The fact that the economics profession can offer so little in the way of consensus guidance about dramatic, crucially important events like the panic of 2007-2008 is a huge problem and a very legitimate knock on the enterprise, but it doesn’t actually undermine the overall epistemic status of the discipline.
First is that the bumptious prose of this sickly little paragraph may as well be a sixth example for Orwell to present in Politics and the English Language. It is merely a hymn plucked in church to appease the faithful. It is difficult -- at least for me, because life is too short to spend too much time reading Teh Woodchuck with anything approaching regularity -- to really know whether these guys actually believe the guff they spread, or they've simply sunk too far into the sales pitch to divest credibly.
It doesn't matter. Just in that stray paragraph one sees much more fundamental errors, namely the classic Princess Bride issue of words not meaning what the user thinks they mean. Yglesias mentions "the panic of 2007-2008", as if those wascally Hunt brothers had tried to corner the dang silver market and caused a stampede. "Panic" is as inaccurate a term to describe what happened as the more tendentious debate over whether the real-estate collapse caused a "recession" or a "depression". An accurate term would be correction, or perhaps heist. "Panic" merely implies unknown causation producing unpredictable results via mass alarm and random collective action.
As opposed to, say, a bunch of boiler-room shysters pushing loans on people they knew full well wouldn't be able to afford them, just so they could slice and dice and tranche a bunch of derivative side bets, knowing full well that their investment in Barack Obama would be recouped when the mathematical reckoning inevitably came. Causation was known, results were predictable, and on the off chance that the engineering of this mess wasn't flat-out deliberate, it was at the very least sociopathically indifferent.
A lesser, but still substantial, semantic failure to follow through in an intellectually honest fashion is the "knock on the enterprise" line. Look, if economics is not an out-and-out religion, as IOZ calls it, with its impenetrable dogma, its cloistered priests, and laity suckaz like Yglesias, then at the very least one can ham-fistedly paraphrase Yogi Berra and point out that it's 90% psychology, and the other half is mathematical.
The problem is, the math side of it has been perverted beyond all honest recognition by the economists' brothers-in-arms, the rentier financiers, who every now and again pay some Indian kid from MIT to swing by the offices of Lloyd Blankfein's subordinates, dump some esoteric algorithm on a spreadsheet for them, and figure out how to plug in the numbers on whatever scheme they devise for the next round of rubes. The banksters neither know nor care how the formula works, or that it doesn't actually produce a tangible good, merely a new twist on the numbers game they run.
Now, I realize that the "enterprise" Matty refers to is economics, but seeing as how that discipline exists more or less symbiotically with finance, perhaps the current lack of, ahem, "consensus guidance" can be attributed to a poisoning of the epistemic well. Finance is not so much an "enterprise" these days -- a system that generates ever more money for ever fewer people, without producing any tangible goods or wealth, even secondarily (such as loaning that money or creating jobs with it) is not an enterprise, it's a racket.
The financiers are always going to maintain the pretense, especially since they have the government by the balls, and the assurance that when the new algorithm becomes mathematically unsustainable, they get bailed out and keep their goddamned bonuses. This is not about the creation of value or wealth, this is about recoupment by the very few from everyone else.
To the extent that intellectually honest economists realize all of this -- and how can they not? -- they are collegially and professionally constrained from stepping up and speaking their minds, fearing to be recognized as dupes to a street-corner hustle, or traitors to the common cause. Financiers move money around, economists track the results and develop arcane theories about yesterday's motions.
But neither group cares to mention the huge behavioral aspect to both, preferring to pretend that it's all mechanical, and therefore predictable and controllable to some degree. And the biggest behavioral factor is the return of a Gilded Age mentality, a smug, patrician assumption by a shrinking claque of well-heeled rulers that the rest of the population are merely sheep to be fleeced.
So no, the lack of "consensus guidance" is not undermining the "overall epistemic status of the discipline". But that status is being undermined all the same, by the failure of its prime movers to simply call things what they really are.
Orwell intrinsically understood the obfuscatory power -- and intent -- underlying cluttered language. It does not have to mean some firebreathing propagandist trying to conceal his true intent; it applies equally well to professional catechists.
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