The Big Lesson of the 2020s? Don't Ignore the Economists.
From COVID-19 lockdowns to Biden's inflation and Trump's tariffs, bad things have happened when economics are sidelined in policymaking.
The 2020s, so far, have been one long and often painful lesson in what happens when policymakers tell economists to shut up and go away.
From the COVID-19 pandemic through Bidenflation and onto the Trump 2.0 trade wars, each successive administration to occupy the White House during this decade has made a critical error by assuming it could ignore economic principles—or simply substitute them for a different set of underlying assumptions. Those errors have been made in different ways and for different reasons, yes, but they share this common characteristic: a belief that economics is optional, and that tradeoffs can be eliminated if your motives are in the right place.
But that is simply not true, as circumstances have shown again and again.
Start with COVID, which is undeniably the defining story of the first half-plus-one-year of the 2020s. When the Trump administration and myriad state and local officials implemented lockdowns under the "15 days to slow the spread" promise in March 2020, it was largely at the behest of public health advisers.
The dominant attitude driving lockdown policies that closed schools, businesses, churches, playgrounds, and more was well articulated by Jon Allsop in the Columbia Journalism Review's newsletter. There is "no choice to be made between public health and a healthy economy—because public health is an essential prerequisite of a healthy economy," he wrote in April 2020 as debate over "reopening" was ongoing.
That all-or-nothing approach reveals how little the economists were involved in the early decisions over COVID. "There are no solutions; only tradeoffs," is how Thomas Sowell once put it, but during the early months of the pandemic, solutions were overly promised and tradeoffs were routinely ignored. That was a tremendous error.
"At its most basic, economics is about analyzing choices made under constraints. Politicians and government agencies made a vast range of public health decisions this past year that violated principles that good economists take for granted," wrote Ryan Bourne, an economist with the Cato Institute, in a 2021 review of early COVID policies. "These decisions made the public health and economic welfare impacts of the pandemic worse than they needed to be. In that sense, the poor response to COVID-19 represents a failure to think economically."
As the pandemic waned, the Biden administration repeated that mistake.
Soon after taking office, President Joe Biden's team pushed for a "run it hot" approach to economic policy and openly dismissed fears of rising inflation. That came to fruition with the American Rescue Plan, a $1.9 trillion spending package that included $1,400 stimulus checks to households earning as much as $160,000 in joint income.
Larry Summers, a Harvard economist and veteran of the Biden administration, warned in a Washington Post op-ed that the American Rescue Plan would "set off inflationary pressures of a kind we have not seen in a generation." Other top economists, including a former chairman of the International Monetary Fund, offered similar warnings.
Biden and Democrats in Congress did not listen. The result? Inflation of a kind America had not seen in a generation. The annualized inflation rate hit 9.1 percent in June 2022 and still has not returned to the 2 percent annualized rate that the Federal Reserve regards as its target.
Indeed, inflation has in some ways supplanted COVID as the dominant political narrative of the 2020s. Even though the current inflation level (2.7 percent annualized) is well below that 2022 peak, it is significantly higher than anything Americans experienced during the first two decades of the 21st century. No wonder everyone seems to be mad about how much things cost.
There were consequences to the Biden administration's "run it hot" economic policy, and ignoring the economists did not make those tradeoffs go away.
The same can now be said for President Donald Trump's tariffs, which his administration implemented over the objections of many economists. Vice President J.D. Vance took to X in July to declare that "the economics profession doesn't fully understand tariffs."
In reality, the tariffs are a huge tax increase—the largest tax increase in more than three decades, according to the Tax Foundation—and the tradeoffs are pretty much exactly what you'd expect to see after a big tax increase: greater revenue for the government (though not as much as Trump routinely claims), and a reduction of private sector productivity.
Trump and his allies promised that tariffs would usher in a "golden age" for American manufacturing. On the contrary, economists warned that tariffs would harm rather than help American manufacturing firms because the majority of all imports are raw materials and intermediate goods that go into making other products.
The proof is in the pudding. Higher taxes on those inputs caused the manufacturing sector to fall into a recession during 2025, and the sector has been shedding jobs. The trade deficit continues to grow. Meanwhile, tariffs have also pushed prices higher.
Economists can be frustrating to advisers in the policymaking process. The impulse to point out the inevitable tradeoffs in any policy can make it seem like their only purpose is to blow holes in the high-minded plans of the nation's elected officials. But throwing them out of the room does not make foolish ideas more perfect. Six years of dismissing economic reality have not brought us utopia.
If our elected officials are looking for a handy New Year's resolution for 2026, here's an idea: Start listening to the economists again.
