Economists’ persistence in error needs institutional explanation, not just psychology

Evidence

How could 132 economists sign a public petition in November 2011 stating that fiscal austerity by the government will provide more jobs than fiscal stimulus in both the short and long term? Does the experience of Greece and Spain mean nothing? To a first approximation, one may subdivide the question in two: what psychological equipment permits people like Cochrane to persist so doggedly in their error; and second, what permits the various gatekeepers of the media and academic journals to continue to promote figures like Cochrane, Michael Boskin, Casey Mulligan and Douglas Holtz-Eakin as people worth reading and listening to? Our brief excursion into historical amnesia and social psychology in chapter 2 proffers a short answer to the first question: it is human nature not to relinquish deeply held beliefs in the face of contradictory evidence, especially if one never knew anything different. Lesson 1 informs us that the modern economist comes equipped with a trained incapacity for historical and philosophical reflection. However, the answer to the second question turns out to be far more complicated, and will connect us up with our primary concerns regarding the Neoliberal Thought Collective. It is insufficient to baldly assert, “Neoclassical economics has won, not because it describes reality accurately, but because it describes a reality which dominant interests want.” What sustains their stubbornness? What injects the steel in their steely confidence? That is the topic of the rest of this chapter. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 490

Categorization

• XREF: Connects to the trained-incapacity and thought-collective themes running through Mirowski’s other work and the reader’s broader austerity reading. — connects to: Economic ideas can blind policymakers to the flaws of their institutional designs — Mark Blyth, Austerity: The History of a Dangerous…, 252; Empirical failure does not dislodge orthodox economists from their theory — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722; Economics as a discipline profited from manufactured doubt rather than suffering from it — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 633 (+8 more)
• DEEPTHINKING: Frames the puzzle of why the profession kept promoting obviously wrong economists as an institutional-gatekeeping question — the load-bearing frame for the entire chapter.

Broader Connections

• Empirical failure does not dislodge orthodox economists from their theory #qualifies (0.95) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 722
• Mainstream economists admit failure to predict the crisis but resist overhauling the discipline #qualifies (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 517
• Economics as a discipline profited from manufactured doubt rather than suffering from it #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 633