THE annual meeting of the American Economic Association (AEA) functions a bit like a large, rumbustious diagnosis session. The world economy is rolled in on a gurney, prodded and poked, and declared to be suffering from a host of conditions. Yet the awareness that economists are not doctors has been rather slow to creep into the profession. Doctors may order a treatment (even the wrong one) and feel reasonably confident it will be administered. Economists cannot. The crisis in the euro zone is an acute case. Ideas for fixing the problem are plentiful. But the best economic policies may never see the light of day because of the brittle and baffling world of European politics.

This year's gathering in Chicago provided several examples of the profession's awkward relationship with political realities. In a thought-provoking lecture Maurice Obstfeld of the University of California, Berkeley pointed out that the euro crisis had decisively undermined the notion that large current-account deficits don't matter as long as governments budget wisely. That's because private foreign debts often become sovereign obligations in a crisis as governments face pressure to offer bank bail-outs. His conclusion was that financial globalisation—and, in particular, the running up of big cross-border liabilities—may require a corresponding globalisation of governance, including international deposit insurance. Yet few things seem less likely.

In another talk, Emmanuel Farhi of Harvard University mooted an idea for boosting an economy in a “liquidity trap”, in which the central bank has already slashed interest rates to zero and can cut no more. The central bank might boost the economy by encouraging a bit of inflation, he said, but that would be a second-best solution. Better to adopt a programme of “unconventional fiscal policy” like raising future consumption taxes and cutting taxes on labour income. But Mr Farhi's assessment of what was second-best ignored the relative freedom of action of an independent central bank compared with elected governments.

Robert Hall of Stanford had a different take on political constraints. He agreed with Mr Farhi that a little inflation could go a long way, but dismissed this option as futile. Since a reasonable central bank would obviously choose a smidgen more inflation in return for much lower unemployment, and the reasonable Fed had not, it must be beyond the Fed's power to raise prices. Given the Fed's ability to create money at will, a discussion of the political animosity it generates (not least among Republican presidential candidates) would be useful.

The importance of the political economy did get some attention. A paper presented by Atif Mian of the University of California, Berkeley, Amir Sufi of the University of Chicago and Francesco Trebbi of the University of British Columbia, laid out why good policy is often most difficult to implement in the wake of a financial crisis. When crisis strikes, asset prices tumble. Debtors who borrowed against these assets must then tighten their belts. A recession may follow if there is not an offsetting burst of spending by creditors. They may instead grow more cautious, especially if repayment of their loans looks doubtful. The authors write that a redistribution of wealth from creditors to debtors could potentially benefit both groups by averting a deep downturn. Yet even though debtors are many, such redistributions are few. Effective lobbying by a few, concentrated creditors helps hold back a populist tide: a few powerful banks, for instance, may be better able to influence legislators than millions of homeowners.

As both debtors and creditors fight to protect their interests, political battles intensify. In America an effort to reduce households' mortgage obligations helped launch the tea-party movement of small-government conservatives. The euro zone's troubles, too, boil down to a poisonous battle between lenders and borrowers. The authors study a 70-country sample of financial crises assembled by Carmen Reinhart of the Peterson Institute for International Economics and Kenneth Rogoff of Harvard University, and find that polarisation usually rises after crises. Voter identification moves away from the middle and closer to extremes. Support for governments shrinks and ruling coalitions become more fragmented. Good policy is harder to implement.

Out of the ivory tower

The economics profession may still be unrealistic about politics but it is now taking a more clear-eyed view of its members' incentives. Many economists do consultancy work for financial institutions or other firms while also offering public-policy advice or publishing research. This year the AEA officially asked members to divulge such potential conflicts. It will also require disclosures from economists submitting articles to its journals, which will be made clear at the time of publication. Change is needed. Economics has internalised the views of rich patrons, according to Luigi Zingales of the University of Chicago. His scathing analysis of journal publications revealed that papers providing justification for high executive pay were 55% more likely to be published than those opposed, and were more heavily cited by others.

Technology, at least, is helping to keep the profession more honest. Bloggers, well-represented even among a record estimated attendance of around 11,500 delegates, provide a source of public oversight and a way to popularise neglected ideas. In a session on the increasing importance of the medium, Alex Tabarrok of George Mason University hailed blogging as “the return of political economy”, a reference to the 19th century when economics was more conversational and relevant.

In recognition of this shift The Economist is changing the name of this column from “Economics focus” to “Free exchange”, linking it more closely to our blog of the same name. In economics, as in politics, greater scrutiny can only help.

Economist.com/blogs/freeexchange