22 December 2008

The party's over

An interesting article about the failure of the economics profession to foresee, let alone forestall, the current financial crisis:
An entire field of experts dedicated to studying the behavior of markets failed to anticipate what may prove to be the biggest economic collapse of our lifetime. And, now that we're in the middle of it, many frankly admit that they're not sure how to prevent things from getting worse. Paradigm lost, Drake Bennett, 'The Boston Globe', 21 December
There are plenty of reasons for this, some suggested by Mr Bennett. For myself, I think the goals of economists are have, like those in other professions, drifted away from their ideals; something that's inevitable when tenure, salaries and prospects depend on spurious micro-targets: number of papers published, frequency with which they are cited, and the rest. With the ever-lengthening and ever more tenuous link between the producers of economic theory & policy and the people they are supposed to be helping, the economics profession has become little different to that of politics and policymaking in general: governed by meaningless volume of output indicators, image, ideology - anything, that is, except outcomes. They have got away with it - until now. My suggestion is that they use this crisis to ask themselves the fundamental question: What is government for?

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