Some interesting links on the topic (HT:Economist’s View Blog)
- Andy Haldane of Bank of England raised concerns on state of economics. His main idea is econs failed to see the crisis
- David Miles, former Bank of England official responds saying no such crisis. Most economics models confirmed the crisis.
- Simon Wren Lewis sums up and says problem is to think economics only means macroeconomics and finance. The other areas of economics like micro, public etc did not face any such crisis. Moreover, even within the two macro and finance, former mostly excluded the latter. So there is no crisis as such but a case of overlooking the data. He says if there was someone who should have spotted risks it was Bank of England!
Then there is another article by Prof Paola Subacchi of University of Bologna. She hits the nail on its head:
Where do we go from here? While we should appreciate Haldane’s candid admission, apologizing for past mistakes is not enough. Economists, especially those involved in policy debates, need to be held explicitly accountable for their professional behavior. Toward that end, they should bind themselves with a voluntary code of conduct.
Above all, this code should recognize that economics is too complex to be reduced to sound bites and rushed conclusions. Economists should pay closer attention to when and where they offer their views, and to the possible implications of doing so. And they should always disclose their interests, so that proprietary analysis is not mistaken for an independent perspective.
Moreover, economic debates would benefit from more voices. Economics is a vast discipline that comprises researchers and practitioners whose work spans macro and micro perspectives and theoretical and applied approaches. Like any other intellectual discipline, it produces excellent, good, and mediocre output.
But the bulk of this research does not filter into policymaking and decision-making circles, such as finance ministries, central banks, or international institutions. At the commanding heights, economic-policy debates remain dominated by a relatively small group of white men from American universities and think tanks, nearly all of them well-versed devotees of mainstream economics.
The views held by this coterie are disproportionately represented in the mass media, through commentaries and interviews. But fishing for ideas in such a small and shallow pond leads to a circular and complacent debate, and it may encourage lesser-known economists to tailor their research to fit in.
The public deserves – and needs – a marketplace of ideas in which mainstream and heterodox views are afforded equal attention and balanced discussion. To be sure, this will take courage, imagination, and dynamism – particularly on the part of journalists. But a fairer, more pluralistic discussion of economic ideas may be just what economists need as well.
Amen to that.
I mean the whole thing is such a close circuit (or a circus?) that all this crisis talk reads like a joke. As the author says the coterie of world economic policy comes from selected certain schools (read Ivy leagures in North East USA). The majority of coterie first rejects a mega event coming (amidst some opposition), then they decide the crisis is on applauding the minority dissenters and then they together look for the solutions! It is that simple. They are least impacted by any crisis as they are always deciding the big world game.
Unless we see more broad basing of economics and look at economists minus the usual tags we are not going anywhere. It will just keep going in circles. It is funny how a local economics person is never seen as an expert despite spending so much time in the region and sector. Whereas anyone from the coterie is seen as an expert on all the issues across the world.