Thursday, November 22, 2007

Two Quotes from Wise Economists

“Economist do not know very much about the economy, other people, including the politicians who make economic policy, know even less.”

(Herbert Stein – Professor at U of Virginia and Chair of US Council of Economic Advisors to President 1969-74)

“Economists have the least influence on policy where they know the most and are most agreed; they have the most influence on policy where they know the least and disagree most vehemently.”

(Alan Blinder – Professor at Princeton and Vice Chairman of the Fed 1994-1996)

The first teach us humility, the second warn us on the danger in the lack of it.


johnorford said...

the way i see it economists spend a lot of thime repeating the preferred equilibrium states ad nauseum -- and rarely think of how we'll get there (i.e. the non equilibrium states).

Berly said...

I'd say it is due to few university teach non-equilibrium states or the process toward equilibrium.

Why they don't do that? The professor were taught mostly on equilibrium states. And the non-equilibrium states is more difficult to understand and teach.

Thus, affirming the wisdom of the two quotes.

dendi said...

Hi Berly & John, economists believe that dis-equilibrium is a temporary condition so the most important thing is the adjustment process to achieve the equilibrium. Equilibrium itself is rethoric concept (McCloskey, 1983, JEL, "the Rhetoric of Economics"). As we know this is the basic concept of economics analysis. However, we never know when or where the real equilibrium exists in real world. Equilibrium is a dynamic concept. It is like time, which is always moving. To some extent I agree with the quotation, it is consequences as the economists' ambition to make economics as a hard science, just like physics.

Berly said...

Hi Dendy, thanks for dropping by. How is Antwerp? Sorry that we didn’t got to meet in your short stay in Jakarta.

Actually at undergrad economist are taught the cobb-webb spiral of quantity-prices. So we are not totally ignorant on the subject. But I must said the heavy load on grad curriculum (especially dynamic optimization) mostly leaving us exhausted on just finding the equilibrium. The textbook discuss very little about the process to reach it and regarded as (quasi) instaneous.

However, I must credit Prof Dorodjatun that taught us (me and Dendi) in undergrad. He like to explain that economics is a process of movement between one disequilibrium and another disequilibrium.

dendi said...

Antwerp is great! ;-)

Anyway.., I think undergrad students in FEUI are too busy with many irrelevant courses, such as: National Ideology and Citizenship, and Religion. It's a good thing that Basic Humanities (IBD) doesn't exist anymore. They also have too many courses without focusing on a certain thing.

fajar said...

salam kenal