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>From The Times April 5, 2010 George Soros backs Oxford to refresh economics Alexandra Frean George Soros is to create a new economics institute at Oxford University. It is part of an attempt to steer the discipline away from the champions of the free market and deregulation who, the billionaire financier believes, share the blame for the global economic crisis. The institute, as yet unnamed, is being funded by the New York-based Institute for New Economic Thinking (Inet), a think-tank and educational and grant-giving organisation founded last October with a $50 million pledge from Mr Soros to stimulate debate about the role of government regulation in the economy and financial markets. Both Inet and the new Oxford economics institute reflect Mr Soros’s frustration at the way global financial markets work on the premise that markets can be left to their own devices. He believes that the current crisis has shown the reverse to be true. “The economic crisis and the failure of economists to predict it and protect society illustrate that economics as a profession needs to re-earn its reputation and regain its mantle of expertise,” Robert Johnson, a former managing director at Soros Fund Management, who is now director of Inet, said. Even now, more than 18 months after the start of the credit crunch, some freemarket economists appeared to be in denial about the causes of the crisis and there was no consensus about what to do next, he said. Too much of modern economic theory relied on sophisticated mathematical models to predict market behaviour. A broader, interdisciplinary approach to economics, taking in history, psychology, natural science — to deal with issues such as climate change — and even literature was now needed, Mr Johnson suggested. He added that the university system of tenure and peer review gave established academics a virtual stranglehold on the debate and made it difficult for economists trying to promote a fresh approach to be heard. Mr Soros has donated $5 million to Oxford’s James Martin 21st Century School, which is putting in another $5 million, to create the new institute, which will be headed by Professor Sir David Hendry, a fellow of Nuffield College. It is the first of a dozen or so that Mr Soros hopes to set up at leading universities worldwide. Inet is talking to Cambridge as well as higher education universities in Germany, France, China, Italy and the United States, where there have been discussions under way with Princeton, Columbia and New York University. Oxford was chosen for the first institute because Mr Soros believed that Britain was more open to broadening the economic debate than the US, Mr Johnson said. “There’s a feeling when we talk to Mervyn King and Paul Tucker [the Deputy Governor] at the Bank of England, Adair Turner at the Financial Services Authority and others, that they are way ahead of the others. We want to go to a climate where the minds are open. We find the climate in the UK to be much more conducive to change. In the US the orthodoxy is a little bit more embedded. What the FSA is writing is far more courageous than anything emanating from the US Treasury.” Ian Goldin, director of the James Martin 21st Century School, agreed that the focus of established economic theory had become too narrow: “It has become very evident in the recent economic crisis that the profession has been unable to fully explain economic activity and that it does not have the right conceptual tools to understand all the changes we have seen. “Part of what the 21st Century School is trying to do is to broaden the debate and get a plurality of voices and think of different ways of modelling.” The new institute at Oxford will be announced this week at Inet’s inaugural conference at King’s College, Cambridge, which will bring together some of the world’s leading economists, including the Nobel laureates Joseph Stiglitz, George Akerlof and Sir James Mirrlees. The man who broke the Bank George Soros became known as the man who broke the Bank of England after he made a reported $1 billion during the 1992 Black Wednesday currency crisis. He profited from the Bank’s reluctance to raise its interest rate to match that in other European Exchange Rate Mechanism countries or to float the currency. Britain left the ERM and in 1997 the Treasury estimated the cost of Black Wednesday at £3.4 billion. Mr Soros, who was born in Budapest in 1930, emigrated to Britain in 1947 and graduated from the London School of Economics in 1952. In 1956 he moved to New York, where he became a banker. He is chairman of Soros Fund Management and co-founded the Quantum Fund with Jim Rogers, which created the bulk of the Soros fortune. In 2007, the Quantum Fund returned almost 32 per cent, netting Mr Soros $2.9 billion. He played a significant role in the overthrow of communism in Hungary between 1984 and 1989. His funding and organisation of Georgia’s Rose Revolution was considered by Russia to have been crucial to its success. He donated large sums of money in an effort to defeat President Bush in 2004. Your Comments 16 Comments (Displaying 1-10) Order By: * Newest first <javascript:;> * Oldest first <javascript:;> * Most recommended <javascript:;> Copyright 2010 Times Newspapers Ltd. http://business.timesonline.co.uk/tol/business/economics/article7087558.ece [Non-text portions of this message have been removed]
