Boom, Bust or What? 1

Reader RichardH sent me a link to The New York Times article Boom, Bust or What? Larry Summers and Glenn Hubbard Square Off on Our Economic Future.  It is a great exploration of the opposing economic views of Larry Summers and Glenn Hubbard, and the reporters futile  attempt to get them to reconcile their differences.

As I responded to RichardH, at first it seems like the point is that there is no way to separate fact from fiction.

Then I realized that this is the wrong way to look at these opposing points of view.  We the consumers of these ideas and as voters and policy makers need to find a way to turn this away from a religious argument about two sets of beliefs and into an engineering discussion of how to get the economy and society to work best.  Engineering is my bias, because that is my training and natural bent.

As an engineering problem we need to realize that this is a discussion about choosing the right policies in the face of huge uncertainties.  There are things we just don’t know about the future.  There are human, social, and technological changes that will occur that we can’t predict.  There are some changes that we cannot even imagine. This is the type of situation that engineers face every day, yet they are called on to make decisions anyway.

So any policy proposal ought to be accompanied by an analysis of the uncertainties that could upset the wisdom of the policy in major and minor ways.  In other words, what is the proposal assuming for the future and  what is the sensitivity of the proposal to changes in these assumptions.  The proposer should tell us what we ought to measure about the progress of the proposal after it is implemented and how are we realistically to measure it.  What remedial steps are available when the path deviates from expectations after the proposal is implemented?

What other steps can you engineers out there recommend to turn this into a discussion that comes out with a resolution instead of an argument that never moves from the spot we are currently in?  What do people who have been trained or are experienced in other disciplines do to find a path forward?  What have people learned from their mistakes along the way?

What really makes me nervous is anybody who is so sure that a recommendation is so bullet proof that nothing could possibly go wrong.  Hearing that kind of argument, tells me that I am hearing ideas that may turn out to be useful, but that need a lot of further analysis before trying.

The role of some people is to come up with as many wild ideas as possible.  Others must take on the role of weeding out the good ideas from the bad ones. Some of the people who come up with the ideas will participate in weeding out the good from the bad.  Other idea people will choose not to participate. This will always be an ongoing exercise in a very dynamic world.


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One thought on “Boom, Bust or What?

  • SteveG Post author

    For years I have been assuming that President Obama doesn’t really understand economics because he was infected by Friedmanism during his association with the University of Chicago.

    Now I realize that economists at all the Universities he attended are on the nutty side of the spectrum – Columbia, Harvard, and University of Chicago.