Nobel Laureate Abhijit Banerjee headed a distinguished panel of speakers who commemorated the centenary celebrations of Stellenbosch University's (SU) Department of Economics during an online event on Friday, 9 October 2020.
Banerjee, Professor of Economics at Massachusetts Institute of Technology, was awarded the 2019 Nobel Memorial Prize in Economic Sciences along with co-researchers Esther Duflo and Michael Kremer for "their experimental approach to alleviating global poverty".
In his talk entitled Good Economics in Hard Times, which is also the title of the non-fiction book he published with Duflo in 2019, Banerjee alluded to the important economic issues facing the world today.
“Our book appeared on the shelves at the end of 2019 and since then things have not gone better, we are now in even harder times," said Banerjee. “The world is struggling with a range of core economic issues in the form of Brexit, trade, immigration, growth, inequality, climate change, COVID-19 and its economic issues and racism and discrimination."
He went on to say that amid all these important issues it is not an exaggeration to state that economists are not doing terribly well when it comes to influencing public opinion.
He referred to a poll they conducted in the UK which measured the public's trust in experts in their respective fields. The results showed that the opinions of nurses (84%), doctors, scientists and historians were valued more than those of economists (25%) and politicians.
Banerjee said one of the reasons why people do not trust economists is that they systematically miss recessions and that their prediction error rate is of concern.
“This just emphasises that economists are better off not doing economic forecasts. But the reason we do it is because it is something that is very visible and a lot of television time is dedicated to it, people love to know the future.
“But there is a deeper problem. We have a long tradition of people basically taking the view that any other social concern other than maximising GDP (gross domestic product) is just a mistake. I think that the general idea of maximising GDP as the only possible social cause is at the core of one of the main disagreements between economists and others."
He said economists often fail to connect to people's sense of reality and that is why they are not trusted.
“Economists have contributed to a view that governments are a problem. But the one thing the Covid-19 crisis has shown us is that we need governments badly − who is going to get you to wear a mask or provide vaccines and ventilators to those who need it − and that we have to be careful when we criticise the government. If there is a moment where we need to reaffirm the important role played by governments, I would say this is it."
Banerjee also feels that this is a time to rethink economics and economic policy.
“This pandemic has taught us that nature is much more powerful than us and that it is critical that we need to fight climate change and we need government and policies to do that. We also need to cure our Victorian hangover, this idea that poverty is your forte, of contempt for the poor. And we need to put dignity back at the centre of social protection. COVID-19 emphasised the fact that a lot of what happens to us is not our fault. We need to design social welfare systems that respect the uncertainty in people's lives."
Economics professor Prof Stan du Plessis, SU's chief operating officer, congratulated the Department of Economics on being 100 years old this year and said he hoped for an even better future.
The former president of the Economics Society of South Africa has been involved with the department both as a student and member of staff for a quarter of its history.
“I thank my colleagues both past and present for the academic and collegial environment that they created and sustained over decades. It helped me and many others to discover our interest in economics and to have it nurtured with such encouragement," he said.
The event also featured a panel discussion with South Africa's Minister of Finance (and Honorary Professor), Mr Tito Mboweni, about the future of the South African economy. The panel included the Economics Department's Prof Rachel Jafta, economist Mr Sizwe Nxedlana and Dr Monique Nsanzabaganwa, deputy governor of the national bank of Rwanda. Prof Nicola Theron was the moderator.
- For further information about the centenary of the Department of Economics, visit the Department's centenary website.
- Photo: Bryce Vickmark