Sunday, November 30, 2008

It doesn't speak well for it, does it?

Spot saw the link to this NYT interview - with Jamie Galbraith - at A Tiny Revolution:

Do you find it odd that so few economists foresaw the current credit disaster? Some did. The person with the most serious claim for seeing it coming is Dean Baker, the Washington economist. I saw it coming in general terms.

But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis? Ten or 12 would be closer than two or three.

What does that say about the field of economics, which claims to be a science? It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless. [italics are Spot's]

You’re referring to the Washington-based conservative philosophy that rejects government regulation in favor of free-market worship? Reagan’s economists worshiped the market, but Bush didn’t worship the market. Bush simply turned over regulatory authority to his friends. It enabled all the shady operators and card sharks in the system to come to dominate how we finance.

Or, as Kevin Phillips, Spot's personal oracle says, "Bad capitalism drives out good capitalism."

Clearly, economics, is more, well, something than science. It's complete with its own holy spirit, called the Invisible Hand. Spot wishes he had a dime every time Craig Westover, David Strom, or King Banaian, just to name three of its confidence men, pledged undying faith in the market. Why, Spot could bail out a bank!

None of Milton Friedman's circumjovialists has had much to say about market fundamentalism recently, come to think of it.

Avidor sent Spot a link to a video of Paul Krugman - make that the Nobel Laureate Paul Krugman - doing a little stand-up comedy on the real estate bubble:

Pretty funny, but the whole thing is going to leave a mark, boys and girls.

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