Splendidly vitriolic discussion of the various entries for the Wolfson Prize on how a country could leave the euro.
We also get a Nobel Laureate recommending my approach to Ritchie:
To paraphrase Krugman, most economists cannot believe that those who write about EZ breakup could be ignorant of basic economics. But many are. Most of their readers are equally innocent of economics, so we cannot rely on market selection to sort out the chaff.
The upside, Krugman notes, is that “it is remarkably easy to make fools of your opponents, catching them in elementary errors of logic and fact. This is playing dirty, and I advocate it strongly.”
Quite.
Paul Krugman isn’t a nobel laureate.
Great sport! Economics professor loses rag because beaten to Wolfson shortlist by non-economist, & £250k may be going to some little oik from humanities department.
Just two things:
1. If only economists were allowed opinions, we’d be f…
2. Once you admit the euro is a disaster, the wise economist would hand off the actual job of leaving to someone with expertise in e.g. expectations management. i.e. that little oik from…
IanB. Yes he is.
He won in 2008.
On stuff that has nothing to do with the nonsense he spouts today, to be sure, but won it he done.
IanB
Yes he is. Won the Nobel prize in Economics in 2008 for his work on trade theory.
oh dear not the economics isn’t a “real” Nobel zinger again.
look it’s just a prize, its status is unrelated to its name. There is a difference between real and nominal variables.
appeals to mauthority are always fun to read…but if he had a magic bullet, perhaps he might have fired it himself. Just asking.
appeals to authority are always fun to read…but if he had a magic bullet, perhaps he might have fired it himself. Just asking.
Last night someone told me to watch RM on Newsnight because “he’s the best economist we have”. I pointed out that despite what he says on his twitter bio, RM is not an economist. To which the Great Man himself responded that he has a degree in Accounting and Economics from Southampton University. But previously he has openly admitted (proudly, in fact, since at the time he was dissing neoclassical economics as taught in universities)) that he dropped economics in his first year at Southampton. So how can he now claim a) to have a degree in Economics, when he hasn’t actually studied it b) to be an economist, when the fact that he hasn’t studied it means he knows stuff all about it?
Anyway, last night there ensued a most interesting discussion about Nobel laureates and behavioural economics. But this morning….aaargh, the flak I got. Someone told me I should apologise to RM and everyone else for my “slander”. Someone else objected to my own claim to be an amateur economist, even though I DID study economics at Masters level.
It’s annoying that RM claims to be an economist on the basis of not having studied it even at undergraduate level, and people not only believe him but get narked with me when I point this out. But I guess real tax accountants would be equally annoyed with his claim to be a tax expert. Tax accountancy has its own accredited training programme and qualification. He hasn’t done that, either – but he’s all over the media on anything to do with tax. When will they see through him?
RM was on Radio 4 this morning. Everything he said was false. Everything!
I tend to think it’s a mistake to focus on his (or anyone else’s, for that matter) formal qualifications. Adam Smith, after all, was a professor of moral philosophy. But even had he not been, and even had Ritchie completed worthwhile study in economics, what matters is the quality of his work. Don’t forget how climate change sceptics are so often marginalised for their amateurism.
If the credentialed experts are reliable, how come they got us in this mess?
Pat,
They aren’t, necessarily. The economics profession does have a lot to answer for. But there are some basic economic concepts – such as tax incidence – which one would expect someone claiming to be an economist to understand.
Munchau in the FT also criticised the Wolfson prize – which he describes as “the prize for European political illiteracy” – and its finalists: http://www.ft.com/cms/s/0/48d37a50-7da4-11e1-bfa5-00144feab49a.html#axzz1rddTTz2a
And in this post, Remy Davison dismisses all five finalists as useless and awards the prize to Yanis Varoufakis (who commented gleefully on twitter about winning a competition he didn’t know he’d entered!)
http://theconversation.edu.au/escaping-the-eurozone-grading-the-wolfson-prize-finalists-6075
But they’ve all got a long way to go to match Crooked Timber’s Greek default game, which was enormous fun and demonstrated just how difficult the whole Euromess is to resolve:
http://crookedtimber.org/2012/02/16/so-what-would-your-plan-for-greece-be/
Edward Lud, you say “Don’t forget how climate change sceptics are so often marginalised for their amateurism.”
I applaud your consistency, but do I really have to listen to Ritchie because if I don’t, I also have to listen to another load of cranks who happen to be at the other end of the political spectrum? (I have no problem listening to people who aren’t really sure what we should do about climate change, given the numerous uncertainties.)
The economics question in the Wolfson Prize has already been answered.
The prior question: “Should Greece leave the euro?” has the answer “yes” implicit in the essay.
So it’s quite fair for non-economists (and dare I say it, the voters) to try to answer the question: HOW?
Luke, thank you, but even with the benighted condition of liberty in the England of 2012 you don’t have to listen to anyone to whom you don’t wish to listen.
I just saw Cameron on C4 news, so I turned over.
On the other hand, if you can bear to listen, you can start to dissect. It’s the bearing to listen that I often struggle with.
But my basic point is that credentialisation deals with few or no issues of substance.
He won
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel
which some people think is “like a Nobel Prize”, but that doesn’t make it one. He isn’t a Nobel Laureate. He’s the winner of Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, which is a different thing.
Note how it’s not called “The Nobel Prize in…”
It seems there is no Nobel prize in Economics.
Nevertheless, the same quick bit of wikipediaing makes it clear that the prize to which Ian B refers is not exactly a cheap knock-off.
Saying that, when they offer me a Nobel I shall send them forth with a flea in their ear.
RM was on Radio 4 this morning. Everything he said was false. Everything!
I heard that too. A lot of it was indeed wrong, but there was one bit that was profoundly illuminating.
I’ve wondered for a while why Murphy et al. are so obsessed with what companies and people are paying in taxes. Where did this come from? What’s the point of it all?
Murph provided the answer: if HMRC could collect all the tax he believes is owed them then “we could change the political landscape. All the budget cuts would not be necessary.” Ah, so now I understand the goal.
Perhaps it was obvious to others, but for me it was a moment of enlightenment. And from Murph, too. Fancy…
Richard Murphy’s achievements are remarkable. He gets lauded “the best economist we have” by the many people who like his conclusions and don’t care about the soundness of the arguments he uses to reach them. He gets endlessly discussed on this site by people who hate his conclusions and have no respect for his methods. And he even takes up the time of people like me and dare I say Frances who like to look at the arguments before making up our minds about the conclusions. All this without showing any glimmer of understanding of economics, tax, accountancy or anything else other than what his punters want to hear.
Edward Lud, thank you too. In a spirit of goodwill, can I refer you to a blog called noahpinion. In one post called something like “dealing with economists”, he addresses the question of people who say “I have a degree/doctorate/Nobel prize” as a line of argument (“sod off and answer the question” is his advice from memory).
Paul B, Frances, I have previously discussed the merits of dealing with Ritchie. Remember the mad bloke in the pink panther films…
I always said that however well the Euro did in the good times it would fail to cope with the first serious bad time that it encountered. What percentage of Economists were equally right?
The article by Richard Baldwin to which you refer is by far the most unpleasant, snobbish piece of arrogance I have read in a long time. And is it justified, as arrogance needs to be?
In Ben Bernanke, Sir Mervyn King and Adam Posen, we have economic management being conducted by three of the world’s most distinguished academic experts in monetary policy and central banking. Yet they seem to be making a hell of a mess of it.
Philip,
RM is funded by PCS. It’s hardly surprising therefore that he is promoting policies that if taken on board would 1) make it essential to recruit lots more PCS members – er, sorry, I mean HMRC staff, of course 2) give ammunition to PCS in their campaign to prevent redundancies among their members. Once you know who RM’s principal paymasters are, his ideas make complete sense…..
I used to think that his obvious and profound stupidity was sufficient to explain Murphy’s incessant and incorrigible wrongheadedness. But Hanlon’s Razor has its limits: cupidity and venality are now obviously in evidence.
The Euro issue is a Physics problem, and the proper question is: How, exactly, will the inherent instability of the Eurozone finally manifest itself?
Incidentally, answers to other implied questions:
1. Nobel in economics = forecasting skill? No, LTCM.
2. Krugman ditto? No, Enron advisor.
In Ben Bernanke, Sir Mervyn King and Adam Posen, we have economic management being conducted by three of the world’s most distinguished academic experts in monetary policy and central banking. Yet they seem to be making a hell of a mess of it.
Expertise in woo is not much use, as any cancer sufferer consulting the world’s finest spirit healers and homeopathists discovers.
dearieme – the answer to your question is “most” – as I recall
an interesting article on currencies – pointing out that the US dollar was not universally tradeable within the USA until the foundation of the Fed
http://www.johnkay.com/2012/02/01/the-pound-is-a-poison-pill-for-an-independent-scotland
Strange how all these experts thought the Eurozone would be a terrific success and that anyone who disagreed was a fool.
Now you need to be an expert to solve the colossal fuckup the Eurozone has caused.
Appeal to Authority is doubly dangerous when those ‘experts’ follow the herd, as ‘experts’ do.
When I want someone who knows about physics I always look for a Patent Office clerk.
I am enjoying all these Worstall readers objecting to Baldwin’s withering (arrogant?) and pedantic style.
NB:
1. most economists predicted the Eurozone would end in tears (see for example another ‘Nobel’ winner Chris Sims 2002 paper ”The precarious fiscal foundations of EMU “)
2. on what basis are Bernanke and King making a hash of things? Inflation? Unemployment? Relative to what counterfactual? What aren’t they doing they ought to be?
on second thoughts, please don’t answer 2. it will be too depressing
Dear Luis Enrique
Ok, I will not answer 2) except to say that it is about distortions, outdated models and the interplay between parallel asset markets and markets for goods and services.
As to 1) my impression, having monitored the economic debate fairly closely at the time the euro was formed , was that economists were as usual divided on the single currency. They were divided in part because economic debate, all the way from immediate policy issues up to pure mathematical theory, is always contaminated by political perspectives. In the case of the eurozone it was also contaminated by differing national interest between, say, French, German and Italian economists.
To the extent that the eurozone has failed, however, that is mainly due to the political process by which it was formed. And that could be seen by anyone who was economically literate, not just professors. A currency union that is formed from similar economies conforming to agreed rules (starting say with Austria, Benelux, France and Germany) would have a much stronger chance of enduring success than one where the entry rules were met only by cheating in the case of France and Germany and waived for several others. And because of that, the essential rules could not be enforced thereafter. Incidentally, the rules of the new fiscal union seem to be even more impractical.
The economic debate over exiting is equally politically contaminated. The method of extrication, subject of the Wolfson Prize, presupposes the economic case for doing so. It therefore becomes a technical and practical issue. As others have said, bankers and experts in financial markets may be better qualified to provide the best solutions than economics professors.
outsider
well it sounds like you agree with Baldwin, who says most of the issues are technical and within the grasp of IMF technocrats, except the problem of how to handle expected devaluation upon exit. Now maybe bankers and experts in financial markets are best qualified to solve that one, but the economics professor is pointing out the problem.
David Gillies:
I am not yet convinced that our esteemed host and Richard Murphy are not one and the same person; as someone remarked some time ago, no one’s ever seen them, separately, at the same time and in the same place.
And it only makes complete practical sense–at least from Tim’s standpoint. Without Murphy as a foil, Tim’s blog’d be in for an approximate 50% reduction (in articles written, mebbe a bit more in comments.
And, wqhen you get right down to it, such explanation holds up remarkably against Occam’s Razor.
AC1:
No, I wasn’t talking about the old modern physics, but today’s postmodern brand, e.g. Climate Science. Basically what you do is build a simulation of the interconnected Euro economies that uses the consensus economic models & feedbacks, chuck in a bit of chaotic nonlinearity, plug in the OECD’s start states, and click Run.
This is only half tongue in cheek. Models rarely have predictive value, but they can illuminate the gross characteristics of the modeled system & in this case all we need to know is does it oscillate a bit and then settle down, or does it go open loop and shake itself to bits.
Does the economy know about economics? Does it need a degree?
Does DNA know about genetics?
What happens when geneticists start messing with DNA the way economists mess with the economy?
Winston Smith
The Zune concentrates on being a Portable Media Player. Not a web browser. Not a game machine. Maybe in the future it’ll do even better in those areas, but for now it’s a fantastic way to organize and listen to your music and videos, and is without peer in that regard. The iPod’s strengths are its web browsing and apps. If those sound more compelling, perhaps it is your best choice.