A few years back, a handful of people surveyed the state of the US housing market, consulted freely available government statistics, got out their calculators, and drew what were to them stunningly obvious conclusions: house prices had diverged from their fundamental long-term trends, leading to massive overbuilding and housing-wealth overspending; in short, a housing bubble had inflated and was due, with catastrophic consequences, to burst. It is telling that none of the people listed by Mr. DeLong as trustworthy prophets--including, of course, Mr. DeLong--were amongst that group with working calculators.
Mr. DeLong, of course, is being ironic--working economists do not trade in prophecies; they leave that to the investment gurus hawking their pet theories through late-night infomercials. But economists can be blind to--or be blinded by--the nature of the problem.
Marc Laventurier brought Wittgenstein to the debate, and so will I: The gifted economist will attempt to get a clear view of the state of affairs, to "look and see" if there is a fundamental misunderstanding that has led to a fundamental distortion. Dean Baker and Steve Keen approach economics like this, and so were clear-headed enough to warn of the coming disaster. A merely competent economist, like Brad DeLong, will helpfully explain how the fire got started but will not sound the alarm.
The Perils of Prophecy
A few years back, a handful of people surveyed the state of the US housing market, consulted freely available government statistics, got out their calculators, and drew what were to them stunningly obvious conclusions: house prices had diverged from their fundamental long-term trends, leading to massive overbuilding and housing-wealth overspending; in short, a housing bubble had inflated and was due, with catastrophic consequences, to burst. It is telling that none of the people listed by Mr. DeLong as trustworthy prophets--including, of course, Mr. DeLong--were amongst that group with working calculators.
Mr. DeLong, of course, is being ironic--working economists do not trade in prophecies; they leave that to the investment gurus hawking their pet theories through late-night infomercials. But economists can be blind to--or be blinded by--the nature of the problem.
Marc Laventurier brought Wittgenstein to the debate, and so will I: The gifted economist will attempt to get a clear view of the state of affairs, to "look and see" if there is a fundamental misunderstanding that has led to a fundamental distortion. Dean Baker and Steve Keen approach economics like this, and so were clear-headed enough to warn of the coming disaster. A merely competent economist, like Brad DeLong, will helpfully explain how the fire got started but will not sound the alarm.