There’s an article in today’s Wall Street Journal which may be difficult for non-subscribers to access, so I will repeat just a couple of paragraphs. It’s by Josh Zumbrun from Chicago.
“The nation’s leading economists are suffering an identity crisis as many of the institutions they helped build and causes they advanced have come in for public scorn and rejection at the ballot box.
“The angst was on display over the weekend at the annual conference of the American Economic Association, the profession’s largest gathering. The conference is a showcase for agenda-setting research, a giant job fair for the nation’s most promising young economists and, this year, the site of endless discussion about how to rebuild trust in the discipline.”
I take the reporter’s point that economists have been promoting globalization and that the public appears to be rejecting that concept. But there’s a deeper reason which is this: economists have not updated their thinking and their doctrines since perhaps World War II. They are flogging the same macroeconomic ideas that their fathers and grandfathers promoted long before the semiconductor and computers changed the world; before China, Japan, South Korea and the rest of East Asia emerged as powerhouses; before NAFTA and other trade deals changed the fabric of manufacturing in this country; and many more fundamental shifts in the way the American economy works.
What people are hungry for are practical ideas about how to organize their states, cities and regions to achieve economic growth and to create jobs in this new world order. This is sometimes called microeconomics as being distinct from macroeconomists. The field is dominated by the macro guys who can talk about the Federal Reserve and fiscal policy, and we need people who can do that, to be sure.
But the profession has fundamentally failed to come up with practical ideas that can improve American competitiveness (economists don’t understand that word) and increase American wealth (another concept they don’t seem to understand) in the face of rapid technological change and increased globalization. That was the subject of my book, “The Next American Economy: Blueprint For a Real Recovery.”
So it’s no wonder that economists feel like they have been left out in the cold. They did it to themselves by sticking their heads into the sand, ostrich-like, and never coming out to see what was happening in the real world as a result of globalization. They clung to their theories. I’m delighted that the profession is feeling a sense of crisis. Maybe it will inspire them to start offering ideas that a majority of Americans would actually find useful.