WE are not amused.
A British newspaper reported recently that a group of eminent economists have apologized to Queen Elizabeth II for failing to predict the financial crisis. No kidding! This is news? They were as blind as their American counterparts (about 15 out of 10,000 economists) raised alarms).
The Observer newspaper reported that a letter has been sent to the Queen after she demanded, during a visit to the London School of Economics last November, to know why nobody had anticipated the credit crunch.
According to the newspaper, the letter says that says “financial wizards” who believed that their plans to manage risky debts and protect the financial system were infallible were guilty of “wishful thinking combined with hubris.”
The newspaper said the content was discussed during a seminar with a group of leading economists in June, including Nick MacPherson, a permanent secretary at Britain’s Treasury, and Goldman Sachs chief economist Jim O’Neill.
“In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole,” the newspaper quoted the letter as saying.
Luis Garicano, a professor at the London School of Economics, said he had discussed the origins of the crisis with the Queen during her visit. He said she had asked: “Why did nobody notice it?”
The answer is simple.
Like most neoclassical economists these guys did not get past their formulae and charts. And that is the reason so many people have bailed out ofeconomics for decades. A bloodless science whose epitaph might be that of Emilio Medici, Head of State in Brazil 1971
“The economy is doing well but not the people.”