He said that he had made himself very unpopular with then Prime Minister Malcolm Fraser by advising the Government “don’t just do something, stand there”.

Politicians are under great pressure to “do something” about the current economic situation. New Government like in the US in here are very vulnerable to this.

Brad DeLong, in his darewell address to the US Treasury in 1995 put it very well:

“Keynes saw economics as a service profession–“rather like dentists,” was the phrase he used in his essay on “Economic Possibilities for Our Grandchildren”. If there is something wrong with your teeth, you go to a dentist, and he or she fixes things. If there is something wrong with your economy, you go to an economist, and he or she…

Well, the analogy does break down…

He or she at least explains why things are unlikely to get better and why steps to try to make them better will probably make them worse. Our specialty is telling unpleasant truths to powerful people who do not want to hear them. This is not called the Dismal Science for nothing.”

Economists must spend a lot of time at present telling unpleasant truths to powerful people who do not want to hear them. Among them: don’t fix things that aren’t broken; even if things are broken, be very sure that in trying to fix them, you don’t just make them worse; and above all: incentives matter. If you reward bad behaviour (like giving lots of other people’s money to people who are clearly pretty bad at running auto makers), then expect to see more of the rewarded behaviour.