UPDATE: See "Quotes Critical of Economics" on WEA Pedagogy Blog for many others, especially post GFC

Quotes from Real World Economics Review: [link] -- A powerful collection of quotes (but still incomplete) from top economists showing that current economics theory is wrong.

Quotes about failure of Game Theory from Ariel Rubinstein

See also, a collection of quotes from Keynes: Keynes Quotes

Greenspan's mea culpa (sort of) Forbes take on this

Quote from Card Interview (re failure of supply and demand) [link]

I've subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole.

Kenneth Boulding: Mathematics brought rigor to economics. Unfortunately, it also brought mortis .. see LINK, which also quotes Keynes to similar effect.

By the early 1980s it was already common knowledge among people I hung out with that the only way to get non-crazy macro-economics published was to wrap sensible assumptions about output and employment in something else, something that involved rational expectations and intertemporal stuff and made the paper respectable. And yes, that was conscious knowledge, which shaped the kinds of papers we wrote.

Paul Krugman

Worst Economics Predictions (from soundmoney.org)

#3 Ben Bernanke, 2005 Forecast: Housing Prices Will Not Fall, No Recession

The man who is considered today’s foremost expert on monetary economics and the cause of the Great Depression not only did not see the housing collapse and the ensuing recession coming, but refuted the possibility. At the heights of the housing bubble in July 2005, Bernanke, then chairman of President Bush’s Council of Economic Advisers, went on national television and rejected the “crazy talk” that the housing boom was really a bubble waiting to pop. In response to this argument, Bernanke stated, “I guess I don’t buy your premise, it’s pretty unlikely possibility, we’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit, I don’t think it’s going to drive the economy too far from its full employment path though.” A year later, housing prices hit their peak and the rest (as you know) was catastrophic history. Somehow, the man who was completely blindsided by the worst recession since the Great Depression was able to get reelected to the chair of the Federal Reserve by President Obama, and was voted Time Magazine’s Person of the Year in 2009.

Bernanke Quote:

Despite these and other policy successes, the episode as a whole has not been kind to the reputation of economic and economists, and understandably so. Almost universally, economists failed to predict the nature, timing, or severity of the crisis; and those few who issued early warnings generally identified only isolated weaknesses in the system, not anything approaching the full set of complex linkages and mechanisms that amplified the initial shocks and ultimately resulted in a devastating global crisis and recession. Moreover, although financial markets are for the most part functioning normally now, a concerted policy effort has so far not produced an economic recovery of sufficient vigor to significantly reduce the high level of unemployment. As a result of these developments, some observers have suggested the need for an overhaul of economics as a discipline, arguing that much of the research in macroeconomics and finance in recent decades has been of little value or even counterproductive.

See article: After the Blowup by Cassidy -- interviews of apostates from Chicago School. especially Posner. [Link]

Mark Blaug: Disturbing Currents in Modern Economics: Challenge, Vol. 41, No. 3 (MAY-JUNE 1998), pp. 11-34

“Modern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world … Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing.”

Mark Blaug Disturbing currents in modern economics - trends in 1990s economics

Professor Geoffrey M. Hodgson, editor in chief of the Journal of Institutional Ecoomics, has organized a web petition in support of the following words byPaul Krugman:-- full article: How did Economists Get it So Wrong?)

"Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy ... the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth ... economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations ... Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets – especially financial markets – that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation. ... When it comes to the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly." (New York Times, September 2nd, 2009).

http://www.socialcapitalgateway.org/eng-revitalizingeconomics.html

More by Krugman: Macroeconomic Madness: By the early 1980s it was already common knowledge among people I hung out with that the only way to get non-crazy macroeconomics published was to wrap sensible assumptions about output and employment in something else, something that involved rational expectations and intertemporal stuff and made the paper respectable. And yes, that was conscious knowledge, which shaped the kinds of papers we wrote.

J Bradford De Long: Economics in Crisis == link to local copy

uppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous — that is, by laughing at it — so as not to fall into the trap of taking it seriously and passing on to matters of technique.

Quoted in Lars Syll Blog

How Did Economics Get That Way and What Way Did It Get? by: Robert Solow

highly regarded economist Ariel Rubinstein has offered rare insider criticism of mainstream economics, commenting, for example, on a ‘as-if-rationality’ that “it ultimately became clear that the phrase ‘as if’ is a way to avoid taking responsibility for the strong assumptions upon which economic models are founded” …

When Joseph Stiglitz was asked at a private dinner party how economists can make repeated falsified claims without having their careers terminated, he reportedly answered: “I agree with you, but I don’t understand why you are so puzzled. What you should be assuming is that — as is done by most economists — economics is really a religion. So why should you be puzzled by the fact that they cling to and never give up their views despite frequent falsification?”

https://rwer.wordpress.com/2016/08/08/on-the-persistence-of-science-fiction-economics/

Declining Trust and Rising Income Inequality:

http://greatergood.berkeley.edu/article/item/americas_trust_fall/

In fact, “trust no one” has essentially served as Americans’ motto over the last two generations. For 40 years—the years of Vietnam, Watergate, junk bonds, Monica Lewinsky, Enron, the Catholic Church sex scandals, and the Iraq war—our trust in each other has been dropping steadily, while trust in many institutions has been seriously shaken in response to scandals.

This trend is documented in a variety of national surveys. The General Social Survey, a periodic assessment of Americans’ moods and values, shows a 10-point decline from 1976 to 2006 in the number of Americans who believe other people can generally be trusted. The General Social Survey also shows declines in trust in our institutions, although these declines are often closely linked to specific events. From the 1970s to today, trust has declined in the press (24 to 11 percent), education (36 to 28 percent), banks (35 percent to 31 percent), corporations (26 to 17 percent), and even organized religion (35 to 25 percent). And Gallup’s annual Governance survey shows that trust in the government is even lower today than it was during the Watergate era, when the Nixon administration had been caught engaging in criminal acts. It’s no wonder popular culture is so preoccupied with questions of trust.

It’s also likely that growing economic inequality is contributing to our crisis of trust. Inequality in America declined during the mid-20th century, when our most trusting generation came of age, but the gap between rich and poor has widened dramatically since then: Since 1979, for example, the after-tax income of the richest one percent of Americans increased by 176 percent, but it only increased by about 20 percent for everyone else, with the poorest Americans earning just six percent more than they did at the end of the 1970s. As many studies and surveys reveal, most recently a 2007 report from the Pew Research Center, people feel more vulnerable when they’re at a social disadvantage, making it more risky to trust others. Thus, those of lower income and racial minorities tend to answer more often that people will “take advantage” of them.

Bowling Alone: The Collapse and Revival of American Community

Drawing on vast new data that reveal Americans’ changing behavior, Putnam shows how we have become increasingly disconnected from one another and how social structures—whether they be PTA, church, or political parties—have disintegrated. Until the publication of this groundbreaking work, no one had so deftly diagnosed the harm that these broken bonds have wreaked on our physical and civic health, nor had anyone exalted their fundamental power in creating a society that is happy, healthy, and safe.

Like defining works from the past, such as The Lonely Crowd and The Affluent Society, and like the works of C. Wright Mills and Betty Friedan, Putnam’s Bowling Alone has identified a central crisis at the heart of our society and suggests what we can do.

Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome

Ricardo J. Caballero

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

September 27, 2010

MIT Department of Economics Working Paper No. 10-16

Abstract:

In this paper I argue that the current core of macroeconomics - by which I mainly mean the so-called dynamic stochastic general equilibrium approach - has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in “fine-tuning” mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in “broad-exploration” mode. We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected.