"Useless Science" by Francesco Saraceno it is a small volume of a few pages, but full of ideas and facts that have involved and upset the world economies for more than a decade now, interpreted with the help of the theories and concepts on which economic science has been built. The lens of the history of economic thought, to understand and evaluate the debates and problems in which we find ourselves today, it is an instrument little loved by practitioners of economic analysis and also for this reason, as well as for clarity and depth, that I gladly recommend reading this volume.
The professional economist does not find new things, but finds a new way to tell them, because on many issues the author goes against the tide of academic consensus, without falling into oversimplifications and hasty conclusions. This is also why it is valid vade mecum for the non-specialist public.
Some examples, taken from the "focus" (references to the current debate highlighted as boxes in the text), may serve to give an idea. The main objection to tax reduction policies supported by both Trump and Macron it is that the teaching of history has amply demonstrated that excessive inequality puts a brake on economic growth; supporters of leaving the single currency do not understand how joining a monetary area does not in itself imply joining liberal policies based on market adjustments and stringent constraints on the action of monetary and fiscal policies. These are dictated by the intellectual climate that has prevailed since the end of the XNUMXs, thanks also to the influence of economic theory which has become prevalent. If the framework changes, those policies could change too.
The reduction of macroeconomic "risk", through reforms and fiscal discipline - the doctrine that Berlin has imposed on Europe - is a shortcut to identifying the causes of the crisis and those responsible ("spending" governments), but the empirical evidence is all other than unique.
An alternative and plausible explanation is that the problems stem from structural imbalances in the euro area, which have led to destabilizing capital flows and excessive private indebtedness for years. Finally, an interesting analysis concerns the answer to the question: How important is flexibility in the labor market? The empirical evidence on the link between labor market institutions and macroeconomic performance (growth, employment, etc.) is weak and the only certain conclusion is that the evolution of employment is determined by the interaction of labor market institutions with country-specific factors. Why then so much stubborn attention to labor market reforms? Saraceno offers an interesting answer, quoting a work by Benoît Coeuré from 2016: "contrary to the labor market, on which small changes can produce large effects, the reforms of the goods and services market are in practice made up of multiple rules, each of more limited, applied to sectors in which lobbies are often powerful”.
Finally, the reader may wonder what are the reasons for choosing the title "useless science". Useless, I think it means, when the economy is interpreted as a set of laws that are good in all circumstances and occasion; Understood in this way, economics does not serve to find circumstantial and specific solutions, which are the only ones useful for solving problems. But how then can we believe in economics as a science? The author borrows the answer from Joan Robinson, who already at the end of the XNUMXs, despite his distrust of what economic theory had become, gave us a key to using it:
“To make good use of an economic theory, we must first of all make a distinction between the propaganda elements and the scientific elements; then verifying with experience, see how convincing the scientific part appears, and ultimately combine it with our own political ideas. The object of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being duped by economists."
