Paul Krugman: The Profession and the Crisis

[n2doc]

So we’re having an economic crisis. I say “having,” not “had,” because we have by no means recovered. Financial panic may have subsided, stocks may be up, but employment remains far below pre-crisis levels, and unemployment — especially long-term unemployment — remains disastrously high. And while you can make the case that the economy is slowly on the mend, slowly is the operative word. We have already been through two years of economic purgatory, and there's no end in sight.

There is a real sense in which times like these are what economists are for, just as wars are what career military officers are for. OK, maybe I can let microeconomists off the hook. But macroeconomics is, above all, about understanding and preventing or at least mitigating economic downturns. This crisis was the time for the economics profession to justify its existence, for us academic scribblers to show what all our models and analysis are good for.

We have not, to put it mildly, delivered.

What do I mean by that? As I see it, there are three main complaints one can make about economists and their role in the current crisis. First is the complaint that economists fell down on the job by not seeing the crisis coming. Second is the complaint that economists failed even to see the possibility of this kind of crisis — and that by pointing out the possibility, they could have helped head the crisis off. Third is the complaint that they have either failed to offer useful advice on what to do after the crisis struck, or that they have offered such a cacophony of voices as to provide no useful guidance for policy.


much more:

http://www.palgrave-journals.com/eej/journal/v37/n3/full/eej20118a.html

[izquierdista]

1. Mystical bullshit gives way to science

Just as alchemy was replaced by chemistry and astrology was replaced by astronomy, the Chicago School of Milton Friedman crank-yanking will one day be forgotten and replaced by real economics of the kind Krugman and Stiglitz write about. Over the course of history, the writers whose ideas don't work are forgotten and the scientists who have discovered what works and is true are memorialized. People now learn Newton's laws in physics classes, and if Aristotle is ever mentioned, it is to say that he was wrong.

Maybe newspapers can move the horoscope column to the financial pages and console the superstitious that they will receive a tax cut when Mars is trine Uranus.

[hifiguy]

2. Which is why economics is not a science in any real sense

of the term.

A biological scientist cannot become a biological scienctist while denying evolution. An astronomer or cosmologist cannot become an astronomer or cosmologist while denying the measurable age of the universe. Nor can a doctor become a doctor if s/he adheres to a humoural or demon-based concept of the causes of disease.

Economists, on the other hand, can and do come to their profession with all manner of crackpot ideological beliefs and then pull unproven and unprovable theories out of their asses to justify their worldview. Honest ones, like Krugman, seek to learn from the lessons of the past and readily acknowledge their failures and limitations. Others, like the Friedman school - the most destructive ideology developed in the 20th century, and no I am not forgetting about Stalinism or Nazism - simply invent theories out of thin air and claim omniscience.

As Naomi Klein pointed out in "The Shock Doctrine" everwhere that Friedmanism has been imposed, whether by military force, natural disaster or deliberately engineered economic crisis, 25 to 60 percent of the population has been turned into an immiserated and impoverished "surplus" to be left to die off.

[applegrove]

3. I know somebody who uses economists in his job and he says their predictions

are like flying using only the 'instruments'.