I find modern economic theory so empty of useful ideas that it amazes me that it still survives. Nothing in a modern text ever seems to be of much value in assessing what’s going on or in deciding what policies to pursue. The Economist has put out a series it titles, Six Big Ideas which are standard forms of theory that either state the obvious in complicated ways or state what is almost certainly false in beguilingly simple ways. It is undated so may be quite old. I can only say that once economics ended up in the hands of academics, rather than being the preserve of people engaged in business and the practical realities of life (Ricardo, James and John Stuart Mill), it went off the rails. The one part that makes me think this is a bit old is the discussion of the Stolper-Samuelson theorem, which they describe in this way:

The paper was “remarkable”, according to Alan Deardorff of the University of Michigan, partly because it proved something seemingly obvious to non-economists: free trade with low-wage nations could hurt workers in a high-wage country.

Since this is what Donald Trump is trying to say, seems unlikely they would say it right now.

Still in Shanghai where the G20 is about to be held today and tomorrow and this is the story on the front page of The Weekend China Daily: Slow global growth sets challenges. From which:

How to revitalize a slowing global economy when many policy tools have been exhausted will be a key challenge for leaders at the G20 summit. . . .

Eight years after the global financial crisis, growth has failed to return to anything that would have been considered normal before the crisis.

Of course, it is those very policy tools that have been the problem. I presented my paper on the classical model to a group who would know be more likely to know whether I had deviated from the original texts than any other group alive, here at the UK History of Economics Conference, and the only criticism was that it is too wide to call it “the” classical model, but it would be OK to call it the John Stuart Mill model. Good enough for me. But what did not seem to occur to anyone is that if that is what Mill did say, and if you take his model seriously, as I do, you would never do the things we have been doing to make the economy come right.

For more on this, in the latest Quadrant, there is an article on classical interest rate policies in contrast to what you see today. More on this when I return.