The Real World Economics Review Blog has opened voting for their ignoble prizes in economics, which goes to economists who, “contributed most to enabling the Global Financial Collapse.” Apparently turnout has been heavy. Here are the dossiers for the candidates.
My ballot: Fama, Greenspan, and Lucas.
Thanks for the heads up, Nick. I voted for Alan Greenspan for the simple reason that he was the guy in charge, and cause of the the GFC wasn’t only economic but also forensic. See the work of William K Black, for instance.
The GFC was largely the outcome of a criminal conspiracy based on collusion, fraud, predation, misrepresentation, accounting “ledgerdemain,” and host of other worst practices that the chief regulatory and overseer should have seen and prevented from mushrooming into global Ponzi finance in Hyman Minsky’s sense of the term. This was the tail end of a long financial cycle, which, if anyone had studied Minsky, would know is unstable and ultimately unsustainable. Greenspan’s protestation that no one could have seen his coming is silly and, I believe, disingenuous. See Jamie Galbraith’s paper, “Who are these economists anyway?
Alan Greenspan was an ideologue running an experiment on the world, and it failed miserably. And Bernanke gets my second for continuing Greenspan’s modus operandi.
The rest of the blame is shared by many other, especially the faux economics of Friedman and Lucas, amplified by Fama.
But I fault them less, since their models are built on obviously ridiculous assumptions with no empirical warrant that could never result in a map of reality. Any nitwit should be able to see this, and Greenspan may be many things, but he is not a nitwit. He knows better than to just take static economic models and apply them to real situations involving dynamic complexity.
BTW, we are still in this the unwinding of this stage, and there are more big shoes to drop. Only unprecedented government intervention has prevented a crash so far. Whether this will work to allow the system to deleverage is still unknown, and the outcome is uncertain. Based on Michael Hudson’s analysis, together with the demonstrated political lack of understanding of the economics of the crisis and absence of appetite for reform, I am not optimistic.
[...] Ignoble Prizes in Economics [...]
[...] voted for Greenspan, but my other selections of Eugene Fama and Robert Lucas earned the 5th and 7th [...]