Making the right call is not enough

Fred Foldvary is one of the smartest economists I know.  I have cited his Public Goods and Private Communities many times.  Charles Tiebout advanced our thinking of local public goods and Fred Foldvary took it the next logical step.  There are market signals and markets for the local public goods that have a spatial ambit.  Fred calls them "territorial goods" and we find them in private communities, shopping malls, industrial parks, cruise ships and all sorts of other places.  This upends much of the public goods/market failure story that is still pedaled so widely.  

This piece by Mason Gaffney tells the story of how Fred was right once again while much of the economics profession was not.  And to make matters worse, he did not get the credit he deserves.  The failure of so many economists to call the crash of 2008 is well known, but Fred made the call in his 1997 paper.  He wrote about cheap money and housing. 

Here is the abstract to Gaffney's report:

In 2010 there was a contest to discover and recognize the economists who foresaw and warned of the crash that came in 2008. Fred Foldvary foretold the crash exceptionally early and exceptionally precisely, writing in a refereed journal article in 1997: “the next major bust, 18 years after the 1990 downturn, will be around 2008, if there is no major interruption such as a global war.” Although Foldvary was nominated for the prize by some thirteen separate individuals, his name was excluded by the prize organizers. Instead the prize went to two of the “family” members of the prize organization, and one other person. I compare the predictions by the prize-winning “family” members to the prediction by Foldvary. The ideas represented by Foldvary’s research deserve attention.