Saturday, January 24, 2009

The State of Economics

Will Wilkinson makes some fair points:
What arises in my mind is the strong suspicion that economic theory, as it is practiced and taught at the world’s leading institutions, is so far from consensus on certain fundamental questions that it is basically useless for adjudicating many profoundly important debates about economic policy. One implication of this is that it is wrong to extend to economists who advise policymakers, or become policymakes themselves, the respect we rightly extend to the practicioners of mature sciences. There is a reason extremely smart economists are out there playing reputation games instead of trying to settle the matter by doing better science. The reason is that, on the questions that are provoking intramural trashtalk, there is no science.

Macroeconomics, in its current form, seems basically inseparable from politics. You see this in the current debates on the stimulus package, with right-wing economists arguing against and left-wing economists arguing against. What little empirical evidence gets introduced can seem cherry-picked. Whenever you see people neatly dividing into two groups, it's got to be more ideology than science.

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