Posted on 07/03/2010 6:43:19 AM PDT by 1rudeboy
In this essay, I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contibute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public.The following is a letter to open-minded consumers of the economics blogosphere. In the wake of the recent financial crisis, bloggers seem unable to resist commentating routinely about economic events. It may always have been thus, but in recent times, the manifold dimensions of the financial crisis and associated recession have given fillip to something bigger than a cottage industry. Examples include Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich. In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why.
Before I continue, here’s who I am: The relevant fact is that I work as a rank-and-file PhD economist operating within a central banking system. I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems. It is precisely from this low-level vantage point that I am totally puzzled by the willingness of many who fearlessly and breathlessly opine about economics, especially macroeconomic policy. Deficits, short-term interest rate targets, sovereign debt are all chewed over with a level of self-assuredness that only someone who doesn’t know more could. The list of those exhibiting this zest also includes, in addition to those mentioned above, some who might know better. They are the patron saints of the “Macroeconomic Policy is Easy: Only Idiots Don’t Think So” movement: Paul Krugman and Brad Delong. Either of these men will assure their readers that it’s all really very simple (and may even be found in Keynes’ writings). Lastly, before you dismiss me as a right- or left-winger, I am not. I’m simply less comfortable with ex cathedra pronouncements and speculations than the people I have named. [footnote omitted]
The main problem is that economics, and certainly macroeconomics is not, by any reasonable measure, simple. Macroeconomics is most narrowly concerned with the tracing of individual actions into aggregate outcomes, and most fatally attractive to bloggers: vice versa. What makes macroeconomics very complicated is that economic actors... act. Firms think about how to make profits, households think about how to budget their resources. And both sets of actors forecast. They must. One has to take a view on one’s future income, health, and familial obligations to think about what to set aside for retirement, how much life insurance to buy, and so on. Of course, all parties may be terrible at forecasting, that’s certainly a possibility, but that’s not the issue. Even if one wanted to think of all economic actors as foolish and purposeless organisms making utterly random choices, one must accept that their decisions will still affect, and be affected by what others do. The finitude of resources ensures this “accounting” reality.
[excerpted]
Rub some dirt on it, Bill.
It might be mad-cow.
If you want to try and argue that the bastardized Keynesian practices of the past 10 years prevented things from getting worse then they are then you are mistaken.
When governments attempt to prevent markets from correcting themselves through policy intervention they are just kicking the can down the road. They did it in 2001 and again and again til the point where we find ourselves now.
I think that this essay is fairly level-headed. Some of the reactions it “inspires” truly are a wonder to behold.
It is a largely self-serving piece of crap. The Fed has violated a few laws in the past few years and while the author had no real say in this the critics are not wrong in their beefs. Furthermore, telling people that if they didn’t acquire a PhD in econ from a university then their grasp of the subject is limited is utter bunk. Is Roubini dead wrong? Schiff? What about all of the folks at the Von Mises Institute or CATO or Heritage?
The bloggers do a very valuable service by pointing out the failures of policy makers who lived in academia for too long and surrounded themselves with other liberal socialists.
lol.Perfect.
He invited it with his language and professions of acuity in economics and declaring his education.
Those who don't know Indians very well will take that as elitism when in fact he states his bona fides as simple fact. He speaks from a position of self-described authority while at the same time denouncing said authority. It's just his way.
I would have preferred he tried to explain Chaos Theory. THAT would have had me reaching for the Thesaurus.
The author simply is reminding you that some want to sell you gold. That's all, and it's certainly not "self-serving."
So far, I’ve claimed something a bit obnoxious-sounding: that writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant
A priest , an engineer and an economist were cast away on a desert island.
One day a big wood crate floated in. They opened it up and found wet rags and some canned goods.
They were hungry, actually starving, but couldn’t open the cans.
The priest said “I’ll pray for guidance”
The engineer scrounged up an old coconut and some palm fronds and worked to no avail on one of the cans.
The economist took one of the cans and then placed it on the empty crate and began to study the can fiercely. the next evening after 28 hours of study and contemplation he rose and announced “ I have the solution, we must first assume a can opener”
Economics is pseudo science and in truth a black art.
Who was to know that Kartik Athreya, Ph.D, self-described “worker bee” economist toiling away at the Federal Reserve Bank of Richmond, is responsible for the meltdown in the derivatives market? /s
No, it is definitely a science. There are “black magicians” who try to turn it into something else, which largely is the thrust of this essay.
“Look at me, I have a PhD therefore I am smarter than other people who write on economics who don’t have one.”
The fact is that there are plenty of PhDs out there who are sadly misguided on economic policy and choose to hide behind their degrees. Telling me that bloggers have an agenda is fine but attacking their motives as “less than pure” serves what purpose? Obama has plenty of PhDs on his side who are shilling for socialism. Who trained these people? Oh yeah, other academics working in bastions of liberal socialism.
Now, you are making one of the author's points.
On of the funniest and truest jokes I’ve heard in a long time.
Laissez-faire is the only way to be.
When you have people who don’t know the difference between the trade deficit and the budget deficit, I’d have to agree.
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