Tyson's not one of the boys -- perhaps her chief attribute

Robert Kuttner

January 13, 1993|By Robert Kuttner

THE nation's leading economists, who gathered this pas week for the annual meeting of the American Economic Association, are upset that Bill Clinton did not draw from the old boy network to select his chief economist. Instead he picked Laura d'Andrea Tyson of the University of California at Berkeley, an unconventional economist with a dazzling intellect who chooses to work in English rather than algebra and to study the rTC real economy rather than build sand castles.

When Ms. Tyson was named, collecting uncharitable comments from the profession's leading macroeconomists was as easy as trolling for bluefish during a feeding frenzy. Economics, especially macroeconomics, tends to attract mathematical theorists, many of whom are astonishingly innocent of actual economic institutions. These whiz kids, often tenured before age 30, thrill each other with arcane manipulations of models, many of which depend on assumptions not rooted in economic reality.

Ms. Tyson is a different sort of economist. She received her doctorate at MIT, perhaps the leading graduate department in economics.

But as director of the Berkeley Roundtable on the International Economy, most of her scholarly work has been on technology, trade and competitiveness -- issues of no small interest for, say, a president of the United States.

Most standard economic models assume what economists call "perfect competition," in which supply, demand and price are set by purely market forces. But in the real world of commerce, governments often intervene to promote economic development, military R&D spending spills over into commercial technology, and companies conspire to set prices (as in the $642 standard coach fare I just paid to fly round trip from Boston to Washington, which, despite deregulation is identical on every airline that flies the route).

Most economists don't like the real world of imperfect competition, because it requires investigation of actual institutions that are too messy for neat computer modeling. Instead, they urge policy-makers to seek a world more like the one in their textbooks.

Ms. Tyson's recent book, "Who's Bashing Whom?," is a study of international commerce, and its attendant politics, in a world where most governments intervene to seek competitive advantage for their industries. It is grounded in Ms. Tyson's careful research, at Berkeley and the Harvard Business School. She studied several real-world industries, their interactions with their governments, and their governments' conflict with each other over what constitutes fair play.

In the past, most macroeconomists have insisted that it doesn't much matter if other nations protect their industries and that the main job of the U.S. government is to set a good example.

Ms. Tyson noticed that several American industries were going down the drain because of foreign government-industry collaborations and assessed the practical policy choices.

As Ms. Tyson's work came to prominence in the late 1980s, C. Fred Bergsten, head of the prestigious Institute for International Economics (IIE), gamely invited her to write her book under his institute's auspices. This raised eyebrows, because Ms. Tyson was not a member of the free-trade club that IIE epitomizes.

I recall Mr. Bergsten saying that if "managed trade" were going to be taken seriously, he wanted the best professional economist sympathetic to that view to make the best possible case, so that the issue could be properly debated. Mr. Bergsten convened a panel of trade experts, economists and others, to meet several times to critique Ms. Tyson's manuscript as it evolved.

I happened to be a member of that panel; I participated, admiringly, as the author engaged intellectually with some of her toughest critics, with grace, wit and real knowledge, and honed the manuscript into a superb book. So I am not impartial. But I have come by my partiality through a careful reading of Ms. Tyson's work.

Some of Mr. Bergsten's colleagues may now regret his invitation, since it was the quality of the book and the imprimatur of IIE which helped give Ms. Tyson one more credential that put her on the short list to chair the Council of Economic Advisers.

When President-elect Clinton nominated Ms. Tyson, there was a spate of rather lazy newspaper stories based on some quick telephone reporting. The stories quoted leading economists, mostly unnamed, saying that she was unqualified for the job. Many of these anonymous critics, of course, had wanted the job for themselves, or one of their colleagues, or at the very least for their brand of economics.

These stories contained enough sour grapes to fill a vineyard. Many quoted senior economists churlishly predicting that no economist of any stature would deign to take one of the other two positions on the council, serving under Ms. Tyson.

Well, last week Mr. Clinton named Princeton economist Alan Blinder, one of the two or three most distinguished macroeconomists of his generation, to serve on the council under Ms. Tyson. The New York Times' Louis Uchitelle, a writer whom I normally admire, broke the story of the appointment in an article that implied Mr. Blinder had been imposed on Ms. Tyson to compensate for her own lack of qualifications. In fact, Ms. Tyson had energetically recruited Mr. Blinder.

As the profession's princelings deal with their wounded vanity, they might wish to re-examine those esoteric models.

Given its recent track record, no academic discipline has less reason for the stunning arrogance so characteristic of economics. As an act of reflection and re-education, they might begin by reading Laura d'Andrea Tyson's book.

Robert Kuttner writes a column on economic matters.

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