Economists, on the other hand, generally do not give sufficient attention to the ways that their own practice induces harm. We even lack the language to discuss economist-induced harm. There is no parallel in economics to the concept of medical malpractice, of course; economists are not held legally liable for their mistakes, no matter how severe the effects. More broadly, there is no economic analogue to the concept of iatrogenesis [see here--ES]. There should be. We need a concept, and a corresponding term, to name what is as-of-yet unnamed. Let us refer to the harm economists cause with the term ‘econogenic harm.’
[E]conomists recognize that harm is a regular and, likely, ineradicable feature of economic practice, as Hicks understood. It needs to be said plainly: economists are in the harm business. Almost always we cause harm as we try to do good. Hence, the Hippocratic directive “first, do no harm,” if taken as an inviolable mandate or a decision rule, has no relevance in economics since it would imply that economists can do nothing at all.
Yet, we have no professional economic ethicists, or any texts, journals, newsletters, curriculum, regular conferences, or other forums that explore systematically what it means to be an ethical economist, or what it means for economics to be an ethical profession. Unfortunately, the absence of professional economic ethics deprives us of a tradition of careful inquiry into the nature of and responsibility for econogenic harm.
This can’t be the proper attitude of a responsible profession that is committed to enhancing the welfare and freedoms of others. Instead, the prevalence and severity of econogenic harm carries an ethical burden for the economics profession to attend more carefully to the nature and distribution of the harms that its practice causes.--George F. De Martino.
De Martino makes a very important point: all economic policy -- including the obviously beneficial ones -- creates harms, and many policies create a wide variety of harms. (This is why a do-no-harm-principle would entail that economists couldn't do anything.) This may be thought surprising because before recommending policy economists are sometimes thought to rely on a Pareto improvement standard, where, by definition, nobody is made worse off. Of course, lots of harms are not monetary (and this tends to be overlooked by defenders of the Pareto standard). In fact, in practice, economists rely (as De Martino notes) on the less stringent Kaldor–Hicks criterion which only demands the possibility of compensation to those made less well off due to the policy change. (And, in fact, often it is the case that if such compensation were paid it would not be clear that the policy would still be worth executing due transaction/enforcement costs.)
Even if one rejects the thought that not all harms can be fully compensated in monetary fashion, there is still another intuitive way to grasp that all economic policy will generate harms. For, (nearly) all policy violates reasonable expectations that have been developed by members of a society. Even if these expectations are founded on some initial injustice, their violation will be experienced as a harm.*
I should note, by the way, that recognition of De Martino's insight puts some pressure on the feasibility of my second norm of analytical egalitarianism, which (recall) states:
Experts/philosophers should not promote policies where the down-side risks of implementation are (primarily) shifted onto less fortunate others.
If it is inevitable that all economists's policy advice generates some harms, it is likely that at least sometimes (unexpected) harms will accrue to the less fortunate.
Some of the harms that are a consequence of economists's policy guidance can be recognized in advance by way of thorough, ordinary cost-benefit analysis. But as De Martino noted in a lecture I recently attented many harms that are a consequence of economic policy are also non-economic in character and tend not to be recognized in economic models at all. (This is true even if one would allow, controversially (and unrealistically) that all harms can, in principle be repaired by economic means.) For, as already noted above, economic policies disrupt habits or forms of life. Moreover, it is a truism in economics that economic policy generates unintended consequences, so that it is also true that economists know (again echoing De Martino) there will be harms they cannot foresee in advance.
As I reported recently, in light of work by my colleague Marieke de Goede (about which more before long) I have lost faith in precautionary principles in the context of public policy; these principles are too easily abused by government officials and their policy advisors. But it does not follow one can't make minimizing harm, all things being equal a permanent feature of economic policy. This would entail a duty to seek out, in advance of implementation, the sources of possible (non-monetary) harm that would arise as a consequence of policy. So, we can reformulate the second norm of analytical egalitarianism as follows:
Experts/philosophers should in the policies they promote minimize harm, all things being equal and, in so doing, should not advocate policies where the down-side risks of implementation are (primarily) shifted onto less fortunate others.
While this norm would be incompatible with certain forms of utilitarianism, it is a fairly minimal ethical constraint on policy. Obviously the approach I advocate leaves room for judgment. It would also slow down and make more transparent some policy making; but these are features of my position not bugs.
*Obviously I am allowing some status quo bias that others might find intolerable.