Simon Jenkins has an outstanding and (at least for me long-overdue) essay about the failures of the economics profession. No modern discipline has promised so much and delivered so little:
Economic managers have always claimed credit for past successes. They have espoused quantifiable outputs, targets, and delivery indicators. They invented the celebrity consultant and the maxim that only what measures matters.
Today we are older and wiser. Controlling the agencies of credit has proved beyond the finest professional minds in the game. Where now the gilded ones of Moody’s and Standard and Poor’s, credit raters to the mightiest in the land? They should have stuck to goose entrails.
America’s former Federal Reserve Board chief and Brown adviser, Alan Greenspan, is unrepentant. He recently declared simply that “anticipating the next financial malfunction… has not proved feasible.” His blind faith in markets and competition is undimmed. There is nothing so unseeing as a wronged economist. The Bank of England’s apologias over Northern Rock have been protests that regulation is a mess and government indecisive.
When muck hits fan, economists always blame politicians. They would have some justice if they did not take credit when things go right. I was always uncomfortable at the overselling of economics as a science, when it is rather a branch of psychology, a study of the peculiarities of human nature. Its spurious objectivity, manifest in its ridiculous love affair with maths, induced a “Jupiter complex”, a conviction that scientific certainty applied with enough rigour to any problem triumphs over all.
Economics has long traded on being a science when it is not. In this it is like war. Now it has met its Waterloo and a little humility would be in order. Once again economics must be rescued by that true master of all things, politics.
A very hard puzzle for the intellectual historians of the future will lie in determining how economics remained the queen of the disciplines when it made so many wrong or simply irrelevant predictions.
One could quite easily compare it to religion, a field in which there is genuine wisdom and profundity, but, as economics has done now, developed a hauteur that it could explain and judge all fields of endeavor when it fact it needed to be tempered and cabined. In the same way that priests used obscure linguistic formulae to disguise a lack of insight, modern economists use obscure mathematical formulae to do the same thing. It’s time to stop.
And no–that doesn’t make John McCain’s proposal for a gas tax holiday anything but a breathtakingly dumb idea.