A few economists and camp followers have been arguing lately that part of the apparent muddle in macroeconomics is due to misunderstandings of broad theory, and arguments against the broad theory using comparative minutiae.

For example, market theory is often taught in broad outline without reference to the conditions where the theory breaks down. This, it is argued, is good pedagogy since it allows the student to grasp the bigger picture before considering the fine points where there are exceptions.

Conversely:

. . . textbook theory doesn’t have any politics in it. In macroeconomics textbooks, government is a benevolent central planner beyond politics. It is assumed, for simplicity’s sake, that governments can act in perfect compliance with theory. It is also assumed that theory is settled before coming to a policy problem, that motivated disagreement over theory is not an essential element of democratic policymaking. But of course, there is politics, which trashes hope of either consensus on or compliance with theory.

We have a great deal of motivated disagreement though when questioned closely there is still broad agreement on many issues. Or so some argue.

In part the appearance of so much disagreement is driven by the fact that both MSM and the blogosphere select for opinions which deviate from the mainstream. Many segments of MSM are willing to represent the mainstream opinion, but there is then a sense that some new point of view must be offered, if only to hold the interest of the reader or viewer. And some parts of MSM are openly partisan and thus they skew toward extreme points of view. In the blogosphere libertarians are overrepresented, relative to their numbers in the profession. On the Democratic side, Paul Krugman is the most influential figure, and I would place him to the left of most Democratic economists. Progressives, like libertarians, are overrepresented on the web, relative to their numbers in the economics profession or elsewhere.

It is good that so many different points of view are being reflected, but we need to keep the biases of our filters in mind. Repeating a moderate view, again and again and again, isn't always the best way to attract or keep an audience.

Is moderation a virtue? It may not be a good way to attract eyeballs, but is it good in some other sense - truer or more rational? I doubt it. The only virtue that comes to mind is that it may help an individual career, and it may allow diplomats to broker policies. It is less clear that those careers and policies serve the general interest of society.

Another problem that I see is that moderation has no clear meaning. In some cases moderation is actually disagreement on another axis which also has extremes. It's a stealth method of advocating yet another position that is distasteful to many or even most.

It may be that the whole project is an illusion of language, ungrounded in reality. It has been noted many times that the fond hopes of systems thinkers were much like supernatural beliefs or the scriptural hermeneutics of early scientists studying natural systems, such as Newton. Grasping - partially, at long last - that complex systems cannot be modelled usefully with the small number of variables that such models are able to measure, monitor and juggle revealed that there is little science to the art of forecasting and so no possibility of actually managing complex systems. It seems to work when nothing much is happening, but completely fails to be of use when something of use is needed.

It seems that people understood this better in the past. They made predictions but qualified them - god willing - to remind themselves and others of the irreducible fallibility of such predictions and the often fatal nature of arrogance.

Exceptions are the rule. Economics, simplified by omitting the fact that markets get squirrely and that politics dominates everything, is an expression of a bias: an ungrounded belief in the possibility of control of large scale complex systems. A more rational stance, one that seems moderate to me in comparison to both the extremes of market believers and government control believers, is to squarely meet this reality and reduce both the scale and the tightness of control. The result would be greater diversity and so greater resilience to the inevitable shocks. Markets and governments will fail, but not all at once and not so catastrophically.

This wouldn't be easy or automatic. On a global scale we have a muddled version of that now by historical accident, but many economic and government units are unbalanced and so are on the verge of tipping over now that their props have gone rubbery. They were not consciously and cautiously independent, and had allowed their governments to dominate society to the detriment of their market robustness and resilience. Oddly, some of these political units blather on about precautionary stances while throwing caution to the winds like drunken sailors when it comes to unbridled government power. They ignore the certainty that unexpected destabilizing events will occur, and party like there's no tomorrow.

There are costs for greater stability and resilience. There's no free lunch. The lows aren't so low but the highs aren't so high either. Rather than an alternatively giddy or depressed bipolar world we would have a boring old stick-to-the-knitting world. Given the diversity of human preferences it is difficult to argue too strongly for this either.

What does seem clearer is that the current efforts to hyper control both government and the economy is a hideously bad idea. Been there, done that, got the scars of the bloody twentieth century as souvenirs. It would be yet another race condition likely to end in war when those who feared that they were falling behind took extraordinary measures to alter their prospects. An economic depression is child's play compared to war, no matter who wins.