Economics as a parasite …

TCA Srinivasa Raghavan has interesting points on state of economics:

It always happens. Eventually, the practitioners bring discredit to their chosen professions. Whether it is religion, politics, climate change, sports, or whatever, it happens with unfailing regularity. Usually, however, the said practitioners restrict themselves to their own disciplines. You don’t see them laying claim to other specialisations.

But is an exception. If you look at its history over the last 60-odd years, it has behaved just as parasites do – drawn sustenance from others in order to stay alive. In the 1950s and 60s, turned to mathematics and physics for making the claim that economics was a “science”. To give you just one bizarre example, one of the problems they set out to solve in growth theory used the calculus of variations and geodesics! If there was a plausible explanation for explaining economic growth in terms of distances between curved surfaces, it escaped most people.

And when maths and physics had been sucked dry, they turned to statistics in the 1970s and 1980s under the rubric econometrics. The “econometricians” themselves were providing many useful tools of analysis but when the economists learnt to use these tools, it was like monkeys learning to use Vernier calipers.

Since then, they have left no discipline alone: law, sociology, psychology – you name it and you will find droves of economists chattering away. Inevitably, as the horizon has expanded, so has the number of charlatans.

Economics today has the largest numbers of the equivalent, if you will, of fake sadhus, babas andmaulvis. And like them, most economists today are happily ignorant of the basics.

One very well-known economist, for example, wrote in a very well-known report a few years ago that it is sensible to appreciate the currency when there is a current account deficit. Aiyyo, Amma!

lol…comparing econs to sadhus, babas and maulvis…well the way we see so many on business media proclaiming what will happen they are not really far away..

The real issue is too many people looking at too narrow issues:

Soon after the 2008 financial crisis, economists tried to figure out what was wrong with the subject. They confined themselves mostly to macroeconomics and, not surprisingly, got nowhere because what new things can be said about a subject with just six or seven variables?

But that was not the main problem. Where they went wrong, in my view at least, was that, instead of asking what was wrong with economics, they should have asked what is wrong with economists.

This is what happens in every other field. For example, physicists, chemists, astronomers and so on don’t start questioning their subjects. They look at the stock of human capital in their fields instead.

There are too many economists specialising in increasingly narrow and meaningless areas with statistical tools that pay no attention to contexts – political, historical, social and, of course, paradoxically, economic. The eclipse of theory has also led to mediocrity posing as genius.

A subject which has become overrated as it has ignored most of what mattered.


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