Campaigning in the 187—member countries for the head of the International Monetary Fund is well underway. The terms of warfare for the most civilized and cerebral economic post in the world are civilized and cerebral as well. The front runner Christine Lagarde is not handicapped by her long association with the recently departed Dominique Strauss-Kahn nor for being a European candidate for a position Europe has monopolized since the IMF’s creation. Yet, the cheap clichés of neighborhood politics are already on display.
Her first declared challenger, Mexico’s central bank chief, Agustin Carstens allegedly has a problem embedded in his illustrious economic resume.
It’s widely acknowledged that, on paper, he’s better qualified for the job. Unlike the front runner, Carstens is a trained economist; he has already spent four years at the IMF as executive director and deputy managing director, and was Mexico’s finance minister from 2006 to 2009. He knows how to recruit, promote, manage and challenge other trained economists. He knows how to influence an economy and how that influence can do great harm as well as some good. Nevertheless, what gave Carstens his start now gives him a problem—he studied at the University of Chicago.
The Globe and Mail reports:
“. . . some critics have suggested Mr. Carstens may be too much of an inflation hawk, a relic of his three years of graduate work at the notoriously free market University of Chicago - a charge he dismissed Tuesday.”
Click on: https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20110608/RBIMFCARSTENSMCKENNAATL
The Financial Times bothered to provide Mr. Carstens’ rejoinder, “At Chicago, I didn’t learn a religion. I gained a series of analytical tools.”
Click on:
Those intellectual tools may be of little help in securing a majority of the votes of the 187 politicians who will choose the next head of the IMF, but they shouldn’t hurt him either.
Some 32 alumni of the University of Chicago are Nobel Laureates, including Milton Friedman and the Paul Samuelson. The impeccably Keynesian London School of Economics and Political Science has produced only 18, including the Bertrand Russell and Paul Krugman.
The University of Chicago may someday be over-rated. However, for the time being there’s nothing “notorious” about this great university of rigorous free expression.
Good point, however let's be honest about objectivity of the "dismal science" of economics. Yes, economists rely on data to determine good or bad policy, but I would hazard that when the chips are down, with a bewildering array of data sources and policy options, an economist ultimately relies on principles - as much as anything else - as a guide for the interpretation of events.
ReplyDeleteLook at the recent (and continuing) financial crisis and the ongoing debate (between nobel laureates, no less) over the best options to stimulate the economy. These economists are for the most part looking at the same data, using the same "analytical tools", and suggesting radically different courses of action. The source of these fundamental differences in analyses must be to a great extent subjective; research, place of learning, childhood trauma, the weather...who knows? However, it is surely true that the place where an economist learns his trade is a great influence on his understanding of the subject.
That is not to say that there is a set relationship between the school one attends and the resulting outlook of the economist - such an assertion would of course be simplistic and stupid. It is merely to say that it is not entirely unreasonable to be concerned that immersion in an environment where a particular set of views are dominant will leave its mark on the immersed. The impact on a practitioner of Mr. Carsten's stature can naturally be very quite easily verified by looking at his record.
I am not one to judge whether it is either a good or bad thing to be influenced by the Chicago School. However, there are many who associate that institution with the dogmatic disavowal of government and blind faith in markets that got us to the point we are at today. Not to mention those who associate the School with the Washington Consensus - the pristine models imposed by the IMF and other multilateral organizations on developing countries to often disastrous effect.
Given the subjective nature of economic analysis described above, there is sound justification (if one is inclined in that direction) for initial concern over an economist that has spent formative years of study and research in a place where a certain orthodoxy reigns. Mr. Carten's is being somewhat disingenuous when he states that he learned no more more than a set of analytical tools at Chicago. He would be more convincing if he acknowledged the prevailing paradigm at the University and described his intellectual response to it.
Fair comments. However, "blind faith" in markets is not passable economic analysis. We needn't fear that attending the University of Chicago will will turn one into dogmatic simpleton.
ReplyDelete