Why It's A Big Problem That Economists Still Don't Understand Money

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:18)

And I'm Tracy Alloway.

Joe Weisenthal (0:20)

So Tracy, both of us, our careers in finance media, it's roughly around the same time, all right? Right, like you started pretty much just before the financial crisis.

Tracy Alloway (0:32)

Yeah, that's right. In fact, I joined the Financial Times in September of 2008, so actually directly in the middle of the financial crisis.

Joe Weisenthal (0:42)

Well, that was like, that's the same month, yeah, or maybe October 2008, I started Business Insider, and we really, I always thought it was like the best time in terms of career timing-wise, because there was just so much to cover in those days.

Tracy Alloway (0:57)

Absolutely, and the best part was, because everything that was happening was so unusual and so new, you were sort of on an even footing with people who'd been covering it for years and years and years. Everyone was trying to figure out what was going on at exactly the same time.

Joe Weisenthal (1:11)

Yeah, my thoughts exactly. And then I think the subsequent years, the last decade or so, has also been incredibly interesting. I mean, obviously the news has slowed down a bit, but I think one of the, I guess, positive aspects of the post-crisis era has been this major rethinking about all kinds of conventional wisdom, all of the standard dogma about economics and which direction should policy go and what framework should best be used.

They're really coming under, even still today, pretty intense scrutiny and just sort of a rethinking of everything.

Tracy Alloway (1:52)

I mean, I'm not sure I would call it a positive development because all these questions of economic orthodoxy are sort of coming up because people think that economic orthodoxy hasn't actually worked and we still have sluggish economic growth and we still have lots of problems in the international financial system. So people are really trying to figure out what has gone wrong. But from a financial media perspective, yes, it's been very interesting.

Joe Weisenthal (2:18)

Yeah, I think that's a good distinction. It's not good that the post crisis economies, especially in the developed world have been so mediocre, sluggish, mediocre wage growth, et cetera.

But from our seats, from our vantage points, it's certainly been a time of sort of a great opening up of the possibilities and lots of chances to explore different ideas.

Tracy Alloway (2:43)

Yeah, and it's not, you know, it's an unusual time when you see headlines like the failure of central banks, and we see those all the time, right? That's sort of almost a given at this point in time with everyone talking about fiscal stimulus.

Joe Weisenthal (2:57)

Exactly right. So today, I'm very excited about our guest because he's probably one of the best positioned people to talk about the history of economic ideas, rethinking economic dogma, anticipating where policy will go and during a period of such a profound change. We're going to be speaking to Robert Skidelsky. He's a member of the House of Lords, but he's mostly known for having been the most famous and authoritative biographer of John Maynard Keynes. He's written extensively about Keynes and his work. And he is the author of a fairly new book. It's called Money and Government, A Challenge to Mainstream Economics.

And it's about this. It's about the history of the ideas that led us up to the global financial crisis. And it's a discussion of where things are going to go next. So sort of the perfect guest for this moment. So Robert Skidelsky, thank you very much for joining us.

So let's start with our intro.

When you look at the post-crisis era and you see all these different debates going on about the new frameworks and new ideologies and new approaches, are you heartened by it? I mean, I mentioned it's a positive. It's not positive that we've had such sluggish growth and that the old dogmas have failed. But do you feel excited by the possibilities that this has created in terms of new directions in economic thinking?

Lord Robert Skidelsky (4:36)

Well, we're in an interesting transition stage, aren't we? I mean, I always recall that old adage, the old world is dying and the new world is powerless to be born. I mean, the old world of economic policy, I think, suffered some pretty devastating blows, both in 2008 and really in the failure of policy to lift economies back to anything like vigorous growth since. That is most economies. There's a dissatisfaction with the orthodoxy. There's political discontent with the orthodoxy. And that is shown right through the political systems of the world. But there's no agreed consensus on where to go from here.