Robert Samuelson devotes his column today to telling readers all the ways in which the conventional wisdom about the economy was wrong. As Samuelson puts it, "our ignorance is humbling." Yes, the experts' ignorance was striking. But, it is also worth noting that some of us recognized that it was wrong five years ago. It should have been easy to see that it was wrong. It is great for people like Samuelson to document all the ways in which the experts did not have a clue, but the more important question is why the experts could not see what should have been very evident, most importantly an enormous housing bubble? There are important sociological issues that must be addressed. How could "experts" get paid very high salaries for doing nothing more than unthinkingly repeating the conventional wisdom? Are these experts facing any consequences for their extraordinary and costly oversights? Unfortunately, the answer to the latter question will almost always be "no." There is no cost to an expert for being wrong because he followed the conventional wisdom. As every good economist knows, people, including economists, respond to incentives. If there is no cost to following the conventional wisdom and being wrong, then we should expect that economists and other experts will continue to follow the conventional wisdom rather than think for themselves. This is a far more interesting and important concern than yet another restatement of the facts about how the experts did not have a clue in their area of supposed expertise.
--Dean Baker
