The post-autistic economics review

So far, the referred papers you’ve cited on the CCC have consisted of mentioning Gorman aggregation.

In the previous discussion about the minimum wage note you referenced multiple papers and what not and provided some explanation of the arguments. I still find them very difficult to believe, having worked on both the management and employee sides of minimum wage jobs, and there’s all that strange stuff about Card catching hell for contradicting the consensus, but at least you made an argument.


I’m going to use this thread as a sort of meta-discussion thread about the state of ecomics. In other words, this is StGabe’s Personal Playground Post. :)

Anyway - in quoting Tim Harford, Ezra Klein makes a good point: economics theory pretty much does predict the financial disaster. The fundamental problem in 2008 was that financial markets were treating a bunch of very risky assets as if they were riskless. Economics can easily predict what will happen in that scenario: a disaster. The question is: why didn’t economics predict this disaster?

The answer is probably that they didn’t have the data. Or that they didn’t look at the data. Ezra concludes:

He’s right. Lots of people did predict the disaster! It didn’t take any exotic theories or models to do so.

So the question should not be “Why did economists fail to predict the financial crisis of 2008?” It should be “Why didn’t economists notice?” It’s a subtle difference, but it’s important.

Also: I recommend The Big Short, it’s pretty succinct and very readable. It also does a great job of selling just how bad the whole subprime mess was.