Friday, January 10, 2014

ASSA - AEA 2014 The Return of Conventional Thinking

The recently concluded Allied Social Sciences Association annual meeting (better known as the American Economic Association and affiliated groups) showed a re-emergence of conventional thinking as the "mainstream" tries to rehabilitate their positions on debt, economic growth and austerity. The conference had a bit of a rocky start thanks to the snow storm that hit Philadelphia and the rest of the Northeast so there were incomplete panels and speakers who were not able to be in attendance.

My concern in sitting through six panels on Friday and Saturday is that there is still a large number of economists, prominent members of the mainstream, that are hell bent on twisting economic policy toward the same thinking that got us into the crisis in the first place. Over the last few years the volume has increased at these gatherings. The introspection seen in 2010 is largely gone. The creative thinking comes from the "allied" groups like Labor and Employment, Evolutionary Economics and URPE.

For example, there were several different panels, three by my count, which featured either Rogoff or Reinhart from Harvard talking about their twin theories of the difficulty of recovering from financial crisis and the relationship of levels of public debt and economic growth. While economists like Pollin from UMass and Krugman from Princeton have debunked much of what they write, the AEA gave them plentiful platforms for discussion of their work. These panels frequently involved a discussion of austerity; the process by which advanced economies have been shrinking their public sectors during this period of economic stagnation (or decline if you are in Europe).

The great irony in all this … the mainstream economist who made the most sense in these discussions was Larry Summers. He has a theory of contemporary secular stagnation which discusses the current stagnation and whether it is fixable given normal mechanisms … he thinks no. Of course, significant progressives like Paul Krugman and Brad DeLong did not participate this year. There were interesting talks from others at the Evolutionary Economics, URPE and Economists for Peace panels. If you are interested in seeing significant work from progressive economists skip the AEA proceedings and go right to Dean Baker, Larry Mishel and Stephanie Kelton.

Oh and hope it doesn't snow in Boston in the first couple days of New Year 2015; because that is where the conference meets next year. I'm a bit worried it is going to be me and some folks from Harvard and MIT if the weather is as bad as this year.

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