Outdated economists are failing us
Most economists still cling to ideas that no longer hold true in our “overconnected world,” said Bill Davidow at TheAtlantic.com.
Bill Davidow
TheAtlantic.com
Our economic theories have become as obsolete as travel agents and brick-and-mortar bookstores, said Bill Davidow. Most economists still cling to ideas that no longer hold true in our “overconnected world.” Adam Smith’s “invisible hand” was a brilliant guide to our economic actions when markets were local and communities “policed unsavory behavior”—a banker naturally hesitates to evict an indebted neighbor if he has to see him at church on Sunday. But that model fails when, as today, bankers pass off the costs of bad loans and never once have to “look the bankrupt person in the eye.” Similarly, John Maynard Keynes’s idea of priming the pump made perfect sense in an earlier era. Government spending stimulated demand and created local jobs, and when those workers spent their paychecks, more jobs were created. But today, the jobs and the wages all trickle off to China. It’s high time that economists came up with some new ideas better suited to the world as it is today. We can’t find a safe course forward with advice “based on a great deal of theory that was right then and wrong now.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
![https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516-320-80.jpg)
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
'The journalistic mission to follow the facts and deliver the truth must persist'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published
-
Today's political cartoons - September 5, 2024
Cartoons Thursday's cartoons - weird creatures, McConsequences, and more
By The Week US Published
-
Death of England: Closing Time review – 'bold, brash reflection on racism'
The Week Recommends The final part of this trilogy deftly explores rising political tensions across the country
By The Week UK Published
-
Issue of the week: Do high-speed traders rig the market?
feature Wall Street is abuzz over high-frequency trading.
By The Week Staff Last updated
-
Issue of the week: How Yellen spooked the markets
feature At her first press conference, the new Federal Reserve chair made the mistake of indicating when the Fed would raise interest rates.
By The Week Staff Last updated
-
Stop calling women ‘bossy’
feature Let’s ban “She’s bossy.” Instead, let’s try, “She has executive leadership skills.”
By The Week Staff Last updated
-
Issue of the week: GM’s recall disaster
feature Mary Barra is facing “her first big test” since she took over as GM’s new CEO in January: a recall of more than 1.6 million vehicles.
By The Week Staff Last updated
-
Issue of the week: Who gets Fannie’s and Freddie’s profits?
feature Fannie Mae’s and Freddie Mac’s shareholders want their money back.
By The Week Staff Last updated
-
Issue of the week: Comcast buying Time Warner Cable
feature Has Comcast won the cable wars?
By The Week Staff Last updated
-
Issue of the week: AOL’s million-dollar babies
feature AOL’s “gaffe-prone” CEO, Tim Armstrong, “got in some hot water” last week.
By The Week Staff Last updated
-
Issue of the week: Why Google unloaded Motorola
feature Three years after shelling out $12.5 billion for Motorola, Google announced its sale to Lenovo Group for $2.9 billion.
By The Week Staff Last updated