Tuesday, November 04, 2008

Economist as Countercyclical Profession

Tyler Cowen's on the impact of current US financial crisis and economics professions:
I believe that demand for economics classes will rise, as it often does in economically troubled times. Some of this will be "shaman demand" rather than "knowledge demand." The consulting incomes of finance economists will fall and fewer talented people will go into finance. Speaking fees will fall since fewer economists will give talks at hedge funds. The relative status of macroeconomists will rise and the relative status of microeconomists will fall. Economists will gain in fame and lose in income. What do you think?
Now, if the crisis happened in Indonesia, how does it have something to do with the profession? This is what I thought:

The demand for economics classes will remain low, or stay the same, and I think "knowledge demand" is always thin in the country. But speaking and consulting fees will go up (yes), and the fame too. Or if you do not yet get your economics degree, at least the crisis will make you more popular in cocktail conversations.

I think in Indonesia the Sadli law --named after economist M. Sadli-- holds. It goes: regardless of many deafening political rhetorics in the media, when crisis happens, demand for sensible economists and economic policymaking and technocracy is up. But when the economy runs well, the populists and populist agenda are more likey to mess up get into policymaking.


  1. i used to think that was true - that populist-leftist economics get into policy making in times of crisis - until i realized, just these days, that it's because people like you guys really just choose to stick to your text books and class room and not speaking up at all, so in the end, only them get heard.

    in the middle of the most serious financial crisis that this country might face in the last 10 years, and cafe salemba featured exactly 1 post directly talking about it (mostly quotes), one post on sarah palin and the rest are text book stuff that might well be very interesting, but well, less urgent.

    the sensible economist stay out of the game and lost without ever getting to play. then it's just not fun.

    my two cents.

    PS: leo or whoever that was, one of your student, please tell him to stop telling me to read text books. i've read enough of them ten years ago.

  2. T/S, is that the real reason? OK, maybe we should try to write more on the current issue --although, as you probably already know, it is not easy to comment on current issue (when the data wasn't out yet) using the proper textbooks' approach. And that probably ends up as a (boring)game.

    After all, this is just a cafe :-)

  3. as you well know rizal, i'm not an economist. I'm the party animal. I hang out in cafes. And trust me, the only good reason to hang out in cafes, are to hear the most relevant stuff around.

    unless, of course, if it's a canteen :D

  4. btw, whatever happen to the lesbian manager anyway? How come i don't see him around at all these days?

    oh, the good old days, this cafe had good music and a lesbian manager, and even some girls.

    good old days of cafe salemba, who knows, i'm feeling all nostalgic.

  5. Dear Manager,

    I just posted a letter.

    Thank you,