Oops! Some Not so Beautiful Minds
The University of Chicago has collected more of those Nobel Memorial economics prizes than any other school. It has also become something of an economic joke. Those economists didn't just fail to predict the catastrophe that engulfed the financial world last year, they contributed to it and in many ways were the intellectual sponsors of it. Paul Krugman has a long article in the New York Times Magazine today examining the massive failure of the economics profession in the run up to the financial detonation, and he looks in detail at the failures of the so-called "freshwater" economists. The rest of the macroeconomics profession doesn't get off either. They too mostly failed to anticipate the tsunami. When a prominent and much glorified school of thought meets a catastrophic reverse, they have the choice putting their heads down and humbly accepting the rebuke of history, or speaking loudly and wildly to guarantee that history remembers them as idiots. Most of Chicago...