Economics Is In A Beauty Contest With Mathematics

First The Historical School, Then The Philosophical School Disappeared

Maybe the beauty contest explains why there is no Adam Smith, Friedrich Hayek, Ludwig von Mises, or even Joseph Schumpeter in our time.

One who does not learn the lessons of economic history is doomed to repeat it. Economists are doomed. Mathematics is no substitute for history. When I studied economics at my alma mater in Frankfurt am Main, there was, if I remember correctly, one elder professor of economic history left, but his courses were electables and he offered few courses.

In 1993, the Nobel Prize Committee had a special moment of inspiration when it awarded the economics prize to two professors of economic history.

Only Pure Mathematics Is More Aesthetic Than Economics

As a consequence, economists do not see reality anymore, only equations and abstract models. In their quest to be equal to physics, economists became econometricians. Or economists research some esoteric topics.

Economists Failed To Prevent The Great Recession

The Great Recession is a result of this beauty contest. The Great Recession should be a clarion call to every economist. Why are there highly trained economists working at, e.g., our central banks and international banks?

A Science Nobody Takes Serious

Economists are to blame when their science is ridiculed by popular opinions like economics is a dismal science guided by  an invisible hand and when they are the target of jokes like economists predicted 10 out of 7 recessions or you ask 10 economists and you get 13 different answers.

Or what did the so celebrated John Maynard Keynes once say “Practical men, …, are usually the slaves of some defunct economist” and “The long run is a misleading guide to current affairs. In the long run we are all dead”. What lesson did economist take away from this nonsense? Use mathematics and practical men will not understand you anymore.