John Komlos, Guest Blogger
Guest blogger John Komlos, author of What Every Economics Student Needs to Know and Doesn’t Get In the Usual Principles Text, takes on economist and Princeton University professor Alan Blinder’s criticism of Jeffrey Madrick‘s recent book Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. A recent Triple Crisis post by Madrick summarizes some of the book’s central arguments.
Alan Blinder’s review of Jeffrey Madrick’s Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World (Knopf, 2014)[1] is critical of Madrick’s characterization of the role of economists in the financial meltdown of 2008. Madrick suggests that their role was “central,” while Blinder claims that economists contributed merely a “bit” and even that bit was limited to “conservative economists.” I think that Madrick’s characterization is much closer to the truth and so does Joseph Stiglitz, who said in a lecture, “I have to blame my colleagues in the economics profession. Not all economists got it wrong; but a lot of them did and they provided arguments that politicians used, people in the industry used for stripping [regulation] away…. The basic argument was a very simple one, a variant of Adam Smith that markets, unfettered markets always lead to efficient outcomes…. they [regulators] were just doing what they said economic theory said you ought to be doing.”[2]