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Economists And The Public: If You Can't Trust Your Witch Doctor, Who Can You Trust?
A few years ago, I happened to run into Olivier Blanchard.
I offered my complaint that folks like Stan Fischer and himself had made macroeconomics narrow and stilted. “We’ve passed the market test,” he replied.
But the “market test” to which he referred is limited to academic macro. It is a supplier-controlled cartel, not a consumer market.
In general, we still seem to be ruled by the guys who were on top of the world in the 1990s and early 2000s. It's often pointed out that virtually nobody on Wall Street went to jail after 2008, but it's also striking that plenty of economists who were in charge of setting up the system that proved so hollow in 2008 are still on top of the world. For example, Stanley Fischer's return to the U.S. is being greeted with hosannas as a nearly infallible genius because he happened to sit out 2008 as head central banker in Israel, with little mention of his role in setting up the global 2008 as the intellectual godfather of the dominant macroeconomists.
A lot of this is just an old fear that any jungle tribesman would understand: Yes, maybe we occasionally have doubts that our most prestigious witch doctors know completely what they are doing, but surely they know far more than you or I, so we'd better keep paying them to keep the evil eye away.