Thursday, September 18, 2014

This is my short and short-attention-span review of Noah Smith's full 5-part review of Big Ideas in Macroeconomics by Karthik Athreya

Dumb luck, maybe. At the top of Noah's sidebar, a link to his review of the book Big Ideas in Macroeconomics. From its title, the book sounds like it might be a useful summary of the big ideas. It isn't. Or at least, I couldn't tell if it is, from as much as I read of Noah's post.

But he did irk me, Noah did. So here we are.

Noah writes:
Deep within my cultural memory is buried a legend - the legend of the Scholastics. The legend goes like this: At the dawn of the modern age, when European rationalists and scientists began to unleash an explosion of creativity and free thought, there were a tribe of very smart, very learned people called the Scholastics, who devoted all their mental powers to defending the old Medieval understanding of the Universe. They produced exhaustive treatises defending old dogmas, and honed their logical thinking to a fine edge, but in the end they could not stand in the way of progress and were swept away. Deep within my cultural memory lies the boyish fantasy of confronting and defeating a Scholastic in an intellectual confrontation, in the name of a new scientific revolution. The 14-year-old in me still wants to be a fictionalized, Hollywood-ized version of Descartes, Galileo, or Francis Bacon, fighting for rationality, enlightenment, etc. etc.

Yeah, I'm no history buff, but I think Noah has the timeline jumbled. The Scholastics were in the 1200s and 1300s. Occam (of Occam's Razor) and Thomas Aquinas and them. The "dawn of the modern age" came a little later, with Descartes in the 1500s, and after.

Oh, crap. Noah's Wikipedia link dates Scholasticism at "about 1100 to 1700".

Oh, yeah, but: Under "Early Scholasticism" they say Charlemagne "attracted scholars" and "By decree in AD 787, he established schools in every abbey in his empire." Wow... he set a standard that lasted more than a thousand years. Only now are we trying to think it might be better to "privatize" schools. We, in our dark-age thinking. Oh, well.

Under "High Scholasticism" they say:

The 13th and early 14th centuries are generally seen as the high period of scholasticism.

Yeah, see? The 1200s and 1300s.

Then, under "Late Scholasticism" there is nothing but a link to some other article! I was right. Noah has things jumbled. Or maybe he's just focused on the dregs of Scholasticism, the unimportant part. Sheesh.

Descartes, it turns out, was a little later than I thought: the first half of the 1600s. But what's interesting, I think, is that when Descartes decided to throw away everything he knew and start from scratch, the stuff he was throwing away was mostly Scholasticism. What he was throwing away was the stuff Wikipedia describes as "a method of critical thought" and "a program of employing that method in articulating and defending dogma".

Interesting fellow, Descartes.

So, Noah:
But anyway, this is the bias I have to overcome when thinking about Big Ideas in Macroeconomics. It definitely has the feel of a Scholastic apologia. The book is clearly intended as a response to the outside criticisms of academic macroeconomics that have proliferated since the 2008 crisis and recession. Some of the critics are bloggers like Paul Krugman or writers like John Quiggin, who criticize macro in the public sphere; others are economists like Dan Hamermesh, who had this to say in 2011:

The economics profession is not in disrepute. Macroeconomics is in disrepute. The micro stuff that people like myself and most of us do has contributed tremendously and continues to contribute. Our thoughts have had enormous influence. It just happens that macroeconomics, firstly, has been done terribly and, secondly, in terms of academic macroeconomics, these guys are absolutely useless, most of them. Ask your brother-in-law. I’m sure he thinks, as do 90% of us, that most of what the macro guys do in academia is just worthless rubbish. Worthless, useless, uninteresting rubbish, catering to a very few people in their own little cliques.


A good number of people within the macro field agree, of course. But not all...

... Athreya seems to believe that most of macro's critics just don't know enough about the field...

But does this mean "outside" criticisms of macro should be discarded, just because they come from outside? Athreya does acknowledge, two pages later, that this process can lead to "capture" of critics - if the only legitimate critics of something are people who do it for a living, then the set of potential legitimate critics is pre-selected for people who will not want to be critics. (Athreya fails to mention a second, more cynical kind of "capture", which is that internal critics of a field are automatically "pissing where they sleep".)

This matters for society, because they're the ones who pay macroeconomists' salaries. Granted, it's not a large burden - if there are 3000 macroeconomics profs and govt. researchers in America and they earn an average of $150,000 each, then that's less than half a billion dollars total each year (the cost of two or three F-35s), for a field that has a shot at preventing trillions of dollars in lost output.

It's all gossip. Sure, in the end it all comes down to money. Of course. But Noah's discussion is not about the economy. It's about personalities and disagreements and zingers. It's all gossip.

It's the money that's important. The people who have money know it. The people who don't have money know it. So, why is Noah writing about economics? Why isn't he writing about the economy?

Noah, you need to throw away everything you know, and start from scratch. Don't worry, it'll be no great loss. You'll be giving up nothing except a method of critical thought and a program of employing that method in articulating and defending dogma. Throw it away, Noah.

It's what you wanted since you were 14.

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