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Could the Swedish Academy Please Stop Giving Nobel Prizes to Economists—Like Eugene Fama—Who Lack Basic Historical Literacy?

Summary:
Someone who wishes me ill reminds me of this from six years ago. Could the Swedish academy please stop giving nobel prizes to economists—like Eugene Fama—who lack basic historical literacy? This isn't rocket science, after all. I really do not think that this is very much to ask: Paul Krugman (2011): Boom For Whom: "While I’m talking about inequality and the crisis, I realized recently that there’s another channel not usually talked about, via the misperception of success... ...Let me start with a puzzle: why did faith in the wonders of financial deregulation persist so long?... Deregulation began producing disasters from early on... the Latin American debt crisis of the early 1980s; Garn-St. Germain produced the savings and loan debacle; freed-up capital flows produced the Asian

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Someone who wishes me ill reminds me of this from six years ago.

Could the Swedish academy please stop giving nobel prizes to economists—like Eugene Fama—who lack basic historical literacy? This isn't rocket science, after all. I really do not think that this is very much to ask: Paul Krugman (2011): Boom For Whom: "While I’m talking about inequality and the crisis, I realized recently that there’s another channel not usually talked about, via the misperception of success...

...Let me start with a puzzle: why did faith in the wonders of financial deregulation persist so long?... Deregulation began producing disasters from early on... the Latin American debt crisis of the early 1980s; Garn-St. Germain produced the savings and loan debacle; freed-up capital flows produced the Asian crisis and LTCM; and now we have the great bust. So why were The Very Serious People so convinced that it was a good thing?... The answer from the usual suspects has always been that the era of deregulation was also an era of unprecedented economic growth... Peter Wallison... Eugene Fama....

Beginning in the early 1980s, the developed world and some big players in the developing world experienced a period of extraordinary growth. It’s reasonable to argue that in facilitating the flow of world savings to productive uses around the world, financial markets and financial institutions played a big role in this growth....

These are pure fantasies.... Why?... The answer, once you think about it, is obvious: growth for whom? There’s only one way in which the post-deregulation boom was exceptional, and that’s in terms of the growth in incomes at the top of the scale.... If you’re looking at the average, the last generation is a poor shadow of the postwar boom. But if you’re talking about the 1 percent, wonderful things have happened. No wonder then, that The Very Serious People... have retained faith in deregulation despite repeated disasters.

#mondaysmackdown
#hoisted
#shouldread
Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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