{"id":1558,"date":"2009-09-08T20:21:38","date_gmt":"2009-09-08T19:21:38","guid":{"rendered":"http:\/\/www.rogerdarlington.me.uk\/wordpress\/?p=1558"},"modified":"2009-09-08T20:21:38","modified_gmt":"2009-09-08T19:21:38","slug":"how-did-economists-get-it-so-wrong","status":"publish","type":"post","link":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/?p=1558","title":{"rendered":"How did economists get it so wrong?"},"content":{"rendered":"<p>In <a href=\"http:\/\/www.nytimes.com\/2009\/09\/06\/magazine\/06Economic-t.html?_r=1&#038;emc=eta1\">this article<\/a> &#8211; long but so informative and convincing &#8211; Paul Krugman, &#8220;New York Times&#8221; op-ed columnist and winner of the 2008 Nobel Memorial Prize in Economic Science, argues:<\/p>\n<blockquote><p>&#8220;So here\u2019s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit \u2014 and this will be very hard for the people who giggled and whispered over Keynes \u2014 that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they\u2019ll have to do their best to incorporate the realities of finance into macroeconomics.<br \/>\nMany economists will find these changes deeply disturbing. It will be a long time, if ever, before the new, more realistic approaches to finance and macroeconomics offer the same kind of clarity, completeness and sheer beauty that characterizes the full neoclassical approach. To some economists that will be a reason to cling to neoclassicism, despite its utter failure to make sense of the greatest economic crisis in three generations. This seems, however, like a good time to recall the words of H. L. Mencken: \u201cThere is always an easy solution to every human problem \u2014 neat, plausible and wrong.\u201d<br \/>\nWhen it comes to the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly. The vision that emerges as the profession rethinks its foundations may not be all that clear; it certainly won\u2019t be neat; but we can hope that it will have the virtue of being at least partly right.&#8221;<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>In this article &#8211; long but so informative and convincing &#8211; Paul Krugman, &#8220;New York Times&#8221; op-ed columnist and winner of the 2008 Nobel Memorial Prize in Economic Science, argues: &#8220;So here\u2019s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1558","post","type-post","status-publish","format-standard","hentry","category-world-current-affairs"],"_links":{"self":[{"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=\/wp\/v2\/posts\/1558","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1558"}],"version-history":[{"count":0,"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=\/wp\/v2\/posts\/1558\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1558"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1558"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.rogerdarlington.me.uk\/nighthawk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1558"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}