There’s a truly interesting post over at naked capitalism on the manifest failures of economists in the lead-up and consequences of the (I believe ongoing) financial crisis. I’m looking forward to the second installment in which the author promises to propose some updates to the economics curriculum.
To the post I’d add one thing. Economics is a science of human behavior. Like anthropology or sociology it is divided into classroom and field work. Classroom economists have titles like “professor” or “lecturer”. Field economists have titles like “trader” or “financier”. Today’s foremost field economists are people like Warren Buffett, George Soros, and Bill Gross.
That dichotomy has been in place since the early days of economics, cf. David Ricardo.
Why do we turn to classroom economists when looking for field-level solutions? I don’t honestly know and I’d like to.
One disquieting possibility is that the classroom economists (in which category I’d place people like Larry Summers and Ben Bernanke) are at base timid souls, easily influenced to provide the answers that politicians, field workers of a different kind, demand.
For a while I (or my evil twin?) used to link “failure of [macro] economics” stories. They were all the rage in the housing bubble aftermath. There was also a mini-industry of “reinvention of [macro] economics” articles a year or so later.
FWIW, I think the big picture criticism is that while economics is undeniably an aspect of human nature, it cannot ever be used as a filter with which to view the whole.
The key difference between economics and anthropology or sociology is that the later don’t limit themselves to a single mode of thought. They don’t hammer everything (love, art, sacrifice) into “exchange.”
Now, I think there are some who do broader integration of economics with human history, but they might be “financial historians” rather than “economists.”
Nice link. Thx. I hope that you at least scanned the Economist article on international banking. They both hit the same notes on the worldwide deregulation of banking along with the financial sector working hand in hand with government rather tahn being regulated by it.
Steve
Yeah, I read it. Thanks.
Why do we turn to classroom economists when looking for field-level solutions? I don’t honestly know and I’d like to.
Because field level people are “interested” parties. Why would I ever trust Soros to tell me the truth about currency when he might profit my lying? You don’t believe a man who might make millions with a well-timed lie.
“You don’t believe a man who might make millions with a well-timed lie.”
Heh. Or a politician who might get perpetually re-elected with, well, 5 decades of lies.
You seem to get the former, and have blinders for the latter.