Someone Got It Right!

Paul Krugman alerted me, in his blog, to this academic paper: Rajan Paper 2005

I pass it on to you in the hope that some of you will read it. The author is a respectable economist who was roundly set upon by the establishment figures gathered at the Jackson Hole event he presented the paper to. Larry Summers was one of the most virulent critics.

Reading the paper now [it’s very long but easy to read and well worth the effort] I wonder why it was that the luminaries who were so vocal could be so uniformly wrong.

And more to the point: why is it that no one seems to have suffered for being so stupid?

Has the economics profession become like sports where a failed coach can simply move on to another team and keep on failing at someone else’s expense? When will our business, political, and academic elites be held accountable for their lamentable failure?

Something tells me that we cannot expect them to admit wrongdoing or foolishness. So my advice to you all: take whatever any of them say with more than a grain of salt. They are all insiders and will protect themselves from the truth. It is up to us to make them sufficiently uncomfortable that they don’t screw up again.

That’s why you should read this paper.