The post-crisis search for prophetic economists diluted prediction into vague prior warnings

Evidence

The gambit to search for “successful predictors” among the economists seemed to have originated with journalists. Economists sat up and took more notice of the rebukes published in The Economist than the other news magazines, if only because those articles softened the condemnation with various potential excuses that the complaints found elsewhere had gone “too far,” and that the allegations only had partial validity. With regard to the accusation that “most economists failed to see the crisis coming,” The Economist averred that some had indeed issued warnings, and explicitly named Robert Shiller, Nouriel Roubini, and the “team at the Bank for International Settlements.” This set off the starting gun for a veritable silly season of all manner of economists being proposed as vindicated prophets and unappreciated soothsayers, as though the prescience of the few would redeem the dimwittedness of the many. This race to populate the Nostradamus Codex continued for more than a year, encompassing even an online ballot to vote for the best crisis prognosticator. A motley cavalcade of economists then jostled in an unseemly fashion to put themselves forward as having somehow anticipated the crisis, across not just from the orthodoxy, but spanning the political gamut from paleo-libertarians to left post-Keynesians. But worse, the scrum began to dissipate the definition of the moving object that stood as the appropriate target for prediction. In the rush to judgment, anyone who said or wrote anything about some kind of bubble or imbalance or financial instability sometime in the 2000s suddenly sought to be credited as rivaling the Oracle at Delphi, engaging in the most exquisite augury. Some Nobel winners in particular pushed this ploy well beyond the breaking point, eliding prediction proper, and instead suggesting that anyone who had ever produced a mathematical model mentioning bank runs or financial fraud or irrational expectations or debt deflation or (fill in the blank) was proof positive that the economics profession had not been caught unawares. It helped if the interlocutor stopped paying attention to what had been taught in the macroeconomics classes across the most highly ranked economics departments. It got so bad after a while that any mention of market failure or departure from equilibrium was supposed to function as a “get out of jail free” card in 2009. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 698

Categorization

• XREF: Connects to the broader literature on the ‘reputational repair’ of economics after 2008 (e.g., Mirowski elsewhere, Yves Smith’s ECONNED) and to the sociology of professions defending legitimacy after failure. — connects to: The Great Recession triggered a redoubling of deliberate ignorance production in economics — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 629; The 2008 crisis discredited efficient-market economists in public policy debate — Mark Blyth, Austerity: The History of a Dangerous…, 158; Failed prediction exposed latent flaws in the rational economic agent concept — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 696 (+2 more)
• SEED: A usable angle: how professions repair reputational damage by reframing the failure bar — ‘any mention of market failure becomes a get-out-of-jail-free card.’ Could be an essay on epistemic credit-conferral after institutional failure.

Broader Connections

• The 2008 crisis discredited efficient-market economists in public policy debate #corroborates (0.75) — Mark Blyth, Austerity, 158
• Failed prediction exposed latent flaws in the rational economic agent concept #corroborates (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 696
• Market speculation functions as secular prophecy sustaining public faith in finance #corroborates (0.70) — Aris Komporozos-Athanasiou, Speculative Communities, 227