Sunday, May 31, 2009

Reminiscences of Ancient Syria? - turncoat economics

It is always flattering when economists regularly expressing their views publicly and supposedly with high authority support one's ideas, even if only unconsciously as they very probably never ever learnt of those. Therefore it is highly understandable if I was very proud of my smart ideas hearing that such an excellent economist as László Csaba (not to be confused with Csaba László, former minister of finance), professor at the Central European University and someone who is not only regularly sought by the media as expert but who also accepts this role and attends different TV and radio shows and gives interviews almost every week, echoed some of my thoughts. The opportunity was provided by the presentation of his new book(s?)"Crisis in Economics?" and in this task he was sided by another renowned expert, Péter Ákos Bod, former chairman of the Hungarian National Bank.

According to Csaba's opinion the crisis brought with it a wave of self-fulfilling pessimism and the real task would be to fight these jinxs as everyone knows that the crisis will have an end. Regarding the fate of economics as a science he didn't dare to make a judgement whether it is in crisis or not, but listed the problems and challenges economists are obliged to encounter. The presumption of absolute rationalism of actors, the capability of the markets for self-correction and the position of the economists as omniscient technicians of the societey, so willingly embraced by many, will certainly be doubted. He can even imagine that the present crisis will be a starting point for a paradigm shift as well. He denied that the road of the ECE countries towards convergence would be identical differing only in the starting points and maybe in their speed. In these assumptions and presumptions he was supported by Mr. Bod.

I won't say that such a set of ideas could not be consistent. But recalling Mr. Csaba's public performance from the last few monthes this book is a complete U-turn. (Just a short collection from the first few pages of a googled list, unfortunately in Hungarian.) He was convinced even in this February that the crisis is not an economic one, rather a financial, he prophesized that there won't be significant contraction. Moreover, he belonged (and still belongs) to the group of economists self-puffedly sitting in a studio and expressing their opinions peremptorily, never expressing reservations regarding its validity, never allowing that other views could have at least some minor relevance. As for the content of those views and proposals, Mr. Csaba never ever expressed something different from mainstream neoliberal ideas, he was always a champion of a smaller state sector, lower taxes and lower social spendings and among his arguments, clearly thought to be irresistible, always hinted to the example of states like Slovakia or Romania. (At least for me it is quite different from the idea of every ECE country having its own path towards convergence, even though in this case Mr. Csaba only wanted to fend off the opinion that the present crisis started outside Hungary and not inside.) To sum up: Mr. Csaba was not only always convinced of his own superiority as an expert, but he havn't got the slightes doubt regarding the mainstream model of economic policy and models and he proved to so overconfident that he dismised the idea of a world economic crisis even three and a half months ago, and attributed the situation in Hungary solely to the faults of its governments.

Everyone has the right to change his opinion. But it would be more credible if he would have been able to spell out some words expressing his sorry over his failure as economist in the recent past, describing clearly the points he reconsidered and not posing continously as the greatest ever Hungarian economists. It would have been made the book even more credible, as one can hardly believe that a serious work (not simply seeking easy publicity and money with a trendy topic) on such an important and complex topic could have been finished in three months (as Mr. Csaba held the opposite view that time) with all the necessary thorough editorial work as well.

I wouldn't waste any words of substance on Mr. Bod whose only considerable contribution to economics was his proverbial and long remered role played at negotiations with taxi drivers blocading the country in 1990, when he was more eager to satisfy his "biological necessities" than to bring the negotiations to a reassuring end, and who is a well-embededd member of the chorus of economists suddenly discovering themselves as non-neoliberals and meanwhile promoting the idea of a low tax, low redistribution, small-state economic model.

Update, 5. 8. 2009.: I have to admit, that I was not entirely fair with Mr. Csaba, but I was only following his public appearances and presumed that he is formulating the same opinion in his scientific texts as well. Now it turned out that he called for attention to the so called new populisms in the flat-tax economies (among them Slovakia), a phenomenon he characterized the politicians willingness to please the entrepreneurs with everything (low taxes, deregulation etc.) and making a fetish from the growth in a paper presented at a conference in March 2008. But as soon as he appeared in a radio or TV studio (and he made it fairly often, in almost every second week) he suddenly forgot about his scientific results and was like a robot, always repeting that Hungary has to cut taxes, spending as Slovakia and our regional competitors made earlier. So, the conclusion: he is not necessarily silly, he is simply mean and unprincipled, in his role as public commentator simply following political aims.

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