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Leithner Letter Nos. 179-183
26 October 2014 - 26 February 2015

In the University of Oxford, the greater part of the publick professors have, for these many years, given up altogether even the pretence of teaching. … [More generally, English universities have] become sanctuaries in which exploded systems and obsolete prejudices found shelter and protection, after they had been hunted out of every other corner of the world. In general, the richest and best endowed universities have been the slowest in adopting those improvements, and the most averse to permit any considerable change in the established plan of education. Those improvements were more easily introduced into some of the poorer universities, in which the teachers, depending upon their reputation for the greater part of their subsistence, were obliged to pay more attention to the current opinions of the world.

Adam Smith
The Wealth of Nations (1776)

The free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. … The prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present – and is gravely to be regarded. In holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite.

U.S. President Dwight Eisenhower
Farewell Address to the Nation (17 January 1961)

There’s a lot wrong [with American universities]. I’d remove ¾ of the faculty – everything but the hard sciences. But nobody’s going to do that, so we’ll have to live with the defects. It’s amazing how wrongheaded [the teaching is]. There is fatal disconnectedness. You have these squirrelly people in each department who don’t see the big picture.

Charles Munger
Vice-Chairman, Berkshire Hathaway, Inc. (2002)

A Reviewee Reviews a Reviewer – Part II

The examples are legion, but one will suffice. “The current economic situation is in many ways better than what we have experienced in years,” the Organisation for Economic Co-operation and Development (OECD) confidently prophesied in the Economic Outlook it published on 18 July 2007. Seers are usually wrong, and often egregiously so; but they seldom doubt their own prophesies:

Against that background, we have stuck to the rebalancing scenario. Our central forecast remains indeed quite benign: a soft landing in the United States, a strong and sustained recovery in Europe, a solid trajectory in Japan and buoyant activity in China and India. In line with recent trends, sustained growth in OECD economies would be underpinned by strong job creation and falling unemployment.

“Why,” asks Ciro Scotti in Robert Shiller Explains Why Economists Won’t Help Fix the Economy (Business Insider, 9 October 2011), “didn’t economists see the financial crisis coming? And why in the face of joblessness and a floundering economy are they, in the words of one top economist, ‘unable to be helpful’?” Scotti continues:

Yale economist Robert Shiller [one of the winners of the 2013 Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, which is erroneously called the “Nobel Prize in Economics”] has a very simple answer – at least to the financial crisis question: His colleagues in the dismal science are wearing blinders these days, with most examining only narrow strands of data instead of taking a world view that encompasses other disciplines. Economists are no longer the “worldly philosophers” they once were, argues Shiller. … “The financial crisis that started in 2007 and that continues today is widely taken in the popular press as evidence of a lapse, moral or otherwise, in the wisdom and judgment of the economics profession,” Shiller and his wife, Yale psychologist Virginia Shiller, write in a paper presented to the 9th annual conference of Columbia University’s Center on Capitalism and Society.

To read the entire Newsletter (PDF), click here.

Chris Leithner


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