During a conversation on FOX Business Network’s Mornings with Maria, Yale University Professor of Economics Robert Shiller talks about his new book ‘Phishing for Phools, which addresses the dark side of economics.
“People can be manipulative and deceptive, I guess we teach that to our children, but what we don’t emphasize is how an economy actually incentivizes that, unless there is a civil society watching, it incentivizes that, it’s a fundamental problem with completely unregulated or unwatched free markets.”
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To illustrate his view Shiller discusses Volkswagen’s recent diesel emissions scandal. “A recent example is Volkswagen, they, a venerable corporation, put in a defeat device in their cars, it was fraud and they got away with it for a long time,” he said, “…we get into an atmosphere where everyone is doing it.”
To counteract this trend toward a manipulative and deceptive economic environment, Shiller suggests we need more people to take action against it.
“So that’s why we need, we call them heroes, people who stand up for what’s right in business.”
But Shiller also acknowledges that it is not a completely black and white issue and people in business often need to balance running a successful business with their moral values. “A business person can think, ‘I don’t want to do these other things, I’m a moral person,’ and to some extent there’s some latitude to do that, but you can’t do it too much or you’ll go out of business …I don’t fault people for accepting some compromises, you have to survive in business, you have to judge someone on balance.”
Shiller also discusses the state of the current economy and housing market.
“Well, right now we are in what I call the new normal boom. Well, it’s not my term, but the new normal is the atmosphere of the world now, I think it’s a somewhat anxious, worrisome time.”