The Lamppost Theory

A drunkard is looking for the keys to his house under a lamppost near his home. A neighbor comes to the rescue and helps him search. As they don't find anything, the neighbor begins to have doubts:

Are you sure you lost your keys under this lamppost ?
Well no, but there's no way I'll find them elsewhere; it's too dark !

The drunkard is right when it comes to scientific investigations: Don't ever look for obscure solutions, because you can't find anything in the dark vicinity of such solutions. If there's nothing under the lamppost, just give up.

If you're lucky, there might be a flashlight under some lamppost, though.

Source: http://home.att.net/~numericana/answer/humor.htm#lamppost

WHO IS THE PRACTITIONER OF POLITICAL ECONOMY? Daniel Klein

The emphasis on formal model building and econometric exploration in academia is crowding out other modes of discourse that could serve as handy flashlights in helping practitioners find their keys. A list of other modes of discourse might include the thought experiment, the parable, metaphors aside from formal models, introspection, typology, ideal types, case studies, institutional comparisons, comparative history, interviews with the actual subjects, exegesis of great texts, and various forms of quantitative and textual evidence. Genres of economic scholarship that might receive greater attention include business and economic history, institutional case study, the essay, the literature review, and most especially the policy study that is not overly reserved in exercising judgment and generating dialogue. All these genres and forms of argument are practiced extensively in the profession, but their standing relative to the two dominant modes of discourse, in terms of esteem and rewards, is lower than it should be.

WHO IS THE PRACTITIONER OF POLITICAL ECONOMY?
Daniel Klein
This article appears in Challenge, Vol. 41, 1998

This economist urges other economists to take up the practice of political economy again. Otherwise, it is left to those who know little economics themselves.

The ordinary person makes decisions every day that are important to maintaining his health. But those decisions are familiar and routine. For new decisions, important decisions, he would usually appoint a doctor to the task. The practice of serious medicine is the province of the doctor, just as the practice of architectural safety is the province of the engineer, and food safety the province of chemists and pharmacologists. In these fields, the practitioner is a specialized expert. Even when the ordinary individual takes on medical decisions himself, he does so after gaining some pointed knowledge of his particular condition and, in a meaningful sense, becoming a narrow sort of expert. (A Yiddish proverb says: "Don't ask the doctor - ask the patient.")

Who makes the important decisions in political economy? Unlike the case in medicine, engineering, and other technical fields, the decision-maker is not the trained expert. The practitioner of political economy is not the professor of economics. Rather, decisions are made by public officials and the ordinary voter - the Everyman (which, of course, includes every woman). The Everyman makes not only the minor and routine decisions of public policy but also the great and awful decisions. Economists have no particular power in this process. Does it makes sense for the discipline of political economy to be fashioned a science in the manner of biology and physics when the actual practitioner of the discipline is not an expert?

The Great Faith of Many Academic Economists

Academic economists have not improved the practice of political economy as much as they might. They neglect talking to the practitioner. By generally talking exclusively among themselves, economists on the whole have left the practitioner stranded in darkness.

Academic economists have become focused largely on their own concerns of establishing and maintaining a set of professional standards for legitimacy in research. Academics require a set of standards that can, relative to other possible standards, be applied like a rubber stamp, to reduce vexing internecine conflict over every orals examination, job candidate, or tenure case. Without common standards and values, an academic community is not a community. The profession has adopted certain modes of discourse that serve the communal and institutional needs. The two dominant modes of discourse are equilibrium model building and econometric exploration of data sets. These have become the bona fides of academic economic discourse. Brilliance in practicing these academic arts becomes the highest achievement.

But as Professor Deirdre McCloskey reminds us, sometimes we make the mistake of looking for our lost keys under the lamppost simply because the light is better there (If You're So Smart: The Narrative of Economic Expertise [Chicago: University of Chicago Press, 1990]). To change the parable slightly; the Everyman is searching for the keys, and the economist might decide to help him. But sometimes it seems that the economist is not interested in helping but, rather, in pacing proudly under the light of his profession's lamppost. Too often the Everyman fails to find the keys, not because the economist cannot tell him where they are but because he neglects to tell him. If political economists are going to assist the practitioner, if they are going to advance understanding of public issues, they are going to have to talk to the Everyman.

One can walk into bookstores such as Barnes and Noble and find certain scholarly quarterlies. But can anyone imagine Barnes and Noble carrying the American Economic Review or Journal of Political Economy? When economists put themselves to "the market test," the markets consulted should be ones in which the fundamental practitioners of political economy play some role, at least indirectly.

One might argue that the current emphasis in academic economics on high-tech discourse does ultimately result in better public understanding. Economic understanding depends at its highest reaches on the top departments and the most austere journals, and a wise and delicate process filters this understanding down to policy-makers and the Everyman. Perhaps. But I have often wondered how economists can spend so much time studying the failures of markets, governments, and other institutions, yet place so much faith in their own institutions. And it is a faith. (Where's the model?! Where's the data?! Or any of the other forms of argument?) Perhaps "public choice" economists, who explain politics by self-interest, can help us formulate a satisfying theory in this connection.

Six Realms of Practice for Political Economy

Instruction in political economy can be useful for a wide variety of human purposes. These may be divided into six realms of practice. The first four realms are fundamental, in the sense that political economy is practiced by ordinary people and public officials, for daily activities. Then come two vocational realms for political economy, where the practitioner is something closer to the credentialed economist.

The first realm in which political economy is practiced is that of the ordinary individual forming attitudes toward the economic and social affairs of his or her own environment. What am I to think of my employer, my work, and the money I receive in exchange for my work? Am I being cheated and victimized by the real estate broker or the direct marketer? Am I being beguiled by the fancy stores in the shopping mall? Is it fair that I don't make as much money as all those people who seem no better than I? Are the payments I make to the Internal Revenue Service like the payments I make to the supermarket or like money given to a robber? Here political economy may play a crucial role in the formation of the individual's moral and personal philosophy. The practitioner is the Everyman. The teachings that are most called for in this practice are the basics of political economy, adapted to the economic affairs and institutions of ordinary life.

The second realm in which political economy is practiced is in talking about public affairs or even in simply following events. Conversation is the staple of society and conviviality, and public affairs make for stimulating and gratifying conversation. Everyone takes part to some degree in this form of social interaction. Learning some basic political economy can certainly enrich this area of one's life.

The third realm of practice is using political economy to advance one's career in worldly affairs. The merchant, the banker, the investor, the accountant, and the marketer may profit by having a command of the vocabulary of economics (such as "economies of scale and scope," "comparative advantage," and "transactions cost"). Again, what the Everyman most needs is the basics, with competent application to worldly institutions.

The fourth political economy realm is the formulation of public policy. Only when holding a Ph.D. in economics becomes a requirement for public office will professional economists be able to claim to be practitioners in this realm. In the meantime, they are at most pundits and prophets. The true practitioner is every public official and ordinary voter. The teachings of political economy called for by this realm, whatever the sophistication of the practitioner, are the basics of the discipline, knowledge of institutions, and maybe some high school-level mathematics. The vast majority of articles in the austere academic journals are of no help here, and would not be even if economists were the policy-makers. It is the policy-research think tanks that are best meeting this need.

The two vocational realms of political economy come next - they are the fifth and sixth realms. Practitioners in the fifth realm use political economy to enhance their participation and effectiveness in public discourse as public commentators and teachers. Whether they be journalists or grade school, high school, or graduate school teachers, by studying political economy they can perform their jobs better and advance their careers. The teachings called for are the basics, with application to public issues. Again, I find that these practitioners are being best served in a timely fashion by think tanks. (Much think-tank literature, however, is written by economists in academia.)

In the sixth realm practitioners use political economy to advance their position in academic circles. As this realm currently operates, a command of the basics and competent, useful application to important public issues will certainly not suffice. In fact, doing useful applications in the form of, say, think-tank policy studies, will sometimes count against practitioners in academia. The ambitious economist in academia will instead strive to demonstrate some special talents in dynamic optimization techniques or sophisticated statistical methods. This practitioner will need to show a supreme competence in at least one of the profession's two dominant modes of discourse, equilibrium model building and econometric exploration of data sets.

The legitimacy of the two vocational realms of political economy rests on the four fundamental realms. Like the worth of professors of history, literature, ethics, and political philosophy, the worth of professional economists is derived from their contributions to realms where the practitioner is the public official or Everyman. Political economy belongs alongside history, literature, and philosophy as a liberal arts discipline. It differs from biology, physics, chemistry, computer science, and other technical disciplines in that the fundamental practitioners in those disciplines are learned experts.

What Is Being Lost

The emphasis on formal model building and econometric exploration in academia is crowding out other modes of discourse that could serve as handy flashlights in helping practitioners find their keys. A list of other modes of discourse might include the thought experiment, the parable, metaphors aside from formal models, introspection, typology, ideal types, case studies, institutional comparisons, comparative history, interviews with the actual subjects, exegesis of great texts, and various forms of quantitative and textual evidence. Genres of economic scholarship that might receive greater attention include business and economic history, institutional case study, the essay, the literature review, and most especially the policy study that is not overly reserved in exercising judgment and generating dialogue. All these genres and forms of argument are practiced extensively in the profession, but their standing relative to the two dominant modes of discourse, in terms of esteem and rewards, is lower than it should be.

Besides crowding out other modes of discourse, the two dominant modes force economics as an academic discipline to neglect important realities that cannot be neatly modeled or quantified. Important facets of reality that are not well captured by model-building include the heterogeneity and fluctuation of conditions, bounded intelligence, sheer ignorance (not knowing what it is that one is ignorant of), serendipity, asymmetric interpretation, the economic roles of voice and conversation, the multiple self, and the dependence of well-being on cultural, moral, and spiritual factors. For example, all humans know that the process itself - of providing community services, of educating one's children, of saving for retirement - is a cardinal issue of well-being. Individuals care not only about getting "the goods" but also about the process of doing so, the process that becomes the story of their lives. Equilibrium analysis, which relies on mathematical functions and a logic of static states, can scarcely shed light on this cardinal issue.

The Economist's Responsibility

Political economy was established as a discipline mainly by Adam Smith's Wealth of Nations, which Jacob Viner described as "a tract for the times, a specific attack on certain types of government activity which Smith was convinced, on both a priori and empirical grounds, operated against national prosperity" ("Adam Smith and Laissez Faire," Journal of Political Economy 35 [April 1927]: 218; italics added). Smith felt responsible for improving political economy as it is practiced by the true practitioners. Today in the academic world this tradition is being lost. It faces its most formidable opponents in the most eminent departments.

Decision-making in political economy is practiced not by experts but by individuals apt to be terribly innocent of basic economics. The practice of political economy is fated to malpractice. Let us hope that academic economists will rectify the malpractice, that they will take as their greatest roles serving as teachers and participants in public discourse.

Herding Behaviour vs Efficient Market Hypothesis

HOW A BUBBLE STAYED UNDER THE RADAR

By ROBERT J. SHILLER

ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming.

Alan Greenspan, a very serious student of the markets, didn’t see it, and, moreover, he didn’t see the stock market bubble of the 1990s, either. In his 2007 autobiography, “The Age of Turbulence: Adventures in a New World,” he talks at some length about his suspicions in the 1990s that there was irrational exuberance in the stock market. But in the end, he says, he just couldn’t figure it out: “I’d come to realize that we’d never be able to identify irrational exuberance with certainty, much less act on it, until after the fact.”

With the housing bubble, Mr. Greenspan didn’t seem to have any doubt: “I would tell audiences that we were facing not a bubble but a froth — lots of small local bubbles that never grew to a scale that could threaten the health of the overall economy.”

The failure to recognize the housing bubble is the core reason for the collapsing house of cards we are seeing in financial markets in the United States and around the world. If people do not see any risk, and see only the prospect of outsized investment returns, they will pursue those returns with disregard for the risks.

Were all these people stupid? It can’t be. We have to consider the possibility that perfectly rational people can get caught up in a bubble. In this connection, it is helpful to refer to an important bit of economic theory about herd behavior.

Three economists, Sushil Bikhchandani, David Hirshleifer and Ivo Welch, in a classic 1992 article, defined what they call “information cascades” that can lead people into serious error. They found that these cascades can affect even perfectly rational people and cause bubblelike phenomena. Why? Ultimately, people sometimes need to rely on the judgment of others, and therein lies the problem. The theory provides a framework for understanding the real estate turbulence we are now observing.

Mr. Bikhchandani and his co-authors present this example: Suppose that a group of individuals must make an important decision, based on useful but incomplete information. Each one of them has received some information relevant to the decision, but the information is incomplete and “noisy” and does not always point to the right conclusion.

Let’s update the example to apply it to the recent bubble: The individuals in the group must each decide whether real estate is a terrific investment and whether to buy some property. Suppose that there is a 60 percent probability that any one person’s information will lead to the right decision.

In other words, that person’s information is useful but not definitive — and not clear enough to make a firm judgment about something as momentous as a market bubble. Perhaps that is how Mr. Greenspan assessed the probability that he could make an accurate judgment about the stock market bubble.

The theory helps explain why he — or anyone trying to verify the existence of a market bubble — may have squelched his own judgment.

The fundamental problem is that the information obtained by any individual — even one as well-placed as the chairman of the Federal Reserve — is bound to be incomplete. If people could somehow hold a national town meeting and share their independent information, they would have the opportunity to see the full weight of the evidence. Any individual errors would be averaged out, and the participants would collectively reach the correct decision.
Of course, such a national town meeting is impossible. Each person makes decisions individually, sequentially, and reveals his decisions through actions — in this case, by entering the housing market and bidding up home prices.

Suppose houses are really of low investment value, but the first person to make a decision reaches the wrong conclusion (which happens, as we have assumed, 40 percent of the time). The first person, A, pays a high price for a home, thus signaling to others that houses are a good investment.

The second person, B, has no problem if his own data seem to confirm the information provided by A’s willingness to pay a high price. But B faces a quandary if his own information seems to contradict A’s judgment. In that case, B would conclude that he has no worthwhile information, and so he must make an arbitrary decision — say, by flipping a coin to decide whether to buy a house.

The result is that even if houses are of low investment value, we may now have two people who make purchasing decisions that reveal their conclusion that houses are a good investment.
As others make purchases at rising prices, more and more people will conclude that these buyers’ information about the market outweighs their own.

Mr. Bikhchandani and his co-authors worked out this rational herding story carefully, and their results show that the probability of the cascade leading to an incorrect assumption is 37 percent. In other words, more than one-third of the time, rational individuals, each given information that is 60 percent accurate, will reach the wrong collective conclusion.

Thus, we should expect to see cascades driving our thinking from time to time, even when everyone is absolutely rational and calculating.

This theory poses a major challenge to the “efficient markets” view of the world, which assumes that investors are like independent-minded voters, relying only on their own information to make decisions. The efficient-markets view holds that the market is wiser than any individual: in aggregate, the market will come to the correct decision. But the theory is flawed because it does not recognize that people must rely on the judgments of others.

NOW, let’s modify the Bikhchandani-Hirshleifer-Welch example again, so that the individuals are no longer purely rational beings. Instead, they are real people, subject to emotional reactions.

Furthermore, these people are being influenced by agencies like the National Association of Realtors, which is conducting a public-relations campaign intended to show that putting money into housing is a reliable way to build wealth. Under these circumstances, it’s easy to understand how even experts could come to believe that housing is a spectacular investment.

It is clear that just such an information cascade helped to create the housing bubble. And it is now possible that a downward cascade will develop — in which rational individuals become excessively pessimistic as they see others bidding down home prices to abnormally low levels.

Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC.

Source: http://www.nytimes.com/2008/03/02/business/02view.html?ex=1362114000&en=f450ee18dc5cde60&ei=5124&partner=permalink&exprod=permalink

Psychology Matters in Economic Events

Below is a view from Robert J. Schiller, an economic and finance professor at Yale University, USA on the current financial crisis. What I find interesting in this article is his view on this question: Why do professional economists always seem to find that concerns with bubbles are overblown or unsubstantiated? I have wondered about this for years, and still do not quite have an answer. It must have something to do with the tool kit given to economists (as opposed to psychologists) and perhaps even with the self-selection of those attracted to the technical, mathematical field of economics. Economists aren’t generally trained in psychology, and so want to divert the subject of discussion to things they understand well. They pride themselves on being rational. The notion that people are making huge errors in judgment is not appealing.

Read the rest of the article below:

CHALLENGING THE CROWD IN WHISPERS, NOT SHOUTS

ALAN GREENSPAN, the former Federal Reserve chairman, acknowledged in a Congressional hearing last month that he had made an “error” in assuming that the markets would properly regulate themselves, and added that he had no idea a financial disaster was in the making. What’s more, he said the Fed’s own computer models and economic experts simply “did not forecast” the current financial crisis.

Mr. Greenspan’s comments may have left the impression that no one in the world could have predicted the crisis. Yet it is clear that well before home prices started falling in 2006, lots of people were worried about the housing boom and its potential for creating economic disaster. It’s just that the Fed did not take them very seriously.

For example, I clearly remember a taxi driver in Miami explaining to me years ago that the housing bubble there was getting crazy. With all the construction under way, which he pointed out as we drove along, he said that there would surely be a glut in the market and, eventually, a disaster.

But why weren’t the experts at the Fed saying such things? And why didn’t a consensus of economists at universities and other institutions warn that a crisis was on the way?

The field of social psychology provides a possible answer. In his classic 1972 book, “Groupthink,” Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. They self-censor personal doubts about the emerging group consensus if they cannot express these doubts in a formal way that conforms with apparent assumptions held by the group.

Members of the Fed staff were issuing some warnings. But Mr. Greenspan was right: the warnings were not predictions. They tended to be technical in nature, did not offer a scenario of crashing home prices and economic confidence, and tended to come late in the housing boom.
A search of the Federal Reserve Board’s working paper series reveals a few papers that touch on the bubble. For example, a 2004 paper by Joshua Gallin, a Fed economist, concluded: “Indeed, one might be tempted to cite the currently low level of the rent-price ratio as a sign that we are in a house-price ‘bubble.’” But the paper did not endorse this view, saying that “several important caveats argue against such a strong conclusion and in favor of further research.”
One of Mr. Greenspan’s fellow board members, Edward M. Gramlich, urgently warned about the inadequate regulation of subprime mortgages. But judging at least from his 2007 book, “Subprime Mortgages,” he did not warn about a housing bubble, let alone that its bursting would have any systemic consequences.

From my own experience on expert panels, I know firsthand the pressures that people — might I say mavericks? — may feel when questioning the group consensus.

I was connected with the Federal Reserve System as a member the economic advisory panel of the Federal Reserve Bank of New York from 1990 until 2004, when the New York bank’s new president, Timothy F. Geithner, arrived. That panel advises the president of the New York bank, who, in turn, is vice chairman of the Federal Open Market Committee, which sets interest rates. In my position on the panel, I felt the need to use restraint. While I warned about the bubbles I believed were developing in the stock and housing markets, I did so very gently, and felt vulnerable expressing such quirky views. Deviating too far from consensus leaves one feeling potentially ostracized from the group, with the risk that one may be terminated.

Reading some of Mr. Geithner’s speeches from around that time shows that he was concerned about systemic risks but concluded that the financial system was getting “stronger” and more “resilient.” He was worried about the unsustainability of a low savings rate, government deficit and current account deficit, none of which caused our current crisis.

In 2005, in the second edition of my book “Irrational Exuberance,” I stated clearly that a catastrophic collapse of the housing and stock markets could be on its way. I wrote that “significant further rises in these markets could lead, eventually, to even more significant declines,” and that this might “result in a substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies of financial institutions as well,” and said that this could result in “another, possibly worldwide, recession.”

I distinctly remember that, while writing this, I feared criticism for gratuitous alarmism. And indeed, such criticism came.

I gave talks in 2005 at both the Office of the Comptroller of the Currency and at the Federal Deposit Insurance Corporation, in which I argued that we were in the middle of a dangerous housing bubble. I urged these mortgage regulators to impose suitability requirements on mortgage lenders, to assure that the loans were appropriate for the people taking them.

The reaction to this suggestion was roughly this: yes, some staff members had expressed such concerns, and yes, officials knew about the possibility that there was a bubble, but they weren’t taking any of us seriously.

I BASED my predictions largely on the recently developed field of behavioral economics, which posits that psychology matters for economic events. Behavioral economists are still regarded as a fringe group by many mainstream economists. Support from fellow behavioral economists was important in my daring to talk about speculative bubbles.

Speculative bubbles are caused by contagious excitement about investment prospects. I find that in casual conversation, many of my mainstream economist friends tell me that they are aware of such excitement, too. But very few will talk about it professionally.

Why do professional economists always seem to find that concerns with bubbles are overblown or unsubstantiated? I have wondered about this for years, and still do not quite have an answer. It must have something to do with the tool kit given to economists (as opposed to psychologists) and perhaps even with the self-selection of those attracted to the technical, mathematical field of economics. Economists aren’t generally trained in psychology, and so want to divert the subject of discussion to things they understand well. They pride themselves on being rational. The notion that people are making huge errors in judgment is not appealing.

In addition, it seems that concerns about professional stature may blind us to the possibility that we are witnessing a market bubble. We all want to associate ourselves with dignified people and dignified ideas. Speculative bubbles, and those who study them, have been deemed undignified.

In short, Mr. Janis’s insights seem right on the mark. People compete for stature, and the ideas often just tag along. Presidential campaigns are no different. Candidates cannot try interesting and controversial new ideas during a campaign whose main purpose is to establish that the candidate has the stature to be president. Unless Mr. Greenspan was exceptionally insightful about social psychology, he may not have perceived that experts around him could have been subject to the same traps.

Robert J. Shiller is professor of economics and finance at Yale and co-founder and chief economist of MacroMarkets LLC.

Source:http://www.nytimes.com/2008/11/02/business/02view.html?pagewanted=1&partner=permalink&exprod=permalink

An Interview with James K. Galbraith

Below is an interview with James K. Galbraith, an economic professor at University of Texas, USA. What I find interesting is his answer to this question:

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.

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.

You’re referring to the Washington-based conservative philosophy that rejects government regulation in favor of free-market worship? Reagan’s economists worshiped the market, but Bush didn’t worship the market. Bush simply turned over regulatory authority to his friends. It enabled all the shady operators and card sharks in the system to come to dominate how we finance.

So you claim in your recent book, “The Predator State,” but will President Bush actually be leaving Washington a richer man? Presidents don’t make money in office; they do so afterward. In his case, I hope he won’t. Maybe his friends will abandon him.

What do you think the future holds for Vice President Cheney? I suspect that Cheney will spend much of his life fending off legal challenges, but that is a different area. I’m quite sure that the human rights issues will follow him for the rest of his life.

Any thoughts on Treasury Secretary Henry Paulson, who engineered the bailout? He is clearly not a superman. This is the guy who had the financial crisis on his plate for a year, and when it finally became so pervasive that he couldn’t handle it on a case-by-case basis, the best he could do was send Congress a bill that was three pages long.

What’s wrong with that? Maybe he’s pithy. It shows he wasn’t adequately prepared. The bill did not contain protections for the public that Congress had to put in.

Regulation is the new mantra, and even Alan Greenspan in his mea culpa before Congress seemed to regret he hadn’t used more of it. I would say a day late and a dollar short. Greenspan blotted his copybook disastrously with his support of deregulated finance. This is a follower of Ayn Rand, an old Objectivist. His belief was you can’t really regulate and discipline the market and you shouldn’t try. I think Greenspan bears a high, high degree of responsibility for what has happened.

As a longtime professor at the University of Texas, where you hold a chair in the LBJ School of Public Affairs, what do you do with your own money? As little as possible. I am in the happy position of not having too much.

That sounds vaguely communistic. Well, maybe academic life has a touch of that, but it’s comfortable compared with the real thing.

Over the years, you’ve stayed loyal to the liberal ideas of your celebrated father, John Kenneth Galbraith. That’s right.

Did you go through any kind of Oedipal crisis when you were younger? No, I went through the non-Oedipal crisis of having a father who was always one step ahead.

Now that the economy has tanked, do you think that progressive economists will come to enjoy a new glamour? I personally never suffered a deficit of public attention.

That sounds a little smug. That’s true. Let’s add that a great many other progressive economists have basically suffered a deficit of attention, and these events should raise their profile enormously.

INTERVIEW CONDUCTED, CONDENSED AND EDITED BY DEBORAH SOLOMON

Source:http://www.nytimes.com/2008/11/02/magazine/02wwln-Q4-t.html?_r=1&partner=permalink&exprod=permalink&oref=slogin

Beyond their means...

Click the picture for larger image.
Source:http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=8717275&story_id=12532624subjectid=8717275&story_id=12532624