avoidable and consequential errors

We didn’t get into this mess by doing things right. We were listening to and influenced by, among others, financial policy experts.

But up to seventy percent of the policy setting experts in economics, often in the media and always at the meetings, advised, owned significant stock in or were on the board of private financial institutions and did not say so. They generally appeared as reputed analysts or studious academics offering objective data and highly evaluated recommendations, seldom identifying their fruitful ties to Wall Street.   Nuts.

Universities have codes of conduct, but these discourage conflicts of interest that harm the University, not the general public.

There is no Economist’s Oath… We easily are fed Grade A spin.

Economists enjoy enormous influence over the life chances of the world’s inhabitants, yet do not receive, at any point in their training, any exposure to the professional ethical challenges that their work entails.

This lack of attention to professional ethics means that even well-meaning economists will take actions that can cross ethical lines, to the detriment of those whom they seek to serve.

Modern finance spilled relentless justification for their actions, hoisting an untested ‘scientific foundation’ that they could carry a risk-free portfolio, sufficiently safe for private Social Security packaging as well,  if we if would only, if we would simply provide an unrestrained free market.

And Wall Street funded thousands of their executive minions too. In fact, what “modern finance developed and taught in the finance and economic departments, particularly of business schools, has been central for creating the conditions for the current crisis“:

Those views have been institutionalized by the astonishing growth of MBA programs. In the mid-1950’s, the annual output of US business masters was a little over 3,000. Close to three decades later, in 1981, the number of business master’s degrees reached 55,000. By 1997-1998, the number had expanded to reach over 100,000. In comparative terms to other professions, the number of MBA degrees surpassed the combined output of Lawyers and Medical Doctors in 1980, and in 2000 doubled the BAs awarded in engineering.

The solution to the current crisis would involve not only significant reform of financial institutions and practices, and more stringent regulations, but also a rethinking of the theories taught by finance departments.

If that does not happen, in the future Universities will have to apologize for their Finance departments, as much as the Catholic Church apologized for the Holy Inquisition.