Word

Funny, if economagical thinking had any relevance in the real world, there would have been oceans of oil available at $150/barrel. Image via Wikipedia

From an ASPO interview with Jeremy Leggett:

Leggett: I think it’s entirely appropriate for the entire economics community, with the notable exception of the very few economists who saw the financial crash coming, to go back to the drawing board. I mean they got that whole thing catastrophically, systemically wrong. And I was shocked but pleased to see on British television news the other night the head of the economics faculty at the University of Chicago saying, when asked, what are the implications of the financial crash? He said, we have to go right back to the drawing board, I’m paraphrasing, but he was as strong in his wording as this. “We got everything wrong at a systemic level. We should be full of humility and by golly we’re going to do it. Our whole discipline has been has been on flawed assumptions.” And that’s what they have to break.

We hear this from the economists now about peak oil: that the price mechanism works, that simply when oil prices go up, they’ll go out and they’ll find more oil; it’s there under the ground isn’t it? Economics will find the oil. Wrong, wrong, wrong. And we know this. But they have to take some of the humility that is absolutely required of them as a result of the financial crisis and bring it to a re-examination of what they’re saying about peak oil.