The opening of my latest column at EveryJoe:
“You’ve heard the claim: ‘Deregulation caused the financial crisis.’ In the years leading up to 2008, the story goes, bad economists convinced bad politicians to deregulate the money/banking/finance sector of the economy, and bad capitalists then enjoyed an orgy of greed that caused the system to go haywire.
“Nobel-Prize-winners Joseph Stiglitz and Paul Krugman have signed on to this story. Krugman, for example, has long championed increased regulation of financial markets, and he recently complained in The New York Times that the politicians have failed to listen to the advice of the right economists. ‘The world,’ he says, ‘would be in much better shape than it is if real-world policy had reflected the lessons of Econ 101,’ and Econ 101, he believes, teaches that more controls (and more government spending) would have prevented the crisis.
“So now let us turn to Round Two of blamestorming about the financial crisis. Round One took up the (silly) claim that free-market academics dominate the economics profession and have sway over politicians and regulators. (See ‘Where are All Those Free-Market Economists Who Caused the Financial Crisis?’) In this next round, let’s look at what politicians did and the trajectory of government regulation in the lead-up to 2008 …” [Read more here.]
Last week’s column: Our Schizophrenic Politics: Sex, Health, Religion, Money, and Other Important Stuff.