In an essay that has attracted some interest from the blogging community, Kartik Athreya of the Richmond Fed, correctly states that there are political hacks misusing economic arguments. But she misses the point.
Economics is Hard. Don’t Let Bloggers Tell You Otherwise
“In the wake of the recent financial crisis, bloggers seem unable to resist commentating routinely about economic events. It may always have been thus, but in recent times, the manifold dimensions of the financial crisis and associated recession have given fillip to something bigger than a cottage industry. Examples include Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich. In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why.”
“The question is: can they provide you, the reader, with an internally consistent analysis of a dynamic system subject to random shocks populated by thoughtful actors whose collective actions must be rendered feasible? For many questions, I and my colleagues can, and for those that the profession cannot, the blogging crowd probably can’t either.”
“…just below the surface of all the chatter that appears in blogs and op-ed pages, there is a vibrant, highly competitive, and transparent scientific enterprise hard at work. At this point, the public remains largely unaware of this work. In part, it is because few of the economists engaged in serious science spend any of their time connecting to the outer world (Greg Mankiw and Steve Williamson are two counterexamples that essentially prove the rule), leaving that to a group almost defined by its willingness to make exaggerated claims about economics and overrepresent its ability to determine clear answers.”
In a polity where we have traded traditional moral principles for the abstractions of economic theory as the means of resolving differences between the ambitions of our politicians, and where at the same time, economics is a nascent, and perhaps insufficient body of knowledge to adequately inform both our polity and its leaders, both sides of any debate are required to rely upon the accumulated erroneous judgements and confirmation biases inherent in their constituents. Bloggers then, like everyone else, are arguing against error with error. Against sentiment with sentiment. Against bias with bias. Against foolishness with foolishness.
Your analysis assumes that economists can be of much help in the public debate. When in fact, there is also a body of economic philosophy that states that the entire DSEM, as well as equilibrium itself, and the descriptive, probabilistic, non-causal mathematics employed in it, are insufficient methods for representing and forecasting economic interactions. In fact, the great progress of economists over the past fifty years has largely been to supply quantitative proof that confirms the traditional descriptions of the consistency of human error, bias and information asymmetry — a set of errors which only needed exposition because of the false pronouncements of the theorists who created the idealistic models suitable for simplistic mathematical modeling.
In other words, politics has little to do with economics. And all economic science seems to have accomplished, is to trade one set of traditional wisdoms for another set of speculations. And while you refer to economics as ‘scientific’, the political use of economic theory has been anything but scientific. And to a large degree, the immature nature of economic theory combined with the foolishness of political rhetoric, has created as much harm as good. In the comfort and support it gave to communism and socialism alone, the record of economic theory is the record of bloodshed, fraud, deception and heady murder.
So while I laud your ambitions, it seems, that you have fallen into the same error that you accuse of others: to pretend to possess knowledge that you do not.
The greater economists who do much of the great work, often refrain from the political discourse, largely because they possess sufficient wisdom to know that it is a pointless exercise. Economics as we know it is a process of describing the past. Politics is the process of inventing the future. The difference between description and invention is infinite.