I have long had high regard for US economist Dean Baker of the Center for Economic and Policy Research in the USA. Today he's got an article in the Guardian that begins with this:
Suppose our fire department was staffed with out-of-shape incompetents who didn't know how to handle a firehose. That would be really bad news, but it wouldn't be obvious most of the time because we don't often see major fires. The fire department's inadequacy would become apparent only when a major fire hit, and we were left with a vast amount of unnecessary death and destruction. This is essentially the story of modern economics.
The problem is not that modern economics lacks the tools needed to understand the economy. Just as with firefighting, the basics have been well known for a long time. The problem is with the behavior and the incentive structure of the practitioners. There is overwhelming pressure to produce work that supports the status quo (for example, redistributing to the rich), that doesn't question authority, and that is needlessly complex.
The result is a discipline in which much of the work is of little use, except to legitimate the existing power structure.
I suggest you read the rest. He's spot on in his analysis. What he's essentially saying are three things.
First, economists operate as a herd and if you're not in the herd you're defined to be wrong.
Second, economists add false complexity to shield inadequacy of their arguments which simple statistics can reveal (a trend apparent in comments on this blog over the last few days where it has been suggested that I can't do stats because I simply divided one number by another and because eight year olds can do that the answer has got to be wrong).
And third, all this is done to hide the total subjectivity of the profession as it is at present, which is very largely dedicated to the preservation of the economic and political status quo.
There are good economists in the world. The sad fact is that most of them aren't working in university economics departments because there's no place for them there. No wonder we're in an economic mess.
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I’d like to see some good economists in Parliament!
Me too
“There are good economists in the world. The sad fact is that most of them aren’t working in university economics departments”
Why would we want all the best economists working in Universities? Don’t we want them advising governments?
I think it’s best if the really awful economists ARE working in universities. Better they peddle their nonsense there than have influence on the real world.
Working in a university and advising governments is wholly compatible
@ Ben Gunn
Mt Gunn, with all due respect (which is almost – well, always – a prelude to saying something disrespectful to re person so addressed, so apologies in advance) I find your statement
“I think it’s best if the really awful economists ARE working in universities. Better they peddle their nonsense there than have influence on the real world”
at best, remarkably ill-informed, and certainly WAY wide of the mark.
For the implicit standpoint behind that remark is the idea that “universities” and “the real world” are two totally unrelated species – the former, those fabled ivory towers, where people develop useless ideas and theories, which have little, or no, application or relevance to the latter, the allegedly “real world”.
Nothing could be further from the truth. Of course, there are scholars and academics whose research and areas of study may seem to have little relevance to the “real world”, but the truth is that the two worlds are inextricably (and often very fruitfully) intertwined, with academia providing real grist and material to the mill of the economy.
The medium we are currently using – the internet – is a prime example, which started out as a collaboration between universities and the military in the USA, with things such as Arpanet and Janet, that eventually, thanks to the insights of Sir Tim Berners-Lee, developed in the WorldWide Web.
Two final points: first, the great American theoretician and educationalist John Dewey (see https://en.wikipedia.org/wiki/John_Dewey) observed that “In the end, theory is the most practical of things”, because it is theory that enables us to test reality, and therefore, effectively, both to interpret it, and even to shape it. The “real” world becomes “real” only insofar as it is comprehended, which is why academic research is so important.
The second, and crucial, point is that the enemies of liberty FULLY understood this, and set about invading and infecting academia, as noted in Richard’s original post and elsewhere on this thread, but most crucially here, where the scope of their activities is set out:
https://www.theguardian.com/commentisfree/2017/jul/19/despot-disguise-democracy-james-mcgill-buchanan-totalitarian-capitalism
Half a century ago the neo-liberal clique engaged in a pre-emptive strike, a pre-internet cyber attack, to ensure that the voices of dissent and opposition would be muted at best, neutered at worst.
The extent to which their project succeeded is truly disturbing, so that I would amend your request that all the awful economists should be exiled to universities, and ask instead that we might send, if not all, then at least the foot soldiers of this neo-liberal project, to some remote island – a very comfortable (luxurious, even) but totally isolated, new “Devil’s Island”, where they might argue out their destructive ideas with each other, and leave the rest of the world to get on the difficult task of repairing the mess they have made of the world the rest of us have had to live in, while they basked in undeserved wealth and prestige.
Andrew
Thanks
Very well argued
Richard
Grief. It’s like a seedy literary circle-jerk on here.
Talking of universities, I don’t think any of the students you reach has ever posted here have they?
How would I know?
How would you know?
You could be one of them, after all
Governments only hire economists who tell them what they want to hear!
Economists are a blot on the whole human race,
You never see one with a smile on his face.
Here’s my definition,
Believe me dear brother.
Supply on the one hand,
Demand on the other.
LSE RFC singers 1956.
There was a discussion here a couple of weeks ago about economics as religion. I think that’s the heart of the problem. As it’s practised by so many at present it’s more a belief system than a science. If there were more good economists working in universities perhaps the paradigm of the scientific method might have more impact.
As it stands there seems little understanding of some basic concepts, such as what constitutes evidence, testable hypotheses and proof. The discussion on Laffer Curves seems a case in point. Someone said that because tax receipts went up after a tax cut then that was proof. It was nothing of the sort. I would contend that the hypothesis is untestable empirically and furthermore there are bound to be many more factors involved in determining tax receipts than the headline rate of tax. And just because two factors seem to be associated is not proof of causality – a basic concept.
Perhaps a little more modesty, an acknowledgement of the limitations of economic prognostications and a little more attention to the scientific method might be beneficial.
A little more emphasis on reasoning rather than correlation would be good
Plus some looking out of the window at the real world
Yes, indeed. And ‘econometrics’ is pure correlation.
Working for the US military via the RAND Corporation, Von Neumann once used Game Theory and a Monte Carlo simulation to help justify his call for a pre-emptive nuclear attack on the Soviet Union.
Should anyone think that is a massive cheap-shot – I offer these sources:
“Von Neumann did not see nuclear interaction as a game of chicken. Words were cheap. He did not argue that we should try and intimidate the Soviets by threatening to attack. He argued for attacking, and for attacking now”.
‘Schelling, von Neumann, and the Event that Didn’t Occur’, Alexander J. Field
http://www.mdpi.com/2073-4336/5/1/53/pdf
Games 2014, 5, 53-89; doi:10.3390/g5010053 (p.55)
“One of the critical questions in the development of the nuclear bomb was if it would cause an uncontrolled chain reaction. It was Von Neumann that suggested the use of Monte Carlo simulations. In this instance, life on Earth was risked on the base of a statistical test.”
Prof. Roger Backhouse’s review of Philip Mirowski’s ‘Machine Dreams: Economics becomes a Cyborg Science'(p. 6)
https://www.fep.up.pt/docentes/joao/material/machine_dreams.pdf
That last one (the review)is a great article by the way. I digress a bit here but I just wanted to offer a little observation about the history & mentality behind the the mathematical approach as we still know it.
“As it’s practised by so many at present it’s more a belief system than a science”
I read somewhere relatively recently that economics is actually far closer to disciplines like psychology/sociology rather than the sciences because it’s ultimately a study of human behaviour.
Science deals with absolutes whereas the human psyche is subject to all kinds of variables so it may not even be possible to apply the scientific method to it.
It can be rationalised
To over do the maths is the error
“Redistributing to the rich” – a bit ironic that a man who opposes liberal planning,and supports Arts subsidies, cohesion funding, and agricultural subsidies has highlighted this.
You are clearly clueless as to why I might do some of these
I don’t recall the agricultural subsidies but if you’re talking controlling pricve increases you might ask yourself why I might do that too
‘Economists’ and ‘working’ in the same sentence – must be a mistake!
[…] Institute for Fiscal Studies here in the UK, who included it in their Mirrlees Review (very much following the prescription for economists Dean Baker referred to yesterday) of what they saw to be the best direction for the future  of UK […]
In the documentary ‘Inside Job’ – which I would highly recommend – the caustic influence of neo-lib academic economists is well exposed (look at how it corners Glen Hubbard for example and other ‘wise men’). Oh yes – they’re all men by the way. And they all get paid handsomely to tell lies too as well as having investment interests that obviously benefit from their dishonesty.
Professor Michael Hudson compares the way in which these flunkies are rolled out to support the supportive policies for the 1% to the oil industry’s practice of hiring junk scientists to deny climate change.
Hudson talks of the ‘learned ignorance’ and ‘trained incapacity’ of neo-lib economists (p. 177, ‘Killing the Host’, 20154).
I would recommend this book because it details how things have been working in America extremely well and boy do we need to know this stuff because America is where it all starts – believe you me – and where it must end too.
My experience might be unusual but most of the good economists that I have met are working in the university economics departments.
When I graduated I realised why. Most of the economists’ jobs outside of the universities are in banks and financial institutions.
He who pays the piper calls the tune – or – as Upton Sinclair famously put it:
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
But the piper now calls the tune in universities as well
Yeah, all progressives should declare total war on private funding / privatisation in higher education. I don’t see how it can be characterised as anything but corruption.
All private funders expect some quid pro quo and the institutions is inevitably compromised.