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Six economists, seven opinions - or more

Published by The Straits Times, Singapore on 2004-10-28

THOMAS Carlyle, the crabby 19th-century author, called economics 'the dismal science' - mostly because he thought that economists such as David Ricardo, John Stuart Mill and Thomas Malthus not only shared irascibility but also were being pessimistic about prevailing social conditions.

Economists are still getting a bad rap, especially when dismaying statistics about economic growth start rolling in. Just yesterday, an economist friend of mine in New York, Mr Neville Bugwadia of the Empire State Development Authority - whose job it is to keep track of economic growth in New York State and to promote it through tourism and foreign investment - drew on the title of an Elton John album to capture his frustrations over being the bearer of poor tidings: 'Don't shoot me, I'm only the piano player.'

If you're in a profession where the three most important words are, as the
American economist Edward Leamer puts it, 'Compromise, compromise, compromise', then you've got to be able to laugh a little at the inexactitude of your business.

And inexactitude is exactly what's been happening this week as concern mounted about a global economic downturn that could affect jobs, prices and production in the region. Different economists interpreted the data differently, prompting one German academician I met at the Austrian National Day celebration on Tuesday to quote Winston Churchill's quoting of Barbara Wootton: 'Where there are six economists, there are seven opinions.'

There may even be more than seven opinions. The aforementioned Churchill once chided John Maynard Keynes for giving him two opinions on every issue.

I asked an American banker based here in Singapore about how economists engage in their own brand of humour, even if it's black humour. He promptly came up with something a fellow American, Professor Abba Lerner, famously said: 'In the long run, there's just another short run.'

I turned to Mr Arjuna Mahendran, the widely respected chief economist and strategist for Asia-Pacific at Credit Suisse in Singapore. So when would the economic downturn affect South-east Asia, and how severe would it be? I reminded him that Singapore's Trade and Industry Minister Lim Hng Kiang said earlier this week 'some kind of impact' could come towards the end of next year, a projection questioned by even Singaporean economists who thought it would come sooner.

'There are optimists and pessimists among economists, as in Carlyle's time,' Mr Mahendran said. 'But what we do have in common is the recognition that economic slowdown will be taking place regionally and globally. What we don't have is any consensus about addressing the situation.'

How could the Sri Lankan economist be expected to expect any consensus, anyway? Do economists ever construct consensus? As Irish playwright George Bernard Shaw said: 'If all economists in the world were laid end to end, they would not reach a conclusion.'

But just because economists seldom agree on any issue doesn't mean that they necessarily vilify one another, at least publicly. That brings to mind a question sometimes raised in economic circles: 'Why won't sharks attack economists?' Answer: 'Out of professional courtesy.'

But even that is changing these days, as economists vie with one another for public attention, media publicity and the Nobel Prize in Economics. I no longer categorize economists into supply-siders and non-supply-siders but into the haves and have-nots - those who've 'won' the Nobel Prize and those who haven't.

Such as Professor Jagdish Bhagwati, the world-renowned trade expert at Columbia University, and his fellow Columbia economist, Nobel Laureate Joseph Stiglitz - whose big intellectual fight is over globalisation. Prof Bhagwati defends the free flow of trade, capital, human resources and manufacturing across increasingly seamless borders, while Professor Stiglitz, in his latest book, contends globalisation hurts the world's growing cohort of poor people because it puts too much emphasis on the viability of free markets.

So who's right? Prof Stiglitz, an icon of left-leaning economists, has the
Nobel citation hanging on his wall, and his book has about 30,000 copies. Prof Bhagwati's book, on the other hand, is nearing 100,000 in hardcover sales.

But what about the Nobel? Disappointing not to have won yet? There are those - the have-nots, mainly - who contend that the Nobel Economics Prize isn't as prestigious as the prizes awarded in other categories as literature, medicine and physics. Indeed, economics is the only category in which two people can share the Nobel Prize for saying opposite things: Sweden's Gunnar Myrdal got it for his contempt of capitalism; Austria's Friedrich Hayek won it for his disdain for the development-through-subvention school of thought.

Which brings us back to Carlyle's characterization of economics as the dismal science. I'd also call it the inexact science. Indeed, Lord Keynes, when asked why his responses to economic queries from Churchill were garrulous, replied: 'I'd rather be vaguely right than precisely wrong.'

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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