The Bankruptcy of Mainstream Economics

Does the Bankruptcy of Mainstream Economics Beget the Bankruptcy of States?

The Daily Reckoning reports:

This year, 44 of America’s united states will deliver a combined 2012 budget shortfall of approximately $125 billion. They are broke, in other words, and determinedly bureaucratizing themselves ever closer to outright insolvency…the financial equivalent of the dinosaurs’ tar pit.

By way of honoring their commitment to financial evolution – that is, by rendering themselves extinct so that newer, more adaptive and innovative concepts of trade and freedom can take their place – we featured a handful of these states during recent Daily Reckoning musings.

First, in last weekend’s edition, we narrowed the field to ten finalists – California, Connecticut, Illinois, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Ohio and Wisconsin.

Then, on Monday and Tuesday, we awarded special mentions to Connecticut and New Jersey for their commitment to wasteful state government spending. Next, we bestowed first and second runners-up honors on California and Massachusetts, respectively.

Do you see anything interesting about this list? Apart from Louisiana and Mississippi (which are just plain poor), they are home to America's most prestigious mainstream departments of economics:

California (Stanford, UC-Berkeley)

Connecticut (Yale)

Illinois (Univ of Chicago)

Massachusetts (Harvard, MIT)

New Jersey (Princeton)

New York (Columbia)

It's not just these states which are bankrupt: so too is mainstream economics. Is this a mere coincidence, or is causality at work here?