“There will be no interruption of our permanent prosperity.”

-       Myron Forbes, President, Pierce Arrow Motor Car Co., January 1928.

“Stock prices have reached what looks like a permanently high plateau.”

-       Economist Irving Fisher, October 1929.

“[1930 will be] a splendid employment year.”

-       US Department of Labour, New Year’s forecast, December 1929.

“..the central problem of depression-prevention has been solved, for all practical purposes..”

-          Robert Lucas, winner of the 1995 Nobel Memorial Prize in Economics, in his presidential address to the American Economic Association in 2003.

Hindsight, of course, is a wonderful thing. Scour Ben Bernanke’s 2004 speech, ‘The Great Moderation’ as much as you may, the text yields little by way of explicit hubris, although the soon-to-be Fed chairman does tend to suggest, as economist Paul Krugman – another Nobel Laureate – hints,

“much as Lucas had, that modern macroeconomic policy had solved the problem of the business cycle – or, more precisely, reduced the problem to the point that it was more of a nuisance than a front-rank issue.”

And it is certainly clear from Krugman’s ‘The Return of Depression Economics and the crisis of 2008’ (Penguin, 2008) that economists love few things more than bitch-slapping their academic rivals. So why are academic politics so vicious ? In a quotation that has been variously credited, amongst others, to Woodrow Wilson, Henry Kissinger, Richard Neustadt and Wallace Sayre, the response would seem to be: because the stakes are so low. Perhaps if economists were managing money, say, as opposed to footling with models and largely sterile theories in a hugely complex and fecund world, they might be more respectful of each other.

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