Well I am.

At school and college I was completely and utterly devoid of any interest in economics. The boredom level in such a subject was so high as to be unimaginable, even downright frightening.

I was wrong on so many levels.

Perhaps if I'd shown even a smidgen of interest my life may have taken a completely different path.

And then again it might not.

I am, after all, very very good at being lazy and giving up easily!

But I've just read this article by Paul Krugman.
It is witty, illuminating and educational. (There's definitely nowt wrong with a spot of edumacation).

I urge you to give it a go if only to experience, as I did, a dry and ostensibly boring subject brought magically to life in a way that you couldn't possibly have imagined.

Another thing; It will reveal that certain academics have, as we've always either known and/or suspected have absolutely no grasp of reality whatsoever and yet are allowed to determine the direction of the lives of millions.

Yeah, you could be me!!

Will it help me to understand why I'm skint?

Maybe maybe not -- I'm guessing that the answer to that is your exceptionally good tastes exceed your income.

It may help you understand why our countries are skint, however.

Thanks martyn, good article. I knew something about the 'chicago school' and efficient market hypothesis from following the tech stocks bubble - which should have been a warning really. There were a load of assets (stocks) clearly being run up to rediculous levels by hysterical speculation before collapsing. Was the market valuing some whacky internet start up correctly on monday when it was worth millions or on friday when it was worth nothing? The efficient market hypothesis true believers said it must have been due to the market correctly 'pricing in' new information about the company in question - as far as the actual traders were concerned they just wanted out of techs because they saw everone else did. There was no new information about the companies to be priced in. ketchup economics as described.
Warren buffett (look him up) is iirc either the first or second richest human on the planet and the most successful long term investor ever and he got there by buying assets (stock) cheap, when the market valued the stock below it's true value - he's what's called a value investor. According to EMH and all those nobel prize winning professors he's just fluked it as all asset prices are always correct, as the market has perfectly accounted for the risks and potential of every asset there can't be hidden value and value investment cannot work.
Buffet's fond of saying that markets operate like a voting machine in the short term and weighing machine in the long term.

Btw the book that sparked my interest in economics was 'eat the rich' by PJ O'Rouke. It's dead right about why people should take more interest in economics but pretty much wrong about everything else, but at least it's readable and funny.

I think that for now I'll take the easy way out and just read Krugman's stuff.

I really cannot fathom how it is that the so called Freshwater school can place so much faith in the idea that people are basically reasonable, rational and level headed.

Where do they live?
Where do they shop?
Where do they drive?
Have they ever watched a reality TV show even for 30 seconds?

How can you even begin to formulate an economic theory when one of the building blocks is so fundamentally flawed?

Does spending an entire life in academics render a person incapable of functioning in the real world.

Obviously not, because there are a whole bunch of academics who don't adhere to the Freshwater way of thinking.

Am I wrong in thinking that the argument about whether the earth is flat or a globe is still going on in economic circles even though almost everyone who knows little or nothing about economics is already comfortable with the fact that it is, really, a globe?

And now I'm left wondering whether, since I'm probably worse at mathematics than anybody else on the planet, if that even matters since it's clear to me that most humans are so fucked up for one reason or another that to trust anybody further than you could throw them to make a rational decision when the chips are down is, in itself, pure insanity!

Economists are keen to be thought of as scientists but they can't really run proper experiments so they come up with hypothesis that's equivalent to their conservation of momentum - one of the foundations of physics and allow the mathematics to soar. Much has been made of the complicated 'rocket science' formulae that
few understood. Imo it's the untested oversimplifications at the foundations of these mathematical edifices that were the problems.
If anything the article underplays the utter disdain with which non chicago economists were viewed by their peers, business and government. Afaict they were looked down on like they were cavemen being viewed by astronauts.
The chicago school economists of course recognised they were in a market and took being showered with money, high paid jobs and nobel prizes as confirmation that they were right cos the market doesn't make mistakes.


'Long term capital management' was a fund run on chicago school economics that suddenly and unexpectedly failed despite being totally bulletproof according to EMH and required a government bailout during (iirc) Bush the elders term.

Economics is justly known as 'the dismal science'

Occurs to me it's not so much like like an argument about whether the earth is round or flat but whether or not it's got any fixed geometry or not... And in that analogy it doesn't. Making the assumption that the shape of the earth is stable allows you to plan your complex mathematical architecture with supreme confidence... But then when the resulting building themselves keep collapsing...

I agree - the equations and models they used did not cover a long enough time span to be "realistic". The data they used for modelling covered a period when the economic condition were (generally) benign and had no major shocks. When the financial crisis occurred in Asia and then the Russians defaulted, markets did something that the model did not expect and the model broke hence:-