“If you “rocket science” math economists are so smart, why is the country in a depression?”

I think we need to retire Deidre McCloskey’s shopworn — and fallacious — rejoinder to her fellow economists:  “If you are so smart, why aren’t you rich?”

Plenty of people with knowledge of economics have become rich — and plenty became very well off directly due to their understanding of the recent economic pathologies, pathologies created in no small measure by economists working in a bogus Keynesian and “rocket science” framework.  Read Michael Lewis’s The Big Short if you doubt me.  (And note well — being smart and being right are the smallest elements of making money — developing a reputation and developing contacts and acquiring investors and leverage are far more important — even the most simple-minded economist should understand that.)

So, I think it’s time to kick McCloskey’s bogus bromide to the curb, and replace it with one that is both true and tells the world something worth knowing about the economics profession.

Here’s my suggestion:

“If you “rocket science” math economists are so smart, why is the country in a depression?”

4 comments to “If you “rocket science” math economists are so smart, why is the country in a depression?”

  • paul e.

    Amir Bhide has a fine new book out, “A Call for Judgement” in which he criticizes the “rocket scientists” of finance (Fama, Black, Scholes, Merton et al) as an important contributor to our current crisis. He argues that the pretense that risk could be modeled led to an increase in arms-length investing at the expense of relationship investing. But in a world of Knightian uncertainty, we were always going to come a cropper sooner or later.

  • Greg Ransom

    Thanks for the heads-up Paul. Bhide is a terrific economist.

  • Lio

    Totally unfounded. Some mistakenly attribute the current crisis to mathematics, mathematicians, and quantitative finance. Are they also responsible for the great depression? People are not puppets and mathematicians are not malevolent puppeteers. Let us not hide behind them to justify our own faults. Are you among those who say, after a plane crash, the responsibility rests with the mathematicians who contributed to the invention of aviation and we must prevent aircraft from flying to solve this problem. Simple but stupid because the plane brings more advantages than disadvantages. Remove the planes will be worse and we can seek to improve them. But what did you offer in exchange for better risk management? Blah blah blah does not really help! How would you respond to specific questions asked by some economic agents? For example, what would you say to a banker who wants to provide its customer with a call or a put option? What method would you give him so he can price the option? What method would you give him so he can hedge his risk? There are practical problems that require specific answers. To those who think themselves smarter than those ‘stupid’ mathematicians, the world eagerly awaits your response!

  • Lilian

    Those who criticize the mathematics are not even aware that without math, their world would look like the one in which prehistoric people lived.

Follow FriedrichHayek on Twitter

Random Quote

If I had to single out the area in which Hayek’s contributions were the most fundamental and pathbreaking, I would cast my vote for the theory of capital. — Fritz Machlup

خريد vpn خريد vpn خريد vpn خرید vpn آنلاین