Last year the Queen (Elizabeth II) visited the London School of Economics and took the opportunity to ask why nobody saw the financial crisis coming. Actually many people saw it coming, at least in principle if not the timing, and the Austrians have emerged with some credit because they provided a good explanation after the event, even if nobody took any notice beforehand.
You could draw a long bow and say that the classical/Austrian Hutt saw something coming when he read The General Theory, hot off the press, while his book Economists and the Public was in galleys. He managed to insert some brief comments in his own book, including the prediction that “The General Theory would have a quite unparallelled influence by reason of what I judged to be its demerits as a contribution to thought.”
As to the answer in 1993, this can be found in a book by Thomas Mayer, Truth Versus Precision in Economics, Edward Elgar, 1993. This is a detailed critique of the systemic failure in teaching economics along the lines that a major criterion of quality is mathematical rigor, and the leakage of that criterion out of “formal” economics (where he thought it might be defensible) into “empirical” economics and especially econometrics where it is not. Closely related to that is/was a deplorable lack of attention to practical/policy problems, and indeed rather little attention to theories in a broad sense, due to the focus on mathematical modellingbased on a specific data set rather than testing theories which is what scientists are supposed to do, at least some of the time.
This was going on despite widespread dissatisfaction among both students and faculty, but it seems that the Titanic of measuring, modelling and econometrics could not be easily diverted in its course. Of course that dissatisfaction has found expression in the vigorous and noisy movement of Heterdox Economics but this seems unlikely to make a difference any time soon, which is just as well because the Heterodox are no more helpful than the Autistic Economists who they abominate.
There was enough concern for the American Economics Association in 1988 to set up a commission on graduate education. According to Mayer a major concern of the Commission was the production of idiots savants. (That is the language of the Heterodox! Rather surprising in an official report of the AEA). He quoted the report’s concern with:
The extent to which graduate education in economics may have become too removed from real economic problems…the screening process poses substantial barriers to students who find elementary topology difficult but few barriers for students who cannot handle elementary undergraduate applied exercises in economics…The Commission’s fear is that graduate programs may be turning out a generation with too many idiots savants, skilled in technique but innocent of real economic issues.
One of the Commissioners, Alan Blinder wrote, regarding the findings:
Both students and faculty find economics obsessed with technique over substance…The impression I carried away from the many macro and micro theory exams the Commission examined is that they tested mathematical puzzle-solving ability, not substantive knowledge about economics…Only 14 per cent of the students report that their core courses put substantial emphasis on applying economic theory to real-world problems. This strikes me as a devastating critique.
That looks like a reasonable answer to the Queen. Blame the idiots savants! (The term idiot savant comes from the French for “learned idiot” or “knowledgeable idiot”)