Market Failure — a teaching moment

Review in the Chronicle discusses whether the current financial crisis causes one to consider whether economics is taught well.  Here are a couple of interesting quotes:

At some point, and this is as good as any, we have to ask ourselves if we have been teaching theory or ideology.

What about a return to the idea that economic theory does not offer settled answers but instead offers only an engine of analysis? Are we fearful that if we allow for too much ambiguity in the use of our theories, we will no longer be perceived as proper scientists? If anything, this episode should remind us to remind our students that there may not always be a unique right answer.

And —

This crisis is built on the foundations of financial illiteracy.

And —

It is very ironic that the end result of the misplaced application of incentives in the Soviet Union led to the increased role of the market system in that country. In the United States, the misplaced application of incentives is bringing about greater government intervention in the economy.

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