You touched on something which is
really interesting.
I'm sure from everyone's
point of view which is the inertia
and the indoctrination that happens
at academic
level, you're a professor.
You lecture in the university you
have lectured
all over the world.
Just talk about that process of when
people as you said drink the Kool
Aid of economics 101
specifically at Ivy League
universities.
Well it's inevitable in some
ways because I see
humans as belief systems.
We see our own picture of
ourselves as we're rational thinking
critical et cetera et cetera.
And we put
at one spectrum scientist,
the other spectrum we put religious
fanatics. But I see them as being
very
very related to each other.
They've both got a belief system.
It's just the scientists have put
their belief system
through experimental verification
over time.
But when you see a scientist when
they've developed
an idea that's survived a few
empirical challenges.
They believe their model does
describe the world.
Now that's the same for us.
So economists are on the same
footing
as physicists
and the same footing as Buddhists
on that front.
The difference is that
economic theory has...
again we have a cult
and they expect to have a meteor
come
and there's going to be a spaceship
behind that's
going to rescue 12 people
and the rest of us get fried in the
incendiary
flames of the meteor
and it doesn't happen they go to
believe it's going to happen
three weeks later.
Well economics is more like that.
They can pass something as massive
as the global financial crisis
and think there's no need to change
anything about
the economy when their own models
said
not only was it not going to happen
their models
predicted 2008 was going to be
a tremendous year for the global
economy.
Imagine you've got this as a doctor
you get told
you go to the doctor and you got a
fantastic
diagnosis no problem at all you're
going to
be fine and two weeks later you die
of cancer.
Well the OECD put out a report
in June of 2007
saying Our forecast is quite benign.
That's two months before the crisis
began.
The Federal Reserve at its meeting
in
December of 2007
its chief economist said my forecast
can be described as being quite
benign.
That's the time we now backdate
the crisis to having started when he
said
there was no recession
and the forecast was quite benign.
That's how bad they are
but they have not taken that as a
holy ---
we've gone the wrong way. We've got
to change.
They suddenly say now you've got to
revise what you think
economics is about.
