Chicago economics — a bit out of touch with the real world

23 Mar, 2020 at 08:34 | Posted in Economics | 1 Comment

new classicalTom Sargent is a bit out of touch with the real world up there in his office … Certain people have a capacity for ignoring facts which are patenty obvious, but are counter to their view of the world; so they just ignore them …

Sargent is a sort of tinkerer, playing an intellectual game. He looks at a puzzle to see if h ecan solve it in a particular way, exercising these fancy techniques.

Alan Blinder

Do you think this is too harsh? Well, then I suggest you read the following excerpt from the interview with Sargent in Arjo Klamer’s The New Classical Macroeconomics (1984):

People say that many of your assumptions are unrealistic.

It is true that these assumptions are unrealistic.

Do you feel comfortable with them?

Yes, about certain matters. I’m aware of all the problems with them. There are philosophical contradictions about using this methodoology. Deep down I don’t believe in them, but I don’t have a better method of understanding what’s going on out there.

But if the best is not good enough? Wittgenstein’s dictum in Tractatus Logico-Philosophicus comes to mind:

Wovon man nicht sprechen kann, darüber muss man schweigen.

1 Comment

  1. There we go. I knew there was a reason I posted my “economists looking for the lost keys under the streetlamp” comment. Though then I was thinking (I think) of a Robert Samuelson phrase that Prof. Syll had quoted.

    ObBlues: “If it wasn’t for bad theories, I wouldn’t have no theories at all.”

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