28th September 2012
Once upon a time two explorers came upon a clearing in the jungle. In the clearing were growing many flowers and many weeds. One explorer says, "Some gardener must tend this plot." The other disagrees, "There is no gardener." So they pitch their tents and set a watch. No gardener is ever seen. "But perhaps he is an invisible gardener." So they set up a barbed-wire fence. They electrify it. They patrol it with bloodhounds. (For they remember how H.G. Wells' The Invisible Man could be both smelt and touched though he could not be seen.) But no shrieks ever suggested that some intruder has received a shock. No movements of the wire ever betray an invisible climber. The bloodhounds never give cry. Yet still the Believer is not convinced. "But there is a gardener, invisible, intangible, insensible to electric shocks, a gardener who has no scent and makes no sound, a gardener who comes secretly to look after the garden which he loves." At last the Skeptic despairs, "But what remains of your original assertion? Just how does what you call an invisible, intangible, eternally elusive gardener differ from an imaginary gardener or even no gardener at all?"
Antony Flew, "Theology and Falsification: A Symposium," in The Philosophy of Religion, ed. B Mitchell (Oxford: Oxford University Press, 1971)
This week a lively debate has sprung up between Simon Wren-Lewis at Mainly Macro and Noah Smith of Noahpinion over whether we should consider macroeconomists as scientists or engineers. On Thursday Dave Altig, executive vice president and research director at the Atlanta Fed, joined the fray arguing that neither definition accurately describes the role.
Instead he suggests macroeconomists (and in particular those who work in policymaking circles) should be viewed as gardeners:
"The good gardener does not presume to create growth, but knows that he or she can play a part by ensuring that growing conditions are the best that they can be. The gardener cannot make the sun shine by applying scientific knowledge, but can take measures to promote resilience and support until it does.
Science and engineering are important, without doubt. But when it comes to policymakers, I'll take a green thumb any day."
His description reminded me of the Flew piece above and an age-old theological problem; If economists are gardeners then are they stewards of the economy, or do they have dominion over it?
So to start, which explorer in the analogy can be seen as the free-market economist? Somewhat counter intuitively, it seems to me the assumption that natural forces create a well-ordered garden suggests the Skeptic better fits the laissez faire economic model. In this theory the garden cannot but be well ordered. That is, it needs no tending to stop it descending into chaos.
Like free-market economists, such as former Federal Reserve Chairman Alan Greenspan, the role of the gardener in this definition is not to interfere in the processes of natural order but to trim back weeds when they threaten its efficient running. Indeed there may be no need for a gardener at all in the foreseeable future.
This might give us an insight into the logic behind Greenspan's more passive approach to monetary policy than a number of his peers, including the current Governor of the Bank of England Mervyn King and his successor Ben Bernanke. In a 2004 speech At the Meetings of the American Economic Association in San Diego the then-Fed Chairman explained his position:
"Instead of trying to contain a putative bubble by drastic actions with largely unpredictable consequences, we chose, as we noted in our mid-1999 congressional testimony, to focus on policies "to mitigate the fallout when it occurs and, hopefully, ease the transition to the next expansion.""
His conception of monetary policy allowed for no doubt that there will be a subsequent expansion and no suggestion that the nature of that expansion should rely on central bank policy. As with the Skeptic's garden, central bankers need only sit on the sidelines with a pair of secateurs and watch the market blossom.
In contrast the Believer stands firm in the belief that the garden requires tending. In the example there may be doubt over who the gardener is, but the basic premise of the claim is that nature is inherently unstable and cannot by itself provide the conditions for sustained order. If beautiful order exists it is because someone, or something, is helping to make it so (or, perhaps more accurately, make it appear so).
The latter theory therefore assumes instability is at the heart of the system. Coherence can be achieved but it must be constantly and proactively managed (although the analogy does somewhat awkwardly suggest the possibility of this being done by an "invisible hand"). Nevertheless it comes much closer to the Keynesian analysis of the vulnerabilities of classical macroeconomic models that predict natural cohesion.
If we are to assume that macroeconomists are gardeners then the question becomes what type of gardener does Altig believe them to be? Clarifying this point could ultimately be key to understanding the likely trajectory of policy and what it is aimed at achieving.
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