Friday, August 30, 2013

Economists need a sense of history

Economists who lack historical background:

"Such an economist becomes a shallower, narrower analyst with feeble capabilities for adapting the theory and statistics he has mastered to new and strange social environments. All problems strike such a one as new."
- William Parker, Yale university economist historian

There needs to be a better sense of history associated with financial crises. As pointed out by one expert on crises, it should be more obvious to other observers:

"that each crisis is not due to coincidental bad events or unique institutional features"
- Gary Gorton

I was one of the economists not trained in history. Luckily, I had a liberal arts education. You cannot be a good investor or analyst without a sense of the past and sense of human nature. A commentator who thinks an event is unique or new is most likely someone who has not studied the past.

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