From a good book review of a book I’ll never read:
The early pioneers made negative arguments. Because of unquantifiable uncertainties (Knight), the fragmentation of knowledge (Hayek), the lack of timely data (Simons and Friedman), and/or the lack of suitable motivation (Buchanan), we cannot expect policymakers to engineer results that are superior to those that emerge spontaneously in a competitive market economy. With such negative arguments, it was difficult to attract adherents in large numbers… Lucas, by contrast, offered a positive argument. He brought laissez-faire into play up front as a modeling technique, rather than saving it as a possible policy recommendation. As a consequence, the macroeconomic modeler of the late 1970s and early 1980s could make full use of the mathematical techniques already in the economist’s tool box, could learn some new modeling techniques that were part and parcel with new classicism, and could possibly develop still more techniques to push the envelope of this new mode of theorizing. Devising so-called fully articulated artificial economies, calibrating the models on the basis of actual movements in real-world macroeconomic magnitudes, subjecting the model economies to hypothetical shocks, and making predictions on this basis occupied many practitioners…. Further, an ideological taint attaches to Lucas’s new classicism… because the tools that Lucas borrowed from Friedman were themselves influenced by Friedman’s ideological commitment to laissez-faire.
Get that? Lucas’ methods — a label I’d give to all methods of modern macro — are ideologically tainted because someone who once used them was an ideologue and because those methods happen to produce (under some sets of assumptions) laissez-faire policy prescriptions.
This is why economics is hard. There’s a mysterious political smell to our models that other sorts of models don’t have.
“Einstein was a Republican so relativity is a back-handed conservative conspiracy!”
Even though the structure and workings of economic models are right there for everyone to see, they’re assumed to be twisted by ideology; their outcomes invalid under some other world view. Crazy.