During my first week as a graduate student in economics, I attended a pleasant social event organized by the more senior students in the department, a Saturday evening party that was meant to help first-year students ease into the demanding program. I sat down among a group of fourth-year students, and they kindly offered to give me the lay of the land regarding the challenges of the first-year curriculum.
After several beers, they began to talk more expansively about economics and economists. One student said “if you took all the economists in the world and laid them end to end, they’d never reach a conclusion”. Another student added, “economists have forecasted five out of the past three recessions”. A third student claimed that President Harry Truman once asked for a one-armed economist to serve as his advisor and when asked why, Truman replied “So he can’t say ‘on the one hand, but on the other hand’”.
But the story I remember best was told by a graduating student who had worked as a research assistant for the head of the Council of Economic Advisors, a prestigious position that gave him unique insights into how economic policy was formulated. His story was about the glory days of the former Soviet Union, where the military would hold a parade each year to celebrate May Day, and leading the procession of tanks, missiles, and bazooka-bearing infantry marching proudly toward Red Square was a row of goose-stepping economists. One spectator turned to his companion and asked, “Comrade, why are there economists marching in this military parade?”, to which his friend replied, “Comrade, do you have any idea how much damage they can do?!”
Source: ‘Beware of Theory Envy!’ by Prof. Andrew W. Lo of MIT – pre-conference essay prepared for “What Post-Crisis Changes Does the Economics Discipline Need?”, a conference organized by Diane Coyle and Enlightenment Economics, the Bank of England, and the U.K. Government Economic Service on 7 February 2012.