Group stink

They can hypothesise all day long with fellow Peter Panners…playing with their (flawed) models and dreaming of a world of where there’s endless GDP growth; not-too-low inflation; wages growth; the abolition of business cycles…‘oh what nirvana it will be’ they say in lilted voices to their Tinkerbells.

A career in Neverland has a number of advantages…

• you are ‘never’ held accountable when your theories fail spectacularly in practice;
• you’ll never have to worry about a job after leaving Neverland because you’ll be given a cushy job in some left-wing group-think tank;
• and, thanks to your taxpayer funded pension, you’ll never have to bother with earning a decent risk-free return on your capital to fund a dignified retirement.

Imagine what would happen if someone (possessing a bulls**t detector) like Patton, should ever be allowed into central bank Neverland?

Stress leave claims would go through the roof.

Where do you go if you want one of these PhDs in group think?

Massachusetts Institute of Technology (MIT) seems to be a breeding ground for all budding Peter Panners.

The MIT alumni include…

• Former US Federal Reserve chairman Ben Bernanke…he of ‘subprime is contained’ infamy.
• Current European Central Bank President, Mario Draghi…‘whatever it takes’.
• Former Bank of Israel governor and former International Monetary Fund chief economist and vice-president Stanley Fischer.
• Current RBA Governor, Dr Phil Lowe
• Current Deputy RBA Governor, Guy Debelle

Nobel Prize winner, Robert Solow — an MIT professor since 1949 and now, an Emeritus Institute Professor of Economics at MIT - was reported in the Sydney Morning Herald as saying MIT’s speciality…‘has been not just to develop theories, but ''have a grasp of what was actually happening''’.

Professor Solow statement is one of good intent…balancing theory with a grasp of what was actually happening.

But, as they say, the road to hell is paved with good intentions.