CURIOUS FACT: Fifteen thousand economists fail
James Galbraith, himself an academic economist, admitted that there were perhaps fifteen thousand professional economists in the USA before the crisis of 2008, but that only a dozen or so of them could have predicted the crisis. Worse still, most of those predicted another kind of crisis that didn’t happen. In fact, none of them were right; not one. A sorry state of affairs indeed.
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David Laibson of Harvard University said that “There are very, very, very few economists who can be proud.” A Nobel Prize winning economist, Robert Shiller, recently wrote: “To a remarkable extent we have got into the current economic and financial crisis because of the wrong economic theory.”
Big respect to Galbraith, Laibson and Shiller for being honest about their profession.
“Modern academics must be able to keep writing and publishing even when they have nothing to say.”
(Michael Billig, professor of social sciences, author of Learn to Write Badly: How to Succeed in the Social Sciences)
Maybe there is a chance to see recessions relatively on time. The terribly-named Chicago Fed National Financial Conditions Credit Subindex appears to rise above zero before a recession hits the economy: