. . . they’re not in awe of economists.
In contrast, economists sometimes treat each other with the soft bigotry of low expectations. For example, here’s Brad DeLong in defense of Larry Summers:
[During a 2005 meeting, Summers] said that in a modern economy with sophisticated financial markets we were likely to have more and bigger financial crises than we had before, just as the worst modern transportation accidents are worse than the worst transportation accidents back in horse-and-buggy days. . . . Indeed, for twenty years one of Larry’s conversation openers has been: “You really should write something else good on positive-feedback trading and its dangers for financial markets.”
That’s fine, but, hey, I’ve been going around saying this for many years too, and I’m not even an economist (although I did get an A in the last econ class I took, which was in eleventh grade). Lots and lots of people have been talking for years about the dangers of positive feedback, the risks of insurers covering the small risks and thus increasing correlation in the system and setting up big risks, etc.
I don’t think Summers, as one of the world’s foremost economists, deserves much credit for noticing this theoretical problem too and going around telling people that they “really should write something” on the topic. You get credit by doing, not by telling other people to do.
I think Steve Hsu (see above link) gets the point. No one’s going to go around saying that some physicist is a genius because he’s been going around for twenty years with a conversation opener like, “Hey–general relativity and quantum mechanics are incoherent. You should really write something about how to put them together in a single mathematical model.”
P.S. Just to be clear, I’m not trying to argue with DeLong on the economics here. He may be completely right that Rajan was wrong and Summers was right in their 2005 exchange. But I do think he’s a bit too overawed by Summers’s putative brilliance. In a dark room with many of the lights covered up by opaque dollar bills, even a weak and intermittent beam can appear brilliant, if you look right at it.