A Baloney Sandwhich?
Arnold Kling:If you stacked up everything written by the leading macro folks of my generation and later (actually, starting a few years earlier also), you would have nothing but an enormous baloney sandwich. Ordinarily, I don't dwell on the fact that these people who were no smarter than me back-scratched each other into the best journals, the prestigious professorships, the important conferences, etc. But sometimes, especially now, I think about how badly they have failed intellectually. They are the precise academic equivalent of Wall Street executives who enjoyed golden parachutes while bankrupting their firms...
My view of the crisis is that every sector of the establishment has been discredited. The financial establishment has been discredited. Government policymakers and regulators have been discredited. And academic economics has been discredited. The fact that we now have all three on the same page about policy going forward is hardly comforting.
Arnold Kling:
1 comment:
Now Arnold Kling tells us!
Of course, I presume Kling would have to be included with those in the pundit class who so failed us.
Funny how he states "how badly THEY have failed intellectually."
Actually, there were a few voices crying in the wilderness who got it right.
For instance, Paul Krugman, the dreaded "liberal" economist, has been warning about the dangers of the housing bubble for years.
In 2005 he wrote:
"The U.S. economy is currently suffering from twin imbalances. On one side, domestic spending is swollen by the housing bubble, which has led both to a huge surge in construction and to high consumer spending, as people extract equity from their homes. On the other side, we have a huge trade deficit, which we cover by selling bonds to foreigners. As I like to say, these days Americans make a living by selling each other houses, paid for with money borrowed from China."
Others who warned us were Nobel Prize Winning economist Joseph Stiglitz and Warren Buffet.
In fact it's amazing how the people who warned us all support Obama in the presidential election. In fact, Obama wrote a letter to Paulson and Bernanke in Mar of 2007 warning about a wave of foreclosures. It was very prescient.
But again, all of these warnings came from those outside of the conservative purview, and so people like Kling may not have noticed or care to notice.
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