In a recent article in The New Yorker, journalist John Cassidy travels to Chicago in search of apostates from the Chicago School of Economics, of which Milton Friedman was a founding father. After conducting a few interviews, Cassidy sums up his findings thus:

Largely as a result of misguided efforts to extend deregulation to the finance industry, we have experienced the biggest economic blowup since the nineteen-thirties.

Today on Uncommon Knowledge, Richard Epstein, professor of law at the University of Chicago, and John Taylor, professor of economics at Stanford, both fellows at the Hoover Institution, address why the Keynesian narrative simply doesn’t work.

John Taylor: [The economic crisis] got started with very low interest rates in 2002, ’03, ’04. Much different than the kind of policies in the 80s and 90s. That stimulated and accelerated this housing boom and other risk taking. . . .
Richard Epstein: The market failure results from the complete disruption of the mortgage market, which has been done through all sorts of government regulations.

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