Saturday, May 19, 2012
Macroeconomics by Dornbusch and Fischer
22 years and the book is obsolete, passé? "Only yesterday" I purchased my Dornbusch text and it was a difficult decision because it cost me 10% of my salary then. But it couldnt be obtained from the library and the course I was doing required it. This edition is much clearer than the original, probably thanks to Fischer, or because I learned things in the meanwhile or because the perplexing J effect (IQ increases exponentially along the time axis).
The book is big in reducing population growth, which is the main cause (for the authors, not for me) of slow GNP growth. Twenty years ago no one imagined that population growth could be reduced to current levels and negative population growth should cause GNP collapse, like in Russia, Japan, etc. Today, Stanley Fischer is our central banker and keeps making exasperating declarations against the religious sector for having too many children. I think the time has come to send him to retirement, and replace him with someone of the new generation. Old and wrong ideas cannot be changed except after the old generation retires or dies.
Another observation is that the book suffers from the Good Soldier Schweik (see statue) cognitive distorsion (I just made that up). In the Schweik book, a soldier is missing and they shanghay a man at random in the street, and the military machine never notices the difference. People, according that 1920 book, are interchangeable. The Dornbusch&Fischer book uses the production equation where manpower is just a variable, and never even suggests that age composition, educational levels and let say it, the racial composition are of supreme importance. This is typical of the hippy era of the seventies but Fischer is a Rhodesian and should know that Zimbabwe's GNP is less a function of 3 or 4 million Africans than those missing 200,000 English settlers.
In general, the science of economics exists in an imaginary, stable, homogeneous country peopled by Europeans, but that world does not reflect Earth Anno 2012. Applying economic ideas that may have worked in America 1970 will cause crisis in 2012. I am expecting a new generation of theoreticians that "didnt knew Joseph" aka never knew the seventies, and will be able to develope the macroeconomic management tools for today. More explicitly, instruments suitable to the behaviour of societies composed by diverse, antithetical, competing ethnic groups. Unfortunately, the new generation is being inculcated the PC doctrine of human equality and interchangeability so my hope may never come true.