Economics used to be called "the dismal science" because of its Malthusian predictions: economies were always on a feast-or-famine cycle: the long-run standard of living was not high, and the long-run standard of living did not change. The Industrial Revolution changed all that (we think!), but that doesn't mean that the "dismal" tag doesn't still have its uses. Gregory Clark, chair of the Econ department at UC-Davis, says the state of the macroeconomic discipline is dismal, and not getting much better:
The debate about the bank bailout, and the stimulus package, has all revolved around issues that are entirely at the level of Econ 1. What is the multiplier from government spending? Does government spending crowd out private spending? How quickly can you increase government spending? If you got a A in college in Econ 1 you are an expert in this debate: fully an equal of Summers and Geithner.
The bailout debate has also been conducted in terms that would be quite familiar to economists in the 1920s and 1930s. There has essentially been no advance in our knowledge in 80 years.
I got an A in Econ 1 and Econ 2, but I pray that I'm not an expert in this debate, and I know that I'm not the equal of Summers and Geithner. Still, I know I can do better than this:
Recently a group of economists affiliated with the Cato Institute ran an ad in the New York Times opposing the Obama's stimulus plan. As chair of my department I tried to arrange a public debate between one of the signatories and a proponent of fiscal stimulus -- thinking that would be a timely and lively session. But the signatory, a fully accredited university macroeconomist, declined the opportunity for public defense of his position on the grounds that "all I know on this issue I got from Greg Mankiw's blog -- I really am not equipped to debate this with anyone."