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Brad deLong: Economics in Crisis (Apr. 29, 2011)

The most interesting moment at a recent conference held in Bretton Woods, New Hampshire - site of the 1945 conference that created today's global economic architecture - came when Financial Times columnist Martin Wolf quizzed former United States Treasury Secretary Larry Summers, President Barack Obama's ex-assistant for economic policy. "[Doesn't] what has happened in the past few years," Wolf asked, "simply suggest that [academic] economists did not understand what was going on?"

Here is the most interesting part of Summers' long answer: "There is a lot in [Walter] Bagehot that is about the crisis we just went through. There is more in [Hyman] Minsky, and perhaps more still in [Charles] Kindleberger." That may sound obscure to a non-economist, but it was a devastating indictment.

...

For Summers, the problem is that there is so much that is "distracting, confusing, and problem-denying in...the first year course in most PhD programs." As a result, even though "economics knows a fair amount," it "has forgotten a fair amount that is relevant, and it has been distracted by an enormous amount."



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Mon Feb 25th, 2013 at 11:52:32 AM EST
[ Parent ]
"economics knows a fair amount," it "has forgotten a fair amount that is relevant, and it has been distracted by an enormous amount."

How is this not an acknowledgement of intellectual bankruptcy?


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Feb 25th, 2013 at 12:34:39 PM EST
[ Parent ]
It is often noted that "Money is Power". In our society the relationship between money and power has, effectively, been sacralized. As anthropologist Mary Douglass noted in How Institutions Think the closer an investigator got to the most holy beliefs in any culture the more evasive and defensive their informants became. It is not that they are taught how to be evasive and defensive. They do so 'naturally'.

Preferment, honors and advancement in one's profession are awarded by those with instinctive ties to the existing order, which is based on great individual wealth. If a US economist questions the tenants of NCE or, worse, undermine them they had best forget tenure at major universities or employment by the Federal Reserve. This is a very powerful disincentive. It is very much like the effects of acknowledging being an atheist has on someone with a Doctorate in Divinity becoming a minister of a denominational congregation. It is not a jest when economists speak of to which church any given economist belongs.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 25th, 2013 at 01:15:08 PM EST
[ Parent ]
OK, then we're talking intellectual and moral bankruptcy.

(Works for me.)

;-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Feb 25th, 2013 at 01:30:37 PM EST
[ Parent ]
If there was ever a 'banca' to 'rupta'. Moralies are just the 'mores' of the various people. In our case they have a strong, unacknowledged differentiation along the lines of total wealth.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 25th, 2013 at 02:31:09 PM EST
[ Parent ]
Well, this is acknowledged sometimes, as with Junker: "When it is serious you have to lie." That this did not result in serious consequences for him just shows how widely, if tacitly, accepted such behavior is for the wealthy and those who represent them.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Feb 25th, 2013 at 02:33:38 PM EST
[ Parent ]

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