PAUL J. RICHARDS/AFP/Getty Images
Paul Krugman supports Occupy Wall Street, but he has some ideas about its agenda.
Lately, I've been reading this very entertaining economics blog, Noahopinion, written by Noah Smith, a recent econ PhD who just got a job at the Stoney Brook University College of Business (Congrats!). Smith engages with a lot of the usual wonky econoblogger topics (and also some heavily wonky topics), but he also takes a look at the culture of economics. In this post, he really nails the strange relationship between economist and the more overtly nerdy members of other professions, like physics, computer science, and math.
He argues that economists should release their inner nerd. BUT they have to be careful about how truly nerdy that nerd they release actually is. For example:
But for Milton Friedman's sake, don't be a science nerd! If someone references Star Trek or Mass Effect, give them the hairy eyeball. Remember, "technology" has nothing to do with semiconductors or machine learning or General Relativity; "technology" is the Solow Residual! Economists evaluate technology from on high; we do not descend into the muck of knowing how it actually works. And remember: you do math well, but you don't likemath, not for it's own sake. Do not gush about all the cool difficult math you just did, whine about it.
The video is of economist Steve Keen, on the BBC's HARDTalk, laying out his plan to escape what he considers a second Great Depression. It's out there. Way out there. But he also presents a very clear analysis of what went so horribly wrong with the global financial system in the lead-up to the financial crisis. Stick around for the part at about 22:30 when Keen talks about being the "non-orthodox" economist with the "biggest mouth."
The upshot is that Keen wants to use the government's ability to "create" money to relieve private debt. Basically, the bank loaned out money it shouldn't have, so the debtors shouldn't be blamed. But you don't make the debt vanish, you empower the debtor — in fact require him or her — to pay it off. You pointedly don't give the money to the bank on the assumption that it will loan it back out.
GEORGES GOBET/AFP/Getty Images
This is what a European "technocrat" looks like. Lucas Papademos will take over from Georges Papandreou as prime minister of Greece, as the Eurozone continues to sink.
Europe is full of flamboyant politicians, but when it comes to rescuing the continent from financial ruin, the money right now seems to be on the most technocratic of technocrats: economists who have served time in the trenches of the very common currency they helped to create in the 1990s. As the euro has melted down, the Greek prime minister, George Papandreou, has stepped aside, replaced by Lucas Papademos, an economist. In Italy, the embattled billionaire PM, Silvio Berlusconi, is being moved aside to make room for Mario Monti, another economist.
The message to Europeans is pretty clear: politicians created this mess, and now the people who actually know what they're doing with the economy will get us out. Try to imagine what this would be like in America. We'd kick Obama out of the White House and replace him with...an executive from a consulting firm. Oh, wait...didn't Mitt Romney work for Bain & Co. back in the day?