New School Economic Review

Award Season must be upon us

by Benjamin on February 13, 2011

It seems the profession has gotten itself onto the L.A. awards calendar as awards for ‘most influential economists‘ are handed out by the academy of insiders (50 invitees of the Economist) with a lifetime award for acting and a ‘break-out actor of the year’ award. Meanwhile a smaller trade body (the AEA‘s Chicago’ish contingent) has thrown in its lot for best American movie (or paper from the AEA).

So what’s the conclusion. Weeell… Someone with an economic or statistical background might balk at  awarding the Academy’s lifetime award on the basis that the winner got seven votes, and second place came in with four… The best new actor won by receiving a massive – and I am sure representative – four votes in total. The best film, as within the standard Academy ‘Oscar’ Awards, can only be granted to a US production (from an AEA journal) and can only be voted for by those selected by the academy.  But hey ho, don’t let me spoil the party; we all know the Oscars are political, but we all watch them – so perhaps one should treat these awards the same way: Good entertainment and a chance to hear of a film or actor you hadn’t yet seen. I mean, Hayek even snuck onto the AEA list…

Don’t trust chinese statistics, says chinese PM to be

by Benjamin on December 14, 2010

Wikileaks seems to be confirming what most students of Chinese statistics have known for a long while – don’t trust Chinese national statistics. That seems to be the sentiment of the current Chinese deputy prime minister, Li Keqiang, who called the statistics “man-made” and preferred to look at other indicators like the cargo volume on the province’s railways, electricity consumption and loans disbursed by banks. The Economist helpfully put together a picture of those three indicators alone for China to show a slightly different picture and pointed out that:

It should come as a relief to all those who doubt China’s economic statistics (ie, just about everybody) that the people in charge of its economy do not entirely trust them either. (Economist, 11/12/10)

I don’t know why, but it put a smile on my face. But that may be because my professor of Chinese economics once told us how unemployment in China was going to fall by 2% over the coming two years, as the party had decided it should, and the statisticians were following those instructions. Of course that’s almost five years ago, but little changed by 2007 when Kequiang made his comment, and I wonder how much is different today.

Anwar Shaikh vs. Economist

by Benjamin on June 16, 2010

A little over a month ago Wynne Godley passed away. He was a fine economist, and it is not for me to eulogise him, suffice it to say that the great and the good did, and his work will be missed. Among those eulogisers was The Economist. They have spent the last 6 months quietly criticising mainstream economics and its over-simplifying approach to the economy, this was their chance to remember a man who constructed stock-flow consistent empirical models, and did some real analysis of the economy – not economics.  They fluffed it. That is why I was so happy to see Prof. Anwar Shaikh (and others) replying to The Economist in print this week.

SIR – Your obituary of Wynne Godley (May 29th) did an injustice to his considerable intellectual achievements in macroeconomics and his courage in going against the orthodoxy that has ruled the economics profession for the past three decades. That very orthodoxy is now under attack all across the world, its otiose theoretical constructions having been exposed to the harsh light of actual economic events. Godley’s contributions to macroeconomics include his 1978 work on pricing with Kenneth Coutts and William Nordhaus, the textbook written in 1983 with Francis Cripps that inspired the “New Cambridge” group, and his 2006 book on monetary economics, written with Marc Lavoie.

His often-cited success as a macroeconomic forecaster came about precisely because he developed a systematic framework for analysing the impact of potential developments, applied first to the British economy at Cambridge and subsequently to America’s economy at the Levy Economics Institute.

Instead of taking the trouble to address these contributions, your piece settled for personal gossip, ending with a snide comment that “against a background like this, a little waywardness in the world of macroeconomics seems entirely forgivable.”  (The Economist, 11 June 2010 – on-line here)

I agree whole-heartedly, and am happy to see this in print. Wynne Godley should be an inspiration to economists of all colours, a point seemingly forgotten in the original obituary, even if everyone, including The Economist,  is calling for a different approach to our subject.

The Mainstream is Back; with prejudice

by Benjamin on January 24, 2010

If you saw the front page of the economist this week you might quickly conclude that the Washington Consensus and Neo-Classical economics is back in the ascendancy. “STOP!” shouts the front page, “The backlash against big government” and a suitably Leviathan-cum-Ghostbuster’s-Slimer picture swallowing the poor citizen follows. That the poor citizen looks like a suited and booted businessman is probably a freudian slip, but the image tells the story. Let business get on with its work and start cutting back on the government.

For the first time, to my memory, the front page leader runs onto the second page, and the reason is simple. The Economist is confused. It wants to encourage us to cut back on the government, limit its impact but it also wants us to support banks being propped up, government stimulus packages and systems of governance by that same government (a lesson of Haiti if not the global recession).  So why is the Economist promoting and opposing ‘big’ government in the same editorial?

Their problem is one of prejudice, of ideology. Don’t take my words for it, the Economist is refreshingly open in stating the ideology to which it clings after reality has illustrated the problems with lack of government intervention in market places:

In these circumstances, hard rules make little sense. But prejudices are still useful – and this newspapers prejudice is to look for ways to make the state smaller. That is partly for philosophical reasons: we prefer to give power to individuals, rather than governments. But pragmatism also comes into it. (Economist Jan 23: Leader p. 9)

They can’t be serious! They oppose government on the philosophical grounds that individuals need to be empowered and protected from big scary states. So much for empirical evidence. Surely, if there’s anything the last 12 months have shown us it is that the individual is not under threat from the state as the leviathan in the 21st century. Yes in the 17th century when Hobbes wrote his book the state was all powerful (Think Cromwell). And if we talk of Myanmar or such states then yes sure. But in today’s market economy the label of Leviathan should be applied to those enitites ‘too big to fail’ – companies.

Banks have been given a bad reputation these last months, but for good reason. Oil, media, pharma, cigarettes, software – all of these industries have their monopolists and their scare stories. Aren’t they the 21st century  leviathan? What governments try to do is to support both companies and individual citizens. Where the company is responsible to the shareholder, the government is responsible to the electorate – sort of. The pragmatism refered to by the Economist is their fear of government mandarins directing private activity. A fair concern, but is that any more fair than worrying about the lobbying and advertising campaigns of monopolies and oligopolies? Too quickly will we forget what has happened in the last year, and move back to a trajectory of prejudice and ideology without understanding the economy or its features.

I wish that the academic economic community would be as open as the economist in declaring its inherent biases or perhaps investigating them. Yes, David Colander and others talked about how we should change the way we teach economics as a result of the crisis at this year’s AEA meeting, but he’s been saying that for a while and I don’t think anyone will change their ways. Sad.

Long time no see – and merry Christmas

by Benjamin on December 19, 2009

“Finally the holidays are here – now we can all get some work done.” This was the first thing my supervisor told me many years ago, and it is a sentiment strangely, perhaps cruelly, reflecting reality in academia. The suggested undertone that teaching isn’t really work is one I disagree with, but a diatribe on teaching is not my intent here, rather it is to declare – happily – that the blog will once more be running on full steam: The thesis is in a reasonable shape and the new job’s learning curve has flattened out, and with the holidays upon us there is once more time for the real work: Blogging.

There is much to catch up on, but for the moment I just want to wish everyone a merry Christmas and suggest a very nice piece in the X-mas Economist out this week on ‘Progress and its Perils‘ (generously available for free) on how good we actually have it, despite our search for positional goods.

Skidelsky talks to the Economist about Keynes

by Benjamin on September 11, 2009

Skidelsky, he of the John Maynard Keynes Biography, met with The Economist this week to have a chat about Mr. Keynes himself… This might just coincide with Skidelsky’s forthcoming book on Keynes’s return… I have just downloaded the podcast myself, but thought I would share it to hear what people think:

This is all part of the economists pod-cast series, which isn’t bad at all, if you ignore the name of the thing…

Oh Mr. Lucas, you silly goose

by Benjamin on August 7, 2009

The Economist is pitching in on the debate about whether economics, and macro in particular, has gone to the dogs. This week Robert Lucas himself contributed a “Defense of the Dismal Science“, in response to an article a few weeks back, arguing that the macro-models were fine, and the simulations we run are still useful even if they failed to predict the crisis, as

the simulations were not presented as assurance that no crisis would occur, but as a forecast of what could be expected conditional on a crisis not occurring.

Let’s have that again, from the Nobel receipient: The economic models which failed to predict the crisis are fine, not because they came close, but because they don’t even consider crisis as a possible outcome… Tell me that isn’t beautiful!?

A whole roundtable discussion of Lucas’s article and the state of economics is on-going at The Economists website. Thus far written by Mark Thoma (U. of Oregon), Tyler Cowen (GMU), Marcus Brunnermeier (Princeton) and Brad DeLong (Berkeley) with more contributors to be added this week. Bard DeLong’s piece even emphasised that “Mr Lucas said he ‘didn’t really get it’ ” when the bank bail-out was being discussed back in March. It makes for interesting reading, if a bit ‘Wonky’ as Steve Kinsella noted… I’m still chuckling quietly at Mr. Lucas’s ‘defense’ though.