Home » Economics » Will the Economics Profession Wither or Flourish in the 21st Century?

Will the Economics Profession Wither or Flourish in the 21st Century?

by John Brian Shannon | September 10, 2015

I compare the entire economics profession (and each individual economist in it) to a star quarterback — like the great Joe Montana who is probably the best quarterback who ever lived, or who will ever live.

But what would the great Joe Montana have been *without a healthy dose of self-confidence* and who instead lived his life on-and-off the field in a world of self-imposed self-doubt about his overall importance to his team — in short, a world-class athlete with vastly superior skills who didn’t know, or didn’t believe, how capable and how important he was to his team, to his sport, and to the fans?

That is similar to how economists and the profession in its totality appear to me in the year 2015 — world-class, with vastly superior skills, who don’t know, or who don’t fully believe how capable and how important they are to our society, to our nation, and to our civilization.

Spelling it out for you! Economics must trump Politics. Image courtesy: The jesuitpost.org

Image courtesy: The jesuitpost.org

Where we are – and where we need to go

It is a profession that is better than it has ever been, certainly no cohort of economists have ever had the knowledge, sophisticated theory, and datasets of today’s economists, nor have such intractable problems ever required solving.

For example, the economic puzzles extant in ancient Rome or of the Victorian Era were Lilliputian by comparison.

Three problems confront the economics profession today

1. Unlike Joe Montana who received huge accolades for his massively successful plays on the field — economists sometimes prevent economic catastrophe but nobody notices and the world moves blithely on.

Economists prevent economic catastrophes and nobody notices. Need I say more? It’s a problem related to mindfulness, to the recognition of competence, and of reward.

It’s a problem intrinsic to human psychology that we reward some, but not others.

It might be more accurate to say that today’s economists ‘make plays’ that are of the utmost importance to ‘the team’ but are more analogous to the defensive linemen on a football team ‘who prevent the other team from scoring’.

Notice that for those players the cheering isn’t as loud?

It’s a problem in sports, and in economics too, and (unbelievably) many economists don’t give their own colleagues due respect.

It isn’t always about creating ‘touchdowns’ sometimes it’s about preventing ‘touchdowns’ by the other team — each is just as important as the other.

Psychology is a major factor in economics, in trade and in the markets, yet the application of human psychology in economic theory has been largely overlooked.

2. The profession lacks self-confidence. Imagine superstar pro athlete Joe Montana — but *without* confidence. (!)

Did Joe Montana, great as he is, ever seriously think that every time he threw the ball that it would result in a 50-yard touchdown?

No. Joe Montana showed up on gameday and played his best game. Because that’s what Joe Montana did.

But did the fact that he didn’t throw a 50-yard touchdown every single time he threw the ball, cause him to lose confidence? No.

If you’re playing *your best game* then you should have all the confidence in the world. But there’s no harm in trying to improve your game, over time, that’s a given. But to lose confidence every time you don’t score a touchdown? That should never enter the equation.

3. “Start with the end in mind.”

In order for economists to do their jobs properly, we need to have measurable goals and metrics to steer by.

Nobody enters a serious car or yacht race where there isn’t a definite start line and a definite finish line.

Economists are stuck in a race with no start line and no finish line. Why are we even racing?

We know who we’re racing, we know when we’re racing, but what goal are we trying to achieve? Would somebody tell me?

They can’t. There is no goal. Economics is a free-for-all-race against other economies with no end goal.

And yet, every economy (country) is in that race and each one started at a different position, are driving different kinds of vehicles, at different speeds, and taking different routes.

We need to stop that.

You can’t *win* a race when there’s no finish line (a goal) unless you kill all the other competitors. Then, you *win* by default. Not very sporting, old chap.

We tried that before. Mutually Assured Destruction (M.A.D.) — anyone remember that?

We arrived at M.A.D. in the 20th century because politics ruled the world and not always with good results. Thus far, the 21st century doesn’t look much better.

I could write a thesis on this — and volumes, or even tomes would still need to be written on the clear and verifiable path that took us from the (economic) competition between nation-states, to the (political) M.A.D. doctrine.

National Economic Goal-Setting

We need to start with the end in mind, a goal.

I posit that the finish line *the goal* (limited to the U.S.A. to keep this example simple) should be that every citizen should have a reasonable expectation to attain a net worth of 1 million dollars by age 25, near-perfect health with universal healthcare systems, and a tuition-free university education.

Further, regulators should require that a minimum of 25% of every American’s investment portfolio should be invested in U.S. corporations, or single entity businesses (artisans, for example) and another minimum 25% of their portfolio be invested in foreign companies that are located in countries that enjoy ‘Most Favored Nation’ trading status with the United States.

And finally, for the United States to always earn a Top 5 ranking in such indices as the UN Happiness Index and the Social Progress Imperative if we expect every citizen to fully buy-into our national success.

Economists could ‘work to’ and ‘measure against’ and ‘devise new theories’ in order to meet those goals

Who but America could attain such a goal?

Germany, Japan, The UK, France, Canada, Australia, a few more Western nations maybe — with America leading the way.

Beginning with the end result in mind would give the economics profession unprecedented focus and allow it to become all that it can and should be, instead of it continuing on without clear and measurable goals to steer by — and because of that it is a profession laden with self-doubt and presently living under the thumb of politicians.

A Tipping Point for Economics

The economics profession is nearing a tipping point in the early 21st century.

It will either rise to unprecedented greatness by asserting its independence from politics by setting its own goals with the ‘end-user’ of economics in mind (which are citizens, not corporations) thereby becoming super-efficient, super-effective, and consequently, economists would become more confident — or the profession will forever remain the scapegoat of politicians.

In the 20th century we faced Mutually Assured Destruction due to the competition between political models.

If economics remains subservient to politicians the 21st century will devolve to M.A.D. of a different kind, this time it will be the Mutually Assured Destruction of the global economy due to the competition between political models.

Because in a no-goal model, the only way to *win* is to eliminate competitors

Economics by its very definition is amenable to and works better with metrics, and an end goal. In politics, there is no end goal.

If we are to survive as a species, eventually, the importance we place on economics must supercede (Canadian spelling) that of the importance we place on politics, because, as I said before, in a no-goal race the only way to win is to kill all the other competitors. Then you *win* by default.

Which is what we’ve been doing in slow-motion since 1914 and one could argue, since the time of Cain and Abel.

Our species must evolve past the ‘law of the jungle’ model to a point where it isn’t all about the politics of ‘country A’ vs. ‘country B’ — but where it’s all about how well citizens score their nation on the UN Happiness Index and Social Progress Imperative index

Only when we devote our industrial, academic, and social effort towards the well-being of the ‘end-user’ (citizens) with verifiable end-user metrics, will we stop working at cross-purposes. Then watch our species succeed!

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