Where Have All the Macroeconomists Gone?
A reporter friend of mine recently asked me for a short list of academic economists he should call to better understand the current financial and economic mess. I found it a more difficult question than it should be.
It really has been quite striking how silent most economists have been in this hour of need. There are, of course, a few notable exceptions. Paul Krugman’s blog has been an interesting source of insight, and his recent column provides the clearest explanation of our current difficulties I have seen. Doug Elmendorf at Brookings has provided some very insightful commentary on the mortgage mess, and Marty Feldstein has offered a very well-thought-out plan.
Economists like Karl Case and Robert Shiller can quite rightly tell us that they saw this coming years ago. I’m sure I’ve missed others, but it remains striking that academic economists are barely visible during one of the most interesting economic disruptions in decades.
Yes, there is an enormous ocean of economic commentary out there, but a lot of it is either the self-interested blather of Wall Street economists, or political rhetoric parading as analysis. (Yes: Republicans are worried that regulation may stifle innovation, while Democrats believe that regulation can help … Oh, and what issue are we talking about? Does it matter?)
Meanwhile our presidential candidates call for action, but ultimately only suggest that we should consider many proposals, and find some experts to ask about them.
Why have the best and the brightest barely dipped their toes in the water?
1. Incentives: Krugman, citing Keynes, has argued that there is no incentive for a public intellectual to challenge the conventional wisdom. Better to be conventionally wrong, than unconventionally right.
2. Career ladders: Interestingly, some of the best analysis is coming from economic journalists, who are unencumbered by either the fight for tenure or post-tenure lethargy.
3. Crowding out: The wisdom of crowds is at its heyday and experts have lost market share in the public square. Everyone with a blog and ten minutes to spare is offering a view (including yours truly), and this is crowding out thoughtful discussion.
4. Reputational market failure: Just as it is tough to identify a good mechanic, it is difficult to identify a good economist. There are thousands of economics PhD’s, but perhaps only a few dozen with the penetrating insight the economy needs. Unfortunately these folks are struggling to be heard.
5. Labor supply: The success of economics over recent decades means that we simply have many more exciting (and important?) issues to focus on.
6. I’m wrong: Academic economists have produced excellent policy-relevant analyses that are providing Bernanke with the ammunition he needs.
I would love to be convinced that this is true. If you have written (or read) first-rate analyses — for a technical, policy, or popular audience — please add a link in the comments.
I suspect that #4 may explain the absence of younger economists from the debate; #1 and #5 seem too strong, but in the right direction; and the problem with #2 is that there is no clear alternative.