Quote of the week, in reference to events of the Great Recession of 2008-09:
"Economists – in government agencies as well as universities – were obsessively playing Grand Theft Auto while the world around them was falling apart."
Kay metaphorically wags his finger at excessively deductive economists whom he says played absurd general equilibrium games while Rome burned. These non-scientists were unwilling to confront the anomalous facts of our world, preferring instead to stay inside the make-believe world of their models.
Induction plays an important part in science, and the attempt to eradicate it (e.g., by marginalizing history of economics and history of economic thought) in favor of pure deduction is a mistake. This explains why, for example, Kay says the corporate community makes very little use of economists—except as spokespeople to talk to other economists. In Kay's view the self-proclaimed high priests of the discipline only talk to other high priests, and are thus totally out of touch with the real world.
It takes a lifetime to master the intricacies of one's niche within economics; how many of us would turn on this labor history to proclaim it all rubbish? Whether consciously or unconsciously, we adopt a reverential posture towards our own labors of love. Kay calls us out of that complacency.
[Addendum: David Warsh reminds us in his column today that Karl Marx never visited a factory!—surely another great irony and tragedy for science and the world.]