Yes I went out searching specifically for more Robert Shiller. I find it really easy to get into what he has to say. I came across an opinion piece titled “The Financial Fire Next Time” in which he discusses ideas for preventing another major financial crisis. The key theme in this article is “overhaul/reform.” Since people are accustomed to hearing the simplified version of he economy through the media, they are less likely to push for change. Change can be confusing, especially when it comes to economics. Therefore, Shiller feels that currently we are stuck with existing practices (mainstream economics) and cannot do much more than minor tweaking.
Coming out of the recession, the focus is now on preventing future crashes, but there is little chance of doing that when only minor tweaking to the current models is possible. Otherwise, a major reform will have to be put in place. Not only in the United States but in all major countries (doesn’t seem too likely though). Shiller also notes a lack of creativity and enthusiasm to develop a truly protected economic system.
Shiller ended this article with the following quote which I think sums up his idea perfectly: “Firefighting is more glamorous than fire prevention.” Just as most people are more interested in stories about fires than they are in the chemistry of fire retardants, they are more interested in stories about financial crashes than they are in the measures needed to prevent them. That is not a recipe for a happy ending.” -Joseph Tracy, Federal Reserve Bank of New York
Will we ever achieve the economic overhaul needed to keep ahead of the crashes or will we always be one step behind?