quiggin - zombie economics; how dead ideas still walk among us (2010)

[...]... that yet-Â� to-Â� made discoveries in genetics and neuroscience would prove that the European model be-Â� was unnatural and unsustainable 0% 1960 2% 4% 6% 8% 10% 12% 1970 1980 1990 2000 2010 Figure 1.1 The End of the Great Moderation Source: Brad DeLong, How Scared of the Future Should Macroeconomists Be? http://delong.typepad.com/sdj/2010/ 01 /how- Â� scared-Â� the-Â� of-Â� future-Â� should-Â� macroeconomists-Â�... abstract ideas Still others, like the Great Moderation INTRODUCTION 3 and trickle-Â� down economics, are catchphrases for claims about how the economy works, or at least, how it worked in the thirty years or so before the current crisis Together these ideas form a package which has been given various names: “Thatcherism” in the United Kingdom, “Reaganism” in the United States, “economic rationalism” in Australia,... focusing on theoretical and policy implications The next section describes the death of the idea brought about by the global crisis, but usually resulting from weaknesses that were evident well before the crisis A brief section on reanimation looks at attempts to raise these dead ideas from the grave as undead zombies The next section, entitled “After the Zombies,” looks at alternatives to the ideas. .. Interest and Money Ideas are long lived, often outliving their originators and taking new and different forms Some ideas live on because they are useful Others die and are forgotten But even when they have proved themselves wrong and dangerous, ideas are very hard to kill Even after the evidence seems to have killed them, they keep on coming back These ideas are neither alive nor dead; rather, as Paul... best possible use of economic information and can never be subject to irrational bubbles is rarely made overtly and usually hedged with all kinds of qualifications and escape clauses In this zombie state, such claims continue to lumber around the intellectual landscape But habits of mind and thought are hard to change, especially when there is no ready-Â� made alternative The zombie ideas that brought... if they did, would rapidly fix themselves The Austrian theory showed that protracted depressions could take place as a result of monetary shocks But it lacked a number of key elements Austrian business cycle theory was a big advance at the time it was put forward But, by focusing on misallocation of capital, it ignored the most obvious feature of the business cycle, namely the massive unemployment... bust has finally been put behind us is not new In fact, ever since the emergence of industrial capitalism in the early nineteenth century, the global economy has been shaken, and stirred, by periodic booms and busts And, in every intervening period of steady growth, optimistic observers have proclaimed the dawning of a New Economy in which the bad old days of the business cycle would be put behind us. .. “capitalist.” However, he showed some ambivalence about the meaning of “capitalism.” Fukuyama’s use of this term implied a triumphant market liberalism But in defending the factual claim of a universalized social order, his use of “capitalism” encompassed the whole range of political and economic systems observed in Western societies, from Scandinavian social democracies to the winner-Â� take-Â� society... data could be read as showing a decline in the volatility of output and employment Most economists saw the decline in volatility as a once-Â� dropping that took place in the mid-Â� off 1980s, after the early 1980s “Volcker” recession, so called because it was induced by the restrictive anti-Â� inflation policies of Fed chairman Paul Volcker 5 Although most attention has been focused on the volatility... moment to discuss how economists use the term recession It is common to describe the occurrence of two successive quarters of negative economic growth as the “technical” definition of a recession However, economists rarely use this definition except as a rough guide to the current state of the economy Rather, economists in the United States generally rely on the assessments made by the Business Cycle . Cataloging- in- Publication Data Quiggin, John. Zombie economics : how dead ideas still walk among us / John Quiggin. p. cm. Includes bibliographical references and index. ISBN 97 8- 0- 69 1- 1458 2- 2.