by Neil McCulloch
Was anyone else disappointed to read Larry Elliott's article in the Guardian on 1 June bemoaning the 'shortage' of great economists today? It demonstrates how out of touch with the real world of economics he is.
There are many superb economists working on extremely policy relevant issues affecting the world today. As only one example, last week I interviewed Paul Collier at the University of Oxford – an enormously influential economist who is tackling real policy problems about what generates and what stifles growth.
There are many others, including in the UK. Larry Elliott’s rant simply demonstrates how out of touch he is with the modern profession. He perpetuates the myth that economists only teach perfect competition, or that we believe that the price mechanism always works to align demand with supply. This is nonsense. Most of the maths that he complains about is trying to model the infinitely more complex world of uncertainty, imperfect competition, and asymmetric information. This is a point which the only modern economist he praises, Paul Krugman, makes with elegance in his chapter Models and Metaphors about the value of mathematical models in his excellent Development, Geography and Economic Theory (MIT, 1997).