Are Canadian Economists, as Much as their U.S. Colleagues, in Need of Soul-Searching?
There is an interesting piece published in last week’s Business Week by Peter Coy, which is making the rounds (I heard about it on NPR). Not just most, but the vast majority of mainstream American economists failed to predict the recent domestic and global financial crisis, the worse economic meltdown since the Great Depression. Add to that the newly emerging debates-verging-on-hissy-fits among economists about FDR’s New Deal policies (and whether they helped or prolonged Great Depression problems) and the continued lack of any consensus about what now to do about the global economic crisis; and one can understand why Peter Coy might ask “What good are economists anyway?”. It’s certainly a provocative piece; and worth reading for economists and non-economists alike. Here’s a quote:
Economists mostly failed to predict the worst economic crisis since the 1930s. Now they can’t agree how to solve it. People are starting to wonder: What good are economists anyway? A commenter on a housing blog wrote recently that economists did a worse job of forecasting the housing market than either his father, who has no formal education, or his mother, who got up to second grade. “If you are an economist and did not see this coming, you should seriously reconsider the value of your education and maybe do something with a tangible value to society, like picking vegetables,” he wrote on patrick.net.
Of course, when Coy says “economists” he is writing about American economists. What about our economists? While I certainly did not read nor hear of any mainstream Canadian economists predicting a global economic meltdown back in 2007 or early 2008, no one seems to be giving them as hard a time, or musing about their potential as vegetable pluckers. Why might that be?
Maybe it’s because Canadian banks– with their own economics shops in tow– played things a lot safer and thus are now less exposed to the same creeping credit problems seen in the U.S. That could be one reason. Another might be that Canadian economics, at least for now, are much better at coming to a consensus about what do to in response to the current crisis.