Are economists invisible gardeners?

28th September 2012

Once upon a time two explorers came upon a clearing in the jungle. In the clearing were growing many flowers and many weeds. One explorer says, "Some gardener must tend this plot." The other disagrees, "There is no gardener." So they pitch their tents and set a watch. No gardener is ever seen. "But perhaps he is an invisible gardener." So they set up a barbed-wire fence. They electrify it. They patrol it with bloodhounds. (For they remember how H.G. Wells' The Invisible Man could be both smelt and touched though he could not be seen.) But no shrieks ever suggested that some intruder has received a shock. No movements of the wire ever betray an invisible climber. The bloodhounds never give cry. Yet still the Believer is not convinced. "But there is a gardener, invisible, intangible, insensible to electric shocks, a gardener who has no scent and makes no sound, a gardener who comes secretly to look after the garden which he loves." At last the Skeptic despairs, "But what remains of your original assertion? Just how does what you call an invisible, intangible, eternally elusive gardener differ from an imaginary gardener or even no gardener at all?"

Antony Flew, "Theology and Falsification: A Symposium," in The Philosophy of Religion, ed. B Mitchell (Oxford: Oxford University Press, 1971)

This week a lively debate has sprung up between Simon Wren-Lewis at Mainly Macro and Noah Smith of Noahpinion over whether we should consider macroeconomists as scientists or engineers. On Thursday Dave Altig, executive vice president and research director at the Atlanta Fed, joined the fray arguing that neither definition accurately describes the role.

Instead he suggests macroeconomists (and in particular those who work in policymaking circles) should be viewed as gardeners:

"The good gardener does not presume to create growth, but knows that he or she can play a part by ensuring that growing conditions are the best that they can be. The gardener cannot make the sun shine by applying scientific knowledge, but can take measures to promote resilience and support until it does.

Science and engineering are important, without doubt. But when it comes to policymakers, I'll take a green thumb any day."

His description reminded me of the Flew piece above and an age-old theological problem; If economists are gardeners then are they stewards of the economy, or do they have dominion over it?

So to start, which explorer in the analogy can be seen as the free-market economist? Somewhat counter intuitively, it seems to me the assumption that natural forces create a well-ordered garden suggests the Skeptic better fits the laissez faire economic model. In this theory the garden cannot but be well ordered. That is, it needs no tending to stop it descending into chaos.

Like free-market economists, such as former Federal Reserve Chairman Alan Greenspan, the role of the gardener in this definition is not to interfere in the processes of natural order but to trim back weeds when they threaten its efficient running. Indeed there may be no need for a gardener at all in the foreseeable future.

This might give us an insight into the logic behind Greenspan's more passive approach to monetary policy than a number of his peers, including the current Governor of the Bank of England Mervyn King and his successor Ben Bernanke. In a 2004 speech At the Meetings of the American Economic Association in San Diego the then-Fed Chairman explained his position:

"Instead of trying to contain a putative bubble by drastic actions with largely unpredictable consequences, we chose, as we noted in our mid-1999 congressional testimony, to focus on policies "to mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion.""

His conception of monetary policy allowed for no doubt that there will be a subsequent expansion and no suggestion that the nature of that expansion should rely on central bank policy. As with the Skeptic's garden, central bankers need only sit on the sidelines with a pair of secateurs and watch the market blossom.

In contrast the Believer stands firm in the belief that the garden requires tending. In the example there may be doubt over who the gardener is, but the basic premise of the claim is that nature is inherently unstable and cannot by itself provide the conditions for sustained order. If beautiful order exists it is because someone, or something, is helping to make it so (or, perhaps more accurately, make it appear so).

The latter theory therefore assumes instability is at the heart of the system. Coherence can be achieved but it must be constantly and proactively managed (although the analogy does somewhat awkwardly suggest the possibility of this being done by an "invisible hand"). Nevertheless it comes much closer to the Keynesian analysis of the vulnerabilities of classical macroeconomic models that predict natural cohesion.

If we are to assume that macroeconomists are gardeners then the question becomes what type of gardener does Altig believe them to be? Clarifying this point could ultimately be key to understanding the likely trajectory of policy and what it is aimed at achieving.

 

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12 thoughts on “Are economists invisible gardeners?”

  1. Anonymous says:

    Excellent post again Shaun. Since the days of notayesmanseconomics your views have been readily accepted by your readership but I wonder why no-one in “authority” takes your viewpoints to heart. What it shows to me is that there has to be a decoupling of the periphery since the circle of destruction has to be broken and for many southern countries this can only mean leaving the Euro. Will it happen? Perhaps when Ms. Merkel has won another “x” years as Chancellor, we might, just might, find some degree of movement. Let’s face it, better to be free to make your own way (for good or bad) than to be hemmed in by a faceless troika! Keep up the good work….

    1. James says:

      Why does noone in authority take these views to heart? Well, I would guess:

      1. The top politicians are all from a euro elite which couldn’t really care less about some Southern european peasants (or, indeed, the general population)

      2. They all talk to each other, reinforcing 1

      3. They come from a generation that was brought up on “ever closer union”

      4. The press and especially the BBC have demonised anyone who doesn’t follow the guardianista view of Europe

      5. There is a complete and utter lack of knowledge of history among the elite, in terms of what causes wars and what prevents them

      6. The elite want to strut the world stage. After all, how else would Van Rompuy or Barroso get to meet Obama?

      7. The scare tactics used are everywhere (Where did we get the 3 million jobs destroyed figure if we left the Euro)

      8. They scheme and devise ways to prevent us proles from voting on anything

      that is about it.

      1. forbin says:

        oh that last bit , item 8 , always gets me

        irish vote – you WILL keep voting until you return the “correct ” answer……

        One of the reasons I’m against the Euro currency, there are others ofcourse

        it could have been done so much better…… now the people will suffer – media will not cover the anti euro protest unless they absolutely have to.

        oh well the show must go on…

        Forbin

        god help me if the eurcrats get hold of popcorn…

      2. Anonymous says:

        Hi James

        Point 5. They don’t care about history, they are preserving their gravy train.

        Point 7. Maybe they are calculating job losses by sex workers if DSK and friends didn’t have euro millions to splash out :-)

    2. Anonymous says:

      Hi Ray

      Thanks for the compliment and welcome back,to the comment section anyway.

      I see you already have some replies but to answer your question I think that Europe and the UK’s political and ruling class find it very difficult to see beyond the improved prospects for themselves as the jobs available for them have increased considerably and many of them do not involve the trouble of being elected either.

      That insidious process moves its way down to officials and economists and a rather large gravy train moves on. Even worse it gathers a consensus around it in spite of the fact that if the credit crunch has given us one lesson it is that the building up of consensus thought is very dangerous indeed.

      James point 7 is also very apt as if we recall the situation in Greece those who argued like me for different tactics were accused of risking an economic disaster. Instead the Euro area ensured one but here we get to the final point which keeps this sorry caravan on the road no-one is apparently to blame or even demoted!

      How is your new venture going?

  2. Justathought says:

    Hello Shaun,

    “No wonder perhaps that rumours have circulated that the European Central Bank is considering its own Quantitative Easing plans”… With
    the latest statement from the BIS released on the Sunday 23 of June 2013, would it be possible for El Senior Draghi to consider such a move???

    1. Anonymous says:

      Hi Justathought

      It was interesting that the central bank to the central bankers suddenly declared itself as a heretic at the court of Quantitative Easing I agree. Although mind you not that much a heretic.

      “Taken together, central bank actions since the start of the crisis have played a critical stabilising role, by first offsetting the forces of the financial collapse and then supporting a recovery in the real economy”

      and

      “Since 2007, actions by central banks have prevented financial collapse.”

      So should Mario wish to go down that road ( officially it has already been denied) he has an excuse/reason preplanned. Although I would expect him to have a lot more trouble with the Bundesbank than the BIS!

      Overall though I was using yesterday’s rumour as an example that the ECB needs to find a new policy as the pyschological impact of OMT seems to be wearing off.

  3. forbin says:

    Hello Shaun

    well lets face it , Portugal would have been better off outside the euro zone – we have the example – Iceland

    But with deep regrets to the Portuguese public – your leaders are daft!

    this Euro is a political institution and not an economic one – and the Portuguese leaders are well aware they are better paid in the Euro and not out – and damm the voters wishes

    Forbin

    1. Anonymous says:

      Hi Forbin

      Portugal has been the place where the political class have stood most firmly behind the Euro and the associated austerity policies. However as I discussed on the 30th of May some flickerings of hope are beginning, but mostly from outside the political class at least for now.

  4. He says:

    In Greece at present on Lefkas island and what is hugely apparent is the increased small allotment style cultivation , related to people coming out of the towns to live an agrarian lifestyle, however it still seems a lot of the locals think the EU money train will reappear. Been coming here since 1986, it is very sad for the people caught up in a mess , which they had nothing to do with,

    1. pavlaki says:

      That’s what I find when talking to Greeks – denial and a belief that if they can only get over this bad time then the good times will return. The same comment applies to Portugal and Spain – a huge amount of denial of reality.

  5. therrawbuzzin says:

    Another great post indeed, Mr Richards.

    When European austerity began, I stated that it was nothing more than an excuse to roll back the state, and that “balancing the budget” was the red herring.

    That governments continue to pursue such austerity policies in the face of universal, unanimous failure to address budgetary defecits shows the lie; they really cannot ALL be that stupid.

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