The article below sums up our predicament, that we have failed to educate ourselves to take a systemic view of our activities and have ‘conveniently’ ignored the downside of our, reductionist, end of pipe, decisions.
We have failed to learn from current events, which will enhance the failure of our democratic institutions, speeded by our ultimate ‘external failure’ as a species, that of failing to understand the bounds of the ‘one planet equation’ and to keep ahead of the oil curve.
More Navel-Gazing from Academic EconomistsBy Justin Wolfers
The abstract of a recent paper by Colander, Föllmer, Haas, Goldberg, Juselius, Kirman, and Sloth:
The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.
The authors call it a “systemic failure of the economics profession.” Krugman calls it “equilibrium decadence,” but rightly reserves his scolding for the macro tribe.
The claim is that academic macroeconomists have become mired in a particularly fruitless equilibrium, in which each is engaged in the search for ever-greater levels of formal elegance, at the expense of empirical relevance. There’s definitely something to this.
Today’s macroeconomists write for other macroeconomists. If you aren’t using the right tools, you aren’t part of the club. And so yesterday’s approach becomes tomorrow’s approach. Echoing Yogi Berra’s famous dictate, each time macroeconomists came to a fork in the road, we took it. It doesn’t take a radical to suggest that perhaps trying the road less traveled might have led……………………