How can we tell that Duvvuri Subbarao, the current Governor of the Reserve Bank of India, is an actual economist and, someone like Henry Paulson, "an American banker who served as... Secretary of the Treasury" under Bush, is not? Go to the question period of a lecture, "India - Macroeconomic Challenges, Some Reserve Bank Perspectives," Subbarao delivered at the London School of Economics and listen to the exchange that happens around the 65:00 mark. A member of the audience asks Subbarao to explain why macroeconomic indicators are not positive and yet the stock market is booming; Subbarao answers: "As the reserve bank governor, I'm expected not to take notice of the stock market. I have no comment on that... I have no informed or educated view on that."
That is something you would never hear from the mouth of someone running the US Treasury or Federal Reserve. Why? Because they are financial managers and not economists. Subbarao, on the other hand, is not a banker because his country, India, is growing not for the sake of growth but because it still faces problems with real scarcity—meaning, real and not culturally imposed poverty (read Part Two).
Now, go to the middle of the lecture (47:00), and I do recommend you listen to the whole lecture, and you will hear Subbarao discussing the argument that advanced capitalist societies (ACS) make to justify what is essentially unjustifiable—their continued economic compound growth. ACSs say that their growth is good because it translates into growth for the developing world. In short, they are growing not to benefit the West but the rest. No one in the world really believes this nonsense. Rich countries are growing not even for their own economies but for their stock markets. This gets us to a very important point in this series. In my first post, I explained why those who run the US Treasury of Federal Reserve are not economists. In my next, but not final post, I will explain exactly why they cannot ignore the stock market in the way that Subbarao can.