For the past few years, the self-styled 'Economics profession' has faced a direct challenge from the students who formed the Post-Crash Economics Society in Manchester. Their network is growing and spreading worldwide. Several years before that society emerged from classroom frustration at the real-world irrelevance of much that the professors asserted, George Soros - the man largely responsible for Britain having to crash out of the European Exchange Mechanism [ERM: forerunner to the euro] when John Major was the prime minister - funded an institute for new economic thinking which has dissipated the founder's concept by engaging Economists who have released no significant alternative thought. In recent days a well-funded group of recognised Economists [including a couple of holders of the pseudo-Nobel prize] has been set up in recognition of the fact that Economics as taught by the Econocracy does not offer even a sensible explanation of how modern mass poverty has occurred. There might be a slight hope that this group may provide some new insight that is of practical utility; but the experience of similar initiatives is not encouraging.
There is a widely-recognised perception among the general public and much of the commentariat, that formal Economics does not address the issues of living humans in the real world; but that has not led to mass resignations by professors who have become ashamed to draw salaries for preaching irrelevant dogma. Nor have the professors gone into purdah to think anew and recast their propositions: no, they continue to assert them with absolute confidence in the 'scientific rigour' of their abstractions. There is a widespread assumption that groups like Soros' institute and the new 'commission' might just add something to the existing corpus of Economics that will enable the professors and their students to carry on teaching and learning the same stuff; to which a new wrinkle will be added that vindicates the mass of the subject and resolves the outstanding issues without anybody having to eat humble pie.
That will not happen.
Meanwhile, practical politics is bedeviled by the impact of Economics upon it. The rise of 'populism' in the USA, in Europe and in other parts of the world is largely associated with the failure of economic policies based on established formulas that have been formed with the participation of the Econocracy. It has been manifest in the USA for almost three decades that redundant steel workers in the rustbelt states do not mutate into migrants who mystically acquire the skills to gain employment in silicone valley that pays them all enough to get new houses [at Californian prices] and live a west-coast lifestyle. That is what the professors say should happen in a fully-fledged free-trading economy; but it does not happen. People have families and associations and familiar landmarks in the places where they [or their parents] have been settled since when times were good: so they mostly stay there. The brightest graduates, the prettiest girls and other identifiable groups who have characteristics that support social mobility may move on in significant numbers, but they are a minority; and the core population will be left in misery awaiting a saviour: who appeared in the US rustbelt in the highly improbable shape of Donald Trump. Trump will fail, as both Bushes and Obama and even Clinton failed, to turn round the march of economic events and the persistence of people in refusing to behave as textbook specimens.
In the UK the practical irrelevance of Economics has become acute, as the head-banging Brexiteers [mostly in the Conservative party] cite the views of extreme Econocrats: such as Patrick Minford, a Thatcher guru who has suddenly returned to prominence with his confident assertions about how good the world will be for the UK if we leave the European Union with no deal. Minford and his little friends have claimed that the British economy could grow by some 7% if all the restraints [and advantages] of membership of the Union were simple sloughed-off. People who try to form a mature and balanced view of the probable impact of Brexit see summaries of these assertions, and the fact that their advocate is Professor Minford: and they wonder whether they should just dismiss his propositions; might he be right? Might the UK be passing-up a great opportunity if we try to stay close to the European Free Trade Area?
The answer is, of course, on the ground all over the UK. The factories and mines and dockyards that were abandoned at the behest of the Thatcherites may have been prettified into tourism sites like the Titanic area of Belfast; but even there a significant proportion of the consumer-facing staff on minimum wages are immigrants who came to the UK prepared to do such work [and they are mostly better at it that taciturn under-educated Brits]. There is no well-paid long-term highly-productive employment for the rising generation in any of the despoiled regions that were once world-leading hives of industry. The formula didn't work in the nineteen-eighties or the 'nineties: and it is even less likely to apply to the real world now. if the headbangers win, mass misery is the only probable outcome: and the growth in new, longer-term non-employment will be well over 7% per year for several years.
Showing posts with label pseudo-Nobel Prize. Show all posts
Showing posts with label pseudo-Nobel Prize. Show all posts
Monday, 23 October 2017
Wednesday, 21 December 2011
Why So Few 'Great' Women Economists?
Women, in general, are not conned by academic Economics and its notion that markets are inherently 'rational'. The reason why women occupy a small percentage of professorial chairs in Economics was perfectly summarised by an intermittently strident feminist politician in the context of the banking crisis of 2008: would the crash have occurred if Lehman Brothers had been Lehman Sisters?
Women are just too damnably sensible, in general, to be deluded over the long term by the normalist models that form the bedrock of twentieth-century Economics. The sole woman winner of the pseudo-Nobel Prize in Economics, Elinor Ostrom, is a Political Economist: not an expositor of simplistic and unrealistic models. The first woman to receive a Fellowship of the British Academy as an 'Economist', Professor Joan Robinson, set out on her career teaching mainstream Cambridge Economics: but she evolved into a critic of the content and methodology of the subject in such works as Economics, An Awkward Corner and in her querulous reviews of the history and evolution of Economics. Joan was married to Austin Robinson, a mainstream Cambridge professor of Economics and a contemporary of John Hicks, who was a professor first in Manchester and then in Oxford. Sir John was the first Briton to receive the newly created 'Nobel Prize' on the basis of a huge output of elaborate theory that was published over many decades. His wife Ursula was herself a highly-regarded figure, known as an Economist but actually a practitioner of Political Economy, with her best-regarded publications on the reform of taxation and the processes of economic development.in the real world. Joan Robinson and Ursula Hicks were held in great esteem from the nineteen forties for the next four decades, though Joan Robinson's increasing 'eccentricity ' - signalled by her turning away from 'high theory' - could not be denied. No British woman has been held in similar eminence among academic Economists since them.
Nevertheless, one British woman stands out now as an economic commentator of immense authority. In 2006 Gillian Tett foretold the impending crash in financial markets that materialised the next year and she explained the whole thing in 2009 in Fools Gold, a book that deservedly brought her a sheaf of prizes and awards. She understands the economy and Economists; because she sees them from the perspective of a Ph D in Social Anthropology. Currently she is working for the Financial Times in New York, where she makes shrewd observations on the morass of data, dogma, pragmatism and irrational optimism that keeps the US suspended over the deep black sea of the debt that has been accumulated by Federal, State and municipal governments. Healthy scepticism enabled her to see through the financial phlogiston that had supposedly created a firmament in cyberspace much earlier than most observers. The financial services created increasingly insubstantial 'products' which others bought as 'assets'; and they accumulated invisible intangibles to hold as hedges against the supposedly-exiguous risk that any of the AAA-rated assets could fail.
In a much-misquoted phrase Keynes wrote that people in markets act quite irrationally when they are taken over by 'animal spirits' in a wave of 'irrational psychology'. Tett's background in social anthropology was the perfect base from which to view the most spectacularly successful indulgence in irrationality in modern history: and to analyse exactly what it was. She was not alone in making those observations, but she was bold in asserting where it must end up. No first-class degree-bearing Economist of her age [of either gender] was able to match her prediction; not that many tried: most of them accepted the dogma about 'rational markets' that they had regurgitated to gain their high marks in examinations. Interestingly, however, the majority of the creators of the new immaterial 'products' were graduates in natural sciences [who alone were able to do the necessary Maths] and in History, Languages and even Moral Sciences [who were able to think 'outside the box'], rather than Economists. Economists were not particularly good operators in those markets, unless their Maths was strong enough to cope with the algorithms on which the 'products' were based.
Everybody is said to have a 'female side' and a 'male side' to their personality; with most men having a preponderance of testosterone-influenced masculinity [some much more overtly than others] and most women displaying the characteristics of practical common sense and the ability to multi-task [which is eclipsed only in love and in the shops]. Some women are reckless gamblers, careless drunks or uncaring parents; but they are clearly in the minority. Some men are steady, sensible and critically analytical at all times; and they are an even smaller minority in their gender. Economics as it has been developed since 1870 is based on irrational 'analysis' of impossible situations which are considered 'normal' for textbook purposes. Many women and men find Economics opaque, often incomprehensible, and they opt not to continue with studying it: they are not thick, but sensible.
Everybody in the 'west' is going to suffer disruption to their economic environment for years to come due to the collapse of the fantasies that were sanctioned by Economics that was produced by men. A female French lawyer [not an Economist] - Christine Lagarde - has been put into the pivotal position in the global mechanism - the IMF - on which the stabilisation of the system depends. If she bases her work on Keynes's template for the Fund she will have a high probability of success. Keynes's contemporaries emphasised his prominent 'feline' or 'feminine' attributes; in equal measure they envied and lauded his ability to assess changing situations and his apparently-intuitive formulation of relevant theory to underpin emerging policies. Those characteristics were absent from the male 'neokeynesians' who created the nineteen-seventies inflation which gave Margaret Thatcher her opportunity to find 'alternative' - male - Economists who found new ways accidentally to undermine the economy. A new science of the economy is needed. Traditional Political Economy offers still-effective fundamental Laws but it is not sufficient. New understanding is needed, and a strong element of feminine insight will be indispensable in its formulation.
AND AN AFTERTHOUGHT....
The lore and legend of Wall Street tells us that one of the most 'toxic' products that emerged from the phoney boom of the cybertrade era, Credit Default Swaps, was invented by a woman in the early 'nineties. That may well be the case, since the product was introduced selectively. The accumulation of a huge concentration of such risk on its balance sheet - via a London subsidiary - was sufficient to ruin the world's greatest insurer, AIG. This was entirely a masculine achievement. No other major insurer was even seriously stressed by the credit crunch, which was a crisis of banking-based financial services, because no insurer [as such] would be such an idiot as to commit his - or her - reserves to such quantities of unquantifiable liability. A minor London market financial organisation, owned by an insurance conglomerate and staffed with greed and recklessness, was subject to grossly inadequate oversight both by corporate bosses and by regulators; which allowed an 'impossible' situation to be engineered; in a man's world.
Women are just too damnably sensible, in general, to be deluded over the long term by the normalist models that form the bedrock of twentieth-century Economics. The sole woman winner of the pseudo-Nobel Prize in Economics, Elinor Ostrom, is a Political Economist: not an expositor of simplistic and unrealistic models. The first woman to receive a Fellowship of the British Academy as an 'Economist', Professor Joan Robinson, set out on her career teaching mainstream Cambridge Economics: but she evolved into a critic of the content and methodology of the subject in such works as Economics, An Awkward Corner and in her querulous reviews of the history and evolution of Economics. Joan was married to Austin Robinson, a mainstream Cambridge professor of Economics and a contemporary of John Hicks, who was a professor first in Manchester and then in Oxford. Sir John was the first Briton to receive the newly created 'Nobel Prize' on the basis of a huge output of elaborate theory that was published over many decades. His wife Ursula was herself a highly-regarded figure, known as an Economist but actually a practitioner of Political Economy, with her best-regarded publications on the reform of taxation and the processes of economic development.in the real world. Joan Robinson and Ursula Hicks were held in great esteem from the nineteen forties for the next four decades, though Joan Robinson's increasing 'eccentricity ' - signalled by her turning away from 'high theory' - could not be denied. No British woman has been held in similar eminence among academic Economists since them.
Nevertheless, one British woman stands out now as an economic commentator of immense authority. In 2006 Gillian Tett foretold the impending crash in financial markets that materialised the next year and she explained the whole thing in 2009 in Fools Gold, a book that deservedly brought her a sheaf of prizes and awards. She understands the economy and Economists; because she sees them from the perspective of a Ph D in Social Anthropology. Currently she is working for the Financial Times in New York, where she makes shrewd observations on the morass of data, dogma, pragmatism and irrational optimism that keeps the US suspended over the deep black sea of the debt that has been accumulated by Federal, State and municipal governments. Healthy scepticism enabled her to see through the financial phlogiston that had supposedly created a firmament in cyberspace much earlier than most observers. The financial services created increasingly insubstantial 'products' which others bought as 'assets'; and they accumulated invisible intangibles to hold as hedges against the supposedly-exiguous risk that any of the AAA-rated assets could fail.
In a much-misquoted phrase Keynes wrote that people in markets act quite irrationally when they are taken over by 'animal spirits' in a wave of 'irrational psychology'. Tett's background in social anthropology was the perfect base from which to view the most spectacularly successful indulgence in irrationality in modern history: and to analyse exactly what it was. She was not alone in making those observations, but she was bold in asserting where it must end up. No first-class degree-bearing Economist of her age [of either gender] was able to match her prediction; not that many tried: most of them accepted the dogma about 'rational markets' that they had regurgitated to gain their high marks in examinations. Interestingly, however, the majority of the creators of the new immaterial 'products' were graduates in natural sciences [who alone were able to do the necessary Maths] and in History, Languages and even Moral Sciences [who were able to think 'outside the box'], rather than Economists. Economists were not particularly good operators in those markets, unless their Maths was strong enough to cope with the algorithms on which the 'products' were based.
Everybody is said to have a 'female side' and a 'male side' to their personality; with most men having a preponderance of testosterone-influenced masculinity [some much more overtly than others] and most women displaying the characteristics of practical common sense and the ability to multi-task [which is eclipsed only in love and in the shops]. Some women are reckless gamblers, careless drunks or uncaring parents; but they are clearly in the minority. Some men are steady, sensible and critically analytical at all times; and they are an even smaller minority in their gender. Economics as it has been developed since 1870 is based on irrational 'analysis' of impossible situations which are considered 'normal' for textbook purposes. Many women and men find Economics opaque, often incomprehensible, and they opt not to continue with studying it: they are not thick, but sensible.
Everybody in the 'west' is going to suffer disruption to their economic environment for years to come due to the collapse of the fantasies that were sanctioned by Economics that was produced by men. A female French lawyer [not an Economist] - Christine Lagarde - has been put into the pivotal position in the global mechanism - the IMF - on which the stabilisation of the system depends. If she bases her work on Keynes's template for the Fund she will have a high probability of success. Keynes's contemporaries emphasised his prominent 'feline' or 'feminine' attributes; in equal measure they envied and lauded his ability to assess changing situations and his apparently-intuitive formulation of relevant theory to underpin emerging policies. Those characteristics were absent from the male 'neokeynesians' who created the nineteen-seventies inflation which gave Margaret Thatcher her opportunity to find 'alternative' - male - Economists who found new ways accidentally to undermine the economy. A new science of the economy is needed. Traditional Political Economy offers still-effective fundamental Laws but it is not sufficient. New understanding is needed, and a strong element of feminine insight will be indispensable in its formulation.
AND AN AFTERTHOUGHT....
The lore and legend of Wall Street tells us that one of the most 'toxic' products that emerged from the phoney boom of the cybertrade era, Credit Default Swaps, was invented by a woman in the early 'nineties. That may well be the case, since the product was introduced selectively. The accumulation of a huge concentration of such risk on its balance sheet - via a London subsidiary - was sufficient to ruin the world's greatest insurer, AIG. This was entirely a masculine achievement. No other major insurer was even seriously stressed by the credit crunch, which was a crisis of banking-based financial services, because no insurer [as such] would be such an idiot as to commit his - or her - reserves to such quantities of unquantifiable liability. A minor London market financial organisation, owned by an insurance conglomerate and staffed with greed and recklessness, was subject to grossly inadequate oversight both by corporate bosses and by regulators; which allowed an 'impossible' situation to be engineered; in a man's world.
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