Remember your economics courses in college? Dull, dry, and you were always trying to figure out what the theory and mathematics had to do with reality beyond what you learned from the world that, in most cases, supply and price were inversely related? So much of the rest of the courses seemed to be simply unrelated to the real world.

It amazes me that these economists are always quoted in the newspaper talking about the economy, when many of them know so little about the economy. Outside a very few of them such as Robert Schiller, Nouriel Roubini, and a very few others had the slightest idea in 2006 or 2007 that we were on the verge of an economic catastrophe. For a wonderful critique of economics see Yves.

This brings me to a larger question: can a discipline that cannot predict be a science? If a science suffers a massive failure, would you not think that there would be significant questioning of the practice and theory? As Yves asked, would you trust your health to a doctor whose record of failure to diagnose serious diseases was nearly 100 percent wrong and with such a record saw no reason to change? Why would a “change” agent/leader fill all the important positions with uncritical and probably unaware acolytes of the failed paradigm?

To put it in the language of this blog, economists may be creative, but it is in the production of dangerous fiction (for those that have lost significant sums in their retirement accounts, “pornography” might be a better term).

Can economics be salvaged and what will it take? What say you?

Robert Schiller, the Yale economist who predicted both the dot.com bubble and the housing bubble, discusses the crisis. Money quote:

The big question: Is this 1987 again… or is it 1929 again. I’m actually fearful that it’s 1929 again… There is much more of a fundamental shock to confidence and much more worry set off among investors.

Click here for video.