On 11th November 2015, The Henry Jackson Society hosted ‘Phishing for Phools: the Economics of Manipulation and Deception’, featuring Professor Robert J. Shiller, 2013 Economics Nobel Prize Laureate; Sterling Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University; and Professor of Finance and Fellow, International Center for Finance, Yale School of Management.
Shiller opened by arguing that there is an ‘impulse among many people to retreat from big economic problems with simplistic solutions’. He said that his book ‘is about the need for regulation of free markets.’
Using the example of the food and pharmaceutical industries, Shiller said that ‘the food industry has to follow the public demand, not that of medical authorities.’ This, he argued, can be to the detriment of quality and safety if not mitigated by a regulatory framework.
Shiller then criticised contemporary economic thought and methodologies. He said ‘economics has become incredibly mathematical…but the world is changing qualitatively all the time, so statistical evidence for economic predictions is very hard to find.’ For Shiller therefore, many economic predictions become redundant when faced with the complex reality of market economics.
Cautioning against the degradation of civil society in favour of free markets, Shiller said that ‘we end up defining ourselves by the car we drive, the cigarette we smoke.’
In closing, Shiller re-affirmed his belief that regulation serves as an essential mitigation against the potential excesses of free markets. He noted that ‘people are fundamentally afraid about the economic future’, saying that for him, ‘this is a deep worry’.