“Given the extraordinary level of incompetence shown by these economists, one may ask. . . .”
from Edward Fullbrook
An article “Stop letting economists off the hook” by Philip Soos in the Business Spectator should be required reading for economists. It raises the question: “If other professions can be held accountable for poor job performance, why not economists?” Here is one section of Soos’s article.
According to conventional economic theory that the majority of economists advocate (neoclassical economics), these assets bubbles should not be forming. Supposedly, the more market-oriented an economy becomes, through deregulation and privatisation, the more efficient it becomes at pricing assets, resources, goods, services and labour. Thus, there should be little to no bubble activity within a freer market economy. History, however, has revealed the opposite.
One would think that given the wide gulf between theory and reality, the economics profession should have performed some sort of self-assessment. Instead, they seem to have fervently congratulated one another for having saved economies.
There is, of course, some truth to this assertion: economies would likely have been worse off had the government not intervened and allowed the banks to collapse. Clearly, this is not the point being made – the point is that if economists were not asleep at the wheel, economies would not have been driven into a brick wall, requiring bailouts in the first place.
It is outrageous those economists in important policy-making and influential positions even keep their jobs. What comprises these positions is obvious: senior economists within the central bank, treasury, the financial regulator, commercial lenders, investment banks, and supranational organisations.
If a taxi driver was to crash while drunk driving, injuring passengers, they would be fired and can be charged by the authorities. A nurse that continually gives patients the wrong medicines, resulting in suffering or even death, will lose their job in short order. A cook that leaves the stove on after finishing work, burning down the restaurant, will predictably lose their job.
On the other hand, economists who are complicit in the collapse of multi-billion dollar corporations and trillion-dollar economies are still employed, often working in the highest levels of government, industry and academia, while unemployment, bankruptcies, and general misery blows out of all proportion among the public.
Given the extraordinary level of incompetence shown by these economists, one may ask why they are still employed. Surely the economics profession should be treated similarly to other professions: incompetence on the job should result in disciplinary measures and penalties.
One explanation can be found within economic theory itself. Economists believe that the prices of goods and services within an economy are determined by the impersonal forces of supply and demand; everything, that is, except for the supply and demand of economic theory itself.
The rich and powerful create strong demand for economic ideology that justifies their wealth and power. Thus, ……. Read the full article here: Stop letting economists off the hook