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This site is set up to provide a forum for a number of like minded professional economists to post and comment on contemporary issues. There are a number of regular contributors whose bios are made available on the site. Most if not all of these contributors use a pseudonym for the simple reason that they are practicing economists who must take into consideration the commercial implications of posting their opinions.

While some may feel that this is a bit of a gutless approach it is the only way we can ensure free and open discussion without jeopardising our paycheques.

Monday, May 18, 2009

Wheres our Milton (Roy Rodgers)

Will the next Milton Friedman please stand up

Let me set the scene, its late, you’ve just put through the final amendments to your latest project and your all done for the night. There is no rush to get home. You know the kids are tucked up sound asleep. Your better half is happily ensconced with her/his illegal copies of the latest season of brothers and sisters/ prison break. No joy there. So what’s the harm in burning up a bit of the company’s broadband and wasting some time on the net.

Here is an interesting exercise, google the following term “famous Australian economists’. Ten to one you’ll get around 200 hits referring to some guy called “nugget” Coombes, whom from what I can gather was a celebrated civil servant who spent large swaths of his life promoting welfare dependencies in aboriginal communities, but does not appeared to have made any contribution to economic thought. No matter how hard I tried I couldn’t find a nugget law, a nugget theorem or even a nugget axiom. But this should not surprise, when you stop to think about it our best known economists are invariably either public servants or bank johnnies and they are generally not known for their academic achievement, nor their impartiality.

Most people would never have heard of our one and only Nobel Laureate, game theorist John Harsanyi. Although to be fair he is also claimed to be Hungarian or American depending on your bias. However disputed his nationality is, it is undeniable that Mr Harsanyi got his first A grade representation here at the University of Queensland, so by State of Origin Rules he is definitely Australian.

Its not that Australia doesn’t produce good economists, we do. Its not that we don’t have any good economic schools, we do. Its that our economists for whatever reason, very rarely venture off campus. They are by and large content to stay in their sandstone castles (or in some cases brutalist dungeons) pontificating on this or that and pumping out mountains of journal articles to the critical acclaim of their peers but very rarely ever read by anyone other than the author or the journal editor. Fame may be a fickle beast but one thing is for certain, you can’t be famous if no one knows who you are and that means you can’t be famous without entering the public arena.

Lets for a moment consider the most famous economist of our time — Milton Friedman. Why is Friedman famous? Sure he was a great economist, he did unquestionably contribute to the field. He championed a whole raft of microeconomic reforms and moreover is viewed as the founder of the monetary school of macroeconomics. He is the reason we have a reserve bank. But that’s not why he’s famous. His fame is a result of a conscious decision in the latter part of his career to become a public intellect. He spoke relentlessly on TV and radio and he wrote newspaper columns. He even went to the extreme of producing and hosting his own tv show. Milton got in the public's face and as a result we remember him.

Well so what you may ask? Who cares? The problem is that the inability of our poor but brilliant economists to get their 15 minutes is symptomatic of a base state of ignorance in the general public about economics — about what economics is, where it came from, what its limitations are, and most importantly, the guidance it can provide. In a democracy like ours you get what you ask for and if you don’t know how to ask for an economically savvy government your probably not going to get one.

Again you may ask … so what! Ordinarily I’d tend to agree, however these are not ordinary times. The problem is that when we experience a phenomena, such as the current global crisis that society judges to be economic in nature, and the general public are clueless, and there are no public intellectuals who can stand on their soapboxes, you will inevitably find yourself in the position where debate does not exist, or exists at a level that is so ill-informed that it is absurd. The consequence is that people take for granted policy and actions that they should by rights resist.

One of the most amazing aspects of our current economic crisis (a crisis so great that its being billed as the Big One, the one that will topple the modern capitalist system) is that no one is really asking our economists what they think. During the height of the gangland wars Chopper got a regular column and even did regular TV spots. Sure every now and again Henry Ergas writes an opinion or John Freebain does a piece for the age or the fin review. But the question is why in amongst all this drama don’t Henry or John have a spot on the morning show. Why isn’t Koshy firing off questions to an actual real life economist? Why are we depending on editors from women’s magazines, talk show hosts and journalists for the bulk of our popular economic comment? Where is our Milton?

People need public access to our economic talent, the consequences of not having it are blindly obvious. People are swallowing whole heartedly policy which should be debated. Despite the ranting of our TV finance experts it is far from clear that fiscal packages of the sort being doled out by Obahma and our own Kevin are effective. There is no consensus amongst economists that Keynesian fiscal programs will pull us out of recession and if you don’t believe me check out the full page add that approximately four hundred economists including at least half a dozen noble laureates took out in the wall street journal. Alternatively you can just ask any of the 120 millionish Japanese what they think of fiscal stimulus.

I feel fairly confident in stating that all economists should feel a collective shiver go up their spine when our Kevin starts talking about FDR and the new deal, or when our Kevin starts selectively handing out bail out packages to industries on no other basis than what appears to be their degree of unionisation. And we should all be extremely worried when our Kevin decides he is going to start picking winners in the technology stakes and backing what he believes are going to be our innovative sectors.

Where were our economists when the debacles of fuel watch and grocery watch were being played out in the public eye?

Anyone with any decent degree of formal economic training should quite literally soil themselves when our Kevin starts declaring that he wishes to turn Australia back into the social democracy it used to be prior to Hawke, Keating and Howard …if that isn’t an invitation to emigrate to Fiji, I don’t know what is.

George Stigler (another famous economist) is reputed to have spent the last days of his academic career trying to answer the question of why we continue to make the same mistakes and pursue the same bad policy in the face of an ever mounting body of economic knowledge. To me the answer is quite simple, its not that people are stupid, nor is it that economics is counter intuitive or difficult to understand, the issue is that people can’t forget what they never learnt in the first place, and the reason they haven’t learnt is that all this knowledge and understanding is being stockpiled on campuses across the country and has not been disseminated through public media, it has not be popularised.

Being famous is not a self serving state rather it is a symptom of making public your lessons and findings, of disseminating your understanding, of providing value to your community. And you don’t do it through obscure journal articles you do it through popular medium.

At the end of the day, policy is made by politicians who are subject to the whims of the public not by economists, and if we want to improve the system it’s the mums and dads we should be trying to educate so that they can demand economically sound policy. And unfortunately mums and dads read the herald sun not the finical review, they watch the morning show not lateline and I think this is something that Milton Friedman intuitively understood.


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