The Dismal Science By PAUL KRUGMAN

[elleng]

'Seven Bad Ideas,' by Jeff Madrick

The economics profession has not, to say the least, covered itself in glory these past six years. Hardly any economists predicted the 2008 crisis — and the handful who did tended to be people who also predicted crises that didn’t happen. More significant, many and arguably most economists were claiming, right up to the moment of collapse, that nothing like this could even happen.

Furthermore, once crisis struck economists seemed unable to agree on a response. They’d had 75 years since the Great Depression to figure out what to do if something similar happened again, but the profession was utterly divided when the moment of truth arrived.

In “Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World,” Jeff Madrick — a contributing editor at Harper’s Magazine and a frequent writer on matters economic — argues that the professional failures since 2008 didn’t come out of the blue but were rooted in decades of intellectual malfeasance.

As a practicing and, I’d claim, mainstream economist myself, I’m tempted to quibble. How “mainstream,” really, are the bad ideas he attacks? How much of the problem is bad economic ideas per se as opposed to economists who have proved all too ready to drop their own models — in effect, reject their own ideas — when their models conflict with their political leanings? And was it the ideas of economists or the prejudices of politicians that led to so much bad policy?

I’ll return to those quibbles later, but Madrick’s basic theme is surely right. His bad ideas are definitely out there, have been expressed by plenty of economists, and have indeed done a lot of harm.

http://www.nytimes.com/2014/09/28/books/review/seven-bad-ideas-by-jeff-madrick.html?hp&action=click&pgtype=Homepage&version=HpSectionSumSmallMedia&module=pocket-region&region=pocket-region&WT.nav=pocket-region&_r=0

[DonCoquixote]

1. Mainstream

Mr. Krugman, the problem is that we have a media whose main profit comes fro making ideas that used to be the fringe the mainstream.

[redruddyred]

2. or labelling the mainstream as "fringe"

[jmowreader]

3. Krugman isn't a "mainstream economist"

"Mainstream economists" can quote Friedman's "Capitalism and Freedom" and Hazlitt's "Economics in One Lesson" like some people can quote the Bible. The only real problem with mainstream economists...is they're full of shit. These guys point to the 1973 OPEC oil embargo as "proof" Keynesian economics doesn't work. In the real world, the 1973 OPEC oil embargo proves that unexpected inputs can break even the best-running system. No economic model can survive the quadrupling in price of a critical commodity.

Krugman is a Keynesian, and as we've seen repeatedly Keynesian economics is the only kind that works.

[elleng]

4. I agree, jmowreader,

what I've seen of 'mainstream economists' is they are full of s**t, but what do I know, I'm a lawyer! Did work as a regulator for fed govt, where I learned 'mainstream economists' could be paid to say (and argue) ANYTHING. Fortunately I was able to have a small bit of influence on decisions the agency made, resulting in SOME rationality.

[CTyankee]

5. Thanks for posting this, ellen! I was so happy to see this. More Paul Krugman!

He is so wonderful. He gives me hope that perhaps sanity will be restored to our economic policies in this country...