A short essay [PDF] by James Buchanan:
Economists do not really understand what they are doing as they seem forced to make efforts to control aggregate variables that are not controllable in any direct sense. For example, the rate of employment (or unemployment) cannot readily be shifted by governmental mandate. At best, small and peripheral changes may be made while the emergent aggregate generated by the working of the large and complex economy remains stubbornly immune, or worse, to wrongly conceived reform efforts.
(HT Bookforum via Tyler Cowen)
1 comment:
I was interested in the Buchanan pdf because of its title: Economists Have No Clothes. I've been thinking along that line myself lately.
But the thing is littered with excessively long words and excessively long sentences. Every once in a while we catch a glimmer of meaning, barely enough to make us think that maybe -- just maybe -- any given paragraph contains a single thought that could be expressed in English.
And Buchanan misinterprets everything. It is as though he wrote the article to be a dull parody of things economists are doing wrong.
He recommends "the construction of idealizations." And he wants to throw over the existing institutions: "Why has not more attention been paid to alternative structures, to differing rules and institutions?" Those are dangerous thoughts, coming from a naked man.
"Critical evaluation and assessment suggests that the structure of the whole monetary economy is flawed," he writes. But it is the evaluation and assessment that are flawed. It is such evaluation and assessment -- and the policy arising from them -- that have brought our economy to its present precarious state.
There is one thing Buchanan says that I do agree with: "Economists are unlikely sources of inspiration for the quantum leaps in attitudes that are needed here."
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