The
crisis of 2008 in addition to impacting all elements of the global economy has
also impacted my future discourse of economics through the enacting of new
government regulations, and new methods of prediction intended to stop this
level of crisis from occurring again. According to the Journal of
Economic Perspectives, Congress passed a major reform of the financial
industry in 2010; the Dodd-Frank Wall Street Reform and Consumer Protection Act
which was aimed at regulating the unregulated, protecting the consumer, and
reversing the perverse incentives that guided the actions of sub prime lenders
and investors, credit rating agencies, market-based financial intermediaries,
and others (5). Finally the Large Institution
Supervision Coordinating Committee a multidisciplinary committee was created to
oversee the supervision of a variety of institutions. The committee uses
horizontal, or cross-firm, evaluations to monitor interconnectedness and common
practices among firms that could lead to greater systemic risk. It also uses
additional and improved quantitative methods from economists such as new
Financial Condition Indexes or FCI’s that include a more complete range (up to
45) of economic variables for evaluating the performance of firms and the risks
they may pose.
The 2008 financial crisis will affect economic policy making
and the predictions of economists for generations to come in a similar way to
how the Great Depression did up until even recently. According to George F.
DeMartino Professor and Co-Director of the MA in Global, Finance, Trade and
Economic Integration and author of The
Economist’s Oath: On the Need for and Content of Professional Economic Ethics, “As I see it, the
economics profession went astray because economists, as a group, mistook
beauty, clad in impressive-looking mathematics, for truth … the central cause
of the profession’s failure was the desire for an all-encompassing,
intellectually elegant approach that also gave economists a chance to show off
their mathematical prowess” (97). Demartino believes that the entire discourse of economics
needs to change to make an effort to produce economists that think more
ethically not just mathematically and this change needs to begin at the undergraduate
degree level. Instead of teaching economics simply by focusing on graphs and
equations professors can explore the value judgments that appear in all
economic theories and methods and encourage their students to consider whether
this or that set of values represents a better foundation for economic theory
and policy (212).
In conclusion the financial crisis of 2008 has been and will
continue to be a monumental trend for the discourse community of economists. I
believe the lessons learned of needing more regulation and oversight instead of
a purely free market capitalist system could have only been learned the hard
way through a crisis like we experienced. I believe because of the scale of the
crisis the regulations put in place by the government will remain, and remain
effective unlike legislation of the past which is repealed soon after it is
brought in. I also believe that because I am currently still pursuing my degree
I can tailor my education to include ethical economic practices and economic
theory and try to view economics on a more philosophical level, not just the
mathematical one in which it is primarily taught. And because of that I am
eager about my future as an economist, I have always thought of economics as
more of a social science then a physical science and as such I can position
myself uniquely when I complete my education and I believe I will possess more
of the traits employers will be looking for as a result of the crisis.
No comments:
Post a Comment