not as worrying as you think. The facts must be told, but in certain circumstances and when the situation is turbulent, such as when a theater is on fire, the treatment of experts should not be like in normal conditions. In such a situation, experts should act much more responsibly, not to falsely deny the existence of fire and tell people to stay in their seats. The truth must be told, but the truth must be told in such a way that the same people whom you intend to save will not be harmed; that is in a way that your recommendation would not backfire. Denying the facts is what governments do, and as a result, their words always have the opposite effect. Like when the government announced people can get any amount of USD no matter for what purpose at the rate of 42,000 rials (for one USD), but we saw this had an opposite impact on the economy. Finally, when the officials saw that their offer could not be realized they changed their mind. Economists and experts should never say things that are unfounded and instead they should make scientific and expert views and this should be done in the right way so that this would not create much irritation and turmoil in the society.

 

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  November 2020
No. 95