Economics in crisis

The Economist contains an article on the crisis of economics in the wake of the global financial crisis. Its particular reference points are macroeconomics and financial economics, and in particular the "rational expectations" school and the "efficient markets hypothesis". The critiques of Paul Krugman and Brad de Long, amoing others, have been developed in the Australian context by economist and blogger John Quiggan.

OF ALL the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself. A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behaviour, from drug-dealing to sumo-wrestling. Wall Street ransacked the best universities for game theorists and options modellers ...

In the wake of the biggest economic calamity in 80 years that reputation has taken a beating. In the public mind an arrogant profession has been humbled. Though economists are still at the centre of the policy debate—think of Ben Bernanke or Larry Summers in America or Mervyn King in Britain—their pronouncements are viewed with more scepticism than before. The profession itself is suffering from guilt and rancour. In a recent lecture, Paul Krugman, winner of the Nobel prize in economics in 2008, argued that much of the past 30 years of macroeconomics was “spectacularly useless at best, and positively harmful at worst.” Barry Eichengreen, a prominent American economic historian, says the crisis has “cast into doubt much of what we thought we knew about economics.” ...

two central parts of the discipline—macroeconomics and financial economics—are now, rightly, being severely re-examined (see article, article). There are three main critiques: that macro and financial economists helped cause the crisis, that they failed to spot it, and that they have no idea how to fix it.

The Economist viral marketing campaign

Interesting developments in market testing. A personal email that I received from Chris McCrudden from Speed Communication to gauge my response to a new campaign being launched for The Economist. The email read:

I’m getting in touch with you on behalf of The Economist in the UK as I notice that you’ve written about the magazine before on your blog.

The Economist has just launched a new cinema ad campaign which it hopes will help attract a new generation of readers. We’re very interested in hearing your thoughts about it as it’s very different to the ‘white out of red’ posters it’s used for over 20 years. It’s intended to grab the attention of the “intellectually curious”, the estimated 3m+ people in the UK who, thanks to the expansion in university education, care about the range of big global issues that The Economist covers every week.

You can see the video here at http://www.youtube.com/watch?v=Esx57x7CtZo

It uses the image of a wire-jumper (Florent Blondeau) walking through a city on a series of red wires and the strapline “Let your mind wander” as a metaphor for the pleasure we get from connecting different ideas, suggesting that you can get a similar experience from reading a copy of the magazine.

I hope you enjoy the ad. If you’d like any more info on the thinking that went into the campaign please let me know.

Best regards, Chris

Note both the personal turn and the feedback loop between my use of The Economist in my blog and an email back about their new marketing campaign.

The video is here.