Macroshamonomics

There was a time when 'doctors' used to bleed patients with mental health problems (on the diagnosis that 'the devil has got them'). That used to count as medical 'science' at some point in human history. One day, historians will look back at economists and put the same inverted commas around the description. In recent history, few professions have disappointed as many people, and as spectacularly, as economics. One can talk about the legal profession, perhaps, and politics, that old suspect, but then nobody claimed grandly to be the answer to the world's problems the way that economics has. From being the moral compass of the world to being the prescriptor of public policy, even governance, to the current fad of deciding the models of human happiness, economics has evolved in fits and starts, always interesting, always ambitious but always wanting. The Great Recession has laid bare many of these claims. Mathematical models, which claimed to lay out precise boundary conditions, have failed miserably in a large number of areas: credit-rating models, CDS pricing, option pricing (Black Swan effect). This list is definitely incomplete; there is not an area of econo

This article was originally published on May 18, 2018.