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Monday, March 27, 2017

Must-Read: Carmen Reinhart and Ken Rogoff are mainstream economists. The fact is that they had much more influence on e... [feedly]

Must-Read: Carmen Reinhart and Ken Rogoff are mainstream economists. The fact is that they had much more influence on e...
http://www.bradford-delong.com/2017/03/must-read-carmen-reinhart-and-ken-rogoff-are-mainstream-economists-the-fact-is-that-they-had-much-more-influence-on-eco.html

Must-Read: Carmen Reinhart and Ken Rogoff are mainstream economists. The fact is that they had much more influence on economic policy in 2009-2013 than did Simon Wren-Lewis and me. Simon needs to face that fact squarely, rather than to dodge it. The fact is that the "mainstream economists, and most mainstream economists" who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side. (IMHO, Simon Wren-Lewis half admits this with his denunciations of "City economists".) For this reason, I think Simon's response here to Unlearning Economics is ineffective, and unhelpful:

Simon Wren-LewisOn Criticising the Existence of Mainstream Economics: "I'm very grateful to Unlearning Economics (UE) for writing in a clear and forceful way a defence of the idea that attacking mainstream economics is a progressive endeavor...

...I think such attacks are far from progressive.... Devoting a lot of time to exposing students to contrasting economic frameworks (feminist, Austrian, post-Keynesian)... means cutting time spent on learning the essential tools that any economist needs.... Let me start at the end of the UE piece:

The case against austerity does not depend on whether it is 'good economics', but on its human impact. Nor does the case for combating climate change depend on the present discounted value of future costs to GDP. Reclaiming political debate from the grip of economics will make the human side of politics more central, and so can only serve a progressive purpose...

Austerity did not arise because people forgot about its human impact. It arose because politicians, with help from City economists, started scare mongering about the deficit.... Every UK household knew that your income largely dictates what you can spend, and as long as the analogy between that and austerity remained unchallenged, talk about human impact would have little effect.... The only way to beat austerity is to question the economics on which it is based.... Having mainstream economics, and most mainstream economists, on your side in the debate on austerity is surely a big advantage....

Where UE is on stronger ground is where they question the responsibility of economists.... Politicians grabbed hold of the Rogoff and Reinhart argument about a 90% threshold for government debt:

Where was the formal, institutional denunciation of such a glaring error from the economics profession, and of the politicians who used it to justify their regressive policies? Why are R & R still allowed to comment on the matter with even an ounce of credibility? The case for austerity undoubtedly didn't hinge on this research alone, but imagine if a politician cited faulty medical research to approve their policies—would institutions like the BMA not feel a responsibility to condemn it?"

I want to avoid getting bogged down in the specifics of this example, but instead just talk about generalities.... If some professional body started ruling on what the consensus among economists was... [that] would go in completely the opposite direction from what most heterodox economists wish.... There is plenty wrong with mainstream economics, but replacing it with schools of thought is not the progressive endeavor that some believe. It would just give you more idiotic policies like Brexit.


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