I frequently listen to CBC podcasts, namely Ideas and The Current. This recent production titled “It’s The Economists, Stupid” sheds some light on the ironies of our current economic system.
I found one point particularly engaging: That economists, as our main source of information on the market, create instability through their projections. However, these predictions are based primarily on feelings, judgments and best guesses. Instead of being transparent about this, they state these predictions as fact. This can result in mass panic and economic instability, even economic crisis. However, we look to these same economists for solutions to economic crises as they occur. This questions is particularly pertinent in our discussion of credit.
It’s definitely worth a listen.
My question to you is:
Will transparency create stability (we won’t worry as much about the predictions of economists) or will it create mass panic (if economists don’t know for sure, can anyone guarantee anything)?
http://www.cbc.ca/radio/ideas/it-s-the-economists-stupid-1.3219471
I think that with the market, no one knows for sure what direction it will head, and it is impossible to guarantee anything (Think the Wolf of Wall Street lunch scene with Leo and Mcconaughey discussing what a Fugazi is but applied to the whole market). People have tried and continue to try to “beat the market”, or even quantify directions it will take, with varying degrees of success, but with no absolute certainty and replicability. It is impossible to disassociate feelings, judgements and best guesses from predictions, in my opinion, as emotion, primarily fear and “irrational exuberance” to quote my man Greenspan, drive the S&P 500.
The public gets a huge amount of information on the market from the news, which more often than not simplifies and sensationalizes economic currents. To me this is more likely, and a greater danger than a public following the actions of the Federal reserve, and reading the Economist and quarterly updates from the IMF.
What I drew from the CBC link was that the biggest danger is that economists working for supposedly neutral organizations (Central banks, IMF, OECD, NGOs), never mind those working for corporations motivated by profits, are often way off the mark because they suffer from group think or careerism that results in thinking biased towards “cutting taxes, reducing deficits, massive down-sizing, bloated CEO salaries, and shrinking social programs till they scream”, to quote the two economists in the link.
Hi William,
While I agree that there is some conspiracy theorizing happening in this podcast, what interests me most is the connection you made about fear and market predictions.
I didn’t get that the panelists were saying that predictions were not possible, just that they were a combination of descriptive and prescriptive practices. However, when ideas about economics are presented to the public as descriptive, there is a lack of transparency about the value judgments used to make the economic claims.
Just as our government is held to account through policies of transparency, so too should economists. Transparency will lead to increased democracy and perhaps even better policy making. However, I’m not so naive as to think that transparency is always the solution. Sometimes, transparency will only breed fear and panic… But censoring what to make transparent kind of defeats the purpose of the whole “let’s be honest” movement. In the end… I think I’m just glad I’m not a politician or economist. 😉
Hi Janine! Thank you for sharing!
This seems to be a contemporary example of the exact point Horner was making in his review of Thornton’s “Inquiry into the Nature and Effects of Paper Credit”. We can rely on economists to provide the public with the raw data (the transparency you address in your question), but it is the intellectuals (or novelists) who make sense of the economists’ esoteric discourse, conveying it to the public in a rational way, which ultimately reduces panic.
So, in response to your question of whether transparency creates stability, I would say that it depends entirely upon the rhetoric. Certain narrative and rhetorical strategies have a way of forging stability in an inherently unstable system. It’s all a matter of persuasion. Think of it as rhetorical ‘control’…since control seems to be such a hot topic in “Emma”.
Personally, I feel as though economists intentionally utilize cryptic language when it comes to explaining our current economic state in order establish their credibility and justify their profession. What better way to incite panic (and thus have people depend on you) than to confuse the hell out of them? The rhetoric of economic discourse is elitist and stratifying (which frankly, is exactly how I feel about scholarly discourse: excuse the bitterness here, I’ve just finished reading Derrida’s “archive fever”).
But that’s why Walter Scott thinks the novel is so great! It provides a complete and whole understanding of these typically inaccessible economic ideologies, through lay terms! Jane Austen’s “Emma” is democratizing in that way; it not only puts forth and critcizes the circulating economic ideologies without causing a crisis, but it also conveys them in a way that everyone can understand. Mainly because we can relate to them on a personal level… I hope that made sense.
Graham,
I could not agree more. When listening to this, I also thought of the conversation we had in class about economic discourse being out of the reach of the public. At this point it is speculation for Austen, but based on a reading that I just finished by Sandra Sherman, it would seem that Defoe was intentional in using his writing (allegory, metaphor, narrative, amatory fiction) to make the economic discourse clear to the lay reader.
I also appreciated that you pointed out the strong connection between information and the democratic process. I believe that journalists play a huge role in this (as William alluded to above). Transparency with the public is helpful, but only if it is communicated in a way that can be understood. Elitist language is almost always associated with creating in and out groups, but in the case of economic discourse, the trajectory of the market affects us all. So I do believe that the rhetoric used to discuss it should be made accessible to the public.