Tuesday, July 19, 2011

It's The Stupid Economists

Paul Krugman and other neo-Keynesian economists have often lamented the eccentric turn so-called fresh-water economics has taken, rejecting Keynes insights in favor of mathematical models which look pretty but can't match real world behavior.  The Chicago school offers aid and comfort to some of the craziest ideas of the Republican right.  Krugman says:

The point is that GOP ignorance on macroeconomics isn’t like GOP ignorance on, say, climate science. In the latter case the bad science comes from a handful of essentially bought and paid for “skeptics”. In the case of macroeconomics, the nonsense is coming from established economists with lots of widely cited papers. Paul Ryan doesn’t have to distill his madness from the scribbling of hacks at Heritage (although he does that too); he can get it over some nice wine from tenured faculty at the University of Chicago.

I really wonder if he's right on that, though. Maybe all the Chicago econics is just the like the fake climate science writ large. The fact is that U. Chicago economics has prospered mightily from the support of those moneyed interests that their theories always seems to support. The gods of the Chicago school likewise might be mistaken for court economists of the mighty. Even all their faux Nobels (like Krugman's own) was established by a bank, not the Nobel foundation - to be fair, though, the selection procedures seem pretty well insulated from the source of the money.