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  • Mark Thoma on Resolving the Disconnect Between Economists and Public Discourse

    Mark Thoma tackles the question of why--and how--the field of economics retreated from what he calls its "public mission," in an essay for the Institute for Public Knowledge . While once a discipline that engaged routinely with citizens and leaders in the public sector, Economics spent much of the latter half of the twentieth century exploring issues that, while important, were not part of the general discourse. Thoma calls this "The Great Disconnect," and he examines several reasons for it: Mathematics and the Desire to be a Scientific Discipline ...Michael Bernstein makes this point as well, as the discipline became more and more mathematical – the language we speak is increasingly symbolic rather than verbal – it became less accessible to outsiders. Positive and Normative Economics ...economists have become less willing to take sides in public debates, and more importantly unwilling to wade into public debates when doing so can be perceived as supporting one side over the other. Sociological Factors ...As economics has become increasingly mathematical and theoretical, it has also become more cliquish. Interest in Different Questions ...The fact that those inside and outside of academics are interested in different questions may have also play a role in severing the ties of academics to the outside world. The result, Thoma argues, is bad for the field, for economists, and for society in general: For all of these reasons, economics lost communication with policymakers and practitioners leaving room for all sorts of “charlatans and cranks” to fill the void. In doing so, academics ceded important ground to think tanks aligned with one party or the other, to self-appointed economic experts, to business economists maximizing profit rather than public knowledge, and to a media that doesn’t always comprehend the economics that underlie a particular issue. Even in cases where there actually was fairly wide agreement among academic economists about a particular policy proposal, the public debate in the media did not convey that economists were largely united on the issue. But there is good news. The last five years have brought about a lot of positive change. Thanks to social media and blogging, more and more economists are writing for a public audience. Thoma has seen the benefits of engaging with the public through his own blog, Economist's View (one of many daily reads for The Watch). He extols the virtues of blogging and writing for the public at large in the second half of his essay. Read New Forms of Communication and the Public Mission of Economics: Overcoming the Great Disconnect here .

  • Tim Duy: Latest Economic Activity Suggests 'More Interesting Year' for Monetary Policy

    In his latest Fed Watch at the Economist's View Tim Duy lays out some reasons to consider the idea that the Fed may shift its policy away from additional easing. He is not ready to predict a new course yet, but he points to a series of recent data reports that suggest an economic picture shifting faster than he expected. First and foremost is the latest ISM manufacturing report --new orders increased 5.8 points. But also the household savings rate appears to be slipping back down, and consumption has improved despite "the damage done to household balance sheets over the past three years": Duy writes: Against the backdrop of generally solid data (yes, homeownership rates continued to decline, but no one expected anything else), the headline gain of just 39k nonfarm payroll jobs was something of a slap in the face. The weak showing, however, was quickly discounted as a weather-related event. As is now well known, the household survey was also challenging to interpret due to new population benchmarks. Jim Hamilton has the story here, along with plenty of links to excellent insights on the topic. Cutting through the analysis, it seems that most are in agreement on one important point – the unemployment rate has made a dramatic drop in the past two months. The kind of dramatic drop that points to some real improvement in the labor market. And yes, I know that we are still deep, deep in the hole on the labor market. But this is one of those “journey of a thousand miles begins with a single step” situations. We have just one solid quarter of real final demand behind us, and the early read on January data is reinforcing the importance of that demand. Sustain final demand anywhere near 7 percent growth – or even 4 to 5 percent – and labor market improvements will emerge in short order. We aren’t there yet. I have already expressed concern that final demand will yield in the face of rising imports. But if the unemployment rate continues to drop at this pace, the Fed’s forecasts will quickly seem overly pessimistic. And that will turn Fed officials back to the issue they began with in 2010 – will they need to shrink the balance sheet sooner than later? Read the full post here .

  • Growing Percentage of Americans Unemployed for 27 Weeks or Longer

    The scariest graph of the Halloween weekend came from Mark Thoma at Economist's View : Please share your thoughts on the striking percentage of long-term-unemployed Americans and what it means for the economy going forward by clicking on comments .