Model building and statistical significance can scarcely appreciate the implications of a world with divided, disjoint knowledge, because only by assuming uniformity, stasis, and common knowledge does the system of equations become workable. By shutting themselves off from the real economy, economists have lost touch with the basic economic insights of Adam Smith, Friedrich Hayek and Ronald Coase. They are in fact worse economists for having preoccupied themselves with the meretricious standards of academic rank. The failings of universities were discussed long ago by Adam Smith. He said educational institutions subsisting on endowments or state funding tend to lose enthusiasm for the basic instructional needs of the people.
University faculty become a self-evaluating body.
They indulge each other's neglect of basic teaching and occupy themselves with elegant yet arid learning. Club economists complacently affirm status-quo academic institutions. Some prominent free-market economists, such as George Stigler and Sherwin Rosen, have even made the presumption explicit. Meanwhile, many complacent club economists are ready to dismiss the research esteemed in Sociology, Political Science, or Women's Studies. Economists ought to think harder about the economics of Economics.