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Saturday, October 3, 2009

Lynn Parramore points to stubborness in irrelevance of academic economics

John Maynard Keynes said in one of his more famous quotes: Better to be approximately right than precisely wrong. New Classical economics and its mathematical precision has directed the wagon over the cliff, yet academic institutions prefer the precise to the correct. Another example here from Lynn Parramore.

Shame on the Dame! Notre Dame embraces wrong-headed neo-classical economists, gives others the boot
Lynn Parramore
New Deal 2.0
September 30, 2009

Here’s a story we wish we didn’t have to bring you. It goes like this: In 2003, the conomics department at Notre Dame was split into two separate entities: (1) The Economics and Econometrics department and 2) the Economics and Policy Studies department.

The mainstream neo-classicist folks went over to the Economics and Econometrics department, which emphasized quantitative tools and gave short shrift to the social context of economics. The Econometrics department was about science. A realm of beautiful models and fancy equations. They didn’t really fit reality, but so what? Adopting them could land you a cushy spot in an Ivy League doctoral program and maybe later a job at the Fed. Buy the nonsense; get paid.
The other poor suckers, Post-Keynesians, Marxists, economic historians, and other civic-minded economists interested in labor, poverty, development, critical analysis of flawed economic theory, and other nefarious agendas, became the Economics and Economic Policy deparment.

Then we had a major economic meltdown, an admission from Greenspan himself that his neo-classical economic model was flawed, and a huge number of Americans suffering because of just the kind of thinking the Econometrics department at Notre Dame has been pushing.

Now the university, which has long ago decided that the split was a bad idea, is getting rid of one of the departments. Guess which one? The one filled with economists whose wrong-headed ideas helped create the climate that led to the Great Recession? Nope! The department to be shut down, its faculty scattered to the wind, is the Economics and Policy Studies department.
From the Chronicle of Higher Education:

They [the' heterodox' economists] say that the dissolution would represent an intellectual loss for the university. While Notre Dame once had an economics program that was distinctively shaped by currents in Roman Catholic social thought, they say, it will now be left with a neoclassical department much like the ones at almost every other major university.

“In light of the crash of the economy, you would think there would be some humility among economists, some openness to new approaches,” says Charles K. Wilber, a professor emeritus of economics at Notre Dame. “There’s not a lot.”
Academia is supposed to be place where the best ideas rise to the top. But in the discredited, Alice-in-Wonderland field of economics, things are upside down. There has been little theoretical competition, and much blind-subscription to dangerous ideas that have cost the country enormously.

Appeals are planned to Notre Dame’s president, Rev. John I. Jenkins, but it looks like the dissolution of the Economics and Policy Studies dept. is pretty much a done deal.

Even stranger: Notre Dame makes this move while that the Pope himself has been blasting American-style capitalism for its lack of ethical focus and affronts to human dignity in and at the G-8 meeting in July
Shame on the Dame. Way to be on the wrong side of history.

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