Abandoning Principles

Oliver Hart and Luigi Zingales write in the WSJ:

This year will be remembered not just for one of the worst financial crises in American history, but also as the moment when economists abandoned their principles. There used to be a consensus that selective intervention in the economy was bad. In the last 12 months this belief has been shattered.

Practically every day the government launches a massively expensive new initiative to solve the problems that the last day’s initiative did not. It is hard to discern any principles behind these actions. The lack of a coherent strategy has increased uncertainty and undermined the public’s perception of the government’s competence and trustworthiness.

Read the whole thing.

One response to “Abandoning Principles

  1. When times get really hectic.. we sometimes revert to childhood fantasies, where we can truly change our environment..

    The necessary aggregate change is possible, but it is improbable as we will never ALL be on the same page. Social fixes by government can only be superficial, and temporary, usually leading to bigger problems as we have learned oh so well in the last few years..

    In the meanwhile, TRUE economists are quietly “milking” the value from the bouncy stock market with each ebb and tide..

    On the other hand.. What the hell do I know? I must stink at economics.. My net worth has only decreased in the last 3 years.. Go figure.

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