A direct steal from Brad de Long who stole it from John Emerson, but right on target to what Eli, MT, Ankh and others have been trying to tell the Weasel and apologies to John Quiggin, Paul Krugman, Noah, Angry Bear, and even Brad de Long
Brad DeLong: Luke Lea Gets It Wrong, I Think: Assessing John Cochrane's "Can't I Let Sleeping Dogs Lie?" Department: Brad's argument would make sense if none of his bullshit artists had been awarded Nobel Prizes for economics, or if most of them did not outrank DeLong in the profession. As it is, laymen can have no trust in the economics profession as such or professional economists as such. There are no internal standards, and any credentialed PhD can say anything he wants with no worries about sanctions. My understanding is that economics has all the right answers sitting there on shelf, mixed in with all the wrong answers. Every once in awhile someone like Minsky or Veblen or Kalecki or Pigou is moved forward on the shelf to patch the failed consensus.
For the last 30-40 years I've been fighting a losing battle with well-regarded Chicago School and neoliberal economists and watching the society I live in being degraded in front of my eyes. During that time the economics profession was doing harm. As long as thing were going well by their standards, there was nothing I could say; I was a laughable crank, fanatic, and slave of archaic ideology. Only now when they've caused a disaster have I become marginally respectable. I don't think that the profession can self-correct fast enough to make it useful in the world it lives in. Maybe by 2050 the profession will have remediated itself enough to become capable of understanding the world of 2012, but that's not soon enough. There needs to be a serious pruning and thinning, but that's not institutionally possible using normal methods. The tumbril and guillotine method is precluded too. A parallel discipline needs to be developed.Brad:
I used to--six years ago--be certain that people like Emerson were wrong.=====================
It seemed to me that economics had a powerful technocratic core and a powerful set of analytical tools that helped to make sense of the world.
But the treatment that the world has gotten from the Lucases, Cochranes, Famas, Kocherlakotas, and many others, not to mention the Prescotts--none of whom seems to have made any effort to mark their prejudices to reality--has shaken my confidence to the core. They seemed to me and seem to me to have simply not done their homework, and not be trying to do their homework.
Oh yes, J. P. Morgan lost $2 Billion today on a wise guy bet.