In a Times Sunday Mag preview Columnist and Princeton Economics Professor Paul Krugman expends a lot of words explaining how the fellow Nobelists at the University of Chicago have been cranky and absurd since, at least, the mid-'70s. The story is headlined, "How Did Economists Get It So Wrong?"
The piece has some hilarious lines (mostly quotes and paraphrases of his rivals), such as, "Unemployment is a deliberate decision by workers to take time off" (Edward Prescott of the University of Minnesota), and "It's not part of what anybody has taught graduate students since the 1960s. They [Keynesian ideas] are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children, but it doesn't make them less false." (U Chicago's John Cochran). But it's also pretty much just a long version of what Krugman's been saying all along: that neo-Keynesians (like himself) need to look even more skeptically on "efficient market theory"-that is, the idea that people are mostly rational actors.
Two thoughts occur: