Thursday, September 3, 2009

Krugman: How Did Economists Get It So Wrong?

Paul Krugman in How Did Economists Get It So Wrong?sets forth his vision the future of economics;

Krugman is spot on regarding financial markets' imperfections and delusions.

However, because of globalization, his prescription of Keynesianism as a cure will not work. Back in the 1930's, when Keynes wrote and FDR began the New Deal, "the economy" was the national economy. Therefore, it made sense and was feasible to address economic issues from Washington. Nowadays, however, "the economy" is the global economy. Absent some global government, it would no longer be feasible to regulate it.


  1. Also, and this is just a niggling inconvenience, there's this old scrap of paper called the U.S. Constitution which denies the USA government powers beyond the ones listed and reserves to the people or the states all other powers. I mention this quaint restraint sheerly out of antiquarian interest.

    A far more serious objection is that Federal Reserve hollowed out the USA government around 1913 or so. Any kind of planetary regulation would probably suffer similar regulatory capture.

  2. It's 40 years after the Moon landing and Krugman got his PhD in 1977. What has he said about the planned obsolescence of automobiles? How much have Americans lost on the depreciation of crapmobiles every year since 1969?

    Our so called economic system depends on economists that can't do algebra. Double-entry accounting is 700 years old. How hard can it be with today's computers? When have our economists suggested that it be mandatory in the schools?

    NO! We need to keep the consumers $tupid. That would screw up our game theory.

    Economic Wargames

  3. That "economic wargames" article is worth spreading around. I'm going to post it on a few forums.