Quotes: 1) John Maynard Keynes on “the master economist”

Posted by: Matt Nolan on: October 11, 2008

In: Quotes
6 Comments

… the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher–in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

ht Anti-Dismal, Bluematter, and India’s Development. Note it is also mentioned under the Economist post on Wikipedia.

6 Responses to "Quotes: 1) John Maynard Keynes on “the master economist”"

1 | Paul Walker
October 11, 2008 at 12:30 pm

And Alfred Marshall is one of the very few who did have that combination of gifts. Who else?

2 | Matt Nolan
October 11, 2008 at 5:45 pm

Keynes himself did. A lot of the classical economists (such as Mill) did.

It is more difficult when we think about contemporary economists as they are all so much more specialised. The most recent economist to fit this category is probably Friedman

3 | Paul Walker
October 11, 2008 at 6:09 pm

How about Mr A. Smith?!

4 | Matt Nolan
October 11, 2008 at 9:30 pm

“How about Mr A. Smith?!”

I think I’d include him with the classical economists 😛

5 | Andrew W
October 12, 2008 at 8:57 pm

Off topic, just wanting to fly a kite past you, as a method of bringing stability to the credit and other markets what would be the result of governments agreeing to legislate to knock, say, 30% off of every loan, Bank or otherwise? Obviously thats a substancial transfer of wealth from lenders to borrowers, but at the moment there just seems to be too much debt around given the across the board reduction in asset values.
To get a recovery don’t we need more confident consumers who’re carrying less debt?

Another question, how much of this crises is a product in the rise of oil and therefore petroleum products? If money was getting sucked out of wallets, consumer state and business and margins squeezed for the last two years wasn’t a credit crunch inevitable? Isn’t there aways a crunch and recession soon after a steep rise in oil price?

6 | Matt Nolan
October 13, 2008 at 9:27 am

“as a method of bringing stability to the credit and other markets what would be the result of governments agreeing to legislate to knock, say, 30% off of every loan, Bank or otherwise?”

I think that this presupposes that growth stems from those that are willing to borrow – when growth stems from the fundamental production (and international competitiveness of our production).

As far as I can tell the current problem stems from lenders unwillingness to loan to borrowers. If we tell lenders that they have to give up a 1/3 of there savings, this will probably make the situation worse instead of better.

The first best solution for me would be the full disclosure of information between borrowers and lenders – however, as this is practically impossible the goal is to get the market to function as well as it can given this asymmetry.

Another issue is the fact that there is a transition cost from the bankruptcies etc that are happening. Personally, I think we if we had full information we should let institutions fail – however in the absense of this information we have to take into consideration what will happen down the line.

There is no quick fix to the problem of freezing up credit markets – and in fact any attempt to create a quick fix will probably end up disproportionately hurting those not directly involved in the market (taxpayers namely).

“Another question, how much of this crises is a product in the rise of oil and therefore petroleum products?”

This is the result of asymmetric information between borrowers and lenders – it is not the result of a wealth transfer stemming from rising oil prices. The higher oil prices will slow growth in countries like NZ sure, but it is not related to the credit phenomenon.

“Isn’t there aways a crunch and recession soon after a steep rise in oil price?”

We didn’t see a recession in 2005/06 when oil prices rose sharply, but there often is a recession. For NZ an increase in petrol prices is a negative terms of trade shock – so it reduces our countries income. A reduction in our countries income implies we can afford less things, as a result a recession is a logical result of that.