Economists need to step outside themselves

Economist Paul Krugman's recently released book "Stop this Depression Now" reminded me of one of the basic truisms I have harbored about economics - the subject is so complex that although any economist who wants to build a career has to develop and publish hugely complex mathematical formulations and theoretical constructs, since there is no consensus on much of anything, in the end many famous economists are pretty clueless about what makes an economy work.


At the moment we are enduring the spectacle of Republican leaning Noble Prize winning economist's who shower data on folks to support their believe that Government taxes and spending are the problem with the economy, while Democrats have their Noble Prize winning economists who have volumes of data to support their view that Government spending is the cure for our economy.


If you took a group of average folks and asked them how to fix the economy, you would get a wide variety of responses, generally reflecting the emotional worldview each person is comfortable in rather than any real hard data.  We all adopt views in life so we have some default position from which to make decisions.  That adoption usually has more to do with our personality as it interacts with our life situation than it does with dispassionate careful study of all the diversity in human behavior.  We have to many decisions in life to spend time studying everything, and most of the time macroeconomics is pretty far removed from the things that touch our lives on a daily basis.


I don't think some economists are any different.  Early in life they found a viewpoint they felt comfortable with and they built their career's on developing data and theories to support their viewpoint.


Krugman's book cited a bunch of economists who agreed with his view Government spending is the way out of our current economic morass, and a bunch who believed  the private sector and the free market are the pathway to jump start our economy.  On the assumption the side of the political fence any particular economist falls on might be a function of his personality and background I randomly picked 10 names out of Krugman's book (including Krugman) and did a little spread sheet  with some basic data about each. 


Two of the 10 were born long ago.  Englishman John Maynard Keynes - the patriarch of the Government spending view, - who was born in 1883, and Milton Friedman - the patriarch of the supply side theories that were the intellectual justification for the Reagan and Bush tax cuts  - was born in 1912.


Of the other 8 the 4 cited as being the spokesperson for the tax cuts and deficit reduction wing of economics, were all born between 1925 and 1939.  The 4 (including Krugman) who are supporters of the idea Government spending is the cure for this economic doldrums were all born between 1939 and 1953.


Nothing scientific about this little survey, but it does suggest the possibility a more careful review may provide some support for the view that an economist's basic predilections may often have more to do with when they are born than with a hard headed view of all the available data.