Tuesday, February 19, 2013

Neil Wilson — New Keynesian? More like New Procrustean

The problem with mainstream economists is that they have a model that they believe in. They believe in it absolutely. It has become part of their core identity. And because the model is pure and perfect in their eyes it is therefore obvious that everything in the world must be adjusted to fit the model.

So we end up with governments that have their hands tied, we end up with persistent unemployment and we end up with silly inflexible system designs like the Euro.

And when the real world throws up endless evidence that the model is utterly wrong, the mainstream economists scream that, no, the world must be forced back into the model.
3spoken
New Keynesian? More like New Procrustean
Neil Wilson

Model fetishism or ideological advocacy?


2 comments:

David said...

"the facts were being fixed around the policy"

Richard Dearlove (Downing Street memo)

Jonf said...

I heard Alan Simpson (you know of the Simpson-Bowles team) say today that if Obama doesn't address the long term solvency of social security it will harm his legacy. I threw a sock at the TV. But millions believe it. I even wonder if Krugman doesn't think so too except not to worry at this particular moment. So it seems that Grandma is in for a surprise before long that she likely won't like.