Behind the Political Bubble: McCarty

“Behind every financial crisis lurks a “political bubble”–policy biases that foster market behaviors leading to financial instability”

“Just as financial bubbles are an unfortunate mix of mistaken beliefs, market imperfections, and greed, political bubbles are the product of rigid ideologies, unresponsive and ineffective government institutions, and special interests”

That’s the description of the new book, published by Princeton University Press, Political Bubbles: Financial Crises and the Failure of American Democracy, co-authored by Nolan McCarty and Howard Rosenthal (both of Princeton University) and Keith T. Poole of the University of Georgia. They “shed important light on the politics that blinds regulators to the economic weaknesses that create the conditions for economic bubbles and recommend simple, focused rules that should help avoid such crises in the future.”

Simple, focused rules? Bring ’em on!

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