"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Wednesday, December 12, 2007

Something Nice About Economists

Well, Krugman is one so they can't all be totally nuts.

See if this reminds you of anything, by the way:
Part of it was the usual bubble psychology. Economists like to cite Stein’s Law: “If something cannot go on forever, it will stop.” I think it needs to be paired with another law — let’s call it Glassman’s Law — along the lines of “If something unsustainable goes on for a while, there will be people claiming it can go on forever.”

...

And I know that when I began writing about housing, I got a lot of mail from people claiming that I was only saying that there was a bubble because I hated Bush. Honest.

Anyway, it’s just amazing. The reality of a housing bubble was staring us in the face — but nobody wanted to see it.

1 comment:

David B. Benson said...

But saying that all economists are totally nuts is saying something nice aout them...