Day: 3 October 2015

“He’s a politician, so within two minutes he’s your best friend,” Blanchard said.

“Perhaps most fundamentally, the crisis raised serious doubts about the ambitious project that Blanchard and others macroeconomists had been working on for close to 50 years: developing a single, scientifically based model that could be used at all times for all circumstances. To skeptics inside and outside the profession, it was becoming clear that, despite all the gains in computing power and mathematical technique, economies were so complex that the search for one big model was quixotic. As economist Dani Rodrik suggests in a new book, “Economics Rules,” perhaps the best that can be hoped for is for a good set of smaller models — along with economists such as Blanchard who have the experience and intuition to know which ones to use in any particular situation. ”

The tyranny of bad ideas

For an academic who had spent a career searching for economic truth, having to reconcile the supposedly scientific insights of economics with political and bureaucratic realities proved even more challenging than Blanchard had anticipated. What he found most surprising, he said during a relaxing moment on Re, was how quickly a consensus can develop around some question on the basis of what decision-makers read in the press or hear over dinner. People on the outside, he said, have no idea how much time and energy is spent responding to or anticipating the reaction of the media and critics.

There’s a big risk of people agreeing on something without thinking about it or doing the hard analysis,” he said. In the face of incomplete information and genuine uncertainty, he said, it was disquieting “how easily bad ideas become entrenched.”

“It’s a strange process,” he mused, but one he is likely to miss.

http://www.washingtonpost.com/business/the-smartest-economist-youve-never-heard-of/2015/10/02/8659bcf2-6786-11e5-8325-a42b5a459b1e_story.html