Three articles in the July 16 issue of The Economist magazine criticize the economics profession for its failure to anticipate the financial crisis of last September, and the ensuing economic crisis, and for its inability to agree on what should be done to speed recovery. These articles, which can be found at
are well worth reading. Both the economists and government officials (often both) have received too small a share of the blame for the current economic troubles. This is a theme I sounded in my book and in several of my blog entries, but it has received little attention. The Obama Administration, with its ambitious public programs, does not want to accuse government of incompetence, and the economists who manage and advise the government's economic policies, many of whom were complicit in the failures of anticipation and response, do not wish to acknowledge their errors and those of their fellow economists. Furthermore, Congress and the public, and much of the media, do not understand macroeconomics or financial economics, and so they are drawn to a populist theory in which the economic crisis is attributed to the avarice and folly of financiers and the vulnerability of gullible consumers. The populist theory suits the Administration and the economics profession just fine, as it directs attention away from government failure and the failure of professional economists inside and outside the government.