Do economists know what they are talking about?

Sure, they all can tell us that companies should not be routinely bailed out but in situations of financial contagion bailouts may be sensible, but do they really know whether such a situation exists today or not? Or how to respond? I was skeptical about whether they knew or not, but didn't want to be impolite, because so many of them are smart and helpful, but my suspicions were confirmed by one of them, anyway:

On the one hand, I share many of the concerns of the letter signers [a reference to a letter opposing the bailout signed by a number of economists] and other critics of the Treasury plan.

On the other hand, I know Ben Bernanke well. Ben is at least as smart as any of the economists who signed that letter or are complaining on blogs or editorial pages about the proposed policy. Moreover, Ben is far better informed than the critics [my emphasis]. The Fed staff includes some of the best policy economists around. In his capacity as Fed chair, Ben understands the situation, as well as the pros, cons, and feasibility of the alternative policy options, better than any professor sitting alone in his office possibly could.

If I were a member of Congress, I would sit down with Ben, privately, to get his candid view. If he thinks this is the right thing to do, I would put my qualms aside and follow his advice.

Thus blogged Greg Mankiw, not any old ordinary economist, but one who actually has experience in government. So much for checks and balances! So much for the majesty of democratic deliberation! Does it remind you of the Bush administration's explanation for its war-on-terror activities? We have to eavesdrop on people but we can't tell you why because if we did, we would reveal our methods and lose the ability to eavesdrop.

By the way, I'm not opposed to a bailout. Like Mankiw, I favor a bailout because Ben does. And I favor eavesdropping because Mike does. Anyone have a better suggestion for deciding what to do?

(I will add that Mankiw posted a letter from a colleague who says that even if Ben is better informed than any other economics professor, he lacks the collective wisdom of all economics professors, and that is why it was correct for the colleague to sign the letter from economists that opposed the bailout plan. The colleague goes on to say that there are better ways of solving the current financial crisis and cites a recent WSJ op-ed written by some other economics professors. The problem not mentioned by the colleague is that while the collective wisdom of economics professors opposes the Paulson plan, it has not converged on an alternative: the collective wisdom fragments into dozens of ideas proposed by little clumps of professors. So the letter itself is a useless document and Mankiw was correct to withhold his signature. Should a member of Congress listen to Ben or listen to a (randomly selected?) clump of economics professors who favor one or another alternative?)