Zombie vs. Shark vs. Anthony Ha

"In creating this state of unreadiness, the role of free-market ideology cannot be ignored. Many leading economists still have a vision of the invisible hand satisfying wants, equating costs with benefits, and otherwise harmonizing the interests of the many. In a column that appeared in the Times in May, the Harvard economist Greg Mankiw, a former chairman of the White House Council of Economic Advisers and the author of two leading textbooks, conceded that teachers of freshman economics would now have to mention some issues that were previously relegated to more advanced courses, such as the role of financial institutions, the dangers of leverage, and the perils of economic forecasting. And yet 'despite the enormity of recent events, the principles of economics are largely unchanged,' Mankiw stated. 'Students still need to learn about the gains from trade, supply and demand, the efficiency properties of market outcomes, and so on. These topics will remain the bread-and-butter of introductory courses.'

"Note the phrase 'the efficiency properties of market outcomes.' What does that refer to? Builders constructing homes for which there is no demand? Mortgage lenders foisting costly subprime loans on the cash-strapped elderly? Wall Street banks levering up their equity capital by forty to one? The global economy entering its steepest downturn since the nineteen-thirties? Of course not. Mankiw was referring to the textbook economics that he and others have been teaching for decades: the economics of Adam Smith and Milton Friedman. In the world of such utopian economics, the latest crisis of capitalism is always a blip."

-- from "Rational Irrationality" by John Cassidy, in the Oct 5., 2009 issue of The New Yorker