The Future of Economics

|Peter Boettke|

Martin Wolf summarizes the panel discussion that took place among several leading economists the other day on the future of economic science.

 

HT: Tyler Cowen

Comments

[Matt Stiles]

Not a lot there that Austrians would disagree with, it seems.

[Roger Koppl]

No Coordination Problem regulars will be surprised that I liked Wolf's sixth highlight: the world is not computable.

[Sanjeev Sabhlok]

Some things I agree, a few partially agree. Economics should go back to the basics and reset the button. The value-add by economists was astoundingly huge in the first 100 years since Adam Smith's Wealth of Nations. It increased all the way till Menger came on the scene. Micro-economics, which is largely a deductive discipline, based ENTIRELY on the work of Menger, is still doing fine. But with the advent of Keynes, the "macro-economics" part of economics dropped off like a rock falling off a precipice.

I've got detailed comment (and a diagram) here: http://sabhlokcity.com/2012/01/economics-where-to-from-here/

[Mario Rizzo]

Problem is: They don't mean a word of it. Let them reveal their views in action. To start they can agitate for opening the AER to real heterodox thought. Then there is something to pay significant attention to.

[McKinney]

"human beings are not rational calculating machines."

Doesn't that make any kind of science impossible? If humans are truly irrational, how is it possible to even drive on the highway without playing bumper cars with everyone?

Seems to me those four economists are really out of touch with the rest of the field. They actually seem to have been humbled by the recent crisis. I don't see that from mainstream or Keynesians at all.

[Allan Walstad]

I didn't think much of the false dichotomy leading off -- you know, skeptics of market efficiency versus "markets are always right unless government messes them up." The real question is whether (and if so, when and to what extent) government intervention can make things better than allowing markets to work. Nirvana is not one of the options. What about government efficiency? Economics can shed on that, as the Austrians and Public Choicers have shown at length. If economics suffers from physics envy, then economists should note the wide array of models that physics brings to bear on understanding phenomena. It's not all about writing down Schrodinger's equation for a gazillion variables.

[Jim]

Hausmann and Hidalgo are doing interesting work. If anything is 'macroeconomics,' it seems to me that modeling the complexity of it is part of the answer.

As to how money works, we will only suffer increasingly larger 'shocks' until we end the Fed, which will end abetting the creation of crippling and debilitating government debt. It also appears Basil is captured as well given their anemic and flat out irresponsible regulation. Banks must be allowed to work in a market; not this strange centralized albatross pasted on top of the economy, and 'managed' by a Fed economist. The whole thing is beyond silly.

Finally, finance (and most importantly debt) must form the basis (not this misleading and useless GDP calculation) for national and fiscal measurement. Think of it; a student who quits school to build bridges may actually cause a drop in GDP. What a joke.

Some very smart people have made this whole economic discussion far more difficult; except for a few very useful concepts, macroeconomics has went off the reservation. And it now frames a surreal and suicidal discussion on how to run a government.

[Jerry O'Driscoll]

Every 12-step program begins with acknowledging you have a problem. It sounds like the group is at step 1. As Mario suggests, progress depends on fulfilling the next steps. We'll see.

[zatavu1@aol.com]

Jim,

Even sillier: an increase in government spending that neither creates value nor wealth contributes to GDP. Better, the government can pay people (increase in G)to go around breaking windows, which causes people to have to buy more windows (increasing private spending), which increases GDP. Nonsense all around.

[Kassandra]

"human beings are not rational calculating machines." --> I liked what you said here, we're not robots so why expect such thing?

[best crib mattress]

Good articles and thanks for sharing! But it's so weird that you blog is in a mess through my new Firefox. I dont think it's my explore problem? Beacuse it's pretty normal when visit other websites.

[JR Hager]

US libertarians need to laugh at the other parties, all look the same anyway, that's why I put together this blog 4 us, and why I'm sharing it with you. We gotta laugh, or go nuts, right !

Thanks, guys and dolls, for being there.
Be safe,
JR Hager