Sunday, March 3, 2013

INET: the state of economics

The Institute of New Economic Thinking has a wonderful summary of the current state of the economics profession:
Theory is when you know everything & nothing works.
Practice is when everything works & no one knows why.
In our lab, theory and practiced are combined:  nothing works & no one knows why.
However, outside of the economics profession's lab, there are people who know why nothing is working when it comes to the response to the bank solvency led financial crisis.

The question is:  will the economics profession show the necessary humility and listen to what these people are saying?

Doubtful given a) the economics profession's failure to predict the financial crisis and b) the economics profession's unwillingness to admit the failure of all their recommendations to address the financial crisis and its fallout.

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