“Economists are the forgotten guilty men

Academics — and their mad theories — are to blame for the financial crisis. They too deserve to be hauled into the dock”

So begins Ana­tole Kalet­sky’s essay in The Times for Feb­ru­ary 5 2009. He is spot on. Eco­nom­ic the­o­ry played a direct role in this cri­sis, by legit­imis­ing the dereg­u­la­tion of finance and encour­ag­ing the prof­li­gate lend­ing of finan­cial insti­tu­tions. There is much more that is wrong with the the­o­ry that dom­i­nates aca­d­e­m­ic economics–known as “neo­clas­si­cal economics”–enough to fill sev­er­al books. My Debunk­ing Eco­nom­ics : the naked emper­or of the social sci­ences was one such book; in it I tried to explain all the tech­ni­cal flaws in eco­nom­ic the­o­ry to a non-math­e­mat­i­cal audi­ence.

The Today Tonight seg­ment has been delayed till this evening (Wednes­day Feb­ru­ary 4th)–which is a pity in a way because I will also be speak­ing at a pub­lic forum tonight at Cir­cu­lar Quay organ­ised by the Prop­er­ty Knowl­edge Forum: An excerpt from the pro­mo­tion­al fly­er:

ARE WE HEADING FOR A DEPRESSION?

When will the bot­tom hit? Are we in store for 40% drops in prop­er­ty or has the recov­ery already begun?

Chan­nel Sev­en’s Today Tonight is doing a piece on whether we might face a Depres­sion, and if so what it might be like. It should go to air tomorrow–Tuesday Feb­ru­ary 3rd.

They have inter­viewed me for analy­sis, and Eric Aarons–who lived through the Great Depres­sion and at 90 is still a dynam­ic sculp­tor and author.

They also want to speak to any­one who has lost their job recently–specifically if pos­si­ble as a result of the glob­al finan­cial cri­sis.

So if any­one out there is will­ing to speak on cam­era about it, please con­tact the jour­nal­ist James Thomas:

I’ve just been inter­viewed for an SBS News piece on Chi­na (for non-Aus­tralian read­ers, SBS is Aus­trali­a’s mul­ti­cul­tur­al tele­vi­sion sta­tion, and its news has a strong inter­na­tion­al focus).

Ordi­nar­i­ly I don’t com­ment on Chi­na, because I don’t know enough about their econ­o­my right now–except to deride the belief that was pop­u­lar in Aus­tralia last year that our exports to Chi­na would insu­late us from the glob­al down­turn. “Decou­pling” they called it–China was sup­posed to have its own inter­nal growth dynam­ic that would mean it would con­tin­ue grow­ing and buy­ing our raw mate­ri­als even as the OECD tanked. This theory–ironically spout­ed by the same peo­ple who once tout­ed that the world is now glob­alised and every­thing affects (and ben­e­fits) every­thing else–is now rather less pop­u­lar as Chi­na’s growth has slowed.