Space shuttle Challenger. Orszag. QUEEN ELIZABETH II. Richard Bookstaber. 2007-08.
It’s not comforting when a leading economist draws a parallel between today’s global economy and the disaster of the space shuttle Challenger.
Orszag found the same flaw in contemporary economic thinking that Feynman found in NASA. The output of a complex process, he pointed out, is the product of the quality of each of its stages or parts, not the sum.
Milton Friedman’s famous comment that “we are all Keynesians now” ... Now, it appears, we all have to be supply-siders. Monetary policy cannot simply look through a supply shock, as the textbooks dictate, if such shocks become regular events.
In April 2007, Richard Bookstaber published A Demon of Our Own Design, one of the more prophetic books on the then-coming financial crisis.
Markets, he argued, were too complex for their own good, creating the risk of disaster.
Examples include Europe’s survival of the 2022 crisis caused by reliance on Russian natural gas, or the way 2014 sanctions over the annexation of Crimea prompted Moscow to build a new payments infrastructure that allowed it to weather the far broader penalties that followed its invasion of the rest of Ukraine.
John Authers Bloomberg 18 September 2026
https://www.bloomberg.com/opinion/articles/2026-09-18/the-o-ring-risk-to-the-global-economy
The End of Theory: Financial Crises, the Failure of Economics and the Sweep of Human Interaction By Richard Bookstaber. Princeton University Press; 240 pages; $29.95 and £24.95.
AS QUEEN ELIZABETH II famously once pointed out, most economists failed to predict the crisis of 2007-08.
The Economist Print 18 May 2017
https://englundmacro.blogspot.com/2017/05/the-end-of-theory-financial-crises.html
Kommentarer