Kilkenny Cats, Heterodox Economics and Economics Blogs

The latest issue of The Economist features a leader on the contributions of economics blogs and a briefing article that highlights the role of blogs in promoting various heterodox economic hypotheses (including the MMT advocated by various commenters here).

31 thoughts on “Kilkenny Cats, Heterodox Economics and Economics Blogs”

  1. Im just a dull engineer but do any of these schools think that America’s external creditors will sit idly by while their wealth is eroded? Does it have anything to say about actual wealth creation – innovation and all that?

  2. The MMTers & the Austrians not corrupted by the John Birch society monetarist mutants generally agree on 1 very important thing.
    The economies need more money and less credit – they just disagree about what is money – goverment money or private money.

    Full Fiat money advocates are however never talked about it polite circles.
    That will have to wait for the next depression when we are all dead.

  3. FTA

    Decades ago macroeconomics resembled an “intellectual witch’s brew”, according to Olivier Blanchard, chief economist of the International Monetary Fund. It contained “many ingredients, some of them exotic—many insights, but also a great deal of confusion”. Things then became more rigorous and refined: disagreements remained, but within set limits.

    I suppose the best explanation for this is that decades ago, economists were hired mouths for all and sundry: trade unions, industrialists, brokers, governments, communists, monopolies, stock traders, etc, etc. Now economists work exclusively for the banks.

    Now, on the blogs, the economic conversation boils and bubbles again. That ferment is surely spreading into the academy—and in time some new quintessence will be brought forth, perhaps from materials now considered base.

    We boil and bubble all right–and admittedly also froth–because of the great heat and pressure that the established church of economics has subjected us to. We the public are being asked to perpetually cover the gambling losses of private companies without limit; and both the intellectual rationalisation and rhetorical support for this state of affairs comes almost exclusively from the academic discipline of economics. Like the old First Estate, it provides the spiritual and “theological” support for the divine right of the Ancien Régime to privatize profits and socialise losses.

    Therefore, we the public reserve the right to complain about economists, to economists.

    Does it have anything to say about actual wealth creation – innovation and all that?

    You cannot create wealth with innovation alone. You have to add value. That is why industrial China is wealthy and innovative California is bankrupt. That is why innovative but valueless industries like finance and banking tend to ruin nations rather than make them prosper.

  4. Inscrutable
    Very little as far as I can see. You must take a “model” and input specific assumptions. Over time, economists are allowed to believe that the real world is just a reflection of the model and not the other way around.

    It is also important to carefully select the assumptions. as you know a machine or a bridge will stand because the computer model says it will and its just the same in economics. It is also important to understand that inspections and quality control are superfluous, since the magic of the market will ensure that the bridge and the machine are safe. Nothing else is required.

    Finally it is important to note that, when you look to the viabilitybof a projevt and find that it doesnt make rational sense but does serve to enrich your friends, it is NEVER because the project is actually wasteful! NO it is because you chose a cost of money that is too high. you just need to assume a lower cost of money and a longer asset life until you will find that the project does, indeed make sense.

    Finally, and this is most important, you need to ensure that, when operaing under this model, you are using somebody elses money and somebody elses good name. you can pay an agent (lets call them a regulating agency or a ratings agency for instance) to swear that the project is both safe and rational and you can show this to those whose money you will use for funding.

  5. It’s interesting that this more global economics blog debate, similar to that here, seems to be dominated by the ‘big picture’ macro, financial and monetary stuff. It also seems to be motivated by a notion that some quick, top-level fix, like an energising potion or a few steroid jabs will get the arms and legs of the patient moving freely again. There is no space for those who are able to diagnose, assess the prognosis and propose cures for the muscle-wasting, the constricted arteries and the subcutaneous tissue-damage that is turning necrotic. And without these cures the patient won’t recover full health.

    There also seems to be little recognition that, in the absence of fortuitous demographic conditions or of potential for an export bonanza (either based on natural resources or on ‘free-riding’ tax arrangements), economic growth will come only from efficiency and productivity in the production of goods and services that final consumers value.

    And this leads to a fear of digging in to the micro layers of economies and of disturbing the creepy-crawlies that reside there and that destroy efficiency and productivity. Irish economists seem no more fearful than those in other economies in difficulty, but all do a public disservice by succumbing to this fear.

  6. @wow, I don’t see a reference in the Economist to a “great debate between Hayek and Keynes.” Only this: “The arguments between John Maynard Keynes and Friedrich Hayek in the 1930s, some of them published in academic journals, were not notable for their tact.” That’s certainly true. Hayek wrote a harsh review of Keynes’s Treatise on Money; and Keynes disparaged Hayek’s work in various writings. But I’d say the debates were mostly Keynes & disciples v. H.M. Treasury, Robertson and Pigou.

  7. @Mickey Hickey
    What is depressing about the ten Canadian economists is the range of opinions. From crowd pleasing little Canada to both pro and anti oil/gas extraction pieces. You’d get as coherent a response in a pub on Saturday night. I’m not arguing for a party line, but many of the best/worsts are political in nature having little to do with economics. Astonishing not to see a mention of the Vancouver property bubble or the role that Canadian GSEs have in distorting risk perceptions given what happened across the border.

  8. @Philip

    (apologies for going off topic)

    @all

    Please allow me to wish everyone a healthy and happy New Year.

    Considering this is an (excellent) economy site I suppose I should also add “Prosperous” but I am sure all of us agree that the first two have priority and the other is useless without them.

    Please enjoy the rest of the break, if you are fortunate enough to have some free time,and I look forward to reading (and occasionally commenting on) the various debates.

    Best…L 🙂

  9. Economists’ blogs have certainly added to the understanding of economic issues among interested segments of populations.

    It’s still in the mainstream media where the serious debates are hosted.

    Every week has new angles or proposals on issues of the day but a little scepticism is also in order.

    It’s a rare economist who would succeed in the political arena and directly implement proposals of consequence.

    Keynes was of course rare and his last contribution was as one of the architects of the postwar multilateral financial support and development system, which has generally stood the test of time.

    The arrival of the new year is a cause of celebration across the globe and I’m just back from a spectacular fireworks display (+8 hours) put on by a pub/restaurant called SouledOut.

    Time for a break on the issue of being soldout?

    Happy new year!

  10. “This debate is not always polite. But was it ever? The arguments between John Maynard Keynes and Friedrich Hayek in the 1930s, some of them published in academic journals, were not notable for their tact. One observer likened their exchanges to the brawling of “Kilkenny cats””

    Hmmm.

    Thanks to the founders. developers and moderators on irisheconomy.ie who have provided terrific commentary and a necessary vent for the events of the last three years. And to the commenters who make this such a lively and rich place to visit.

    A Happy New Year to you all!

  11. ‘… and the meek shall inherit the debts’ (Orthodox Annals, 2011).

    Happy and Heterodox New Year to 99% of All!

  12. Shaun Byrne: “Stupid question but exactly where does macro economics and micro economics divide?”

    That’s not a stupid question but it’s a bloody hard one to answer. Don’t be surprised if nobody takes it on.

  13. @ Dork, and others who were patient enough to respond to my various commentaries. Thank you, and the very best wishes for 2012.

    See you all, again.

    Brian

  14. “..allowing people to retreat into “information cocoons” or “echo chambers” in which they hear only views they agree with, the blogosphere fosters polarisation..”

    I guess there is a bit of this in all blogs including to a lesser extent this one – I do miss the contributions of JohnTheOptimist who spoiled the “echo” somewhat but he was not always wrong.
    Happy 2012 to all contributers.

  15. I will add my wishes. A happy new year to all of you and a huge thank you from bklyn. Both contributors and commenters have managed to make a thoroughly depressing situation both educational and entertaining.

  16. @hoganmahew
    If by Canadian GSEs you mean Canada Mortgage and Housing Corporation then there is a problem. CMHC while at arms length from the gov’t religiously follows the advice of the Minister of Finance. In 2008 the MOF another son of Erin suggested that CMHC should accept liability for initially $60 billion of bank held mortgages which became $120 billion during 2009. There is a property bubble right across the country which is worst in Vancouver due to Chinese spreading their risk by investing in Canadian property. The Euro and US$ problems have led to an inflow of funds and while it is not as bad as Switzerland it is keeping down both short and long term interest rates. Small steps have been taken to stabilise property values such as reducing the max term from 35 years to 30 years with the big banks now lobbying for a max 25 year term led by the CEO of TD Bank Ed Clark. Down payments have been increased especially for speculators. A very clever move by the banks which gets them into a “We told you so in the Fall of 2011 if the market goes tits up.”. If the MOF is serious he will instruct CMHC not to insure any mortgages with a term over 25 years and tighten up affordability criteria.

    I expect the ten economists were chosen because they are all over the map. The newspaper is owned by the family that owns Reuters and a raft of financial information companies. If the EU goes into a serious recession the US and China will follow and the 2012 comments will not be as frivolous as the 2011 comments.

    Happy New Year to everybody.

  17. @ shaun byrne
    “Stupid question but exactly where does macro economics and micro economics divide?”
    Edward Prescott, Finn Kydland, Robert Lucas, Tom Sargent asked themselves the same question and all got nobel prizes for giving some answers to it.

    Happy new year to all!
    I hope this blog with it’s lively debates will remain one of the best economic blogs worldwide.

  18. Thanks for the ideas jmg
    Is there a another,super/macro economics for dealing with the Euro zone or is there no economics for this and that is the reason @we are where we are”!!
    Maybe need to read up on Blundell!!!

  19. There once were two cats of Kilkenny
    Who argued the worth of a penny;
    Whether ward of the state
    Or something innate, 
    It affected the welfare of many. 

  20. Ath bhlian faoi mhaise to everyone. This is a wonderful site and great for insight into how Ireland operates . I was reading the connacht tribune over christmas and thinking back to stuff Paul Hunt and Michael Hennigan had written recently .
    I got a copy of Understanding Limerick ed Niamh Hourigan for christmas and was wondering if the site could rise to a couple of guest posts by experts from other fields in the new year. The whole Irish class system played a big role in the emergence of the Moyross situation in Limerick and drives a lot of economic relationships . There is some great work being done in other academic fields that probably deserves a wider audience especially if ireland is going to get out of its current predicament without condemning a generation to a rerun of the 1980s.

    Keep up the good work and never mind the trolls.

  21. @ seafoid

    +1 and many happy returns.

    I think, sadly, the lost generation is a done deal, but we are in danger of wasting another good crisis.

  22. Happy New Year Brian……

    The economists will eventually figure out it all about the BTUs and who gets to use them.

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