Shiller Interviewed on the Subprime Crisis
By Arnold Kling
Greg Mankiw has the 8-minute video. It’s worth watching. Shiller is a very independent thinker. He says that what we need is more financial innovation, not less. He says that we should not have been trying to urge so many people to take leveraged positions in homes, and that we should not be trying to maintain high house prices. (He spells out this latter point more in his book.)
Contrast these eight minutes, which are enlightening and educational, with the eight minutes of Furman and Holtz-Eakin that Mankiw linked to and I snarked about.
It is not that Shiller is fantastically better as an economist than those two. But political campaigns truly cause evil things to happen.
This year, the campaign feels to me like a popular movie that, like most popular movies, is not to my taste. While the Sarah Palin character adds melodrama and is well played, the overall script does not appeal to me. It includes too many promises of energy independence and no mention of unsustainable entitlement spending. And nothing remotely as thought-provoking as what Shiller has to offer.