Naturally, DeLong is entitled to his opinion; and I'm sure that he sometimes makes some good points (as in, even a blind squirrel finds the odd nut). But exactly what point was he trying to make with a blog entry entitled "Oh Why Can't We Have Better Nobel Laureates in Economics?"
Who does he have in mind as a better laureate, exactly? Himself, perhaps? Here is a second rate historian with an Econ 101 toolkit dissing one of the great economists of his generation. And for what, pray tell?
Lucas claims that there is widespread disappointment with economists because we did not forecast or prevent the financial crisis of 2008. He goes on to say
Macroeconomists in particular were caricatured as a lost generation educated in the use of valueless, even harmful, mathematical models, an education that made them incapable of conducting sensible economic policy. I think this caricature is nonsense and of no value in thinking about the larger questions: What can the public reasonably expect of specialists in these areas, and how well has it been served by them in the current crisis?
Good question. People are likely to have different views on this. An invitation for debate.
DeLong does not appear interested in addressing the question. Instead, he brilliantly points out that there were economists who predicted recent events; and the source of public disappointment is that economists did not listen to these correct forecasts! Well, not that anyone actually forecasting anything with precision...here is what he says:
It is true that no model is going to successfully forecast the time and date of a "sudden fall in the value of financial assets." But that misses the point. What Mussa and his posse correctly did was forecast the growing size of the left-side tail of the distribution of possible future financial asset changes.
Let me see if I understand. Regular economists were simply cautioning that there was risk of financial disruption; say 5% (or some number consistent with historical norms). A financial crisis occurs...and this proves regular economists to be bad forecasters. They did not see the "increasing risk" like others. Mussa and other were better forecasters because their risk estimates were higher.
Two weathermen make a forecast: One predicts precipitation with 10% probability and the other with 20% probability. The rain comes...and Brad DeLong would claim that the latter is a better forecaster than the former.
Thanks Bradley. A word of advice: Don't stay up at night waiting for the Nobel prize.