The New York Times yesterday had an interesting, but also rather frustrating, interview with James Galbraith.  For those of you who don't know him, Galbraith, the son of legendary economist John Kenneth Galbraith, is brilliant; outspoken; Democrat-leaning; and even though he is currently teaching at the University of Texas in Austin, definitely one of the chosen inside the Washington Beltway.

The statement that made me cringe was that more economists should have seen the current financial and economic situation coming and should have warned us all.  Here's the money quote.  When asked what the failure says about economics and economists Galbraith said:

It’s an enormous blot on the reputation of the profession

This statement seems to have been made out of anger, embarassment, and sadness.  But for a number of reasons, it is an overstatement.

1. Economics (and, as a result, economists) has never been good at predicting things; It has always been much better at explaining what has already occurred.  This might not be what we would like, but it is what we have.
2. Economics (and, again, economists) are best maing straight-line extrapolations.  It has never been good at hairpin turns.
3. My guess is that the majority of the "15,000 professional economists" mentioned in the question that Galbraith was responding to specialize in areas that would not have given them any expertise on any aspect of the current situation so they shouldn't be held responsible or thought of poorly because they didn't.  That's like getting angry at every doctor because he or she hasn't yet found a cure for cancer even though only a very small percentage are experts in that field.

But, and most important, even if an economist, or economists, saw the current situation coming, policymakers would not have wanted to hear it.  We've gotten to the point in the policymaking world where, and completely contrary to what Aaron Wildavsky, one of the godfathers of the public policy field, used to say, power no longer wants to hear the truth, it wants to hear things that will enhance and keep it in power. 

That means that no matter how well thought out and substantiated, statements by economists that the sky was about to fall would have been met with extreme skepticsm and ridicule.  As it typically does, the profession and the specific practitioners that were sounding the alarm would have come under attack and been contradicted by other economists from whatever other side didn't believe, or didn't want to believe, what they were saying.

In extreme cases, academic credentials would have been questioned, promotions delayed, research grants to their institutions threatened, or new business to their firms stopped.

There's a lesson here from fiction.  Jor-El, the scientist father of the boy who eventually became Superman, was so criticized by the rulers of Krypton when he insisted that his research proved definitively that the planet was about to explode, that he was forced not to say anything publicly.  Jor-El and his wife died when Krypton exploded as he predicted, but he saved his son by sending him in a rocket to Earth where he eventually became the star of comic books, a radio program, a television show, and a series of very popular movies.

Galbraith was too hard on his colleagues, especially the academics, for who saying the sky was falling might have done so much damage to their political careers that it made little sense for them to go that far out on the limb.

The better question is how many Wall Street economists, whose job it actually is to predict the future, either didn't see this coming, saw it coming but felt contrained to talk about, or predicted it but (like the leaders of Krypton did to Jor-El) were prevented by their institutions from saying anything.

It would also be interesting to know how many Wall Street economists blasted their son  or daughter to Earth before the explosion, that is, how many moved their own money because of what they saw coming even though they or their firms didn't provide the rest of us with warnings.