Bloomberg News has an article on the many MIT economics Ph.D's currently in top policy slots at central banks around the world. The article paints a rosy picture of grad school life during the period when we were there, including:
Its emphasis on solving policy problems instead of perfecting theories... "We turned out students who were actually interested in macroeconomic policy and understanding daily events and not in showing off." [quote from Robert Solow]... the emphasis at the university was on trying to understand "real phenomena and how the world works" rather than seeking to come up with elaborate theories or better techniques.
Oh, barf. Or, to put it more politely, these passages struck a false note. In reality, the MIT training was all about the math. All about the math. Abstract mathematical methods were known as "tools" and graduate education was about "adding tools to your tool kit."
I think that Solow really was focused on useful economics as opposed to pure math, but he was already being shoved aside by the young mathematical theorists. The main message you learned in graduate school was that more difficult math equated to better economics.
I failed to accumulate an impressive tool kit. Writing my dissertation under Solow was not a good career move, because Dornbusch and Fischer controlled the placement of macro students.
With no attractive academic offer, I ended up spending my career in organizations. Along the way, I learned some things that you don't learn in graduate school. In an actual business, you are not given a demand curve and a cost function; instead, you grope. The internal alignment of an organization cannot be taken for granted; instead, a lot of time and effort goes into just trying to keep people focused on common goals. Day-to-day life in a organization is a soap opera, with individuals and departments often working at cross-purposes. No one, including the CEO, has full knowledge or control.
When I came to think of every organization as a dysfunctional family, it affected my mental model of markets and government. I don't assume that organizational units know what they are doing. Instead, I ask: what institutional pressures exist that ensure that more effective units survive and less effective units disappear? That in turn leads me to be relatively pessimistic about government as an institution, because I see the tools of voice (elections and representative democracy) as less effective than the tools of exit (consumer choice, leading to profit and loss).
MIT's contribution to producing technocrats was what it did not teach. It did not teach humility. It did not teach that the world is too complex for technocrats to control.