Wednesday, October 26, 2011

What economists lack - Paul Krugman

Paul Krugman's presidential address to the Eastern Economic Association (The Profession and the Crisis) identifies three failures of the economics profession in the present crisis: a failure to see the crisis coming, a failure to imagine such a crisis being possible, and a failure to draw on the insights of Keynesian economics to deal with it. For Krugman, the latter is the most serious failing, and it's hard to disagree - up to know we have had a series of fanciful invocations of austerity to deal with what looks for all the world as a kind of depression. After that approach did so well in the 1930s.

Meanwhile Joe Stiglitz is equally damning about this policy direction in his presentation of the report by the UN Economic and Social Committee. Two Nobel prize winners at odds with most of their profession: looks like time for a paradigm shift to me.