How One Economist’s Warning About The Dangers Was Ignored

Here is a striking example of how group think among the world’s supposedly savviest economists led them to completely ignore a warning about what we have come now to know as a disaster.

In 2005 Raghuram Rajan, a professor at the University of Chicago’s business school and something of a free market proponent, presented a paper that nailed the risks inherent in the economy. He was pretty much dismissed out of hand by those present. Lawrence Summers, one of President-elect Obama’s main economic gurus, said, he found  ”the basic, slightly lead-eyed premise of [Mr. Rajan's] paper to be misguided.”

The Wall Street Journal has the whole story and it is an interesting read. The more I watch and read what economists say and do and then say and do some time later, the more they seem like politicians to me. There seems to be much trafficking in the conventional and little regard or patience for the dissenting or out of vogue view. That’s troubling considering how much we seem to be depending on them right now.

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