Tom Streithorst
Krugman: too easy and too hard on his profession
Reality has a way of destroying elegant theories. This recession has demonstrated the vapidity of most neoclassical economics. It is hard to predict the collapse of the world economy and the destruction of a quarter of its wealth if you start with the assumption that people are rational, utility maximising and omniscient. Back before the bust, even distinguished economists were so infatuated with the Efficient Market theory that they argued bubbles were impossible. If markets always get prices right, bubbles can’t exist. One published a book claiming that the famous Dutch tulip bubble was no bubble at all but rather a rational response to supply and demand.
How did economists get it so wrong? That’s the title of Paul Krugman’s article in this week’s Sunday New York Times magazine and his short explanation is that they forgot Keynes and developed an amour fou for the free market. From Adam Smith until the 1930s, most economists believed that markets were self-regulating. They didn’t look self regulating in the 1930s, with the economy stuck in high unemployment and no prospect of escaping it. Keynes realized that lack of effective demand and unemployment fed on each other, trapping the economy in a low equilibrium state. His solution was for government spending to take up the slack and it seems he was right. It took World War II and the greatest government deficits ever seen to end the Great Depression.
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James Crabtree
Generally intellectual
Noam Chomsky. Francis Fukuyama. Anthony Giddens. Christopher Hitchens. Slavoj Zizek. All names that didn’t even make the top 10 in Prospect’s contest to crown 2008’s public intellectual of the year. So who did? Moving on from previous attempts to list the world’s 100 greatest living public intellectuals, this year we decided to name those who had the most impact in 2008 alone. We took soundings—from friends, here on First Drafts and on our Facebook group—to bring up a shortlist. From there it was down to our panel of judges. A three-way contest emerged, between economist Nouriel Roubini, social scientists Richard Thaler and Cass Sunstein, and General David Petraeus. Our judges voted according to type: the wonks liked the Nudge duo, the more economically minded wanted a thinker linked to the credit crunch, while foreign policy watchers thought the soldier-philosopher deserving of the nod. On our website we provide details of all our judges’ votes, and their reasons, along with short bios of all those we considered. Ultimately, though, there could only be one winner. As in Iraq, so in Prospect: Petraeus surged to victory.
James Crabtree
Jeffrey Frankel, an economist at Harvard, has an excellent weblog. He also has a knack for the one-liners, as evidenced by the fact that Paul Krugman just confessed to borrowing one of his quotes, which then ended up as a quote-of-the-year. And now, to top if off, Frankel has managed to boil the financial crisis down to one slide. Here it is:
if a picture is worth a couple of trillion dollars
Nice touch in the bottom right hand corner. [Thanks for the tip, Noah!].
James Crabtree
but who is 2008's biggest public brain?
We just put the Christmas edition of the magazine to bed, at 3am on Wednesday morning. If you join up for our Facebook group you can see the new cover, and get an overview of the contents. If you aren’t on Facebook, like David Goodhart, our hold-out editor, I’ll put it up here in a day or two. The magazine, meanwhile, arrives at a train station near you in the middle of next week.
Personally, I’m most excited about the results of our public intellectual of 2008 poll. This is different from our previous public vote poll, run with Foreign Policy, to find the greatest living public intellectual. This one is just about the figure who did best in 2008 – and is picked by us, and a team of all-star judges. Thanks to any of you who threw names into the hat for consideration, when we announced it here on First Drafts a month or so ago.
I can’t put the winner on here just yet, but will put the shortlist up shortly. In the meantime, below, are the people who just missed out on the top 10 – those we liked a lot, but didn’t make the cut. More on who actually won in due course – along with the judges’ decisions, and the eventual winner. If this lot didn’t win, who would you have given it to? And what do you make of this longlist – just the same old group of old white English-speaking men? Click the more button to see the list…….
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James Crabtree
Hello there, Paul. Click the pic for the full strip.
[Hat tip: The Browser, thanks guys.]
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