Do We Need Economists?

Not if you listen to Carmen Reinhart and Ken Rogoff (R-R) who continue to wallow in a controversy of their own making.

As you are aware these are the economists whose research has, along with similar work, been the intellectual underpinning for much of the hyperventilating by right wingers about the evils of high levels of government debt. An R-R paper published in 2010 showed that once an economy crosses a certain threshold in the ratio of government debt to GDP growth screeches to a halt. That threshold they determined to be 90%. Except their research didn’t show any such thing – they had a simple error in their spreadsheet which has now been discovered and corrected for by others, a team at UMass being the most prominent of these others.

The controversy that has followed this discovery has been both extraordinary and illuminating. R-R have used a couple of New York Times op-ed articles to fend off criticism, but I think it fair to say they have only dug themselves a deeper hole. They persist in making claims based upon their work that now are looking defensive to say the least.

Take, for example, this statement:

“Our view has always been that causality runs in both directions, and that there is no rule that applies across all times and places.”

So what is the relevance of the work that arrives at this point? It is like saying that sometimes it rains and sometimes it doesn’t, and, in any case, it depends if you’re under a cloud in which case it might rain. Or not.

My problem with the entire R-R farrago is that it demonstrates so succinctly all that is wrong with economics.

What’s wrong is that economists actually “know” very little. Their systems, models, and theories are all highly spatially and historically contextual and extremely limited. Not to mention gender, class, institutionally, and ideologically specific. Yet they continue to churn out massive piles of research, papers, and other learned material. They also teach from that material as if it were generalized or timeless.

What’s wrong is that society respects this output and values it as being a professional and thoughtful basis on which to make decisions. Economists far too rarely go public with what they talk about privately – that economics is very limited and is subject to a myriad restrictions based upon the axiomatic and other assumptions made in the process of theorizing.

What’s wrong is that some economists run and hide behind a veil of “being scholarly” whenever they are held accountable for their ideas or theories. They bask in the limelight as commentators. They suddenly become “scholars” when someone calls them on their work. This slippery double act cannot continue.

R-R seem to be stuck in this duality.

Their very successful book back in 2009 brought them fame and attention. Rightly so, it was a good piece of work. They popped up in the media constantly. They seemed to relish the opportunity to influence public debate. They were clearly not just scholars back then. A few years later they throw their hands up and claim to be shocked that their work causes controversy. After all, they now claim, they’re just scholars trying to add the pile of scholarly stuff on the issues surrounding government debt. Or, rather, high levels of government debt.

I am not aware of another academic discipline that tries to play this game.

Either economics has something to communicate to society, in which case it must – collectively – take responsibility for what it says. Or it has no social value at all and exists as a self-referential puzzle to occupy a few clever people. In which case it deserves no public funding or attention.

Economists persist in trying to have it both ways.

Nor do they seem to understand that they are a collective. They have collective responsibility for what is taught under the rubric of economics. They cannot run and hide by arguing that something taught at some other school is not really economics whilst what they teach is. Nor should they ever get away with teaching a theory without adding the caveat[s] about its limitations. Nor should they tolerate the enormously selective version that forms the basis of the economics taught to non-economists at places like business schools. Being a scholar and holding dear academic freedom is not a license to abdicate any ethical responsibility for the subject as a whole.

Economics is crippled by its inability to arrive at any collective definition or portrayal of itself. Variety of ideas is always healthy. Scholarly bunfights over those ideas are how progress is made. And as R-R say themselves, mistakes are crucial to progress. The problem within economics seems to be that, since nothing is ever “proved”, nothing can ever subsequently be “disproved”. So mistakes become simply those of arithmetic, like R-R’s, rather than those of concept. Instead of disproof, ideas just pile up. Contradiction, confusion, obfuscation, and fragmentation become the order of the day. It is one thing for economists to coexist under a broadly catholic roof. It is another not to coexist at all, but to have many roofs. Each called economics.

And yet that relationship with society exists. It nags away. If economics is not trying to say something about society, then what is it saying? If they aren’t trying to influence the way in which people – students and public policy makers – think, then what are economists doing? If the answers to these questions are that economists are indeed trying to say something of value to society, and that they are indeed trying to influence people, then they must face the music when their ideas appear to flop. Or when they make mistakes.

That’s the ethical thing to do. It’s what everyone else does.

You don’t run and hide behind a veil of scholarly argument when what you’ve published has formed the basis for policies that have cost millions of people their livelihoods.

You don’t pretend to be surprised when politicians latch onto your ideas when you drop some research plumb into the center of a raging debate over government debt levels. And you had better damn well have checked your arithmetic before launching a paper laden with opinion about that debate. Only a simpleton could claim not to be aware of that debate. And R-R are no simpletons which makes much of their defense disingenuous.

People like R-R need to grow up and accept the role they play by virtue of being an economist. They dabble around in the guts of society. They can muck things up. Their innocent comments and scholarly papers are never wholly innocent. They are tainted by the irrevocable link between economics and politics. Someone, somewhere, might just act on the ideas of that paper. And ruin lives. Or save them. Either way the specter of ethical responsibility hovers above every single statement an economist makes.

Does that statement save or ruin?

R-R need to ponder that as they compose their next paper.

Else their work is reduced to irrelevance. In which case we don’t need economists.