I like this post by Simon Wren-Lewis. The first two sentences say, “Internal consistency rather than external consistency is the admissibility criteria for microfounded models. Which means in ordinary English that academic papers presenting macroeconomic models will be rejected if some parts are theoretically inconsistent with other parts, but not if some model property is inconsistent with the data.”
Later he says “In Real Business Cycle models, all changes in unemployment are voluntary. If unemployment is rising, it is because more workers are choosing leisure rather than work.”
So there you have it. The rise in unemployment over the last five years has nothing to do with silly lending by banks. If I’ve got this right, it’s all down to those lazy workers choosing leisure as against going out to work.
Can’t these economists just be given the job of counting the number of angels dancing on pin heads?