Roger E A FarmerPublished on Fri, Oct 11, 2019 / 7:00 AM GMT+8
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SINGAPORE (Oct 14): In a recent commentary in The New York Times, Binyamin Appelbaum placed the blame for increasing inequality in the US squarely at the feet of economists. He cited the work, among others, of Nobel laureate economist Robert Lucas, who directed policymakers’ attention towards the problem of growth and away from redistribution. Appelbaum also cited statistics on life expectancy in the US, which has fallen in recent years, owing partly to higher rates of drug abuse and suicide among economically disadvantaged groups.
But economists have not ignored the problem of inequality — far from it. Inequality has become a central research area in economics over the past decade, and has entered the public discourse in the US because of the penetrating work like that of Princeton’s Anne Case and Nobel laureate economist Angus Deaton. Moreover, there has been increasing collaboration between economists and other researchers from both the social and physical sciences — an approach I actively support through my involvement with the Rebuilding Macroeconomics project at the National Institute of Economic and Social Research in the UK.
The economics profession should not be so defensive in the face of criticism such as Appelbaum’s. Economists are not omniscient, of course. But insights from the dismal science — and in particular the advocacy of market-based policies to boost prosperity — have proven their worth many times over.
When I began working in the field of macroeconomics in the 1980s, the discipline was still dominated by Keynesian models. The questions we addressed then are now coming back into fashion: What causes business cycles? Is there a trade-off between unemployment and inflation? How can we design economic policies to improve the performance of the economy and prevent recessions?
But in the two decades from the late 1980s to the Great Recession of 2008, macroeconomists shifted their focus away from business cycles and towards economic growth. And the influence of University of Chicago-based economists such as Lucas was an important reason for that shift.
Roger E A Farmer is professor of economics at the University of Warwick, distinguished emeritus professor of economics at UCLA, management team and hub leader for Rebuilding Macroeconomics and the author of Prosperity for All
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