Monday, February 23, 2009

Nice commentary by Hassett of Bloomberg about the Obama economic team.

Economics is not "science". There is no course of action that will lead to predictable results.

Summers knows this...or at least has written at length about the fallibility of economic analysis (See "The Scientific Illusion in Empirical Macroeconomics, Scandanavian Journal of Economics, Volume 92 No. 2). And yet there is a body of anecdotal evidence that he ignores his own medicine and comes across as intensely positivistic in the presence of other humans who may harbor differing opinions.
Drank the Water

But collectively, the team that he assembled is long on people who are predisposed to agree with him and short on those who steered clear of the Keynesian water of Cambridge.

The list of Cambridge insiders includes the chairwoman of Obama’s Council of Economic Advisers, Christina Romer (MIT); council members Cecilia Rouse (Harvard) and Austan Goolsbee (MIT); and even senior adviser Paul Volcker (Harvard). All told, of the 27 top advisers on the White House economic team or its Economic Recovery Advisory Board, 14 went to Harvard or MIT and 20 are Ivy Leaguers. As an individual, each of these team members is worthy of bipartisan praise. As a group, there is a disappointing lack of diversity.

Is it any wonder, then, that we would see a stimulus package that puts so much faith in Keynesianism? It would be like inviting only American League fans to a debate about the designated hitter.

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