I was told there would be no math- Part II

In the Washington Post, columnist Harold Meyerson displays his own ignorance by attacking free-market economics for using all of those confusing numbers.

The problem with contemporary economics, at least with the purer strain of free-market economics associated with the University of Chicago, is not simply that it failed to predict the near-collapse of the world financial system last year. The problem is that it believed such a collapse could not happen, that all risk could be quantified by mathematical models and that these quantifications could help us correctly price just about everything. Out of this belief arose the banks' practice of securitization, which put a value on all manner of mortgages and enabled buyers to purchase and swap them with the certainty that such transactions reflected an accurate judgment of the value of the properties and the risks associated with them.

The housing bubble that burst last year was fueled by government subsidies and a Congress pushing banks to loan to unqualified home owners. The Chicago School certainly never postulated that home values always go up, or that excessive risk should be rewarded through government bailouts.

Meyerson's straw man is that free market economists believe that everything is always correctly priced, and therefore bubbles can't exist. He is, to use a technical term, an idiot. No school of economic or political thought has the power to predict the future, but the theory of markets does predict that people will respond to incentives. Government intervention created incentives for people to buy homes they could not afford, and for businesses to take foolish risks knowing that Uncle Sam was there to bail them out.

Ignoring these ideas, Meyerson falls back on the Church of John Maynard Keynes, which he interprets as having a single commandment; more government spending. It doesn't work, but why believe the evidence of the last century? Far better to base our national economy on anecdote and logical fallacy. Besides, all of that math makes his head hurt.