Bridging the Gap Between Theory and Practice: 2011 Public Economic Theory Conference

IU Auditorium
IU Bloomington
June 3, 2011

Introduction and Acknowledgments

On behalf of Indiana University, it is my pleasure to welcome you to the 2011 Public Economic Theory Conference.

Let me take a moment to recognize conference organizers Myrna Wooders and John Conley from Vanderbilt University and the Association for Public Economic Theory, and Gerhard Glomm and Frank Page from the Indiana University Department of Economics.

As many of you may know, Dr. Page first organized this conference in 1998 when he was at the University of Alabama. We are most fortunate that Dr. Page is here at Indiana University now and continues to play a leading role in this conference, which has travelled the world, with meetings in Paris, Seoul, Hanoi, Marseille, Istanbul, Galway, and a number of other places.

The Gift of Keynesian Understanding

At this point in our nation’s history, it may be impossible to overestimate the importance of public economic theory, especially in relation to the real-world crises that have rocked global financial markets.

The global financial crisis, described as the worst financial crisis since the Great Depression, has unequivocally demonstrated the intricate network of connections among economic systems of many different countries around the world. The fact that this conference brings together nearly 300 scholars from four different continents reinforces the global nature of your discipline.

All of us, I am sure, have vivid memories of the global economic crisis at its peak in late 2008 and early 2009. At that point, there was a renewed burst of interest in a Keynesian approach as people looked for public policy solutions to the unfolding crisis.

I knew of Keynes not through the computer science side of my academic life, but through my other academic appointment as a professor of philosophy. I knew of him as a friend and contemporary of such philosophical giants as G.E. Moore, Bertrand Russell, and Ludwig Wittgenstein, and, I should add, through battling through The General Theory in an economics course I took as a student.

Over the years, I had read with enormous pleasure Skidelsky’s magnificent three-volume biography of Keynes.

At the height of the economic crisis, and considering the resurgence of interest in Keynes, my wife and I gave the abridged single-volume edition of the Skidelsky biography as a Christmas present in 2008 to the vice presidents and deans in my cabinet, to the university trustees, and others.

Incidentally, one of them has since told me that I should ask for my money back. Maybe some of you agree.

My purpose in giving this book was, for those not familiar with Keynes’ history, to provide a full account of his life, his remarkable career of public service, and his career in what you might term public economic theory.

He demonstrated—especially through his role as a senior advisor to the British government at the highest levels during the First and Second World Wars—the most extraordinary dedication to the welfare of his nation and, in many ways, to the free world.

To me, then, he is a paragon of both an academic of prodigious powers and a public intellectual with a complete command of the critical economic problems confronting the world at various times of supreme crisis.

As I understand it, this is the role to which all of you aspire, and this conference provides a way of focusing and testing your efforts.

Bridging the Gap Between Theory and Practice

We are most fortunate, then, that public economic theory does not end with theory. You, among the best economists from around the world, help bridge the gap between economic theory and practice.

I am pleased to say that for many years, scholars at Indiana University have been bridging that gap. For instance, in the decades leading up to the introduction of the euro, IU scholars, including Michele Fratianni, George von Furstenberg, and the late Roy Gardener, were heavily involved, serving as advisors to central bankers in Europe.

Currently, Eric Leeper is serving as advisor to the Swedish Central Bank (Sveriges Riksbank).

In addition, many students have gone on from graduate studies in economics at IU to work in the Federal Reserve system as have IU faculty members. In fact, at least four IU alumni have served as presidents of regional Federal Reserve Banks and in the Board of Governors.

This is the kind of leadership fostered in the IU Department of Economics, and this is precisely the sort of leadership that scholars of public economic theory should be and are providing nationally and internationally.

Conclusion

As I mentioned, gathered here for this conference are the world’s leading scholars of public economic theory, including two Nobel Laureates in Economics. One of those is Distinguished Professor Elinor Ostrom from the Department of Political Science at IU Bloomington. The other is 2004 Nobel Laureate Ed Prescott from Arizona State University. Let me extend a special welcome to them.

Thank you all for coming to share and debate your insights, and I hope this conference continues to play a major role in building bridges between theory and practice.