Economists: A Profession at Sea

[marmar]

from TIME:



Economists: A Profession at Sea
How to keep economists from missing the next financial crisis.

By Robert Johnson | January 19, 2012


After the financial crisis of 2008, the Queen of England asked economists, “Why did no one see the credit crunch coming?” Three years later, a group of Harvard under­graduate students walked out of introductory economics and wrote, “Today, we are walking out of your class, ­Economics 101, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University, and our greater society.”

What has happened? Rebellion from both above and below suggests that economists, who were recently at the core of power and social leadership in our society, are no longer trusted. Not long ago, the principal theories of economics appeared to be the secular religion of society. Today, economics is a discipline in disrepute. It’s as if our ship of state broke from its stable mooring and unexpectedly slammed into the rocks. How could things have gone so spectacularly wrong? And what can be done to repair economics so economists can play a productive role in helping society?

As the Oscar-winning documentary Inside Job illustrated, there is a very lucrative market for false visions of financial-market behavior that legitimate the desires of participants to be unshackled and make more money. But good policy prescriptions are public goods that represent the social good and not just the concentrated financial interests. Unfortunately, as economists beginning with the work of Adam Smith have repeatedly shown, public goods are under­provided in the marketplace. In addition, the reputation of the economics profession is itself a collective good, and those who have tarnished it are not adequately penalized for the damage they do to their fellow professionals when they accept large sums of money in return for marketing a perspective that benefits vested interests.

These are problems that some within economics have been aware of for a long time, but the discipline as a whole has been unable to address them. The onus is on the profession to face these challenges and help lead society off the rocks. ...........(more)

The complete piece is at: http://business.time.com/2012/01/19/economists-a-profession-at-sea/

[jody]

1. IMO the problem is the total disconnection between macro-economics and micro-economics. The former

is the pulpit from which "experts" advise presidents and congress how to control the economy but they have been mostly wrong since Keynes.

The latter is the working level at which new businesses begin based on a fistful of dollars and a pocket full of dreams.

If they survive they provide new jobs for the future but most fail in the first two years.

If one survives, owners might become rich evenly wealthy but that's a gamble every new venture takes.

I have never read a single macro-economic theory that suggests a credible cause and effect relationship to micro-economics.

Any president can ask the most brilliant economists in the world to Camp David to advise how to help our dying economy.

So far that hasn't worked.

[applegrove]

2. The 1%/GOP has managed to diminish economists with their bullshit. They want to diminish all

Last edited Fri Jan 20, 2012, 02:32 AM - Edit history (1)

public experts and leave all good knowledge only in the hands of the corporations (who will be the only ones who can afford to pay for it). This is part of us heading back into the dark ages where only corporations will have a monopoly on information this time - instead of religion. Why do they hate experts so much? Because they inform people and regulate corporations. All things that take profits, and therefore big bonuses, out of the hands of ceos. They have been pushing bullshit economics for so long, people deregulated financial markets and as a result we have chronic unemployment. And now people don't trust the other economists..the ones who still teach what worked in the past (Keynesians). Just like the gop/1% made government not function so that people would no longer believe in it. It is working.