Paul Krugman says the state of modern macro is “rotten”. But a reader passes along a comment that I largely agree with:
“I disagree with Krugman. I think the state of macro is getting better. The rise of heterodox schools like Keen’s MCT, Mosler’s MMT and Roche’s MR are huge advances in understanding the monetary system. I’d love your thoughts here.”
I think this is right. The internet has caused some fairly serious examination of the state of modern macro. The spread of free educational tools and access to information has made it possible for just about anyone to begin to better understand the macroeconomy and question what was once only available through a textbook. The ideas in the field were once limited to distribution through a small group of economists who had publishing deals or relationships with the right journals and institutions. That’s no longer the case. Today, any old schmuck (like yours truly) can come along, pour his/her soul into understanding the dynamics of the world of money.
This spread of information and very public questioning of ideas has resulted in great outgrowth in thinking and huge advances in learning. I think it’s even influenced the way Dr. Krugman approaches things, but that’s just speculation.
I briefly touched on all of this in my Financial Times op-ed earlier this year (see here). The way we are beginning to understand “the machine” is changing. And it’s this growth in education and debate that will ultimately ensure that the way the machine functions is also changed. I think the state of modern macro is fantastic. In fact, I doubt it’s ever been better. That doesn’t mean it’s perfect, but we’re moving in the right direction. After all, with the free exchange of ideas and information we’d have to be fools to not build a better model for understanding….