Daron's wisdom

The lessons from the crisis of 2008, as identified by Daron Acemoglu (below are my expressions based on his splendid essay -- I suggest you to read the whole thing directly)

1. Business cycle is not dead.
   
1. Pay more attention to the "tail" events.
   
2. Years of economic calm can be followed by tumultuous times.
3. Schumpeterian creative destruction can happen in the macro.
   
2. Free markets are not equal to unregulated markets.
1. Institutions matter more than thought.
2. Greed is neither good nor bad. But can be made good or bad.
3. The giants don't self monitor well.
   
1. Role of reputations should not be underestimated.
2. Firm reputation should be derived from the behavior of individuals in that firm.
4. Growth economics still very important.
1. Recognize not just K, L, and technology, but also innovation and reallocation.
2. Look at the institutional framework.
3. Pay attention to the political economy of growth.
5. Others
1. Stimulus plans are fine, but consider their full set of implications.
2. Ideological pendulum might swing too far to heavy government and away from market.
   
3. Warning: anti-market policies are real threats to economic growth.
   

HT: Arnold Kling, who also offers his takes on Acemoglu's.