How many auditors caught the problems with Worldcom, Enron or Tyco? Extremely small minorities did, and yet people don't question whether 'accounting works, but they may question the incentives for companies to provide honest books to auditors, and the compensation awarded independent auditors.

Let's say that you need someone to think that it will be sunny tomorrow, and you believe that it will be sunny tomorrow. The meteorologist's forecast is for 20% chance of a thunderstorm. You tell your investor that meteorology is not a science. The real probability of a thunderstorm, given the conditions and the most accurate model possible is 18%, or maybe 4% or 93%.

What does any of this mean? Have you ever heard someone say that economics is not a science? Unfailingly, it comes from someone who has a bias toward a specific conclusion, and has no method explaining how they arrived at their conclusion other than something like "common sense".

There was a renaissance for economic data collection in the wake of the 1929 crash, and the collapse of classical economics (How could the same capital equipment and human capital in 1932 produce about 48% of the industrial output it had in early 1929?). That was when most of the data collection programs were created, and the industrial classifications that were only revised again in the late 90s and early 2000s.

It is about as difficult to imagine the world of 7B people without modern economics as it is without integrated circuits or container ships or antibiotics or industrial and agricultural advances of the past 70 years.

Often in medicine, advances have met strong resistance from the respected people and overwhelming expert consensus (a very long list including how to prevent Pellagra, Yellow Fever, stomach ulcers, etc), and yet that is not a sane argument for abandoning medical research funding, condemning the practice of medicine as unscientific, or for choosing folk or "traditional" remedies instead.

And yet, that is what has happened over the past six years. To understand the value of this proposition regarding inflation requires an understanding of the mechanisms and justifications they describe, and then an attempt to assess the most likely outcomes of a course of action. In other words engagement, not people throwing up their hands and stating that it is impossible to choose any actions as better than any other, as though defeatism and fatalism are wise.

The housing bubble caught a lot of really smart people off guard. Housing was overpriced, but it's been overpriced for years. You had to have special, insider information about just what sorts of crazy tricks were being pulled behind the scenes, and you had to understand that it wasn't sustainable and what would happen once people started defaulting. Looks easy in hindsight, but you go out there and try to predict what's going to happen in two years.

http://www.cepr.net/index.php/reports/the-run-up-in-home-pri...

By 2004 he even sponsored a $1000 contest for whoever could make a good case that there wasn't a bubble:

http://www.nytimes.com/2004/01/18/business/personal-business...

Also, this kind of article adds little to this site: it's basically round 4348388282998271193 of "mainstream economics vs Austrians and other heterodox schools of thought" on the internet. It's all been said.

But as is the case in all bull markets, the naysayers are always drowned out by the crowd. Voicing a contrarian opinion is always frowned upon.

Here is multiple lists with sources:

http://investorhome.com/predicted.htm