Reflections on a vast economic system

These days New York is only one of many huge metropolitan centers across the globe. The scale of the whole thing is, more or less, inconceivable, in the sense that nobody can picture the reality of our getting and spending.

Maybe the reason that this realization hits me now and then is that in my normal line of work I analyze this gigantic system using little stylized models that reduce its vastness to a couple of intersecting lines. And that’s O.K. - people who reject stylized models invariably end up relying, whether they know it or not, on implicit models that are even less realistic because the assumptions underlying them go unexamined. Furthermore, those stylized models have been hugely successful in recent years, predicting the quiescence of inflation and interest rates, the adverse effects of austerity and more.

But every once in a while, it does seem worthwhile to contemplate the enormity of the system we’re talking about.

No Shaving Grace

Serious matters are afoot, but I don’t know if there’s anything more I can say about them right now. So, on to a subject where I think I can make a useful intervention: Peter Dorman’s query about why so many economists wear beards (read his blog post here: bit.ly/1CZdywR).

Actually, other economists, in addition to Mr. Dorman, have asked the same question - and found that bearded Nobelists are not quite as prevalent as one might have thought.

Mostly it’s about the impression conveyed by myself and Joseph Stiglitz, although Simon Wren-Lewis has an even more impressive display.

But to the extent that there is a pattern here, it basically comes down to the whiz-kid culture of economics, in which careers can take off very quickly - and one’s appearance may not have kept up with one’s professional reputation.

In my case, I grew my beard when I was 26, and it was definitely a defensive move. There I was, writing what I hoped were groundbreaking papers - “everything everyone has said about international trade is wrong!” - and looking like an undergraduate. (Seriously - when I went to see a colleague once, some of the students waiting to see him complained that I was cutting ahead of the line.) So I was looking for a bit of hairy gravitas.

And by the time I no longer needed that gravitas, the beard had become part of my persona.