Economism and the Night Sky
At Davos -- Why do economists get it so wrong?
| While hobnobbing with the power elite, the BBC examines why economics is not a science, while economists consider a code of ethics. We trim, blend, and append four articles, one of 2010 from (1) the New York Times, Dec 30, on ethics by Sewell Chan, and three of 2011 from (2) the BBC, Jan 26, on forecasts by Tim Weber; (3) the News-Gazette, Feb 8, on a university by Christine Des Garennes; and (4) New Economics Institute, Jan 27, on economism by Richard B. Norgaard (U California-Berkeley, who has served on numerous committees of the National Academy of Sciences, as a visiting scholar at the World Bank, and as President of the International Society for Ecological Economics). |
by Chan, by Weber, by Des Garennes, and by Norgaard
- Academic Economists to Consider Ethics Code
Faced with a run of criticism, including a popular movie, leaders of the American Economic Association, the world’s largest professional society for economists, founded in 1885, are considering a step that most other professions took a long time ago -- adopting a code of ethical standards.
The proposal, which has not been announced to the public or to the association’s 17,000 members, is partly a response to “Inside Job”, a documentary film released in October that excoriates leading academic economists for their ties to Wall Street as consultants, advisers, or corporate directors.
Universities and medical schools have tightened disclosure requirements and conflicts of interest policies for scientists, engineers, and doctors in recent years, and the main professional associations for political scientists, sociologists and psychologists have all adopted ethical codes.
In “The Economist’s Oath: On the Need for and Content of Professional Economic Ethics,” to be published in January, Mr. DeMartino describes concerns dating to the 1920s about the influence of business on economic research, and cites multiple calls within the association for a code of conduct -- all of which have been rebuffed.
A recent paper by Gerald Epstein and Jessica Carrick-Hagenbarth of the University of Massachusetts, Amherst, found that many financial economists who weighed in on the Wall Street overhaul signed into law in July did not prominently disclose potential conflicts of interest.
To see the entire article, click here .
JJS: Not only are economists late to the morality party, they’re not actually scientists, either, if their predictions count. Both shortcomings are related.
- Why do economists get it so wrong?
If there's one thing that's in demand here at the World Economic Forum in Davos, it's economic forecasts. When should I invest, and where? There's just one problem: economists have a poor track record for getting it right.
If economics is a science, then it's not a very exact one.
Paradoxically, while everybody knows that forecasts are mostly wrong, "everybody still demands them," said the senior economist of a large banking group, speaking off the record.
To make things worse, he said, economists -- just like investors -- were suffering from a very bad case of "group think" where "everybody is unwilling to stick their nose out" and challenge the consensus.
"If you step outside the comfort band of the consensus forecast," agrees Simon Johnson from the MIT Sloan School of Management and another former IMF chief economist, "you get beaten up, you can risk your career."
To see the entire article, click here .
JJS: Not just economists but people in general have a hard time going against the grain, us being a gregarious species. So there’s something more at work here -- the pecuniary interests of universities.
- Managers approve 10-year deal with Fox/Atkins
The governing board of the University of Illinois Research Park gave the green light to local development firm Fox/Atkins to continue to expand the university's technology park.
Unlike the UI's first 10-year agreement with Fox/Atkins, which expired last May, the university this time has negotiated for: charging the developer ground rent based on appraisal with the ability to increase that rate based on inflation.
The developer could pay more money to lease the land long-term from the UI and pay to access the infrastructure the university puts in place.
The firm also was willing to build new buildings on speculation.
The agreement now will be sent to the UI Board of Trustees for final approval at its next meeting on March 23 in Springfield. University officials can then begin negotiating a ground lease with Fox/Atkins for the next tract of land to be developed.
To see the entire article, click here .
JJS: Many universities are big-time landlords, and have been for a century or more. For the whole story, see Mason Gaffney’s Corruption of Economics click here .
Like many bosses, universities don’t want their employees snooping around, examining the role of land in business cycles, even though that’s the only way to get their predictions to come out right. Three geonomists -- Fred Harrison of the UK, Fred Foldvary of the US, and Phil Anderson -- predicted the peak of the recent land price cycle and the subsequent downturn, well in advance, and explained why it had to happen.
So why do economists who can forecast not get Nobel prizes while those who can’t do? Probably because economists, just like the makers of documentaries and everyone else, have lost sight of the power of the land beneath our feet. Better able to see land than most other economists are those seeing the environment.
- Economism and the Night Sky
There have long been differences between rich and poor, those with land or capital and those with neither.
As markets expand to global proportions, the cosmologies and moral tales embedded in the cultural narratives of particular places fade, and their lessons are forgotten, replaced by “economism” (belief in the primacy of economics).
I distinguish between actual economic activity and the complex of myths we have developed that sustains our trust in the economy and makes it possible to keep it functioning -- possible to keep people, capital, and land working together.
Yet the academic discipline of economics is completely infused with economism. Economists keep selecting “reasonable” assumptions enabling them to reach conclusions that support the status quo.
While the notion of the public good has not withstood economism, the notion of "the commons" has, and it needs to be developed more fully as part of our new vision.
To see the entire article, click here .
JJS: The writer comes so close to seeing a total big picture. He sees economism, environment, and commons. All that is lacking is seeing all the money we spend for the nature we use as the commonwealth.
Seeing that is tough for any homeowner. A middle class person can not imagine that profiting from the land beneath their home could in any way be stressing either the economy or the ecosystem. But it does.
When we eschew sharing Earth’s worth and instead plan to gain exclusively via ownership, we turn land into an object of speculation; then everything that well-meaning people try to correct comes cascading down upon them and all living beings.
Scott Baker (Huffington Post blogger; President: Common Ground – NYC): The NY Times is having an economists debate on whether the recession was avoidable. Leaving aside humans being greedy, selfish, and short-sighted, the cause of this crisis and others occurring every 18 years going back centuries in western civilization, is the same: speculation in land. We know how to prevent the next one. I left a comment to that effect and would appreciate a recommend. Additional comments would be even better. click here .
NY Governor Cuomo wants a cap on property taxes, ala the disastrous proposition 13 in California. To urge him not to, sign an e-petition: click here
JJS: While promoting a tax does do some good, it does not shift the paradigm. To do that, we need to promote the commons, the commonwealth composed of the worth of Earth, and a society-wide sharing of those economic values. The results will be so impressive that economics would wither away, replaced by truly scientific geonomics.
---------------------
Editor Jeffery J. Smith runs the Forum on Geonomics.
|
Also see: Greek debt, Merrill Lynch buyout, & Killer Pills are Rip-offs
Too Much of a Good Thing?
Absentee Ownership -- biggest worry about land |
| Email this article | Sign up for free Progress Report updates via email |
What are your views? Share your opinions with The Progress Report:
| Page One | Page Two | Archive |
| Discussion Room | Letters | What's Geoism? |
