A culture of irresponsibility took root from Wall Street to Washington to Main Street...- President Obama
The culture of irresponsibility wasn't restricted to greedy guts who were reeling in hundreds of millions in shady financial dealings. It extended to policy-makers, media, and the civil servants who worked in the regulatory agencies and bond-rating companies. It was born in universities. It was the direct result of the way Economics is taught. Economics, at least as I was taught it in Canada in the 80s, is an indoctrination into simplistic free-market ideology backed up by complicated math based on dubious assumptions.
A number of people have been writing lately about Sheila Bair, head of the Federal Deposit Insurance Corporation, who repeatedly blew the whistle on subprime mortgages and other financial shenanigans prior to the financial industry collapse last year, but was shouted down and is still shut out by the powers that be who are planning America's financial industry reform.
A prevailing argument is that Bair was able to see beyond the paradigm of the day because she's female - not part of the old boy's club, wired differently, more caring, whatever. I don't know about that, but I can see one thing that Sheila Bair has that sets her apart from the rest: an undergraduate degree in philosophy with no formal economics training. (She's also a lawyer.)
Economists have taken over too much of the policy area. Social scientists should provide input, but not set policy. We live in a world dominated by pseudo-specialists, when what we need is pragmatic generalists.