Playboy Pushing Back on Mainstream Economics?
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The University of Missouri-Kansas City economics department is featured in an article in the current Playboy that discusses the failure of what I call " theoclassical" economics and economists to admit their theoretical and policy errors. The devotion of theoclassical economists to those errors has proven so dogmatic that their disastrous policies have created the ever more criminogenic environments that drive our recurrent, intensifying financial crises.
The title of the article is: "These Rogues Of The Dismal Science Have Been Vindicated By The Economic Crash. How Much Longer Can Mainstream Economists Ignore The Heterodox?" You now have a valid excuse to purchase Playboy, care of the UMKC economics department.
Tim Schultz, the author of his article sets out his purpose in attending the 2011 annual meeting of economists in Denver.
“Black is not alone. He is a leading voice among a small group of economists who believe modern economic science simply doesn’t understand the real world. Members of this loosely organized group call themselves, a bit dramatically, the heterodox. Many of them had predicted the financial crisis before it occurred and are now calling for real reforms in order to avoid an even bigger one. Like Black, they are ignored or belittled by most in their profession. Yet reality has issued a wake-up call. The financial crisis and ongoing recession have largely validated many of the heterodox positions on fraud, deregulation and debt. Could the mainstream still refuse to publish, cite or listen to them? I went to Denver last year to find out if the rogues of the dismal science were finally going to have their day.”
Schultz asked one of America’s leading quants, John Cochrane, to critique heterodox economics.
“I mean, every· now and then there’s an excluded subgroup that turns out to be right,” said John Cochrane of the University of Chicago. Cochrane speaks proudly for mainstream, also known as neoclassical, economics. Talking with me over the phone before the conference, he made clear that his condemnation was general: “I haven’t read their specific work. I’m busy, and I try to read what is considered interesting and valid.” His position on heterodox economists was unambiguous: They’re kooks. “They are about two percent of academe and about zero percent of finance.” He was dismissive of their prediction of the credit-bubble collapse. ‘Beware those who predict nine of the last two crashes, okay? They’re just not rigorous and don’t use modern mathematical tools. This business is a wide-open meritocracy. You have to distinguish between closed minds and a lack of quality. The perception is that this is 1969 stuff. Give me new data and new ideas.’”
To review the bidding, Cochrane hasn’t read any of our work. Like all of us “he’s busy.” He reads “what is considered interesting and valid.” The key word in that phrase is “considered.” It means by him and like-minded colleagues. In plainer English, Cochrane doesn’t read anything we write because the people he hangs with don’t read anything we write. They know without reading anything we write that our work is not “interesting and valid.”
A prominent economist at an even more prominent university recently denounced ad hominem criticisms made by Paul Krugman because he alleged that Krugman criticized without taking the time to read the works of the economists he was criticizing. The economist wrote that “many colleagues” at one of the most prestigious universities in the world helped him draft his denunciation of Krugman, but that he needed to keep their names secret “for obvious reasons” so that they would not also be criticized.