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November 29, 2008

Wicked Or Merely Stupid?

This is from a New York Times interview with Jamie Galbraith:

Do you find it odd that so few economists foresaw the current credit disaster?
Some did. The person with the most serious claim for seeing it coming is Dean Baker, the Washington economist. I saw it coming in general terms.

But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis?
Ten or 12 would be closer than two or three.

What does that say about the field of economics, which claims to be a science?
It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.

Here's the Wall Street Journal, writing about Robert Rubin:

Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.

"Nobody was prepared for this," Mr. Rubin said in an interview. He cited former Federal Reserve Chairman Alan Greenspan as another example of someone whose reputation has been unfairly damaged by the crisis.

Noam Chomsky:

[T]he commissars, the secular priesthood, the state ideologists...I think it is an extremely corrupt group. I think this is also the group that is the most subject to effective indoctrination, tends to have the least understanding of what is happening in the world, in fact, tends to have a sort of institutionalized stupidity.

Mark Twain:

Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.

George Orwell:

Whether the British ruling class are wicked or merely stupid is one of the most difficult questions of our time.

—Jonathan Schwarz

Posted at November 29, 2008 10:11 PM

Unfortunately, the quote attributed to Twain appears to be apocryphal. This does nothing to diminish its quality, however.

Posted by: Mike at November 30, 2008 04:44 AM

Basic question: is the global economic condition a crisis out of hand and unmanageable or a manipulation with ulterior designs?

Posted by: Woodyeofalb at November 30, 2008 10:12 AM

Basic question: is this global economic situation a crisis and out of hand, unmanageable, or a manipulation, or series of manipulations still "under control"?

Posted by: Woodyeofalb at November 30, 2008 10:16 AM

Noam Chomsky's linguistics research was funded by the Department of the Defense. He wasn't complaining when he was suckling at the teat.

Just saying.

Posted by: Bob In Pacifica at November 30, 2008 10:40 AM

Third time in print-second time here.

A strange creature The Economist
In the land of supply and demand
He sees Neither the salesman
Nor the guy with cash in hand
But only the fine line of a Laffer curve
Horrizontal, never up nor down
And when their convoluted plans fail
(as they must)
Only market forces can be found

Posted by: Mike Meyer at November 30, 2008 11:30 AM

Why should he complain? He is, in fact, always trying to make it known and explain why the system operates this way: basic scientific research can only be financed by the public and in the US the Pentagon is the most commonly used mechanism for it.

Posted by: abb1 at November 30, 2008 11:31 AM

Plenty of non economists saw it coming. Well hello there sleeping beauty.

1. Be careful what Noam Chomsky is giving you when you are out trick or treating kids.

2. I don't see what any big money interest economists are any better than Choamsky

Seems like all the free sage information we been getting ain't the blessing we thought, huh? Imagine that.

Posted by: meshuga at November 30, 2008 12:17 PM

I call this the Crook-Or-Fool Dilemma. Are the guys on top as really as dumb as they look, or are they putting us on?

It's hard to tell, perhaps impossible. Folly and wickedness tend to support each other, and lead to each other.

I wouldn't call stupidity 'mere'; it is as great an evil as wickedness. You can police a crook, but a fool is a force of nature.

In the end it doesn't matter; neither crook nor fool is to be trusted.

Posted by: paradoctor at November 30, 2008 12:59 PM

It is one thing to make fun of economists. It is one thing to make fun of Noam Chomsky.

However it is something else entirely to suggest that this year's bonus payments or dividends be suspended. Many bankers worked long hours in anticipation of just compensation relative to the excess returns they were planning to earn for their shareholders.

Why should they be blamed because the markets seized up?

People have been warned to acclimate themselves to free markets for decades and have not heeded these warnings. Whose fault is that may I ask?

If you want to take the blame off of the shoulders of the poor then you must allow the banks to make equitable distribution of the monies they have received from the Treasury to the valuable and hardworking and brilliant talent they employ. Otherwise they will not be able to retain that talent and it will be forced to find alternative employment.

The proof that the banks know what they are doing is how much money they have made. QED.

It is an embarrasing act of class warfare to argue against bonuses and dividend payments. In tough times we all need to pull together.

Posted by: Seth at November 30, 2008 01:29 PM

I like how the interviewer continued to press Galbraith even after he tried to squirm out of the first couple iterations of the question.

Posted by: darrelplant at November 30, 2008 01:59 PM

Seth, your comment is an embarrassing attempt at confusing a simple issue.

Bankers drove their banks into bankruptcy and thus should go out of business. For some reason though, the public has been forced to keep them in business with a form of national socialism. That the banks have all of our money is only proof that the USA is run by a bunch of nazis.

And somehow, you are arguing that those failed bankers should get christmas bonuses and stripper parties, because otherwise failed free market entities couldn't keep the skilled workers they don't deserve? Wtf?

And to top it off, you chalk it up to don't blame the free market? QED? How about nazi troll please stfu with your nonsense.

Posted by: meshuga at November 30, 2008 03:03 PM

WE DO NOT ELECT KINGS HERE IN AMERICA, but WE will elect a blindly greedy moron in half a heart beat and have been doing it for decades. OUR problems are in OUR mirror, LOOK at them.

Posted by: Mike Meyer at November 30, 2008 03:35 PM

How about nazi troll please stfu with your nonsense.

Meshuga, I believe he was joking.

I hate to repeat myself, but let's please try not to e-scream at each other here.

Posted by: Jonathan Schwarz at November 30, 2008 04:08 PM

Joking? I?

Posted by: Seth at November 30, 2008 05:33 PM

Mr. Rubin, your excuse sounds a lot like a certain someone trying to say he didn't get the memo saying "Bin Laden prepared to strike inside U.S." So, your unread memo apparently read "Citygroup prepared to shit all over the country."

Posted by: catherine at November 30, 2008 06:23 PM

If all economists were laid end to end, they would not reach a conclusion.
-- George Bernard Shaw

Also, Bartcop's Law #2
Any time a person or entity makes a "mistake" that puts extra money (or power) in their pocket, expect them to make that "mistake" again and again and again.

Posted by: Jeff at December 1, 2008 10:15 AM

In addition to these there is the quote, mentioned on this website a couple of times, by Nasser about American policy that is created by complicated stupid decisions.

Posted by: Anna in PDX at December 1, 2008 12:55 PM

"Even the Gods rail at stupidity"

- Wagner (I think, may be apocraphal)

Posted by: Solar Hero at December 2, 2008 04:46 PM

By the fall of 2003, I realized that a serious recession would result from the incipient housing bubble. Unlike the dotcom boom of the 90s, this bubble was being inflated at the expense of average people, who couldn't possibly pay the fantastic prices being asked for the houses and condos that they needed to live in. So I figured this bubble would be difficult to sustain. I also guessed back then that the powers that be would try their mightiest to keep this economic house of cards that they were building from collapsing until the fall of 2008, thus leaving the mess for the next administration to clean up. My exalted profession: proofreader. Number of classes on economics that I've taken: 0. Do you think they might have a teaching position for me at the University of Chicago?

Posted by: Joe Magil at December 3, 2008 02:41 AM