Wednesday, August 25, 2004

Thinking Globally

My sojourn here hasn't been fruitless though, as I have had the chance to read a lot, beginning with Global Political Economy by Princeton's Robert Gilpin. It's an interesting book by a political scientist on the interaction of economics with international politics. If, as I do, you feel that the focus of economic analysis on mathematical modeling isn't on its own sufficient to understand many of the big questions, then this can add much to your mental equipement.

Partly, I'd say this because I just don't have the mathematical knowledge to work with most of the models. Neither have I ever liked the very abstract approach to teaching the subject that I've heretofore had to suffer in my undergrad education. Finance and econometrics always offered both much better data and a much tighter connection to practical applications. Macroeconomics, by contrast, always seems to be the business of theorising with little data, none of it reliable. After experiencing the turmoil of the emerging markets and the upheaval in global energy over the past few years, I couldn't remain as nihilistic as I used to be and argue that the macro doesn't matter, dismissing any type of macroeconomics as being the unspeakable in pursuit of the unmeasurable or "Sunday newspaper economics" in the words of my supervisor Paddy Waldron.

Gilpin, while not an economist by background, is celebrated, I'm told, for adding the institutional and political elements to international economics so as to better understand the multinational corporation, how the global trade and monetary architecture is built and maintained and how sovereign states manage economic issues in order to maximise their power.

While Gilpin has worked to build a bridge from political science, economists have been working in the other direction, bringing institutions, geography and historical path-dependency into their frameworks. Paul Krugman in particular forms an interesting contrast: Showing savage rhetorical bloodlust, Krugman has attacked many of those such as Laura Tyson trying to employ the analysis of strategic trade he himself devised to argue for managed or limited trade.