Paul Rosenberg highlights Dean Baker’s 2002 piece about the housing bubble:
This paper shows that there is no obvious explanation for a sudden increase in the relative demand for housing which could explain the price rise. There is also no obvious explanation for the increase in home purchase prices relative to rental prices. In the absence of any other credible theory, the only plausible explanation for the sudden surge in home prices is the existence of a housing bubble. This means that a major factor driving housing sales is the expectation that housing prices will be higher in the future.
Matt Yglesias explains why there is no professional benefit to being prescient in the economic world:
And in the reputational economy of analysts the consequences are even worse. If you go along with the herd and then predict a problem a month before it arises, then you strike everyone as prescient. But if you start warning about something and then it doesn’t happen, and then you keep nagging people, and then you keep complaining about how nobody’s listening to you, you start getting dismissed as a crank. And when you’re proven right, you’re still that crank nobody wants to listen to. You don’t get hailed as a hero. But Ben Bernanke who made very mainstream mistakes and then pivoted adroitly once the bill came due does.
Of course, it’s the same with everything. The people who opposed the Iraq war are are still those cranks that nobody wants to listen to, while George Packer and Fareed Zakaria are hailed as brilliant foreign policy minds. Zakaria and Bernkanke are bright and competent, which is why they’re good examples here: it’s not just that our discourse holds up idiots as experts, it’s also that, within the world of intelligent commentators, those who are wrong are rewarded while those who are right are ignored.
Again, I don’t see how any of this ends well for the United States.