Geoffrey Miller, Gerald Rosenfeld, and Richard Epstein discuss the recent economic crisis in Harvard journal
In their article, “Intellectual Hazard: How Conceptual Biases in Complex Organizations Contributed to the Crisis of 2008,” Miller, Stuyvesant P. Comfort Professor of Law, and Rosenfeld, Distinguished Scholar in Residence and Senior Lecturer, team up to explore a phenomenon that they say has contributed to calamities in space exploration, surgery, and investing. Focusing on the recent financial meltdown, they describe “the tendency of behavioral biases to interfere with accurate thought and analysis within complex organizations” and how this can lead to catastrophic failure. They also suggest ways policy makers might mitigate this “intellectual hazard,” as they grapple with ways to head off future financial crises.
Epstein, who on July 1 will join the NYU Law faculty full time as the inaugural Laurence A. Tisch Professor of Law, weighs in with a piece titled, “Why I Will Never Be a Keynesian.” Noting that the subprime crisis has led some of his fellow Big Thinkers to reassess their faith in minimally regulated markets, and to accord the theories of economist John Maynard Keynes renewed respect, Epstein firmly declares that he won’t be joining them. True to his libertarian colors, he writes: “Any move to a larger governmental role in planning or stimulating the economy is likely to make the current recession deeper and the recovery slower than they ought to be.”
Published June 11, 2010