Video: Steve Keen on modelling and the Krugman debate
I think this video is worth watching because Keen gets to the heart of the issues with the standard approach to economics. He says that banks, money and debt are front and center in reality as we now see after the crisis. Consequently, they should also be integral in economic models. I have made exactly the same criticisms in the past. See my piece on the origins of the next crisis which is holding up well in the two years since I wrote it.
For me, the bottom line here is that the crisis is really not over. We need authoritative people like Blinder telling us we’ve got it wrong if we are to have a reasonable chance of getting out of this unscathed. I lobe that kind of stuff – more please! My fear is that the debt and banking problems re-assert themselves in the next downturn to cause significant economic damage. And since I am predicting this is what is likely to occur, it’s not just a worry, it’s something more than that.
Steve Keen video below
P.S. – I did read the comments on the Krugman post Lauren and Steve discuss in the video and the comments are as negative toward Paul Krugman as they suggest. My hope is that we see some more engaged and thoughtful follow up.