The Dismal Science

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Paul Krugman reviews 'Seven Bad Ideas,' by Jeff Madrick, in the NYT's Sunday Book Review (picture by Michael Lionstar):

In “Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World,” Jeff Madrick — a contributing editor at Harper’s Magazine and a frequent writer on matters economic — argues that the professional failures since 2008 didn’t come out of the blue but were rooted in decades of intellectual malfeasance.

As a practicing and, I’d claim, mainstream economist myself, I’m tempted to quibble. How “mainstream,” really, are the bad ideas he attacks? How much of the problem is bad economic ideas per se as opposed to economists who have proved all too ready to drop their own models — in effect, reject their own ideas — when their models conflict with their political leanings? And was it the ideas of economists or the prejudices of politicians that led to so much bad policy?

I’ll return to those quibbles later, but Madrick’s basic theme is surely right. His bad ideas are definitely out there, have been expressed by plenty of economists, and have indeed done a lot of harm.

So what are the seven bad ideas? Actually, they aren’t all that distinct. In particular, bad idea No. 1 — the Invisible Hand — is pretty hard to distinguish from bad idea No. 3, Milton Friedman’s case against government intervention, and segues fairly seamlessly into bad idea No. 7, globalization as something that is always good. As an aside, this sometimes makes Madrick’s argument more disjointed than I’d like, with key propositions spread across nonconsecutive chapters. But there is an important point here, and Madrick has clarified my own thinking on the subject.

More here.