Wednesday, February 10, 2016

Robert Triffin: "Most economists are demagogues"

Jan Joost Teunissen interviewing Robert Triffin, 1985.
I would like to come back to an issue raised in a post of last year, Robert Triffin: "Most central bankers and economists are demagogues". In that post I quoted from an interview I had had with Robert Triffin in which he said, "policy decisions are dominated by slogans. (…) Many of my best friends share those slogans."

Why do academics (especially economists?) share and promote (!) slogans?

Because they believe in them?

Because they are conformist?

Because these slogans defend their interests?

All three answers may be true. But there is one other possible answer that I would like to dwell on and that is that many economists (most of Robert Triffin's friends were/are economists, I guess) simply do not see that they are sharing slogans. They feel, I think, that they are doing a serious, thoughtful job by defending these slogans.

What slogans am I talking about, or what slogans did Triffin have in mind when I interviewed him in Louvain-la-Neuve? Slogans that defended and promoted the current order, or disorder, as Triffin preferred to call it. Rather than promoting a proper international financial system, most economists defend and promote a global financial system based on the US dollar as key currency, which in Triffin's view is a non-system causing recurrent crises that hurt the poor.

Robert Triffin was not only critical of his fellow economists' defence of the US dollar based global system, but also of their lack of proper, rational analysis. Are many economists indeed not making a proper, rational analysis?

In a future post, I would like to try and answer this question taking the defence of the euro as an example. The insteresting fact is that both Dijsselbloem and Varoufakis defend the euro...

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