This being my first year as a full-time professor of economics at Berklee, one thing on the to-do list was to attend an economics conference.  I’d attended conferences on other topics, such as a green campus conference this past summer, but this was my first “mainstream” economics conference ever!  So with that in mind, here are this young chick’s thoughts:

Overall, my impression of this conference wasn’t very good.  I was struck by two things.  One was that “economics” is an extremely broad topic, with enormous diversity on as many dimensions as you care to go.  What happened, then, was that even within the breakout sessions the presenters talks were at most extremely tangentially related to each others, and certainly nobody really had the ability to critique each other’s work.  Particularly when a presenter says essentially “I did years of work on this and here’ what I found.”  This perhaps is the direct cause of my next observation.

There was practically nobody there!

The one photo I took of a breakout session room. You only can see some half the room, but this was pretty typical of what things looked like.

The break-out sessions were in rooms that could hold up to about 25.  Every session I went to there would be four people presenting, a fifth person there as “moderator” and then between two and six people (usually 2 or 3), myself included, who were just there to listen.   0

The Saturday afternoon Plenary Session/ Sadly no wide-angle shots or shots looking back, but the ratio of chairs:people was pretty much the same throughout the room.

Even the much advertised keynote and plenary sessions, where we all came together, featured a large room with people in under 10% of the seats.  My best estimate was 35-40 people in the audience in a room meant for 500.

Anyway, all these people presenting to mostly empty rooms felt like an eposide of the Twilight Zone, and had me theorizing several things…

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Sunday featured two break-out sessions, with no large plenary sessions.

First was a 2-hour session titled “Computable General Equililibrum Models from U.S. Tax Policy Analysis.”

If memory serves me right, one of the four presenters wasn’t there, which meant the others got more time.  Professor Bhattari of the University of Hull (U.K.) presented an analysis claiming that much of the problem with the economies of southern Europe is that many “intermediate goods” (e.g. electricity, which gets used by the private sector to make stuff) are supplied by state-owned companies whose wages are about a third higher than in the private sector, resulting in an oversize intermediate-goods sector.

My attitude toward large theoretical mathematical models that produce all-too-convenient results for the already-wealthy.

Next was a pretty lame presentation which featured a very theoretical, mathematical model which claimed that, if the corporate income tax rate were reduced by 20% for the next 40ish years, GDP would be about 1% higher.  I asked the presenter why the corporate tax rate matters at all (assuming it’s under, say, 95%), since the goal of a corporation is to maximize profit so that you’ll try to hit the same number even if a fraction gets taxed away.  He replied that a lower corporate tax rate encourages investment in the corporate sector. I found his assumption highly questionable, especially in an economy that has a glut of unused savings, and in which so much corporate cash goes toward stock buybacks.

At the same time, at least the claim was that it would only affect things 1% over 40ish years, which is an effect you could never even notice.  Roughly 0.03%/year is virtually impossible to spot with all the ups and downs.  In addition, we have no clue what great new technologies will come along in the 2020s and 2030s…or how bad the environment will get, how badly resource depletion will bite, etc.  So I suppose the main takeaway from the model is “whatever…don’t bother.”

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Saturday culminated with a plenary symposium:  “Perspectives on the Post-Crisis Financial Reform in the U.S. and Europe.”

The first speaker, Dr. Robert Eisenbeis, spoke about the three banking crises of the past century.  Two of them I was familiar with:  the recent one (epicenter 2008) and the one that unfolded during the Great Depression (1929-39).  He added a third crisis, the bank and Savings-and-Loan institutions failing during the 1980s, though noted that this crisis was a “slow-burner” that spread over many years and didn’t put the economy into recession.

Note above the large differences. Blue = unemployment rate  Green = Inflation, Red = GDP growth rate.

The recent crisis most resembled the Great Depression, hence its nickname, “The Little Depression.”

Each crisis had its own causes for failure:  in chronological order, overinvestment is risky assets (notably stocks), high inflation of the last 1970s reducing the real value of their outstanding loans, and the housing bubble combined with financial derivatives.  Crises played out in different ways, as did the federal response to each crisis.  He was less impressed with the partial-solutions (the Dodd-Frank bill) to the more recent crisis than with the more robust solutions to previous crises.

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