The link goes the opposite way- lack of theory has created a simplistic and dangerous public economics, only bringing epistemological questions to the fore can create reflexivity
(Dan, Professor of International Political Economy at Harvard University, “Occupy the classroom?”, 16 Dec 2011, http://www.aljazeera.com/indepth/opinion/2011/12/2011121494147161362.html)
Consider the global financial crisis. Macroeconomics and finance did not lack the tools needed to understand how the crisis arose and unfolded. Indeed, the academic literature was chock-full of models of financial bubbles, asymmetric information, incentive distortions, self-fulfilling crises, and systemic risk. But, in the years leading up to the crisis, many economists downplayed these models' lessons in favour of models of efficient and self-correcting markets, which, in policy terms, resulted in inadequate governmental oversight over financial markets. In my book The Globalization Paradox, I contemplate the following thought experiment. Let a journalist call an economics professor for his view on whether free trade with country X or Y is a good idea. We can be fairly certain that the economist, like the vast majority of the profession, will be enthusiastic in his support of free trade. Now let the reporter go undercover as a student in the professor's advanced graduate seminar on international trade theory. Let him pose the same question: Is free trade good? I doubt that the answer will come as quickly and be as succinct this time around. In fact, the professor is likely to be stymied by the question. "What do you mean by 'good'?" he will ask. "And good for whom?" The professor would then launch into a long and tortured exegesis that will ultimately culminate in a heavily hedged statement: "So if the long list of conditions I have just described are satisfied, and assuming we can tax the beneficiaries to compensate the losers, freer trade has the potential to increase everyone's well-being". If he were in an expansive mood, the professor might add that the effect of free trade on an economy's growth rate is not clear, either, and depends on an altogether different set of requirements. A direct, unqualified assertion about the benefits of free trade has now been transformed into a statement adorned by all kinds of ifs and buts. Oddly, the knowledge that the professor willingly imparts with great pride to his advanced students is deemed to be inappropriate (or dangerous) for the general public. Economics instruction at the undergraduate level suffers from the same problem. In our zeal to display the profession's crown jewels in untarnished form - market efficiency, the invisible hand, comparative advantage - we skip over the real-world complications and nuances, well recognised as they are in the discipline. It is as if introductory physics courses assumed a world without gravity, because everything becomes so much simpler that way. Applied appropriately and with a healthy dose of common sense, economics would have prepared usfor the financial crisis and pointed us in the right direction to fix what caused it. But the economics we need is of the "seminar room" variety, not the "rule-of-thumb" kind. It is an economics that recognises its limitations and knows that the right message depends on the context. Downplaying the diversity of intellectual frameworks within their own discipline does not make economists better analysts of the real world. Nor does it make them more popular.
AT US Economic Model Good/Comparative Power
The U.S. is ineffective at using its economic power.
Gelb December ‘10
Leslie, President Emeritus of the Council on Foreign Relations. He was a senior official in the U.S. Defense Department from 1967 to 1969 and in the State Department from 1977 to 1979, November/December Foreign Affairs, Proquest
Most nations today beat their foreign policy drums largely to economic rhythms, but less so the United States. Most nations define their interests largely in economic terms and deal mostly in economic power, but less so the United States. Most nations have adjusted their national security strategies to focus on economic security, but less so the United States. Washington still principally thinks of its security in traditional military terms and responds to threats with military means. The main challenge for Washington, then, is to recompose its foreign policy with an economic theme, while countering threats in new and creative ways. The goal is to redefine "security" to harmonize with twenty-first-century realities. The model already exists for such an economic-centric world and for a policy to match: the approach of U.S. Presidents Harry Truman and Dwight Eisenhower. They understood that a strong economy is the basis of both a vibrant democracy at home and U.S. military might abroad. They also knew that no matter how strong the U.S. economy and military, Washington would need a lot of help in checking communism. Accordingly, they bolstered U.S. power by resurrecting the economies of Western Europe and Japan, and they added legitimacy to that power by establishing international institutions such as the World Bank and nato. To respond to threats from the Soviet Union and communism, Truman and Eisenhower fashioned the policies of containment and deterrence, backed up by military and economic aid. The idea was to check Soviet military power without bankrupting the United States. Today, of course, any U.S. approach must account for the complexity of the global economy as well as new threats from terrorists and weapons of mass destruction. All this can be done-but not without causing some intellectual and political mayhem. The most ferocious fight will be over how to rejuvenate the U.S. economy. Everyone agrees that it must be fixed, lest the nation face further decline and more dangers. But few agree on how. The basic must-do list is lengthy, unforgiving, and depressingly obvious: improve public schools to sustain democracy and restore global competitiveness; upgrade the physical infrastructure critical to economic efficiency and homeland security; reduce public debt, the interest on which is devouring revenue; stimulate the economy to create jobs; and promote new sources of energy and freer trade to increase jobs, lower foreign debt, and reduce dependence on Middle Eastern oil. Even as politicians and experts do their war dances on these do-or-die domestic issues, they will grapple over foreign policy, as they should. The United States is less and less able to translate its economic strength into influence abroad, even though it will remain for some time the world's largest economy. Why this gap between U.S. power and results? In part, it is because many problems internal to states today are beyond all external ministrations. It is also because U.S. power has been squandered and employed inefficiently. Having overlooked profound changes in the world, U.S. leaders have done little to modernize their national security strategy. Present U.S. strategy offers too little bang for its buck because there is not enough buck in the strategy. A new way of thinking about U.S. interests and power must aim for a foreign policy fitted to a world in which economic concerns typically-but not always-outweigh traditional military imperatives
We control the uniqueness- the debt crisis already collapsed the legitimacy of the US’s economic model
Altman and Haas December ‘10
Roger C Altman, Chair and CEO of Evercore Partners. He was U.S. Deputy Treasury Secretary in 1993-94, and Richard N Haass, President of the Council on Foreign Relations. He was Director of Policy Planning at the U.S. State Department in 2001-3. “American Profligacy and American Power: The Consequences of Fiscal Irresponsibility”. Foreign Affairs. New York: Nov/Dec 2010. Vol. 89, Iss. 6; pg. 25. Proquest.
More than just financial resources will be affected. The United States' global influence, in all of its facets, will suffer.Washington's ability to lead on global economic matters, such as its recent urgings in the G-20 for more stimulus spending, will be compromised by the coming plunge into austerity. Similarly, the United States' voice within the imf and other multilateral financial institutions will be weakened. Nor will Washington have the capacity to engineer direct financial interventions, as it did with the 1994 rescue of Mexico. A related cost of the United States' debt has even greater consequences: the diminished appeal of the American model of market-based capitalism. Foreign policy is carried out as much by a country's image as it is by its deeds. And the example of a thriving economy and high living standards based on such capitalism was a powerful instrument of American power, especially during the Cold War, when the American model was competing with Soviet-style communism around the world. Now, however, the competition comes from Chinese-style authoritarianism: a top-heavy political system married to a directed and hybrid form of capitalism. The recent stellar performance of China's economy in the midst of Western economic troubles has enhanced the appeal of its system. Reinforcing this trend is the reality that the U.S. approach (one associated with a system of little oversight and regulation) is widely seen as risk-prone and discredited after the recent financial crisis. If the United States is unable to address its own debt crisis and a solution is forced on it, then the appeal of democracy and marketbased capitalism will take a further blow.