The following article first appeared in the INOMICS Handbook 2022.
Prof. Marcel Fratscher, respected macroeconomist and president of DIW Berlin, once again asks his colleague questions about economics and life in general in the 2022 edition of the magazine. INOMIX Handbook Questionnaire. This time he was joined by renowned economic historian Adam Tooze, who generously agreed to take a hot seat in this exchange. Thus, the back-and-forth confrontation was called Fratzscher vs. Ace, by tradition. What follows is a dive into the beauty of the wilderness, the gender bias still present in the economy, the connection between politicians and central banks, the limits of the search for perfect causality in the social sciences, and more. Ace’s point of view is unique and fresh, and is sure to be an interesting read that you won’t want to miss.
The eminent economic historian Adam Tooze was born in London and spent part of his childhood in England and in Heidelberg, Germany. He received a bachelor’s degree in economics from King’s College Cambridge in 1989 and then went on to postgraduate studies in Berlin. He received his PhD from the London School of Economics in 1996. From then until 2009, Adam taught at the University of Cambridge. He was then appointed the Barton M. Biggs Professor at Yale University. Adam joined his current position in the history department at Columbia University in the summer of 2015. He is well known for his economic stories (including Paying for Destruction), which have won him several awards, including the Wolfson History Award and the Lionel Gelber Award.
Marcel Fratscher: What is your favorite place on earth?
Adam Tooze: I love the intensity and hustle and bustle of New York. I like the cultural density of Europe. But right now, my favorite place is the Cat Lagoon between the two outer islands of Abacos in the Bahamas. This is an extraordinary place. Delightfully beautiful. Creole. The game. A little dangerous. The infrastructure is fragile. Sharks and barracudas in the water. Extreme weather conditions. The historic Hurricane Dorian, which struck the islands on September 1-2, 2019, wiped out the homes of almost all the inhabitants of the island, including the cottage that we called our own. We built a house in its place.
MF: Besides economics, what would you do if you could be absolutely anyone?
AT: I left economics to become a historian. So that’s part of my answer. As a child, I wanted to be a mechanical engineer. If I had talent, I would like to become a visual artist.
MF: What virtue do you value the most?
MF: What is your favorite figure in the economy?
In: John Maynard Keynes.
MF: Your #1 economic blog?
AT: In the new universe of substations, this is Matt Klein’s Overshoot. Among the first generation of Conversable Economist blogs, Timothy Taylor is indispensable. In Germany, I like Macron.
MF: What is your ideal student?
AT: Someone who has a deep inner drive but also has a sense of humor, is open and intellectually receptive to other people and other ideas.
MF: What needs to be done to eliminate gender bias in economic research?
A.T.: This is a pressing issue for economists. I say this as someone who retired from the economy in large part because of the toxic masculinity I was exposed to during my training. I found it intellectually unproductive and didn’t like what it was doing to me. So I got out. I admire both women and men who choose to stay and fight. I’m worried about what it will cost them. I hope they are right that it is possible to change the economy from within. When I need support, I put on my historian’s hat and remind myself of the truly gigantic transformation we are collectively undertaking in relation to the gender division of labor. The two academic places that shaped me came together just fifty years ago. In my current history department at Columbia University, we are, I believe, in complete parity even in professorships. And there is no reason to stop there.
MF: What is the most misguided research program in economics?
AT: I don’t like to state the law in a negative way. I avoid zero-sum trench wars for intellectual space. I know this is somewhat naïve given the limitations of funding, jobs and who gets the microphone. So, let me give you a reluctant answer: I deeply disagreed with the True Business Cycle movement. And I also deplore the narrowing effect that preoccupation with causal identification has had on the social sciences. Like many people, I feel that looking for truly reliable causal evidence often leads to triviality. Of course, no one would deny the importance of supply-side shocks, and the problem of precise causal inference is of continuing interest, but it is a narrowing down to make any one of them the gold standard. I’m afraid my pluralism doesn’t make me a better fighter for a “pluralistic economy”.
MF: What is the most promising current area of research or issue in economics?
AT: I’m sure there are many, but my best knowledge is macro finance. For me personally, this was the point of return to the economy. Influenced by the shocks of 2008 and the Eurozone crisis, this field is open to an unusually wide range of interested people.
MF: Where does economic research have the greatest impact on policy making?
AT: I’m watching this as an outsider, but the area of engagement with which I’m most closely connected is the central bank, where, for better or worse, the line between research and policy practice seems to be very clear indeed. Even someone with a deep interest in economic history, like Ben Bernanke, can become a high-profile decision maker. The risk is that central banks dominate the field of monetary economics to the point where it becomes an echo chamber. In this sense, I appreciate the emergence on the central banking scene of both “unorthodox” schools of thought and pragmatic ones, lawyers and politicians such as Jerome Powell and Christine Lagarde.
MF: On what issues should politics listen more to the opinion of economists?
AT: The answers to these questions depend on the judgment of both politics and economics. Given my political preferences and my doctrinal preferences in economics, which group of economists would be safe and helpful for politicians to listen to? On climate change, I tend to think that economists have been listened to too much. Politicians have also too often listened to the “wrong” economists about fiscal policy. The group of economists that I think it would be safe and beneficial for politicians to listen to are the macrofinancial economists. As I said, this is a subfield that was developed to deal with financial instability and crisis, to bridge the gap between finance and macroeconomics.
MF: What is your career advice for a young economics researcher?
AT: Take care of your mental health.
The above article first appeared in INOMICS Directory 2022which you can download from our website.