Economist running Nations... Look at India headed by MMS

They indulge in short term populist policies and do not look at the longer term picture

Mario Monti and Lucas Papademos have been rushed to manage Italy and Greece respectively in the ongoing crisis crisis. As both are famous economists turned technocrats this question is aptly asked by Matt Kahn - What If Economists Ran Nations?

Now, I realize that most economists are not electable.  Ben Stein is the most charismatic among economist.  But, suppose we managed to achieve power through some trick such as when Kevin Kline seized power in that epic “Dave”.   What would we do if Paul Krugman and Robert Barro jointly served as “co-presidents”?
Hmm. Barro and Krugman as co-Presidents would be fun for sure. The entire set of media can just focus on war of words between them.
He picks a list of things economists when elected heads would do:

1.   pursue international free trade in goods and labor (i.e immigration restrictions would ease sharply).
2.  credible short term and medium term budget targets would be announced and rules would be introduced to meet these targets.
3.  early life investments in children would be increased.
4.  A series of field experiments would launched to create an “evidence based” government who only intervenes in the free market after a serious cost/benefit analysis has been conducted.
5.  The government would commit that no government funds would be used in “picking winners” or “subsidizing industries” unless large positive externality effects are demonstrated to exist by a group of blue ribbon economists.
6.  Health care would be reformed to offer all Americans a basic package of services and citizens will be allowed to augment that care through private competitive markets.  A group of health economists would agree to what services and procedures would be bundled into the “basic package”.  For example, nose jobs would unlikely be part of this list.
7.   Retirement benefits will be adjusted to reflect life expectancy tables based on your birth year, age and sex. If you are part of a demographic group with a shorter life expectancy (i.e African Americans), then you can receive benefits earlier.  To give people time to plan for this transition, anyone who is over the age of 52 would not be affected by these new rules.
8.  The U.S Military would be given a fixed budget that is tied to the growth of the U.S economy.   The Military can save any budget allocation that it does not spend in any fiscal year.
9.  The U.S would enter an exchange program with China so that its leaders can travel in the U.S and vice-versa.  Such an international exchange program would facilitate trust and mutual understanding.
10.  The U.S government would take a close look at the unintended consequences of many of its policies. If these consequences are large and bad, then this would be used as a reason to end such programs.  For example, as Casey Mulligan has argued — many of the Obama Administration’s well meaning policies regarding student loans and housing loans discourage work. Here  is some survey evidence that backs up some of my claims.
11.  A vast majority of economists would support serious fossil fuel taxes and using this revenue to lower labor and capital taxes.

An impressive list but Kahn is clearly overestimating economists by a huge margin. Taking a cue from public choice theory, one would imagine economists to turn politicians and behave like one instead of being economists. After all that is a rational thing to do!!
Some econs might get a taste of real life and realise how difficult it is to be a politician and implement things. And how easy it is to be an economist and just suggest ideas without really worrying about implementation issues.
Kahn says Italy is running a natural experiment electing an economist as its new leader. He just needs to look a bit more east to see the natural experiment already running for many years now.  India has been running such an experiment since 2004.
Dr. Manmohan Singh has been India’s leader since 2004 and what can one say. There were huge expectations as he was seen as the father of India reforms as he initiated the process post 1991 crisis. In his first term (2004-09) nothing much happened as Left was coalition partner and did not allow reforms (that is what we were told). People gave him a second term (2009-04) with a bigger majority minus the left and this time expectations were a lot higher. But since then there has just been more and more disappointment.
What is worse is we now have perhaps the most corrupt government under the PM. Some even call it India’s gilded age. Things do not look good when we look at 20 years of reforms India between 1991 and 2011. Arun Shourie goes on to say it is not important to simply elect people who are seen as reformers. We need leaders who can stand upto reforms. Some even go onto say it was Prime Minister Narasimha Rao and his office which was responsible for the reforms and not Manmohan Singh.
Ironically, Lula of Brazil also started at the same time amidst very little expectations but by 2010 (after two terms) he seems to have done a fab job for Brazil. And he was no economist…
In a related article Ruchir Sharma of Morgan Stanley points leaders should know when to quit. If they elongate their career it not just leads to worse performance but even wipes out gains made in their earlier years:

At last, every hero becomes a bore. Writer Ralph Waldo Emerson’s observation is lost on most politicians who often tend to overstay their welcome in office. This is particularly true in the developing world with young democracies, where term limits are either not widespread or where several incumbent leaders change the constitution at the peak of their popularity to extend their stay in office. 

But in the long established democracies as well, the populace generally tires of rulers who hang around for more than one term and any goodwill generated in the first few years of their reign almost always dissipates rapidly if they remain in power for a decade or longer. This axiom is even more relevant in the current economic environment where growth and inflation dynamics are taking a turn for the worse across the globe. 
He points to several examples from Russia (Putin), Malaysia (Mahathir), UK (Thatcher) etc who were disasters in their second terms. Then there are countries in Latam and Africa where leaders toying with rules to elongate their careers.
Naturally he ends with MM Singh:

Although Prime Minister Manmohan Singh has not yet spent a decade in power, it is quite apparent that had he stuck to being a one-term head he would have gone down as one of the most accomplished leaders in India’s history, along the lines of the Italian economist and leader Calo Azeglio Ciampi, who held many public positions including those of the central bank governor, finance minister, prime minister and president of the country. 

Apart from his long stint as central bank governor from 1979 to 1993, Ciampi didn’t remain in any of the other posts for more than one term. For every day that Singh stays on as the premier, his legacy diminishes, as like most other long-serving leaders he now seems enervated. 
The lesson from history is that leaders are most effective in their first term of power and the goodwill they have erodes very quickly if they stay on in office up to a decade or longer. There are exceptions to the rule, such as Lee Kuan Yew in Singapore who after 30 years of rule was still widely admired. Those are very rare cases; the odds generally are that after a few years in power, most leaders become a bore. 
Am not sure about this conclusion. Yes they become a bore but it all boils down to the policies. Infact just reversing the debate one can say second term is the true test of a good leader. In the first term most policies are a carry on from the previous government/leader and difficult to seperate the impact of two leaders/sets of policies. Many now say that Congress and Dr MM Singh had a good first term in terms of economy mainly because of policies of previous BJP government. As nothing much was done in first term (blaming left for all ills), second term has just been a huge laggard.
Sharma mentions Lula’s success but he also completed his two terms. Clinton did well in two successive terms whereas Bush’s were just a disaster…
I would instead argue that whether to be a bore or an entertainer depends on the policies followed in the earlier terms. This might fail in other cases but we know that it is mostly true in case of Dr MM Singh who is an economist and a leader.
Though one must acknowledge that politicians do not get longer term like policymakers as most constitutions allow 4 to 5 year of government and then elections. So they indulge in short term populist policies and do not look at the longer term picture. But you would imagine better behavior from econ turned politicians but in India’s case it has not really worked…
It will be interesting to see if Monti and Papademos have a different tenure..