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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."
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."
"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
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."
(Works for me.)
;-) She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
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