A couple of very interesting op-ed pieces, written by economists, have appeared on Reuters in the past couple of days. The first questions the relevance of the field of economics, noting that academic economists have little connection with reality. Here’s a link:
You can find my response among the comments, but to save you the trouble of scrolling down through the responses, here it is:
Mr. Thoma, congratulations for having the courage to take your field to task. I am convinced that there are no solutions to our economic problems that will be found in the realm of politics. It makes little difference which party or ideology is in power when they all take their economic advice from economists who basically adhere to the same dogma and remain focused on one thing – macroeconomic growth. It’s the field of economics that must change if we are to have any hope of fixing our economy.
Among the other sciences, nothing is sacred. Everything is put to the test and old theories give way to new when the data and facts prove them wrong. This is what’s wrong with the field of economics. There is one parameter of economics – indeed, the most important parameter – that no economist dares to tackle. I’m speaking of the economic ramifications of population growth. Ever since the beat-down endured by economists following the seeming failure of Malthus’ theory, economists have steadfastly refused to ever again consider the subject of overpopulation, and anyone who does is immediately dismissed and riciculed as a “Malthusian.” Economists are united in their response: man is ingenious enough to overcome any obstacle to further growth.
Perhaps man is clever enough to stretch resources and mitigate stress on the environment indefinitely. But, since it’s impossible for population growth to continue forever, even if we tried, shouldn’t economists at least be curious enough to ponder what, then, will bring it to an end? If they did, they might discover the relationship between population density and per capita consumption, and the role that an excessive population density plays in driving down per capita consumption and, consequently, in driving up unemployment and poverty. And they may discover the role that disparities in population density play in driving global trade imbalances in manufactured products, the imbalance that now threatens to collapse our economy.
If the field of economics wants to better understand how the economy works, then it must be willing to consider the impact of every parameter.
In response to this first piece, another economist then wrote the following, suggesting that the real problem is a lack of accountability:
My response to this one was written when I was in a little more cynical mood. Here it is:
Want to know what’s wrong with the field of economics? Consider your response if I were to suggest to you that there are economic consequences of overpopulation that go far beyond a strain on resources and stress on the environment. It’s easy to predict your response, since it would be the same response of any economist. You would dismiss me as a “Malthusian” and refuse to even consider the subject. That’s what’s wrong with economics. This field of “science” instantly curls into a fetal position any time the most dominant parameter at work in economics is even mentioned. If the other sciences reacted the same way to such challenges, the world would still be flat and lie at the center of the universe with the sun rotating around it.
It should be obvious by now that there are no political solutions to our economic ills. It matters not if we cut the deficit by cutting spending or by raising taxes. Either approach will have the same effect – cutting macroeconomic growth and jobs, leaving us with reduced revenues and the same deficit that we started with, which can only lead to another round of the same thing. Nothing can change until the field of economics reforms itself into a real science, fully exploring the consequences of all economic parameters, especially the unpleasant topic of population growth, and then developing policy recommendations that are rooted in reality. The fact that these economists are questioning their own profession may be the first small step in that direction.