Home > Economics Curriculum, economics profession, Old Paradigm Economics > Economics departments — turning out generation after generation of idiot savants

Economics departments — turning out generation after generation of idiot savants

from Lars Syll

Paul Samuelson once claimed that the ergodic hypothesis is essential for advancing economics from the realm of history to the realm of science.

That view on what constitutes economics doesn’t please neither yours truly nor Nassim Taleb, who writes (emphasis added):

However, if you believe in free will you can’t truly believe in social sci­ence and economic projection. You cannot predict how people will act. Except, of course, if there is a trick, and that trick is the cord on which neoclassical economics is suspended. You simply assume that individuals will be rational in the future and thus act predictably. There is a strong link between rationality, predictability, and mathematical tractability …

In orthodox economics, rationality became a straitjacket … This led to mathematical techniques such as “maximization,” or “optimization,” on which Paul Samuelson built much of his work … This optimization set back social science by reducing it from the intellectual and reflective discipline that it was becoming to an attempt at an “exact science.” By “exact science,” I mean a second-rate engineering problem for those who want to pretend that they are in the physics department— so-called physics envy. In other words, an intellectual fraud …

uesc_09_img0509The tragedy is that Paul Samuelson, a quick mind, is said to be one of the most intelligent scholars of his generation. This was clearly a case of very badly invested intelli­gence. Characteristically, Samuelson intimidated those who questioned his techniques with the statement “Those who can, do science, others do methodology.” If you knew math, you could “do science” … Alas, it turns out that it was Samuelson and most of his followers who did not know much math, or did not know how to use what math they knew, how to apply it to reality. They only knew enough math to be blinded by it.

Tragically, before the proliferation of empirically blind idiot savants, interesting work had been begun by true thinkers, the likes of J . M . Keynes, Friedrich Hayek, and the great Benoît Mandelbrot, all of whom were displaced because they moved economics away from the precision of second-rate physics. Very sad.

This may sound harsh, but in fact already back in 1991, Journal of Economic Literature published a study by the Commission on Graduate Education in Economics (COGEE) of the American Economic Association (AEA) — chaired by Anne Krueger and including people like Kenneth Arrow, Edward Leamer, Robert Lucas, Joseph Stiglitz, and Lawrence Summers — focusing on “the extent to which graduate education in economics may have become too removed from real economic problems.” The COGEE members reported from own experience “that it is an underemphasis on the ‘linkages’ between tools, both theory and econometrics, and ‘real world problems’ that is the weakness of graduate education in economics,”  and that both students and faculty sensed “the absence of facts, institutional information, data, real-world issues, applications, and policy problems.” And in conclusion they wrote (emphasis added):

The commission’s fear is that graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues.

Sorry to say, not much is different today. Economics education is still in dire need of a remake!

  1. May 11, 2014 at 11:02 am

    The tragedy is: the idiot savants are running the world economy through the central banks. The least the academic economists can do to redeem themselves is to question the scientific validity of official policies, instead of a submissive silence.

    • May 11, 2014 at 12:39 pm

      Exactly, Lyon, economists should be helping design a seven branch replacement democracy, this is an emergency job required to stop the military madness of totalitarian corporatism before another fascist war is more fully unleashed on the world by the US.

  2. May 11, 2014 at 12:35 pm

    Comparative economic systems, development economics and economic history attracted me while in graduate school, late 60’s. My mathematics had been satisfied during earlier studies of Physics and math; I have always viewed Paul Samuelson’s books as outside reality.

  3. May 11, 2014 at 1:58 pm

    Neo-classical economics isn’t going anywhere since its mathematical-based, a priori theorizing, reality detached approach to economics allows economic high priests to create whatever “facts” the kings want to hear.

  4. May 11, 2014 at 3:22 pm

    Henry George made a pretty good case for the Science of Political Economy at the end of the 19th Century. The marginalization of his ideas constitutes a massive wrong turn for humanity: http://www.politicaleconomy.org/speindex.html

  5. originalsandwichman
    May 11, 2014 at 5:10 pm

    “…but innocent of real economic issues…”

    How “innocent”? The ambiguity in the word cries out for elaboration. The context of the commission’s conclusion makes it obvious that the intended meaning is naive and childlike. The other connotation of innocence is lack of culpability.

    I would argue that economists’ innocence, in the first sense, is strategic in that it provides a hedge against culpability for the consequences of policy advice that is not at all as disinterested as it purports to be.

    http://angrybearblog.com/2014/05/scoundrel-time.html

  6. May 11, 2014 at 6:28 pm

    The “Divorced from reality” economics that you see these days is divorced from any predictive power, but it is actually very efficient at giving rich people the answers that they want to hear. Empirical economics, on the other hand, does a very poor job at giving rich people the answers they want to hear to the extent of actually giving answers that they *don’t like*.

    The opposition that the truth in economics movement faces has not just a purist component, but a pragmatic component as well that we should be aware of.

    • originalsandwichman
      May 12, 2014 at 5:09 am

      “very efficient at giving rich people the answers that they want to hear…”

      For all the pseudo-math, orthodox neoclassicism mainly subsists on a perverse, vulgarized inversion of Marx.

      http://ecologicalheadstand.blogspot.ca/2014/05/the-sticky-wages-of-sin.html

      • originalsandwichman
        May 12, 2014 at 5:10 am

        That is to say, “it is workers who exploit the diligent entrepreneurs and savers.”

  7. May 12, 2014 at 12:55 am

    Empirical economics would be quite refreshing. One that took a look at the facts, such as:

    1. Why does everyone have to work when, given all this labor-saving technology, everyone doesn’t actually have to work?

    2. Why are people not able to buy the things they want, even though the things they want are perfectly and increasingly easily capable of being made?

    3. Why does the economy have to keep on growing? Can’t it be steady-state, or get smaller, if people wanted it to, in physical terms?

    And things like that.

    • originalsandwichman
      May 12, 2014 at 9:22 pm

      “everyone have to work”

      Everyone has to work so there will be enough unemployment to keep the ones who are working from shirking. It’s called the “efficiency wage hypothesis” or, as I call it, “the sticky wages of sin.”

      http://econospeak.blogspot.com/2014/05/the-sticky-wages-of-sin.html

    • colon
      May 13, 2014 at 2:34 pm

      Why do people want to work so much, even though we are so productive that there is no need for long working times?

      In fact that is sort of a trick question`, because if you look at the opinnion polls 50-60% of people want shorter working times and only 20-25% want longer than what they get.

      So the question becomes why does not the will of the people happen?

      • colon
        May 13, 2014 at 2:49 pm

        Actually, here are working time preferences for Germany and it seems I disremembered amount of people who want longer hours, it is about 15%.

        http://www.eurofound.europa.eu/ewco/surveys/DE0503SR01/DE0503SR01_4.htm

      • BFWR
        May 13, 2014 at 2:59 pm

        Make that: Obviously the elites have another agenda, and the mass of individuals are both unconscious and too unorganized to demand change.

  8. May 13, 2014 at 2:20 pm

    my view is taleb only knows ‘power laws’. if you read p samuelson, for example, there would be no wall street, no hedge funds, no taleb. (h simon and mandelbrot among others—champerowne–were on top of the issue). the problem with samuelson like krugman and others (eg stiglitz) is they didnt put in their popular media what was in thier academic papers. he was way ahead of his time. but he didnt follow his conclusions (like, say, galbraith—who donated his moeny to charity—where else but harvard u, starving students of millionaires).

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.