Friday, December 12, 2008

Courage in venturing outside economics

Erik S. Reinert writesProfessor Krugman and the ancient Mexicans have something in common. Both made epochal discoveries, only to keep them as toy models instead of putting them to practical use. In my book How Rich Countries Got Rich…and Why Poor Countries Stay Poor, I refer to two important vices of the economics profession: what Schumpeter calls the Ricardian Vice, that is, the habit of piling a heavy load of strong policy recommendations upon very shaky assumptions; and what I have dubbed the Krugmanian Vice, the production of theoretical models that explain the real world better than Ricardo did – but not applying them to actual economic policy. In the third world the two vices combine to create serious obstacles to development.

Much of the author’s clime or understanding seems politics theories of blaming or criticizing the government and its policies.  

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