Who knows more about economics - Harvard PhD economists or hockey's greatest defenseman?
One of the most distinguishing features of economics as a field of study is the complete failure of economists to learn from their many mistakes. In science and engineering, theories and design practices are constantly subjected to the acid test of whether they match observed real-world phenomena. In science and engineering, theories and design practices are not judged on the basis of their complexity or the academic pedigree of the person who developed them. Instead, theories and design practices are judged exclusively on whether they work in the real, physical world or not.
This "acid test" of judging the merit of academic theories on the basis of their success in modeling real-world phenomena is clearly not a test that economic theories are subjected to. The best proof of this is the praise that the Soviet command economy regularly received from academic economists. Paul Samuelson had a PhD from Harvard and was a professor at MIT. (Samuelson is uncle to Lawrence Summers, #45 on the Confederacy of Dunces list.) Ben Bernanke credits Samuelson with performing "foundational work in the application of sophisticated mathematical methods to economics." To most people - certainly anyone who has ever taken an economics course in college, Samuelson wrote, by far, the most popular and influential economics textbook.
Throughout many editions of this textbook, Samuelson regularly included graphs that were used to predict future output of the Soviet Union and the United States. For example, in the 1973 edition of his textbook, Samuelson applied a "maximum" estimate of Soviet economic growth and a "minimum" estimate of United States economic growth to show that by 1990 the Soviet economy would be larger and more productive than the US economy! (1) In the 1989 version of his textbook Samuelson wrote, "The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive." (2)
Samuelson was hardly alone in failing to see what Soviet communism was, and praising it's non-existent economic achievements. In 1989, Lester Thurow, another Harvard PhD economist and dean of MIT's Sloan School of Management, asked the question, "Can economic command significantly accelerate the growth process? The remarkable progress of the Soviet Union suggests that it can...Today the Soviet Union is a country whose economic achievements bear comparison with those of the United States." (3) Could there be a more damning indictment of economics as a field of study than the conclusion of Harvard PhD economists like Paul Samuelson and Lester Thurow that Soviet communism wasn't a great engine of cruelty and impoverishment, but an economic system of considerable merit that warranted a serious comparison with that of the United States?
It is extremely illuminating to contrast the views Harvard PhD economists had on the merits of the Soviet Union with those of someone who lived under the yoke of communism. This contrast will show that the myriad problems present under communism - or any command economy for that matter - don't require 20:20 hindsight to see. Viacheslav "Slava" Fetisov is considered by many the greatest defenseman in hockey history. For most of his career he played for the all-conquering Red Army team. With the exception of a very notable loss at the 1980 Lake Placid Olympic Games - the record of success of the Red Army hockey team rivals that of any dynasty in sports.
In 1978 Fetisov was just a teenager and already regarded as one of the best junior players in the world. In the winter of 1978 Fetisov particpated in the World Junior championship held in Quebec City and Montreal, Canada. In an interview for the documentary "Red Army" Fetisov recalled being awestruck by what he saw. He marveled at the dozens of channels available on the cable television in his hotel room. He was especially taken aback by the commercials which showed tropical fruits and vegetables being available in the dead of a brutal Canadian winter, something completely unheard of in the USSR. He contrasted the seafood available every day of the week in Canada with the "fish Thursday" he was accustomed to in Moscow. What was immediately obvious to a Soviet teenager visiting Canada - the superiority of capitalism over communism - was lost on hundreds of PhD economists.
The fact that the economic establishment as exemplified by Samuelson and Thurow was completely blind to the intellectual, economic and moral bankruptcy that was communism demands some sort of explanation. The best explanation would appear to be the economic establishment wanted to see communism succeed, and this desire led them to become little more than propagandists for communism. The reason so many economists wanted to see communism succeed was communism, like socialism, relies on central planning, and the economists saw themselves as the best choice to be central planners. The great Wilhelm Ropke in his A Humane Economy, identified a tremendous lust for power behind much of the lousy theory that passed for economic insight. Ropke said of the economists constantly preaching economic intervention, "pump priming" and predicting the future,
"We are entitled to set least store by such moralizing attitudes when they are preached by intellectuals who have the open or secret ambition to occupy positions of command in such an economic system, but who are not critical enough of themselves to suspect their own, ethically none to edifying, libidio dominandi. They want to use the horsewhip to drive the carriage of virtue through impractical terrain." (4)
It would appear the many economists of the modern variety were blinded by power - or at least being placed in a position where they could exercise it - and this blinded them to the immediately obvious contradictions and failings that communism was replete with. Regrettably, these errors are not limited to the past. Instead we see these same errors repeated by the economic establishment of today. See for example the Confederacy of Dunces list and Ben Bernanke (#3), Alan Blinder (#5), William Dudley (#19), Charles Evans (#20), Austan Goolsbee (#25), Alan Greenspan (#29), Paul Krugman (#31), Frederick Mishkin (#36), Jeremy Siegel (#43) and Lawrence Summers (#45).
28 OCT 2018
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(1) David M. Levy and Sandra J. Peart, "Soviet Growth and American Textbooks," p. 10 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1517983
(2) Ian Harvey, "The Nobel Economist who Predicted the Soviet Economy Would Overtake the US," The Vintage News, August 23, 2018, https://www.thevintagenews.com/2018/08/23/soviet-gnp/
(3) Daniel J. Mitchell, "Even Economists are Vulnerable to Moral Blindness," Foundation for Economic Education, November 13, 2017 https://fee.org/articles/even-economists-are-vulnerable-to-moral-blindness/
(4) Wilhlem Ropke, A Humane Economy, 3rd edition, ISI Books, Wilmington, DE, 1998, p. 6