Wednesday, March 18, 2009

Economics, town and untrained economists………

In the morning I read three articles the subject of article vary from financial crisis to urbanization and false theory of economists. 

First, in today’s ET Joseph E. Stiglitz has article in which he says that “Trickle-down economics almost never works” it comes after doing a significant damage which the present academic community fails to understand and give up the theory. 

Second, fight over whether macroeconomics was advanced or not after 1970s. Typically T. C. A. Srinivasa-Raghavan says by quoting Keynes who said in 1931 that “If economists could manage to get themselves thought of as humble, competent people on a level with dentists that would be splendid.” 

And “he is also intensely critical of the tendency introduced by engineers-turned-economists to look on the real world as a sort of machine where pressing the right buttons leads to predicable outcomes.

 In case of India it includes Raghuram Rajan also. 

T. C. A. Srinivasa-Raghavan earlier criticized Raghuram Rajan report on financial sector reform saying “unfortunately, and thanks in a large measure to the data boys, especially those with engineering backgrounds, this has become a generalised problem in macroeconomic analysis and policy wonking. So even though they pour scorn on anecdotal evidence, the data boys have become guilty of the same methodological flaw. They confuse correlation with causality and use induction and deduction inter-changeably.” 

Third, in India many think Bibek Debroy is a liberal economist but some time seem to be a terribly Keynesian economist. He writes in today’s Financial Express “In the long run we are all dead.” Most people know this Keynes quote and most non-economists probably think it is from General Theory (1936). It is actually from A Tract on Monetary Reform (1923), written well before those troubled times. Given these troubled times, the subsequent sentence has relevance for the tribe of economists. “In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.”

No comments: