Thursday, October 19, 2017

"Rethinking" vs "shoehorning"

At Bloomberg, Noah Smith's Fixing Macroeconomics Will Be Really Hard jumps around so much on my screen that I'm tempted not to read it. Good subtitle, though: "The field is still reckoning with the failure to see the Great Recession coming."

Noah's article considers the same "Rethinking" symposium that Carola Binder went to and wrote about, which was grist for my mill yesterday. Noah writes:

A presentation by Blanchard and Summers provides a useful summary of how elite thinking has changed. They basically draw three lessons from the crisis: 1) the financial industry matters, 2) government should use a wider array of policies to fight recessions, and 3) recessions can last longer than expected.

Here's my response list:
1. financial cost matters
2. government would do better to focus on observing the causes of recessions, and
3. oh my god, are you kidding me?

Noah also comments on the items on his list. Here's what he says about finance:

In the past few years, macroeconomists have been scrambling to shoehorn the financial sector into their standard models. Of course, there’s always the danger that the Great Recession prompts macroeconomists to focus too much on finance, and ignore whatever leads to the next downturn -- fighting the last war, as it were.

Shoehorn as a verb.

I don't like it that Noah buries the "focusing too much on finance" idea between "fighting the last war" and "of course". The burial minimizes the significance of finance's contribution to the problem.

Beyond that, Noah Smith's thought that economists might "focus too much on finance" tells me Noah has no idea why it's important to focus on finance. Noah and other economists. They know it must be important, because that's what the chatter's been since the "financial" crisis. So they'll "shoehorn" finance in, and it'll look like they have everything under control.

And if they are "shoehorning" finance into their models, then I'd say they are thinking about their models, when really they should be thinking about the economy.

It just won't do.

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