The economic profession has some serious soul searching to do. They blew it, not a little, but a lot. For the last decade they ought to have all over the risking tide of risks in the economy. But rather than do that work they were cheerleading the move to increasing volatility and risk. They did that not in a sober and professional way, but rather they fell victim to all the standard failure modes of professionals: arrogance, pride, chauvinism, provincialism.
No doubt Shiller is right when at the beginning of this talk he mentions Jarvis’s Groupthink. But he moves on. Jarvis is pretty clear about how groups fail via groupthink. It’s not pretty. It is certainly not an excuse. The last time I sighted groupthink being used as diagnosis it was to explain how the Bush administration got us into Iraq. As I wrote then “This framework is just what the doc ordered. It offers the people writing the report a chance to avoid blaming anybody.”
People talk about the need for something along the lines of a “truth and reconciliation” process to help air up dirty laundry of the last eight years. That’s work which we as a nation ought to do. Not for revenge, but to cleanse, but to help eliminate the root causes. That’s why the Republican establishment in particular ought to be desperate to do that work.
This situation re. the economic profession is, seems to me, more serious. We have no means to vote the profession out of office! We are stuck turning to that very same of arrogant smarty pants to try and puzzle out what to do. Jarvis has a list of what appears to cause the fiascos that go under the name Groupthink. It’s in that posting I did about the Iraq use case. But notable in that list is “unquestioned belief in the the group’s inherent morality.” Economists need to get over themselves. They need to understand that at this point a significant portion of the responsibility for every foreclosure, every layoff, every hungry child lies at their feet. Humble pie’s on the menu, but will they heed the dinner bell?