Links to Consider, 7/16
Olivier Blanchard on Stan Fischer; Niccolo Soldo assesses the Ukraine War; Heather Heying's idealism about education; Rory Sutherland on bureaucracy; James F. Richardson on elite overproduction
many students [of Stan Fischer] ended up holding important policy positions. A nonexhaustive list of Stan’s students who played an important policy role includes. . .
just about every important central banker of recent decades.
Pointer from Alex Tabarrok, who highlights a passage about students who went jogging with Fischer and Rudi Dornbusch. I associate the jogging craze much more with Dornbusch, and I always thought of the students who jogged with him as suck-ups. Many of them went on to enjoy high-status positions in academic and policy circles.
I call Fischer the Genghis Khan of macroeconomics, not because he was vicious but because almost every academic macroeconomist, including Blanchard, is one of his descendants. Coincidentally, macroeconomics has been a sterile field for the past fifty years.
As it stands right now, the Americans are the big winners, the Russians are the small winners, the EU are the small losers, and Ukraine is the big loser. I made this very same assessment in the first days of the war, and my contention is that it still holds true.
He proceeds to justify this assessment. It is kind of like my early remark that the U.S. is prepared to fight Russia to the last Ukrainian.
In 2001, Heather Heying wrote,
Education should not serve primarily to make the student feel good about herself in the moment. Education is about enriching the lives of students so that they may live informed, enlightened lives in which they have the curiosity to ask “why?”, the knowledge to ask “are you sure?”, and the courage to ask “is this right and good?”.
In 2023, she comments
Embracing uncertainty, knowing that you do not know, and that what you think you do know may be wrong—this is foundational to a scientific approach to the world. Over the last decade, and especially since Covid, we have seen an increasing focus on certainty, and on single static solutions to complex problems. Perhaps most alarming of all, those appeals to authority, and to silencing those who disagree, has arrived under the banner of science. #FollowTheScience, we are told, when that has never been how science worked. I hope, still, that the educational philosophy that I laid out here, as a young scientist who was yet to discover most of the joys of teaching, can once again rise up in institutions of higher education throughout the land.
Fifty years ago. . . Hospitals were run by doctors, newspapers by journalists, history faculties by academics, so your best career move was to be seen by your peer group as being good at the thing your organisation purported to do. In return you were assured of advancement and job security, which your boss had the power to bestow. Back then ‘Finance’ was called ‘Accounts’ and ‘HR’ was called ‘Personnel’. No one had an MBA.
Not any more. As a doctor, you may have been hired for your medical expertise by eminent practitioners, but you must defer to people with no medical knowledge at all.
Pointer from Rob Henderson. I doubt that the private sector on its own would evolve that way. My guess is that if you look closely enough, you will find that the need to comply with government regulation serves to empower bureaucrats over technically skilled personnel.
Also from Rob Henderson, a pointer to James F. Richardson, who writes,
An elite living mostly with itself has only transactional monetary relations with the broader public. We hire them into our homes and lives. They don’t come to our weddings. An elite whose consciousness lies anchored in a personalized, optimized future state and how to get there is an elite that grows ever more detached from the concerns of the majority in America.
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I doubt that the sterility of macroeconomics is correlated with the dominance of Stan Fischer. In my experience Stan has always been far from being doctrinaire and from mathiness. Two examples: 1. In the middle 1980s I was an RA for Stan on an inflation model which assumed adaptive expectations, not rational expectations. Simple and practical. 2. In 2009, Stan gave the main address to the annual Israel Economic Association conference. (Generally the Bank Governor gives this address.) Stan emphasized that while textbook models tend to view the Central Bank as helpless in a zero-interest-rate environment, in fact central bankers have many tricks up their sleeves and are able to adequately control the money supply. Definitely a practical, salt-water approach.
I attribute the sterility of academic macro to an over-reaction to the Lucas critique. It was right to seek micro foundations, but the particular paradigms adopted for those foundations (e.g. SGE) were proven after a few years to be sterile and mathy, yet were not put aside.
Soldo is partially wrong- everyone is a big loser in the Ukraine War, Ukraine's young men are just the biggest losers since it is them that are getting conscripted by force and sent to their graves.