[jolepp]

Q. Why do we rely on economists at all? It was the economists who could neither predict nor prevent this huge recession. This is like asking a buggy repairman to work on digital cars. Shouldn’t we keep lockjaw reins on the entire financial industry rather than listen to these “advisers” who caused us to snowmobile down that old icy slope? Please tell me any advantage to the study of economics or the advice of economists. — Bob Davis, Washington

A.

Simon Johnson: I agree that much of economics has proved worse than useless — actually quite dangerous.
But what should we study or even think about? To me, our most pressing problems are about the misuse of power, distorted incentives, and crazy excess. This is about much more than economics — but changing the way we think about the economy must be part of the way forward.

Yves Smith: I take a pretty dim view of the economics discipline in my book “ECONned” and agree that the financial services industry needs to be put on a much shorter leash. However, there were economists who saw that the credit bubble was going to come to a bad end, yet their warnings were ignored. The big problem with economics is that the discipline uses particular types of mathematical exposition, and to make the math tractable, the models assume that the economy has a propensity to equilibrium. That means that they have effectively assumed it is stable — and they focused on how to make the economy grow faster, and how to make it more efficient, and didn’t worry about stability very much.

Economists play a role in policy much like that of systems designers. The economy after the turn of the millennium looked much more like what economists would recommend than did the economy of the 1950s. But a real systems designer, like an architect or a software developer, worries about stability first. Efficiency is a secondary priority. So they build in lots of redundancy and compartmentalization so that if one part of their creation gets in trouble, the whole enterprise will not be jeopardized.

The sort of financial system we have now, where markets and financial firms are so tightly linked, is the opposite of what a good systems designer would recommend. There were economists who recognized some of these links but those ideas were ignored until recently. For instance, Hyman Minsky, who took some of his thinking from Keynes, had a theory of how periods of economic stability inevitably create instability, which was ignored until the financial crisis. There are other useful ideas and relevant theories; in fact, the economics profession is quite diverse once you get outside the orthodoxy. Hopefully some of those ideas will get the hearing they deserve in the wake of the crisis.

(Answers on Europe's Debt Crisis, Part 3 - NYTimes.com)

[jogiba]

Greenspan and his low life buddies on Wall Street should be shot for the mess they made and got billion dollar paydays for doing it.

You Tube

You Tube

[jeffkrol]

Same reason we trusted the "experts" who bled people in the dark ages....................or thought the world was flat or the earth went around the sun....

Human nature.

doesn't help when your basic axioms are in complete error..................