Economists in Denial

Sit down before fact as a little child, be prepared to give up every preconceived notion, follow humbly wherever and whatever abysses nature leads, or you will learn nothing...................T H Huxley

Few seem to be wise enough to heed Huxley's advice. It seems to be human nature to believe what we want to believe and ignore the evidence. This is a fault in anyone, but absolutely disabling in a scientist.


The efforts of the Chicago School to protect its imaginary theory of economics are a good example of that flavor of folly. John Cochrane's puerile and argument poor attempt at a counter-attack on Paul Krugman was an unfortunate early exemplar. Now Cochrane and John Taylor's analyses of the Lehman failure ignore obvious facts, says the EofC who has a word for it: lying.

It's generally hard to come to agreement when one side simply lies...

Cut and paste doesn't seem to work for me at EofC, so you need to compare Cochrane and EofC paragraphs to see the divergence from reality.

So why do I find it hard to believe that a professor at a prestigious school should get away with such egregious nonsense? I need to keep reminding myself that much of what passes for economics consists of "a smokescreen for justifying policies convenient to powerful economic interests."

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