Here is the latest Marginal Revolution post on housing-bubble talk.
They missed Mike Davis' contribution in this morning's LA Times ("The Bubble, Then the Blues") -- probably for good reason. Davis rambles all over the place, touching on many of the favorite class warfare chestnuts ("underfunded" schools and health care, globalization, George W. Bush, etc.).
Can those of us who are skeptical of bubble talk take comfort in the Davis column? Take comfort in Paul Ehrlich's doomsday forecasts? Do these examples and many similar ones actually help us?
Very smart people can be very wrong when they subscribe to poor theory (poor paradigms). Cleaning my office (a steady and loosing enterprise), I came across a nine-year old column by Rutgers Prof. Robert Fishman ("Reimagining Los Angeles", LA Times Sep 10, 1996). He wrote:
"As the Los Angeles autopia reaches a state of permanent crisis, the seemingly buried Los Angeles of the era of trolleys, local-centers and a vital downtown has become increasingly 'visible'. Every major 'progessive' project put forward by our most committed avant-garde designers constitutes a revival of the best features of the 1920s city ... The most obvious and important project is the work of the MTA to make Los Angeles in the 21st century once again a world center of light-rail transportation, and also an important commuter rail and even subway city. The imptus toward a balanced transportation system for Southern California seems unstoppable."
Like it or not, all of us have to make good forecasts all the time in order to survive. In doing so, we have to gather and process lots of data.
It may sound harsh, but vital parts of the puzzle are the prognostications of smart people who are off on the wrong (paradigmatic) track.