I’m exaggerating to make a point. But
here goes….
It’s striking the number of leading
advocates of Modern Monetary Theory (MMT) who are, or have been self-employed or
run businesses: e.g. Warren Mosler, Mike Norman, Roger Mitchell, Neil Wilson
and last and least: me.
People who run businesses are in the
habit of GETTING THINGS DONE. If there’s a problem (like unemployment) they
tend to want the problem “effing” solved by this time yesterday.
In contrast, for academic economists,
an economic problem like unemployment is an excuse to write a paper or book
designed to further their careers. There’s no urgency to solve the problem.
Quite the reverse: the longer the problem remains, the more work there is for
academics.
And academics welcome any additional
and unimportant complexities: those complexities can be used to pad out their
papers and books. The complexities can be used to make the problem they address
more complex than they really are. That makes the author look technically
competent.
For people who want problems effing
solved by this time yesterday, unimportant complexities get chucked out of the
window.
Of course the above are caricatures.
For example there are plenty of academics who are MMTers. Plus simply running a business gives one some
sort of insight into real world microeconomics, but it does not give one an
insight into macroeconomics. But there’s more than a grain of truth in the
above caricatures. So a basic grasp of economic theory, plus an ability or
desire to run a business isn't a bad combination of skills or character
attributes.
Ricardian equivalence.
One of the worst examples of
academics’ love of irrelevant complexities is Ricardian equivalence. Academics
love working Ricardianism into their discussions or equations.
But the EVIDENCE seems to be that the
Ricardian effect is feeble or non-existent. E.g. see here
or here.
But in fairness to academics, some have been screaming from
the rooftops that Ricardianism is nonsense. Joseph Stiglitz said, “Ricardian
equivalence is taught in every graduate school in the country. It is also sheer
nonsense.” And Bill Mitchell
described Ricardianism as an idea from “La-la” land.
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