Thursday, 14 April 2011

The death of macroeconomics

Like me Tim Worstall has been thinking about the death of macroeconomics and makes a good point:
But there’s another reason I’m really not all that fond of macro: the uses to which it is put. Or the use, which is to tell politicians what they should do. And given my entire lack of trust in politicians to do the right thing, I’d rather they didn’t even try. I’d prefer that they concentrate on those micro things, most especially that they concentrate on not screwing up prices, incentives and all the rest, as a result of their grand plans.

It’s all a bit John Cowperthwaite really. He wouldn’t let anyone collect GDP figures for Hong Kong because he was aware that people would only try and do things with them. Given that everything seemed to be going just fine without anyone doing anything with GDP figures, best to not let the fools have any peg to hang their hats for action on.

So it is with macroeconomics in my more cynical moments. We don’t want to study it because politicians will only use it as an excuse to do things.
The last thing we need to do is to encourage politicians to do ... anything.

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