Filed under: brave new world, the sweet life | Tags: economy, financial crisis
A to do list for today. First write down all the ideas that don’t work, then publicly confront them. Simple. Easy peasy. Anyway, someone took the time to make the list below, so the hard part’s already done. Some are: that markets decide, that wealth trickles down, that private is always better than public. Those are the living dead still marauding and loitering around . Now for step two, to confront. I suppose it makes sense to come up with some replacement ideas too. Of course, the big tent idea is to manage risk – the risk of zombie ideas taking over our lives.
Despite the financial crisis, we have yet to have a real national conversation about the ideas that got us into the mess in the first place. Those ideas–Thatcherism/Reaganism/the Washington Consensus/market liberalism–still walk about amongst us, deprived of life but able to exert supernatural force on politics. They include the Great Moderation–the myth of unparalleled macroeconomic stability since 1985; the Efficient Markets Hypothesis–the myth that markets determine fair investment prices; the Dynamic Stochastic General Equilibrium–the myth that macroeconomics should be derived not from economic aggregates but from microeconomic models; trickle-down economics–the myth that what helps the rich will ultimately help the poor; and privatization–the myth that anything government does can be done better by private companies. The great failure of the last two years is that none of these zombie ideas has been confronted head-on by our political class. Risk and uncertainty must be rethought for the twenty-first century: “A social democratic response to the crisis must begin by reasserting the crucial role of the state in risk management.”
Zombie Economics: How dead ideas still walk among us, John Quiggin, LSE
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