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Summary of "Zombie Economics" How Dead Ideas Still Walk Among Us by John Quiggin • Economic theories continue to live as “zombie ideas” even after events refute them. • The 2008 “Global Financial Crisis” exposed the fallacy of five hard-to-kill principles that fueled “market liberalism”: • First, beginning in the 1990s, “the Great Moderation” claimed business cycles had stilled. • Second, the “Efficient Markets Hypothesis” assumed markets have perfect information. • Third, full employment fell away under “Dynamic Stochastic General Equilibrium,” which says that free markets would determine labor and capital allocations. • Fourth, “trickle-down economics” said that enriching the wealthy benefits everyone. • And fifth, “privatization” advocates said government cannot run an economy as well
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Summary of "Zombie Economics" How Dead Ideas Still Walk Among Us by John Quiggin • Economic theories continue to live as “zombie ideas” even after events refute them. • The 2008 “Global Financial Crisis” exposed the fallacy of five hard-to-kill principles that fueled “market liberalism”: • First, beginning in the 1990s, “the Great Moderation” claimed business cycles had stilled. • Second, the “Efficient Markets Hypothesis” assumed markets have perfect information. • Third, full employment fell away under “Dynamic Stochastic General Equilibrium,” which says that free markets would determine labor and capital allocations. • Fourth, “trickle-down economics” said that enriching the wealthy benefits everyone. • And fifth, “privatization” advocates said government cannot run an economy as well
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| Summary of "Zombie Economics" How Dead Ideas Still Walk Among Us by John Quiggin • Economic theories continue to live as “zombie ideas” even after events refute them. • The 2008 “Global Financial Crisis” exposed the fallacy of five hard-to-kill principles that fueled “market liberalism”: • First, beginning in the 1990s, “the Great Moderation” claimed business cycles had stilled. • Second, the “Efficient Markets Hypothesis” assumed markets have perfect information. • Third, full employment fell away under “Dynamic Stochastic General Equilibrium,” which says that free markets would determine labor and capital allocations. • Fourth, “trickle-down economics” said that enriching the wealthy benefits everyone. • And fifth, “privatization” advocates said government cannot run an economy as well as private sector interests can, though many privatization efforts failed. • Persistently high unemployment results in “hysteresis,” in which idled workers’ job skills deteriorate, entrenching chronic joblessness. • Many countries reaped cash by selling national assets but ended up being harmed by the long-term fiscal impact of such divestiture. • A “mixed economy” recognizes government’s role in the long-term interests of society. |