Economics: A Million Mutinies Now
There are now so many versions of ‘what’s wrong with the economics profession’ that, with apologies to V.S. Naipaul, I could describe the state of economics as one of a million mutinies.
In August of 2008, Olivier Blanchard, a dean of establishment economics (now serving as chief economist at the International Monetary Fund), produced a working paper that surveyed the field of macroeconomics. He described what he saw as a stable consensus, concluding with the pronouncement, “The state of macro is good.”1
A month later, the financial crisis took a turn for the worse, the economy fell into its worst slump since the Great Depression, and economists are not so smug any more. There are now so many versions of “what’s wrong with the economics profession” that, with apologies to V.S. Naipaul, I could describe the state of economics as one of a million mutinies.
What I want to do in a series of essays is provide an overview of the various factions. They are listed in the table below. For each perspective, I give a short “bumper sticker” that indicates the main thrust of their point of view.
This is not an exhaustive list, by any means. I will devote part one of this series to the conspiracy theorists and the behavioral economists, saving the rest for later articles. Also, the reader should be warned that I am in the Anti-modernist camp, which may limit my ability to provide a charitable treatment of the other factions.
Conspiracy Theorists
Charles Ferguson is the producer of the documentary film Inside Job, in which economists are portrayed as tools of evil bankers. Although many economists were offended by what they saw as a Michael Moore-style attack, the film did serve to raise the issue of disclosing the sources of funding for research. At its most recent convention, the American Economics Association adopted a code of ethics that calls for such disclosure.
The conspiracy theorists see economists as the paid lackeys of entrenched interests. In this view, if economists were not corrupted by private funding, they would produce research that points out more clearly the flaws in markets.
In my view, the issue of private funding for economic research is a red herring. Most funding for economists comes from the government. This funding tends to support regulation. For example, some of the most lucrative work in healthcare economics has been in designing government interventions. Having said that, I do not believe that the economists undertaking this work have anything other than sincere convictions grounding their research.
The intellectual development of economists takes place in graduate school. There, we form strong opinions that are not going to be swayed by private funding sources.
I can imagine that, on a topic that is really isolated and obscure, a large share of the research could be driven by private interests. However, on topics such as financial regulation or macroeconomic policy, the overwhelming majority of economists examining the problems are expressing beliefs that are sincerely held. Disagreements about modeling strategy and empirical methods are honest and substantive.
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