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December 19, 2011

Comments

UnlearningEcon

I would have thought economist's completely failure to see the crisis coming and deal with it was a major reason.

You might say that this falls under the realm of 'forecasting' but I disagree. All the devils were there, and if they had understood the nature of private debt rather than dismissing it as macroeconomically irrelevant, they would have found it hard NOT to see the crisis coming.

Tom Addison

Most of the universe is made of dark energy, not dark matter, and I wouldn't say that cosmologists tend to gloss over this. Heck, I didn't do any of the sciences beyond GCSE, and even I know!

Luis Enrique

I think its noticable that after having failed to predict the financial crisis mark 1, Economists have not won back any popular respect because they more or less predicted exactly what would happen with the Euro.

(for those that doubt that, textbook treatment of optimal currency areas fits very well and there are examples of papers, e.g. by recent Nobel winner Sims, talking about the perils of monetary union without fiscal union)

gastro george

Surely economists have had a vast input into US, UK and Eurozone policy - it's just the wrong economists. Policy, in fact, conforms to the consensus view of (neo-liberal or neo-classical) economists. Do you think the OBR, the Treasury or the ECB do not employ economists? Or am I missing something?

droog

The US examples aren't particularly strong.

Social Security is its own independently financed programme; a surplus in SS doesn't alleviate the budget, nor does a deficit burden the budget. Currently SS has a surplus and most analysts consider it to be solvent for about 40-70 years without changing it. The problem is that the government has borrowed from this surplus and they need to start paying back as baby boomers put a toll on the fund. If anything SS is an example of financial responsibility.

And there's a good reason why economists can't take charge of the Medicare issue: the left want a policy change instead of book balancing. They want to move to single payer schemes where insurance companies aren't raising costs and denying treatment to customers in order to file a juice quaterly earnings report. Why would the left agree to let economists affect the rest of the budget and private sector just so that the insurance sector can continue to hold its parcel which in real terms negates coverage?

Paolo

I would argue that narcissism at the individual level translates into borderline personality disorder at a societal level....just check out the diagnostic symptoms.

Jame Brown

Speak for yourself. Germany respects and listens to Schäuble.

Andrew

There is also the ethical and presentational failure of the economics profession: there is no culture, let alone set of rules mandating disclosure of personal economic interest when prescribing policy.

This is less relevant for the physicists and has already been sorted by the medics.

You have bemoaned the effects of the big money incentive; this is not just a failure of those economists, but rather your entire profession.

Andrew

...and the boom/bust WAS spectacularly obvious.

Keith

If economists are disrespected by the public it comes about I think from three factors: one people want to know how they can get rich preferably easily and quickly, but economists never seem to be able to tell you how to do that! Their practical advice is boring and often annoying like get a degree or vocational training etc. Which takes time money and effort and may not work anyway. Two famous economists seem to be rich and one wonders if they do know how to get rich but won't let the rest of us in on the secret. The third reason is that it is obvious that the recommendations of economists are not value neutral like the insights of physicists regarding atoms; and why should economists tell you what values to embrace? Your opinion is as good as theirs is. For example some economists view the low participation of females in the Labour market in Latin countries, like Spain, as a problem to be "solved" to help growth. But may be women want to stay at home in Spain and look after the babies? Does not the strong family have great social and economic benefits? Why should family life be changed to please puritanical protestant capitalist economic "experts"? Market relations are only one form of human organisation. Not only do economist get things wrong about which they are experts but they insist on telling every one else how to live and what values to adhere to.

Ralph Musgrave

“If you think the deficit can be cut painlessly . . .” Actually it CAN be cut painlessly. Basic reason (to over simplify a bit) is that where a government funds itself by borrowing, the deflationary effect of that borrowing must equal the deflationary effect of the tax that would have been collected had there been no deficit. Ergo, when a government raises taxes so as to remove a deficit, and cuts borrowing, the net deflationary / stimulatory effect is zero.

But that point is way beyond the comprehension of Kling, who is a w*nker, and way beyond the comprehension of 99% of the population, economists included.

If you want to see the above point spelled out in more detail (you’ll need an attention span of more than ten minutes) see:

http://mpra.ub.uni-muenchen.de/34295/1/MPRA_paper_34295.pdf

guthrie

Which economists? Part of the problem is simply that you can find economists willing to say anything you want, or rather, the failure of the field to achieve proper scientific agreement* means that you've putative economists selling every possible solution to the problem, from Austrian austerity to Keyneisanism. This means politicians can pick and choose, and the public as a whole remain confused.

*Contrast with everything from evolutionary biology to climatology, where despite a lot of political noise, the scientists are effectively unanimous.

guthrie

Also, your medical error comment is not actually relevant - you can kill someone with a slip of the knife even whilst knowing the precise structure of their internal organs, exactly how they work down to the physical and chemical behaviour. Yet economists don't agree on how many things work, and attempt to stick the knife into the wrong organ altogether not by accident, but because according to their erroneous model of the universe it is the correct organ.

Johnnydub

Lots of economists saw the current issues coming a long way away - but simply too many people, principally politicians had too much vested interest in milking the bubble for their voices to have much impact...

George Hallam

"Lots of economists saw the current issues coming a long way away"

This is simply untrue.

I attended an economics conference at the end of August 2007.

One of the key note speakers was the Head of the Government Economics service.

His was very complacent.

I talked to a lot of people but nobody, absolutely nobody, was interested in what was happening in the money markets.


guthrie

Rather, lots of outsider non-mainstream economists saw it coming, and nobody wanted to listen to them. Contrast this with hard sciences, where people like Margulis and Darwin and geologists galore etc etc all had a point to make, and made it successfully.
Of course this is not entirely the economists fault, rather to do with politics. I'm sure the corruption of economics by political considerations is worth more investigation.

Dipper

IMHO its because over the long term an economy is an expression of the culture of a country, and not down to economic theory.

So politicians and voters tend to be more concerned about the morality and ethics behind a government rather than the detail of macroeconomic policy.

AMS

Politics, or the control of discourse, trumps reality.

Specialists are myopic, focused on their brand of knowledge, and wonder why nobody cares -- assuming the public can even understand.

This isn't limited to the realm of economics.

Specialists are disconnected (naive?) and it is very difficult for those on the outside to determine who to listen to -- especially with politicians and corporate interests and their media proxies promoting or discrediting viewpoints.

Matic

I would say 2 things just don't pan out in the piece.

1) What is the evidence that Economists have no say in the White House or other places?

2) Author seems to think that things that happen in economy are what the "population" wants to happen. (I suppose the myriad protests, sometimes general strikes against government measures and police shooting people in the streets are not a clue)

Which leads me to the conclusion that the author is completely detached from political reality.

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