Contrarian economist Robin Hanson of George Mason University gives his version of what has just happened with the Current Crisis at his fascinating Overcoming Bias blog:
Few experts in our society could pull off saying:
Emergency!!! We will suffer terribly if you don't spend a trillion dollars right now overpaying for stuff from our friends! No, you don't have time to study the problem, nor will we present an analysis for your review. No, other experts in our field cannot actually see this problem, and there will never be data showing the problem really existed. You just have to trust us and give us the trillion right now!!
US military experts said something similar on Iraq weapons of mass destruction, but at least they admitted we'd eventually be able to see if they were wrong (as they were). Medical experts implicitly say something similar about the health value of the second half of medical spending that costs a trillion dollars a year, even when our best data show little value, but this is a steady problem not a sudden new problem. Global warming experts have been trying, so far without much success, to get us to spend similar amounts on their problem, even though other experts can supposedly verify it.
Given how much less respect and deference economists get on most policy topics, relative to docs, physicists, or generals, I'm surprised to see some economists just got away with this sort of thing. The US has given top government economists, such as Paulson and Bernanke, well over a trillion in mostly blank checks to spend saving their Wall Street friends from ruin, supposedly to prevent another great depression. But it seems economists looking today at the data available then just can't find clear evidence a massive buyout was needed.
Well, the generals did get away with this trick, just like the economists just did. Most people know they don't have any understanding of this national and international capital market stuff, but have a frightened sense that it is capable of causing them great and long-term harm. And unlike with, say, global warming, they also don't have a sense that what the experts are now doing to "solve' the problem will harm their lives or livelihoods in obvious or understandable ways, in the short term.