A Rake's Progress ... Marion Barry bares (almost) all. by Matt Labash

A Rake's Progress ... Marion Barry bares (almost) all. by Matt Labash
09/07/2009, Volume 014, Issue 47


Let me live in a house by the side of the road,
Where the race of men go by;
The men who are good and the men who are bad,
As good and as bad as I.
--from Sam Walter Foss's 'House by the Side of the Road,' the first poem Marion Barry recited in church as a boy

In most conceptions of Washington, D.C., the city operates on Eastern Standard Time. But those who pass through Marion Barry's orbit know there's another zone which has nothing to do with the mean solar time of the 75th meridian west of the Greenwich Observatory. It's called "Barry Time." The former four-term mayor of D.C. will show up for speeches, meetings, and civic events whenever he damn well pleases.

This translates into many minutes, even hours, of waiting for Barry to appear. So after being slated to hang out with Barry for several days, I am surprised to receive a call from his spokesperson, Natalie Williams, two days before we're supposed to meet.

"Mr. Barry wants to start early," Natalie informs. "He wants you to come to church with him tomorrow."

"Great," I say. "What time does church start?"

"Eleven A.M.," she says.

"Okay. And what time should I meet him before church?" I ask.

"Eleven-thirty," she responds with complete seriousness.

Barry, now in his second postmayoral term as a councilman representing the city's poorest ward, is these days something less than a political powerhouse, but my interest had recently been rekindled in the man universally known as one of the two or three finest crack-smoking politicians our nation has ever produced. A 1990 FBI sting yielded grainy video of Barry holding a crack pipe to his lips that was broadcast around the world (launching a booming "Bitch-set-me-up" T-shirt industry), and his name became a late-night comic's rim shot, especially as he won one more mayoral term in 1994 after serving six months in jail.

Now, after a relatively dormant postmayoral period of local politicking, serial brushes with the law, health and taxman problems, with the occasional drug relapse, Barry seemed to be enjoying a renaissance for both good and bad reasons. The good, for him, has come in the form of a balanced, years-in-the-making documentary called The Nine Lives of Marion Barry, now in regular rotation on HBO. It traces Barry's arc from an idealistic, dashiki-wearing civil rights activist, through his rise and fall as mayor, to his current redemptive plateau-period, a life which has made him the singular figure in the history of D.C.'s municipal politics.

The bad came this past 4th of July weekend, when Barry was arrested for "stalking" his former girlfriend, Donna Watts-Brighthaupt, after an argument they'd had on the way to Rehoboth Beach. She changed her mind about the trip and returned to D.C., flagging down an officer when Barry was allegedly pursuing her in his car. The stalking charge looked like an honest lover's tiff, amounted to nothing, and was quickly dropped.

In typical Barry fashion, however, there were baroque touches that gave the story national oxygen. For instance, the Barry team called a late-night press conference to denounce Watts's psychiatric fitness, and she showed up in the middle of it, loudly denouncing their denunciation. Scribes at the Washington City Paper, who still enjoy riding Barry like the village Zipcar, detailed the knotty love triangle between Barry, Donna, and her ex-husband--whom Barry had had banished from the City Council building--and ran transcripts from leaked voicemail tapes of a lovesick Barry trying to woo Donna back. They did the same with a taped fight in which Donna proclaimed that Barry had booted her out of a Denver hotel room "cause I wouldn't suck your dick," a quote that provided likely the most memorable cover-line in City Paper history.

Still, this was just the entertainment portion of the program. The real trouble was Watts-Brighthaupt's employment arrangement with Barry, who had (legally) garnered nearly $1 million in earmarks for various nonprofits in his ward--which journalistic Nosy Neds discovered had all sorts of irregularities, such as outfits overseen by Barry's City Council staffers, contracts thrown to women he'd dated (not just Watts-Brighthaupt), people being paid for do-nothing jobs, alleged forgeries, etc.

Nobody's yet alleged Barry personally profited. For all the perceptions of Barry over the years as a dirty politician, he's been a remarkably clean one on the financial front. Having periodically teetered on the edge of personal insolvency, even as two of his deputy mayors went upriver for embezzlement and corruption in the 1980s, Barry has never been caught with his hand in the cookie jar, and not for lack of investigators trying.

Barry has audaciously proclaimed he's done nothing wrong--if you can't throw work to qualified girlfriends with City Council-approved taxpayer money, just who can you throw work to? Barry insists he wouldn't give a job to his mother if she wasn't qualified. Still, as Barry points out, "Old Man Daley gave his son the insurance contract, and was criticized for it. He said, 'If a father can't help his son, what the hell is he here for?' "

The whole messy business has resulted in the City Council authorizing an ethics investigation of Barry by superlawyer Robert Bennett (something of an expert on ethically challenged politicians, having represented Bill Clinton). It has also reportedly piqued the more serious investigative interest of the feds, who've never lacked for zeal in building cases against Barry, having spent tens of millions doing so going all the way back to the FBI's 1967 file on "Marion S. Barry, Jr., Negro Militant."

When I ask a Barry staffer if her boss is spooked by the new attention, she says, "No. He never gets spooked. We get spooked." By the lights of longtime Barry aficionados, this latest doesn't rank very high on his scandal Richter Scale. A ward boss throwing sketchy patronage jobs to friends? It could make a Barry connoisseur very sleepy. Plus, some Barry-watchers think he might be losing a step. There wasn't even any cocaine involved.

Yet the scandal wasn't my reason for visiting hizzoner. Barry-bashing has been a near ubiquitous sport, and approaching him in order to find holes in his stories is about as sporting as taking candy from a quadriplegic preemie. Rather, I was curious to take his measure as a human being, which many forget he still is, despite the caricatures and self-parodies. For 73 years, over 40 of them in public life, Barry has kept rearing up like a plastic varmint in a Whac-a-Mole game. No matter how many times he's batted about the head with a mallet, he relentlessly reappears.

Like countless Maryland commuters, I drive past the turnoff to Marion Barry's house every time I go to the District without ever giving his Congress Heights neighborhood in Southeast Washington a thought. The Suitland Parkway that runs past it doubles as the most common artery from the city to Andrews Air Force Base--Air Force One frequently casts shadows on your car as you drive it. The denizens of Ward 8 commonly refer to their locale as "east of the river"--by which they mean the Anacostia River, an 8.4 mile long, meandering toxic soup which is about as clear as Swiss Miss and where up to 68 percent of the brown bullhead catfish have been found to have liver tumors. Flowing into the much more celebrated Potomac, it's the kind of river most people tend to forget, just as they do the ward that nestles it.

For decades, Ward 8 has been the crime and poverty and every-other-dubious-statistic headquarters of D.C. It is the land that the real estate bubble forgot. Amidst the check-cashing places and screw-top liquor stores, it contains such tourist meccas as the reeking Blue Plains Wastewater Treatment plant and St. Elizabeth's psychiatric hospital, where Ezra Pound sweated out his insanity plea for treason and John Hinckley Jr. can compose rock operas for Jodie Foster in peace. While only minutes from Capitol Hill, and from the more prosperous black suburbs in Maryland's Prince George's County, Ward 8 might as well be in Burkina Faso to the commuting class. The only reason to pull off there is if you needed to buy a quick fifth of Hennessey for the ride home, or possibly something less legal.

It is here, after cruising past street signs bearing the names "Martin Luther King" and "Malcolm X," that I find Barry's house, a rented red-brick duplex. (He lives alone, as Cora Masters Barry, his fourth wife, left him in 2002, without going through the formality of getting a divorce.) The window shades are yellowed and drawn. There is bird splat on the bricks. A Metro bus-stop pole is posted right in front of it, meaning Barry sometimes has a chance to involuntarily meet constituents, as some end up waiting for their ride on his barren concrete porch.

I knock on the door--the doorbell's missing--even though I'm a good half hour early. I don't want to make Barry late for being late to church. "Come in!" he yells. And as I do, I find him sitting on the couch, wearing track pants and a loose workout shirt, eating a greasy, four-course IHOP take-out breakfast on a TV tray in front of his big-screen. He looks both gaunter and more appealing than during the glory years, when the drugging and boozing often swelled him up like a sweating, smirking sausage. His skin is smooth--he believes in the healing balm of moisturizer--and the lines on his face make him look more avuncular and settled.

The furniture is no-frills--the dining room table is pushed against the wall, and some chairs still have the plastic on them. There is no vanity wall of past glories. Décor is minimalist, besides the Afro-centric statuary and Barack Obama's beatific mug on a commemorative "From Slavery to the White House" blanket draped over his couch. The coffee table is littered with books of the self-improvement variety: the Bible, M. Scott Peck's The Road Less Traveled, Gary Chapman's The Five Love Languages: How to Express Heartfelt Commitment to Your Mate.

Most jarring is the end table littered with prescriptions--13 bottles in all--and syringes. It looks like Elvis's medicine cabinet, circa 1977. At first I think maybe I have the wrong day and have walked into a Vista Hotel-scene redux (the location of his 1990 crack bust). But I'm looking instead at all the meds he takes after a February kidney transplant. The syringes, he explains, are for "taking my sugar," which he has to do as a longtime diabetic. Barry has other health issues, too. He has hypertension. His cancerous prostate is a distant memory, the surgery for which caused some incontinence issues. He keeps a urinal next to his bed for middle-of-the-night emergencies. It's not the most ideal arrangement for a legendary Romeo, but, as he points out, "The alternative is worse."

Barry speaks in a mumbly whisper ("I'll talk louder" he repeatedly promises when I keep checking my tape recorder for pick-up), but seems in fine spirits. He's used to dodging bullets. With varying success, as he reminds me of the time in 1977 when Muslim terrorists took hostages in the District Building when Barry was a councilmember. It was shortly before his first mayoral run, and he caught a bullet in the chest. "Do you have a scar?" I ask. "Let's see," he says, lifting up his shirt, so that within ten minutes of arriving, I'm eyeball to areola with Barry's left nipple. It's a move that's very Barry. Most times, he reveals nothing at all. Then he reveals too much.

After about 30 seconds of examination, we can't decide if what we're looking at is a fading gunshot wound or a skin blemish. But for Barry's semi-nakedness, he's still adept at showing less than everything. The point I shouldn't miss, one of the reasons he wants to bring me to church, is that "I go through this time and time again, when if it weren't for God, I wouldn't be here." He catalogs various dramatic happenings in his life: making it out of Mississippi as the son of sharecroppers, near misses during his SNCC-organizer days in the civil rights movement, the Vista Hotel.

I wasn't even going to bring the latter up until our second date, as it's generally bad manners to mention your host's crack bust straightaway. But since he mentions it, I pursue a bit, asking him how he felt when he realized he'd been stung. "I didn't realize what happened," he says. "It happened so fast. And so my instinct was as I said 'This bitch set me up.' "

"She kinda did," I offer, an objectively indisputable point.

"Not kinda--she did!" he reiterates of Rasheeda Moore, the former model and Barry paramour. While Barry admits to using cocaine "recreationally" beforehand (several witnesses at his trial said he "recreated" habitually), he says he had not smoked crack before (also at odds with the testimony of witnesses), claiming he even needed to go to the bathroom to practice holding the pipe, so as not to look like an amateur in front of Moore. In the video, Barry is seen asking her multiple times how to do it and brushing off her initial invites. But, he adds, "Rasheeda could talk an Eskimo into buying a refrigerator."

One of the more underappreciated, pathos-laden aspects of the video is how the main impetus for Barry's being present "was sex," as he freely admits, and he repeatedly grovels to Rasheeda on the video. I mention that I recall him grabbing her breast. "Tried to," he readily agrees. "The manly instincts took over. .  .  . I guess what was probably in my mind--first time I thought about it--was if I took a hit, maybe she would change her mind about sex."

"So your motives were pure," I note.

His cellphone rings, as it incessantly does, and he answers it. "I'm gettin' ready to go to church, let me call you back." He hangs up, saying, "I'm glad you're interested in all that. Very few people ask me."

Of his own culpability in the matter, Barry's a little less forthright. He says he's thankful to God, as it "could've turned out another way." I point out that the incident and resulting trial turned out pretty badly: serial humiliation, his third wife leaving him, and eventually six months in jail (not, actually, from the Vista incident, but from another misdemeanor possession that was part of the 14-count indictment). "People assume there was crack cocaine in there. The jurors didn't believe it," he says.

Some pro-Barry jurors did speculate that the pipe was filled with baking soda. But he at least assumed there was crack in it, I assert. "How do you know?" he asks, now defensive. Well that's what most people assume is in a crack pipe, I proffer, hence the name "crack pipe."

"I don't know," he says, completely straight-faced. "I didn't think about it. .  .  . Who knows what the FBI put in there? I know this: They tried to kill me. That's for sure."

We are joined for church by a slew of younger women, many roughly half his age, in their Sunday finery. Barry gives off the whiff of a black Hugh Hefner: old enough to seem a fatherly elder that younger women like to mother-hen, lusty enough that you're never sure which of his female relations goes beyond platonic. There's Natalie Williams, his spokesperson, and her friend in from Los Angeles, who is a dead ringer for the actress Robin Givens. There's Chenille Spencer, Barry's sometime companion and personal assistant, and her nine-year-old-son Fats, who is Barry's godson. (Barry has five godsons, as he says it's important for the kids around his ward, often raised by single mothers, to have "positive male role models.")

Barry is often circumspect about who he has seen romantically. Though when I point out to him that he's entitled to see whoever he wants, he agrees: "That's right. I'm free, black, and 21." There is Kim Dickens, though, who Barry admits he "takes out" sometimes and who was kind enough to donate a kidney to Barry after his renal failure. She basically saved his life, but makes no great to-do about it. I ask Kim if she misses her kidney. "I do have separation anxiety," she says. "But I visit him enough. So the kidneys see each other."

There is also a CW network cameraman along for the morning, collecting b-reel for a two-part series on Barry. The star goes upstairs to get suited up, right down to his silver wraparound cufflinks. "A professor told me if you want to be a millionaire, look like a millionaire," explains Barry. We finally gather ourselves to go to church, about 45 minutes after the opening bell. Kim waves off our lateness. "Marion likes to get there to hear the Word," she says. "They'll still be praising the Lord, honey."

Before we go, Barry huddles everyone in the center of his cramped living room and instructs us to grab hands for prayer. I join in, but we decide I should fall out, as the praying white reporter kind of confuses the cameraman's visual. Barry lifts his voice to the heavens, which is still mumbly, so my tape doesn't pick up the particulars. But I am struck by two things while listening to him:

The man prays with the familiarity of someone who regularly talks to God.

Who prays in front of a cameraman and before they go to church?

We arrive in a blue Cadillac with a missing hubcap (a loaner since his 2000 BMW is in the shop). The ushers at the Temple of Praise in southeast show Barry a deference due a visiting dignitary, though it has been his home church for some years. The congregants are in the full throes of Holy Ghost power when we arrive. The percussion from both the band and all the stomping comes up through the floor, rattling the soles of your shoes. Rookies would do well to wear a mouthguard, as they might catch a stray elbow, as I did, from rapturous church ladies performing the Pentecostal shake. At one point during a song, I watch a beefy elder onstage square his shoulders, tuck his head, and dash down the steps like a fullback hitting a hole, then into a breakaway open-field sprint around the sanctuary. Natalie asks if I'm okay. "Sure," I tell her, "this is just like my church."

My vantage point is excellent, since even though we arrived an hour late, the front pew is cleared out for Barry and his entourage. He has a standing reservation whenever he wants it. Bishop Glen Staples, a silky prosperity-gospeler, welcomes "Our dear mayor-for-life. We are thankful that he is here." Staples alludes to Barry's recent troubles, saying, "I love him because he's taught me how to get back up."

Staples finds the old rhetorical rhythms, as congregants whoop on the rests. "You got to learn how to get up. [Whoop.] Because everybody in this life, if you are alive and breathing, that is the one thing you can be sure of, making mistakes. [Whoop.] When you fall down 'cause of mistakes, get back up, dust yo'self off, and start over again. [Whoop.]" Staples instructs us to grab one person and tell them "I know you're going to make it!" The audience obliges, and whoops some more, as Barry is called to the stage over pumping, orgasmic organ.

"Praise the Lord!" Barry says. "Hallelujah!" He is echoed by the audience. "Whenever you see me, I'm going to praise the Lord, because with all that I've been through. [Whoop.] You understand." The thought doesn't need to be finished. They understand.

Barry says the media have tried to demonize him, "But y'all know how much I care. [Whoop.] There are a lot of people who don't like what I do. [Whoop.] Lookin' out for black people. [Whoop.] Lookin' out for black people. [Whoop.] Standin' up for black people. [Whoop.] They don't like it, and so I'm constantly attacked. But because of God's mercy and grace and power. [Whoop. Whoop. Whoop.]"

Again, he doesn't need to finish. The crowd is all about extending however much forgiveness he needs, even if he doesn't feel he needs any, and it was never asked for. "So I want to thank this congregation and the bishop for your prayers," Barry continues. "Thank you Temple of Praise. You love me, and I love you!"

Bishop Staples retakes the pulpit and whips the crowd into a frenzy with a hell-for-leather sing-songy sermon that is half T.D. Jakes, half Otis Redding. Only amateurs wait for the altar call. Most just come up front during the sermon, wailing and whooping and feeling the electric surge of Holy Ghost power hitting in jolts like the Staples-punctuating organ.

Staples laces the sermon with plenty of Barry references. But the main subject is Paul and his thorn-of-the-flesh, which God wouldn't remove. Instead, Staples says, God told Paul, " 'I'm gonna leave it right there, to keep you humble.' .  .  . You better believe that everybody in here got a thorn in yo' flesh. .  .  . But God said the prescription that I'm gonna give you for your malady of being a human being is called grace."

Barry is by now transported himself. He gets up and joins the mosh pit of ululators, swinging his arms like a child readying himself for the standing broad-jump at a school track meet. When asked afterward what part of the sermon spoke to him most, he says, "All of it," then starts throwing some Bible himself. "It says, 'Greater is He that is in us than he that is in the world,' " Barry says, adding his own interpretation: "Greater than devils, and evil-doers, and haters .  .  . Barry critics."

It's a tad ironic that while all but Emperor-for-Life in Ward 8, Barry didn't make his bones as mayor by standing up for "the last, the least, and the lost," as he has spent the post-Vista half of his career rebranding himself in these parts. While his signature summer-jobs program for youth insured that you can swing a cat in a local black neighborhood and hit five adults for whom Barry provided their first gig, his primary accomplishment was riding '80s-era real-estate-boom market forces.

Barry threw the city open to development the likes of which D.C. hadn't seen before. He was so proactive that old staffers tell how, early in his mayoral tenure, he used to have weekly brainstorming brown-bag lunches with architects and developers and would fast-track formerly glacial construction-approval processes with Post-it notes saying "Good idea, do it!" When he assumed office in 1979, whole quadrants of the city were ghost towns, and there were streets untouched since they were torched in the '68 riots.

During Barry's first term, 70 new buildings were either started or completed, and millions of new square feet of downtown office space were added. Even Republicans, after rolling through their mental rolodex of Chris Rock crack-smoking jokes or using Barry as a handy excuse to deny D.C. statehood, sometimes recall the '80s-era Barry with fondness. Even if there were accusations of untoward cronyism, he was a mayor you could do business with. "The one thing Barry fundamentally understood is that nobody--not the city, not the private sector--profits off a weed-strewn lot. In that way, he was a supply-sider," says one.

In other ways, though, he was a raging redistributionist. "Some call it socialistic, some call it democratic," Barry tells me. "I don't go by labels, they don't mean s-- to me." Figuring if the Poles and Italians could feather nests in Chicago and the Irish could dominate Boston, Barry ruthlessly insisted that all of his departments meet minority set-aside contracting quotas, up to 30 percent. At the same time, his knack for creating patronage jobs would've left Huey Long gaping in awe. At one point in the late '80s, the city didn't even know how many employees it had on its own payroll (an independent commission estimated there was one city worker for every 13 residents). By the end of Barry's third term, shortly before the Vista bust, the size of the municipal payroll had swelled to 52,000-- that's 14,000 more taxpayer-funded jobs than Los Angeles, a city five times the size of D.C.

Barry, always intent on buffing the scratches out of his legacy, tells me that he didn't just foster a black middle class in D.C., but also in neighboring Prince George's County. He's more right than he'd like to be. For much of the newly created black wealth fled the city, as they had a much better chance of enjoying their spoils without getting shot in the suburbs.

Barry's early electoral success was also partly attributable to lily-white affluent do-goodniks, enamored by the exotic former black radical taking on the establishment. He was championed by the Washington Post, which endorsed him in three out of his four runs for mayor, though the Post's editors later publicly wished they could rescind the last one. But his consistent racial polarization and claims of martyrdom when running into various ethical and personal lapses eventually cost him that goodwill.

In the late '80s, most of the poor black wards became drug-ravaged killing fields, and it was their voters that saved Barry's hide in subsequent elections. (Barry's talents as a political Machiavelli are grossly underrated--he's only lost one election ever, for an at-large council seat right after his trial. "I had to get that out of my system," he jokes. "Even then, I got 50,000 votes.") Some of these circumstances were far beyond Barry's control. But then, some of them weren't. As Harry Jaffe and Tom Sherwood detailed in their 1994 book Dream City, D.C. became an inefficient, pothole-ridden sinkhole, and even Barry himself admits that he'd lost all energy by the third term (1987-91). "I was getting tireder and tireder," he tells me, "because the job was so damn hard."

Most of the talent that had graced his first administration had left through attrition and indictment. The schools ranked as some of the worst in the nation. The hobbled police force was literally outgunned by homegrown drug-dealers and their imported Jamaican rivals. Barry was distracted, disconnected, and partying like he was getting paid by the gram of whatever he ingested. As Dream City suggested, some of his more suspicious hospital visits for things like "hiatal hernia" were likely cocaine-related.

Things grew so bleak, that the liberal Washington Monthly even ran a piece in 1989 that jeopardized Detroit's civic pride, with a detailed house-of-horrors portrait entitled "The Worst City Government in America--Washington D.C."

But here at the Temple of Praise, people don't break out the scales and stack Barry's good deeds versus his bad ones. His popularity here transcends such minutiae. Supporting him, in spite of his struggles--even because of them--is almost a symbolic sacrament. Plus, he does something few other politicians in the District, even the city's later black mayors, do: He shows up.

Over the course of my time with him, he shows up to senior centers, where he gives 20 bucks to the oldest doll in attendance, which often takes some sorting out, what with senility. He shows up to the planning of the Labor Day picnic that he throws out of his own budget, overseeing details down to the hot dogs and what Go-Go bands are hired. The fact that he regularly gets raked over the coals by newspapers--which Barry tells me Ward 8ers largely don't read--for tax evasion and traffic arrests and addiction issues and many of the pathologies that plague their community in such numbers might help him rather than hurt him.

One morning, Barry hauls me to a "Ward 8 Leadership Council" breakfast at the gleaming, new IHOP--considered a Ward 8 development triumph, which Barry helped champion. I find out that there isn't technically a "Ward 8 Leadership Council." Barry has merely assembled 17 people in a back room--everyone from activists to ministers to community leaders to a Giant store manager (the first grocery chain to do business in the ward in a decade). There's even a white real estate developer named Jeff Epperson, who has a Texan accent, used to work for the National Republican Senatorial Committee, and speaks from experience that "politicians and perfect behavior should never be mentioned in the same sentence."

They tell me of Barry's tireless devotion to the ward, of how "he remembers people that don't have no title, no nothing," of how after 40 years of public life he will "stand at the gate" for Ward 8 "and knows every crook and cranny in city hall, he knows exactly where the money is at, where the dead bodies are," and can therefore put people with resources.

They tell me how the ward is finally moving in the right direction (Epperson's company is investing there), even if Bishop C. Matthew Hudson of Matthews Memorial Baptist says he's preaching two funerals that week--one for a gunned-down 18-year-old, the other for a 76-year-old man beaten by a group of teenagers on Malcolm X Boulevard. (One afternoon, when tracking home with Barry, we get out of the car to see a dozen squad cars at the Congress Heights Metro Station, as a young man in a wife-beater is being cuffed and put into one of them, while the woman he just assaulted, and who dropped her baby in the melee, lies crying on the ground. "In Ward 8," Barry tells me, "if it ain't one thing, it's another. But it's always something.")

The IHOP convocation is a Barry-engineered Potemkin exhibit, to be sure. But the intensity of their possessiveness is no put-up job, and is similar to what I encounter all over the ward. When I interview Barry standing on Alabama Avenue, a random car pulls up and a woman yells out the window, "Are they pickin' on you again?" The IHOP amen corner pisses blood over the way their man has been pilloried for behavior that's conveniently forgotten when it comes to the likes of Bill Clinton or Ted Kennedy.

As James Coates, senior minister of Bethlehem Baptist Church, says, "He understands our path--stony the road we trod. So when someone attacks Mr. Barry, they attack all of us." I push back, and ask the ministers and others what it would take for Barry to lose their support. Would they still support him if he killed somebody? "Yes I would," says Coates without blinking, then breaks into laughter. The ministers then give biblical murder precedents--Moses killed, David killed Bathsheba's husband, etc. "I'm coming to your church next week," says Epperson.

When I visit Barry's constituency office one day in the ward, conveniently located a few floors above the local welfare office, the intensity of this devotion is put quite explicitly to me by a woman who mans Barry's phones and who's been volunteering for him for years. She wears a matching African-print gown and head-wrap, and she is called "Mother Boone." She says she came to D.C. decades ago, when her husband was laid up overseas in a hospital after getting injured in the war--she doesn't remember which war.

"It started with a 'K,' " she says, her spotty memory failing her.

"Korea?" I ask.

"Maybe," she says.

After arriving from St. Louis, she lived in her car with her baby. "The front seat was my living room, the back was my bedroom." Who gave her shoes and milk for her baby? "Mr. Barry!" Boone says. Who found her a place to live? "Mr. Barry!" When she was shot in the stomach after getting carjacked, she got a special room at the hospital with extra flowers and nightgowns and the works. "Guess who was there with me," Mother Boone intones, practically grabbing my lapels. "Gawwwd, and Jesus, and MR. BARRY!"

A few minutes later, I ask Barry if she in fact got shot when she was carjacked. He shrugs, and says, "I don't know." Mother Boone "goes in and out," a staffer explains. In some parts of the city, Barry can't buy credit for things he's legitimately done. In Ward 8, he gets credit even for the things he hasn't.

After church, Barry is famished. If you participate in a Temple of Praise service, your cardio requirement is fulfilled for the day. Barry insists on taking me and the Barry Angels to the pricey Old Ebbitt Grill downtown, since the only sit-down restaurants in Ward 8 are the IHOP and a former topless bar, the Players Lounge, where Barry likes to order the liver and onions and occasionally takes the stage to sing his theme song, T-Bone Walker's "Stormy Monday."

Before we go, however, we have to deposit "what little money I have" in his account so his debit card can cover it. The Caddy rolls up to a Safeway grocery store in neighboring Ward 7, which contains a SunTrust bank counter that sits behind bullet-proof glass. Barry and I go in, and he spies the long line. "Oh my God, I gotta cut that," he says. So he heads to the front of the line and negotiates with a woman, telling her he's with a reporter, and he's in a hurry (after cutting, he'll later work every person in the line, as he's a perpetual campaigner).

While I wait behind him, a woman with a neck tattoo and bandanna-covered head approaches, assuming I'm a Barry staffer. Her name is Vicki Mitchell, and she's on the phone with her son, Lejeevan Toudle, who's currently in lock-up for armed robbery. Telling her son Mayor Barry just walked in, she tells me, "My son said to tell you D.C. jail ain't got no air. You wanna speak to him?"

I grab the phone, and Lejeevan proceeds to tell me how it's 110 degrees in his cell. Not only that, "the canteen is messed up, they don't give us what we ordered." Spying my notebook, his mother adds, "put that on the list." I ask Lejeevan if he wants to speak with the mayor, who's technically a City Councilman. He does. I hand the phone to Barry. "Yeah, what's happenin'?" Barry says, hearing his complaints. "Alright," says Barry. "I can deal with that tomorrow, can't deal with that today." Barry gives me Lejee-van's phone number to write down, but is a digit short. No matter. He never asks me for it anyway.

Back in the car outside the Safeway, a booty-shaking lass walks by, giving Barry the eye. Kim, the kidney donor, offers play-by-play from the backseat: "We call it grinnin' and skinnin'."

"Y'all leave her alone, now," says Barry, adding, "I'm glad I'm in the car."

"We glad you are too," says Kim, "or you'd be out there another 15 minutes."

"God gave me the gift of being gregarious," Barry explains. "I'm a touchy-feely kind of person." I offer that that's gotten him in a spot of trouble in the past. "A little bit," says Kim, caustically. "Everybody has some trouble sometimes," Barry assents. Another Safeway patron extends well wishes through the car window. "I don't care what nobody says. You my man!" he says. "I can't come in here," Barry says to me. "If I were to shop, I wouldn't be out of here till three hours later."

Arriving at Old Ebbitt, we are seated in a side-room in the front of the restaurant ("the slave quarters" one of the girls calls it). Barry orders his favorite, the trout parmesan, and shows a sign of aging, as he occasionally does, when asking the waiter where his spinach and mashed potatoes are--they're under his fish.

I order a post-church bourbon, and Barry joins me by ordering a white zinfandel, having sworn off the cognac--along with the cocaine, he insists--that used to cause him so many problems. If he bothers ordering any, he stops at one glass of wine during the many meals we have together. Still, I'm pretty sure that's not in the program of the AA meetings he's attended for years. Isn't even one glass of wine bad for his sobriety?

"No, it's bad for my kidney," he says, telling me everybody deals with addiction differently. "I do it my way," he says. "Oh no," says his spokeswoman, Natalie, sitting beside him.

I hadn't visited Barry to put him on the rack. But his responses to addiction issues, along with a host of his other troubles, practically dictate that any self-respecting reporter play prosecuting attorney. Barry is gentlemanly, never malicious, but he's also eternally argumentative. Anything you preface with "I read in the City Paper or Washington Post" will immediately elicit an objection. So that if, for instance, you told him you'd read that he loved his mother, he'd have to insist he didn't.

It's understandable, perhaps, that a man who is constantly under attack tends toward the defensive. But Barry frequently loses track of his own narrative, contradicts his former public utterances, and shows a less-than-straightforward hold on the truth. Over the entirety of our time together, we incessantly play cat-and-mouse. At various times, he insists he never really had an alcohol or serious drug problem--that his post-Vista trip to Hazelden was a "tactical move" for the upcoming trial. Then later he'll admit that alcohol is his only real addiction.

When I ask Barry how a 73-year-old man can still find so much trouble, he says, "I don't get into trouble. People get me in trouble." But he does have a knack for getting into more trouble even when he's seemingly in more trouble than he could already be in. For instance, when already in prison, he was transferred to another facility after witnesses reported seeing him receive oral gratification from a female admirer in the visitation room. (He denies it to this day.) And after failing to pay his taxes for roughly seven years, repeatedly getting hauled before judges for his negligence, and having his pay garnished for roughly $3,050 per month (he says it was due to "procrastination"), Barry was put on probation by a judge and subsequently failed a drug test in 2006. Barry insists it was an unfortunate relapse. As with most of his problems, "a woman was involved," he admits.

Yet he swears that despite persistent rumors and even public declarations by his friends calling for him to take his sobriety more seriously, he did not use drugs from the time of his 1990 arrest until the 2006 relapse. When I bring up a 2002 incident, when police found a $5 rock in his car and claimed Barry had white powder on his face (they didn't charge him, saying they were trace amounts), Barry insists it was a frame-up. "It's really not consistent," he says. "If I'm smoking crack, I don't have powder on my face." He decided not to run for City Council afterwards, and his fourth wife left him two weeks later, but he insists none of this was related.

I mention to Barry that his real addiction seems to be women. And in fact, in the early '90s, he confessed to sex addiction. "I never said that," he insists. Yes he did, I inform him. I had just read the clip the night before. He said it on an episode of Sally Jessy Raphael. "No, that's bulls--," he says. "We made a tactical mistake. We were trying to get our story out about what happened at the Vista, and she put me on with a sexually addicted person. We corrected that." I recheck the Washington Post clip later. Headline: "Marion Barry, Airing His Vices; On Sally Jessy Raphael, the Ex-Mayor Tells of Sex Addiction."

So naturally defensive is Barry that at one point, when driving around Ward 8, I ask him what pisses him off most about what he sees. "Some things don't piss me off, some things make me angry."

That's the same thing, I tell him. Natalie laughs, and shakes her head, as though I'm seeing what she's up against.

"Nah, nah, there's a difference," he says.

"You argue about everything!" I tell him.

"I have to!"

Barry feels like he's been in a fight his entire life. Born to Mississippi sharecroppers (his mother used to carry him around in a cotton sack in the fields), she split for Memphis with Barry and his sisters when he was eight, leaving his father behind. Barry never saw him again. "I used to be ashamed of that," says Barry. "So in my bio, I used to say he died. 'Cause I was ashamed that I didn't have a natural father."

Growing up, he says, "I was very insecure. Didn't like my name. It was a lady's name. Didn't like my looks. Didn't like anything about myself." Kids would tease him about his name, and "I'd pop 'em in the mouth, damn right I would. Then I got to the point where I said what the hell. That's what God gave me. That's how I was born. This is how I look. To hell with them. Though I wasn't cussin' back then."

Sure, Barry has taken a beating over the years. "But I'm not supposed to be here," he tells me. When he was in high school, he'd never even heard of college, didn't know what it was. "In fact," he says, "my sixth-grade teacher told me, 'Marion Barry, you not gonna be anything. You're not gonna be anywhere.' I went home and cried to my mother. She said, 'Now don't listen to that stuff. You can do anything you want to do.' Here's a woman with a fourth-grade education talkin' about what I could do."

"I felt depressed for a couple days, then I said I'm not gonna buy that in my own mind." He became an achiever. He consistently made the honor roll. He was an Eagle Scout. He recited poems in church. He went to college, and stopped one year short of getting his doctorate in chemistry, quitting to join the civil rights movement. "In chemistry, there's order," he says wistfully. "In politics, there's disorder. The rules change just about every other day."

I mention to Barry that for all his biblical invocations, the Bible teaches us to be humble, a trait he doesn't often display. "But there's a time to be humble, and a time not to be humble."

"When's the time not to be?" I ask.

"In front of your enemies," he says. "Because if they're trying to break your spirit, even if your spirit is broken, you can't let them know it. .  .  . God gave me a strong spirit. People expect me to come in with my head down and out. Not me. I'm not doing it. I hold my head up. High."

Barry's spirit is sung home to me by longtime Barry-watcher and critic Mark Plotkin, a political analyst for WTOP radio. In 1986, Plotkin unsuccessfully ran for City Council, and in the midst of his campaign, went to see Barry, who shared some advice. "I don't remember anything else he said," says Plotkin. "But the one thing that sticks in my mind 23 years later, which sums him up, is he told me, 'My whole life, people have told me what I can't do. And I'm not going to abide by that.' "

"I think that's what motivates him more than anything," says Plotkin. He remembers talking to Barry right before sentencing in the income tax case. "I said, 'How do you feel about this?' He said, 'Well, you never know how these things turn out.' He was majorly calm. I'd be a sweating wreck. He was literally flirting with the clerk who announced the verdict. Talk about chutzpah."

After lunch at the Old Ebbitt, the check comes. I offer to split it, but Barry waves me off and throws down his debit card. The waitress disappears, then returns apologetically, informing Barry that his card's been rejected. I throw my credit card instead, and Barry's spokesperson Natalie panics, saying she should pay so I won't write about it. I tell her I will anyway, so she might as well let it ride.

A symposium commences at the table on the journalistic pros and cons of what just happened. The only person who doesn't care in the least? Marion Barry. "It just shows I'm human," he says. "Millions of Americans go through this every day. Think they got the bank thing straight, don't have it straight. Come on. .  .  . We make mistakes. We have frailties." It turns out Barry has a big wad of bills in his pocket, which we notice when he tips the valet outside. "You could've paid for lunch," observes Natalie. "I had it," says Barry. "But whenever THE WEEKLY STANDARD offers to pay, I'm takin' it."

"Welcome to the family," Natalie says with a grimace.

A few days later, Barry wants to return the favor, taking me and Natalie to lunch at Acadiana, a New Orleans-style eatery where he'll have the fried catfish and watermelon salad. First, though, he has to go to a downtown SunTrust and see what's what with his card and his retirement check, which seems to be missing from direct deposit.

"Who do I see about a problem with my card?" he says, once in the bank. As Barry cools his heels, customers, both white and black, come up to make small talk and take cell-phone pictures. The branch manager, Yolette Olufemi, sits down with Barry and checks the damage. She looks a little sheepish about what she's discovered and gingerly informs him that Thrifty Car Rental has billed his card for $1,353.10, which has caused him to be overdrawn and to be assessed an additional penalty.

Barry mutters that the police impounded his car during the stalking-charge episode, and, though they didn't press charges, "The police had my car. For a week. Illegally." He must've forgotten to pay for the rental car he needed in the meantime. He tells her apologetically that he should have his paycheck soon, and can cover the shortfall. She sees me taking notes, and seems somewhat embarrassed for him, telling Barry she waited on him six years ago, and thanked him then, because he was responsible for her first summer job when she was a high school student. "Those lifetime experiences helped to put me where I am today. So I always say, 'Kudos Mr. Barry,' " she adds with somewhat strained cheer, offering to reduce his overdrawn penalty.

Marion Barry was, is, and will always be a ladies' man. We talk about women plenty. When I chat up one of his supporters, commenting on the fake gemstones glued to her eyelashes, Barry leans over my shoulder and says, "Don't hit on those women. That's my job."

One of the women he won't talk about much is Donna Watts-Brighthaupt, the central character in his current troubles. But when I ask him what the biggest regret of his life is, he has only one woman on his mind: "Effi."

He's referring to the late Effi Barry, his third wife and mother of his son, Christopher. Effi was an elegant former model with an aristocratic bearing, best known for sitting by Barry every day during the six-week Vista trial, hooking a rug in supportive silence, while a parade of witnesses detailed sex'n'drug specifics that would've caused any normal wife to have a stroke.

She stuck with Barry for a while longer, then left him before he went to prison. They remained close, however. And he says that in the years before she died of myeloid leukemia in 2007, they even talked about getting remarried. The depth of his affection for her was evidenced from what he said at her funeral at National Cathedral: "I was not late, this time, Effi. I was on time."

One afternoon, in Barry's City Council office, after a vigorous interrogation, he says, "Wanna go to lunch? I ain't got no money. Card's still messed up." Before we do, however, he walks over to a framed photo of him with a laughing Effi at a chamber of commerce dinner. "Come look at this over here. Look how fine she looks. Yeah, my God." I ask if he misses her. "Absolutely," he says. "I do. I miss her. For about the last ten years or so, I didn't dream. After my transplant, I started dreaming again. I dream in color. The toxins are out of my body. .  .  . Two or three nights ago, I dreamed about her."

I ask what he dreamed. "I don't want to get into that," Barry says, as he often does about subjects he brings up.

Later that day, she comes up again. Barry has insisted we visit Linda Greene, his "fine" former chief of staff and decades-long friend, at her beautiful restored Victorian at the foot of a national parkland hill in Anacostia, atop which sits Frederick Douglass's old house.

Inside Linda's living room, the television is on, showing the "beer summit" between Obama, Skip Gates, and the Cambridge cop who arrested him. Barry and I both agree the spectacle of Obama and Co. pretending they're just regular guys having a brew is preposterous. When I suggest it might be useful for him to have a beer summit with the police, he grunts: "They'd probably poison my beer."

Barry sinks back on his shoulders into Linda's luxurious couch, while eating pineapple and cheese slices from an hors d'oeuvres tray. She takes a seat on the arm of the couch beside him. They flirt, they reminisce, she fusses over his tie, telling him she doesn't like it much. They seem like an affectionate, old married couple. I ask if they've ever been romantic. They both insist not, though Linda says her ex-husband still asks her if they ever got it on.

Linda was one of Effi's best friends and was with her at the end, so she and Barry start trading off, giving me the blow-by-blow of Effi's last days. Barry had seen Effi shortly before, in what ended up being her deathbed in Annapolis. "Even then," he recalls, "She said, 'Marion, I'm getting tired. I'm getting tired.' I said 'You're not getting tired. It's gonna be alright. You're gonna make it through this. We've gone through worse than this.' "

Shortly thereafter, he left for Memphis to see his ailing mother. Linda called him while he was there and told him this was it. He knew he couldn't get back in time. "About ten minutes later," Barry says, "Linda called back again and said she's gone." His face pinches when he says this, his lip starts quivering. He shuts his eyes tight, and tears stream from them, which he quickly covers with his hand, so nobody can see.

He eventually lightens the mood, looking at Linda, "Linda complains about me sometimes. But Effi willed me to you. So I'm stuck."

Both Barry and Linda talk freely about how much he cared for Effi, which prompts me to ask how he could put her through what he did: the infidelity, the public humiliation. Linda covers for him: "He's not doing it out of disrespect, or less love for the person he's committed to at that time."

Barry takes this in, meditatively chewing on a pineapple slice. "I haven't thought about it much," he confesses. "First of all, I love people. Attractive women. They're all attractive to me if they're female." We laugh.

"No, really," he insists:

But I guess part of what happens in life is you are what you see. Growing up without a natural father, I didn't see these one-on-one relationships. I'm just thinking about it for the first time, quite frankly. I mean I've thought about it, but not in this depth. .  .  . I think there ought to be fidelity between a man and a woman. .  .  . But you are what you see. And when I was growing up, I didn't see men who were one-woman men. So I guess it sort of got caught in my personality. I'm not rationalizing it. It is what it is.

We're ready to leave Linda's. We go out to the car, and on the floor of the backseat is a Häagen-Dazs cup filled with melted butter-pecan ice-cream. Natalie had bought Barry a cone when she was driving us around D.C., as Barry showed me his mayoral-era development triumphs. But the cone started dripping all over his suit. I suggested throwing it out the window, but this is Barry's city. He adamantly refused. He might run afoul of the law every now and then, but he's not some kind of litterbug. So instead, he quickly ate it while letting the rest drip into the cup.

When he slides into the car at Linda's, he reaches down, drinks the melted ice cream, then hands the empty cup to Linda. "Oh thanks," she says. "Now I'm the trash-woman."

Several days later, I follow Barry to New York for the premiere of The Nine Lives of Marion Barry. He is in his glory, disembarking from a stretch limo with his Angels for a screening high atop the HBO building, which overlooks the yoganauts and ping-pong players of Bryant Park. He sings a few bars of the old gospel hymn "Victory is Mine" when he takes the microphone after the screening (I told Satan to get thee behind / Victory today is mine). He accepts well wishes from statuesque blondes, who are aroused at the sight of a young, militant Barry in a leopard-print dashiki. "You're a beautiful man, I just want to put that out there," says one.

At a reception buffet line, I run into Jim Vance, a tall, well-dressed, barrel-chested African-American news anchor from D.C.--half of the longest running anchor-team in Washington--who has known and covered Barry since the late '60s. Vance, too, was addicted to cocaine for seven years back in the '80s.

Around Barry, Vance is all hugs and smiles. But I ask him to give me his straight-up assessment of Barry. He raises his eyes to the ceiling, thinks a bit, then says, "There were so many of us who had so much hope for Marion. I don't know too many people that were more blessed or that had more skills than Marion had, nor too many people who were a bigger disappointment, quite frankly."

Vance's own addiction "snuck up on me":

It was a pattern of behavior that was nobody's fault but my own. I think the same applied to Marion. A pattern of behavior began that Marion couldn't blame anybody, or anything, except Marion for. There comes a point for most of us who are addicts, that today, I'm either gonna live, or gonna die. And you begin the process of living, or continue the process of dying. I don't know that Marion's got to that point yet.

After the screening, Barry and the Angels and I load into the limo and head uptown for chicken 'n' waffles, fried catfish, and shrimp étouffée. It's supposed to be the last of our time together, but he insists on breakfast the next morning, to clear a few things up. Just as he'll do when he calls me a few days later, unbidden, at home.

The specifics of what he says turn out not to be that important. But it feels as though he is addressing some advice I'd given him when catching him at the screening. Earlier that afternoon, from my hotel, I'd watched him tussle with an MSNBC anchor while promoting the film, Barry insisting yet again that he'd done nothing wrong at the Vista. I suggested to him that if he didn't insult people's intelligence regarding the things they already know about him, he might get a fairer hearing regarding the things they don't know.

So, for instance, at breakfast the following morning, Barry offers, "When I told you about recreational use, I don't want you to think I'm trying to minimize it. It was a serious problem, yeah. But the good news is, look at me now!" Of course, such rare moments of honest disclosure come between hours and hours of amnesia, revisionism, suspect self-justification, air-brushing, and legacy-buffing.

But that's okay. It felt, over the time I was with him, that there were several moments where Marion Barry was trying to tell me something. Maybe even the truth. If he can't quite always get there, it's still a commendable effort. After all, he hasn't had much practice.

Matt Labash is a senior writer at THE WEEKLY STANDARD.
PREVIEW: A Rake's Progress (26 December 2009)
http://www.weeklystandard.com/Utilities/printer_preview.asp?idArticle=16888&R=1645A1D733
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Welcoming the New, Improving the Old By SARA BECKMAN

September 6, 2009
Prototype
Welcoming the New, Improving the Old By SARA BECKMAN

FOR decades, companies from Cisco Systems to Staples to Bank of America have worked to embed the basic techniques of Six Sigma, the business approach that relies on measurement and analysis to make operations as efficient as possible.

More recently, in the last 5 to 10 years, they have been told they must master a new set of skills known as “design thinking.” Aiming to help companies innovate, design thinking starts with an intense focus on understanding real problems customers face in their day-to-day lives — often using techniques derived from ethnographers — and then entertains a range of possible solutions.

To many, the two skill sets don’t fit together well, and Chuck Jones, vice president for global consumer design at Whirlpool, explains why that may be so. Design thinkers, he says, are like quantum physicists, able to consider a world in which anything — like traveling at the speed of light — is theoretically possible. But a majority of people, including the Six Sigma advocates in most corporations, think more like Newtonian physicists — focused on measurement along three well-defined dimensions.

Six Sigma, a kit of analytical tools first developed in the 1980s at Motorola, has been embraced by many businesses — big and small. Joy Ulickey, a quality consultant in San Francisco, applied them in 2008 to help a midsize Sonoma winery figure out why it was having so many failed fermentations.

Through a detailed analysis of possible factors affecting fermentation, like yeast type, temperature and the rate of cycling wine through the tanks, Ms. Ulickey identified the primary problem as temperature control. Then she suggested several “countermeasures,” including hiring workers to monitor temperature or investing in newer fermentation tanks. Her work allowed the winery to save hundreds of thousands of dollars a year and improve its wine.

On a much larger scale, it is unimaginable that Intel could produce a single one of its highly complex semiconductor chips or that Procter & Gamble could deliver laundry detergent of consistent quality globally without these types of analytical techniques.

Design thinking can be equally effective, but in different ways. While in business school, Jeff Denby and Jason Kibbey concocted an online underwear company called Pact, applying design thinking to understand prospective customers and to rethink how underwear is developed and sold. They visited underwear stores and asked friends and family to send pictures of the underwear in their dresser drawers, or, for those brave enough, shots of themselves posing in their favorite boxers or panties.

They tested different approaches to marketing, including subscription programs, and different ways of developing stylish products. For example, they considered letting up-and-coming designers compete to create designs showcasing particular causes.

Today, their company, based in Berkeley, Calif., sells organic cotton underwear created by the designer Yves Béhar. The designs use graphics that highlight the work of groups like 826 National, which helps young writers, and a portion of revenue is contributed to those causes.

To survive, many businesses will have to figure out how to incorporate both approaches. Design thinking offers tools for exploring new markets and opportunities; Six Sigma skills can be applied to improve existing products. Companies that adhere strictly to one or the other risk failure. “The practices that make for success at one time can trap firms and contribute to their downfall at a later time,” says Bob Cole, a quality expert and professor emeritus at the Haas School of Business at the University of California, Berkeley.

Professor Cole uses the history of the Japanese DRAM industry to illustrate his point:

In the early 1990s, Japanese DRAM producers doggedly pursued quality improvement, investing in engineering and equipment to develop products of higher and higher quality. The market, however, was shifting from mainframes to personal computers, a shift that South Korean producers observed.

Samsung, for example, released a 128-megabyte DRAM in 2000 that was a perfect fit for vendors of low-priced PCs, and it leveraged that design into other products. By gathering valuable knowledge on emerging user needs, Samsung was able to rapidly respond to a changing market, while Japanese producers slowly left the DRAM field.

According to Michael Barry, a consulting assistant professor at the Hasso Plattner Institute of Design at Stanford and a partner at the design firm Point Forward, the Six Sigma process starts with an assumption about what is good — like higher-quality DRAM chips. Design thinking, meanwhile, inquires as to what is good — as lower-cost, higher-speed DRAM chips were for PCs and other products.

THE different world views, however, can be brought together.

At Whirlpool, Mr. Jones first proved the value of design with the introduction of the Duet washer and dryer. Duet’s novel, easy-to-use, energy-efficient design made Whirlpool a player in the front-loader market. After that success, he invited Whirlpool’s Six Sigma experts to help him improve design processes. They developed various new metrics — for how customers evaluate product quality, for example — that allowed designers and Six Sigma types to understand each other better.

Progressive Insurance has also turned design and Six Sigma techniques into reasonably comfortable bedfellows. In the early 1990s, it started emphasizing showing up at an accident scene and handling situations in real time, according to a 2004 article by Michael Hammer in The Harvard Business Review. That move reflected a designer’s way of thinking about customer needs, but the company was able to execute the idea through its ability to measure, analyze and improve its processes.

Both worlds — the quantum one where designers push boundaries to surprise and delight, and the Newtonian one where workers meet deadlines and margins — are meaningful. The most successful companies will learn to build bridges between them and leverage them both.

Sara Beckman is faculty director of the Management of Technology Program at the Haas School of Business at the University of California, Berkeley.

How Did Economists Get It So Wrong? By PAUL KRUGMAN

September 6, 2009
How Did Economists Get It So Wrong? By PAUL KRUGMAN

I. MISTAKING BEAUTY FOR TRUTH

It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they believed — were both theoretical and practical, leading to a golden era for the profession. On the theoretical side, they thought that they had resolved their internal disputes. Thus, in a 2008 paper titled “The State of Macro” (that is, macroeconomics, the study of big-picture issues like recessions), Olivier Blanchard of M.I.T., now the chief economist at the International Monetary Fund, declared that “the state of macro is good.” The battles of yesteryear, he said, were over, and there had been a “broad convergence of vision.” And in the real world, economists believed they had things under control: the “central problem of depression-prevention has been solved,” declared Robert Lucas of the University of Chicago in his 2003 presidential address to the American Economic Association. In 2004, Ben Bernanke, a former Princeton professor who is now the chairman of the Federal Reserve Board, celebrated the Great Moderation in economic performance over the previous two decades, which he attributed in part to improved economic policy making.

Last year, everything came apart.

Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.

And in the wake of the crisis, the fault lines in the economics profession have yawned wider than ever. Lucas says the Obama administration’s stimulus plans are “schlock economics,” and his Chicago colleague John Cochrane says they’re based on discredited “fairy tales.” In response, Brad DeLong of the University of California, Berkeley, writes of the “intellectual collapse” of the Chicago School, and I myself have written that comments from Chicago economists are the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten.

What happened to the economics profession? And where does it go from here?

As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess.

Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.

It’s much harder to say where the economics profession goes from here. But what’s almost certain is that economists will have to learn to live with messiness. That is, they will have to acknowledge the importance of irrational and often unpredictable behavior, face up to the often idiosyncratic imperfections of markets and accept that an elegant economic “theory of everything” is a long way off. In practical terms, this will translate into more cautious policy advice — and a reduced willingness to dismantle economic safeguards in the faith that markets will solve all problems.

II. FROM SMITH TO KEYNES AND BACK

The birth of economics as a discipline is usually credited to Adam Smith, who published “The Wealth of Nations” in 1776. Over the next 160 years an extensive body of economic theory was developed, whose central message was: Trust the market. Yes, economists admitted that there were cases in which markets might fail, of which the most important was the case of “externalities” — costs that people impose on others without paying the price, like traffic congestion or pollution. But the basic presumption of “neoclassical” economics (named after the late-19th-century theorists who elaborated on the concepts of their “classical” predecessors) was that we should have faith in the market system.

This faith was, however, shattered by the Great Depression. Actually, even in the face of total collapse some economists insisted that whatever happens in a market economy must be right: “Depressions are not simply evils,” declared Joseph Schumpeter in 1934 — 1934! They are, he added, “forms of something which has to be done.” But many, and eventually most, economists turned to the insights of John Maynard Keynes for both an explanation of what had happened and a solution to future depressions.

Keynes did not, despite what you may have heard, want the government to run the economy. He described his analysis in his 1936 masterwork, “The General Theory of Employment, Interest and Money,” as “moderately conservative in its implications.” He wanted to fix capitalism, not replace it. But he did challenge the notion that free-market economies can function without a minder, expressing particular contempt for financial markets, which he viewed as being dominated by short-term speculation with little regard for fundamentals. And he called for active government intervention — printing more money and, if necessary, spending heavily on public works — to fight unemployment during slumps.

It’s important to understand that Keynes did much more than make bold assertions. “The General Theory” is a work of profound, deep analysis — analysis that persuaded the best young economists of the day. Yet the story of economics over the past half century is, to a large degree, the story of a retreat from Keynesianism and a return to neoclassicism. The neoclassical revival was initially led by Milton Friedman of the University of Chicago, who asserted as early as 1953 that neoclassical economics works well enough as a description of the way the economy actually functions to be “both extremely fruitful and deserving of much confidence.” But what about depressions?

Friedman’s counterattack against Keynes began with the doctrine known as monetarism. Monetarists didn’t disagree in principle with the idea that a market economy needs deliberate stabilization. “We are all Keynesians now,” Friedman once said, although he later claimed he was quoted out of context. Monetarists asserted, however, that a very limited, circumscribed form of government intervention — namely, instructing central banks to keep the nation’s money supply, the sum of cash in circulation and bank deposits, growing on a steady path — is all that’s required to prevent depressions. Famously, Friedman and his collaborator, Anna Schwartz, argued that if the Federal Reserve had done its job properly, the Great Depression would not have happened. Later, Friedman made a compelling case against any deliberate effort by government to push unemployment below its “natural” level (currently thought to be about 4.8 percent in the United States): excessively expansionary policies, he predicted, would lead to a combination of inflation and high unemployment — a prediction that was borne out by the stagflation of the 1970s, which greatly advanced the credibility of the anti-Keynesian movement.

Eventually, however, the anti-Keynesian counterrevolution went far beyond Friedman’s position, which came to seem relatively moderate compared with what his successors were saying. Among financial economists, Keynes’s disparaging vision of financial markets as a “casino” was replaced by “efficient market” theory, which asserted that financial markets always get asset prices right given the available information. Meanwhile, many macroeconomists completely rejected Keynes’s framework for understanding economic slumps. Some returned to the view of Schumpeter and other apologists for the Great Depression, viewing recessions as a good thing, part of the economy’s adjustment to change. And even those not willing to go that far argued that any attempt to fight an economic slump would do more harm than good.

Not all macroeconomists were willing to go down this road: many became self-described New Keynesians, who continued to believe in an active role for the government. Yet even they mostly accepted the notion that investors and consumers are rational and that markets generally get it right.

Of course, there were exceptions to these trends: a few economists challenged the assumption of rational behavior, questioned the belief that financial markets can be trusted and pointed to the long history of financial crises that had devastating economic consequences. But they were swimming against the tide, unable to make much headway against a pervasive and, in retrospect, foolish complacency.

III. PANGLOSSIAN FINANCE

In the 1930s, financial markets, for obvious reasons, didn’t get much respect. Keynes compared them to “those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those that he thinks likeliest to catch the fancy of the other competitors.”

And Keynes considered it a very bad idea to let such markets, in which speculators spent their time chasing one another’s tails, dictate important business decisions: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

By 1970 or so, however, the study of financial markets seemed to have been taken over by Voltaire’s Dr. Pangloss, who insisted that we live in the best of all possible worlds. Discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse. The field was dominated by the “efficient-market hypothesis,” promulgated by Eugene Fama of the University of Chicago, which claims that financial markets price assets precisely at their intrinsic worth given all publicly available information. (The price of a company’s stock, for example, always accurately reflects the company’s value given the information available on the company’s earnings, its business prospects and so on.) And by the 1980s, finance economists, notably Michael Jensen of the Harvard Business School, were arguing that because financial markets always get prices right, the best thing corporate chieftains can do, not just for themselves but for the sake of the economy, is to maximize their stock prices. In other words, finance economists believed that we should put the capital development of the nation in the hands of what Keynes had called a “casino.”

It’s hard to argue that this transformation in the profession was driven by events. True, the memory of 1929 was gradually receding, but there continued to be bull markets, with widespread tales of speculative excess, followed by bear markets. In 1973-4, for example, stocks lost 48 percent of their value. And the 1987 stock crash, in which the Dow plunged nearly 23 percent in a day for no clear reason, should have raised at least a few doubts about market rationality.

These events, however, which Keynes would have considered evidence of the unreliability of markets, did little to blunt the force of a beautiful idea. The theoretical model that finance economists developed by assuming that every investor rationally balances risk against reward — the so-called Capital Asset Pricing Model, or CAPM (pronounced cap-em) — is wonderfully elegant. And if you accept its premises it’s also extremely useful. CAPM not only tells you how to choose your portfolio — even more important from the financial industry’s point of view, it tells you how to put a price on financial derivatives, claims on claims. The elegance and apparent usefulness of the new theory led to a string of Nobel prizes for its creators, and many of the theory’s adepts also received more mundane rewards: Armed with their new models and formidable math skills — the more arcane uses of CAPM require physicist-level computations — mild-mannered business-school professors could and did become Wall Street rocket scientists, earning Wall Street paychecks.

To be fair, finance theorists didn’t accept the efficient-market hypothesis merely because it was elegant, convenient and lucrative. They also produced a great deal of statistical evidence, which at first seemed strongly supportive. But this evidence was of an oddly limited form. Finance economists rarely asked the seemingly obvious (though not easily answered) question of whether asset prices made sense given real-world fundamentals like earnings. Instead, they asked only whether asset prices made sense given other asset prices. Larry Summers, now the top economic adviser in the Obama administration, once mocked finance professors with a parable about “ketchup economists” who “have shown that two-quart bottles of ketchup invariably sell for exactly twice as much as one-quart bottles of ketchup,” and conclude from this that the ketchup market is perfectly efficient.

But neither this mockery nor more polite critiques from economists like Robert Shiller of Yale had much effect. Finance theorists continued to believe that their models were essentially right, and so did many people making real-world decisions. Not least among these was Alan Greenspan, who was then the Fed chairman and a long-time supporter of financial deregulation whose rejection of calls to rein in subprime lending or address the ever-inflating housing bubble rested in large part on the belief that modern financial economics had everything under control. There was a telling moment in 2005, at a conference held to honor Greenspan’s tenure at the Fed. One brave attendee, Raghuram Rajan (of the University of Chicago, surprisingly), presented a paper warning that the financial system was taking on potentially dangerous levels of risk. He was mocked by almost all present — including, by the way, Larry Summers, who dismissed his warnings as “misguided.”

By October of last year, however, Greenspan was admitting that he was in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.” Since this collapse of the intellectual edifice was also a collapse of real-world markets, the result was a severe recession — the worst, by many measures, since the Great Depression. What should policy makers do? Unfortunately, macroeconomics, which should have been providing clear guidance about how to address the slumping economy, was in its own state of disarray.

IV. THE TROUBLE WITH MACRO

“We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.” So wrote John Maynard Keynes in an essay titled “The Great Slump of 1930,” in which he tried to explain the catastrophe then overtaking the world. And the world’s possibilities of wealth did indeed run to waste for a long time; it took World War II to bring the Great Depression to a definitive end.

Why was Keynes’s diagnosis of the Great Depression as a “colossal muddle” so compelling at first? And why did economics, circa 1975, divide into opposing camps over the value of Keynes’s views?

I like to explain the essence of Keynesian economics with a true story that also serves as a parable, a small-scale version of the messes that can afflict entire economies. Consider the travails of the Capitol Hill Baby-Sitting Co-op.

This co-op, whose problems were recounted in a 1977 article in The Journal of Money, Credit and Banking, was an association of about 150 young couples who agreed to help one another by baby-sitting for one another’s children when parents wanted a night out. To ensure that every couple did its fair share of baby-sitting, the co-op introduced a form of scrip: coupons made out of heavy pieces of paper, each entitling the bearer to one half-hour of sitting time. Initially, members received 20 coupons on joining and were required to return the same amount on departing the group.

Unfortunately, it turned out that the co-op’s members, on average, wanted to hold a reserve of more than 20 coupons, perhaps, in case they should want to go out several times in a row. As a result, relatively few people wanted to spend their scrip and go out, while many wanted to baby-sit so they could add to their hoard. But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer. . . .

In short, the co-op fell into a recession.

O.K., what do you think of this story? Don’t dismiss it as silly and trivial: economists have used small-scale examples to shed light on big questions ever since Adam Smith saw the roots of economic progress in a pin factory, and they’re right to do so. The question is whether this particular example, in which a recession is a problem of inadequate demand — there isn’t enough demand for baby-sitting to provide jobs for everyone who wants one — gets at the essence of what happens in a recession.

Forty years ago most economists would have agreed with this interpretation. But since then macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense.

Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work, a premise violated by the story of the baby-sitting co-op. As they see it, a general lack of sufficient demand isn’t possible, because prices always move to match supply with demand. If people want more baby-sitting coupons, the value of those coupons will rise, so that they’re worth, say, 40 minutes of baby-sitting rather than half an hour — or, equivalently, the cost of an hours’ baby-sitting would fall from 2 coupons to 1.5. And that would solve the problem: the purchasing power of the coupons in circulation would have risen, so that people would feel no need to hoard more, and there would be no recession.

But don’t recessions look like periods in which there just isn’t enough demand to employ everyone willing to work? Appearances can be deceiving, say the freshwater theorists. Sound economics, in their view, says that overall failures of demand can’t happen — and that means that they don’t. Keynesian economics has been “proved false,” Cochrane, of the University of Chicago, says.

Yet recessions do happen. Why? In the 1970s the leading freshwater macroeconomist, the Nobel laureate Robert Lucas, argued that recessions were caused by temporary confusion: workers and companies had trouble distinguishing overall changes in the level of prices because of inflation or deflation from changes in their own particular business situation. And Lucas warned that any attempt to fight the business cycle would be counterproductive: activist policies, he argued, would just add to the confusion.

By the 1980s, however, even this severely limited acceptance of the idea that recessions are bad things had been rejected by many freshwater economists. Instead, the new leaders of the movement, especially Edward Prescott, who was then at the University of Minnesota (you can see where the freshwater moniker comes from), argued that price fluctuations and changes in demand actually had nothing to do with the business cycle. Rather, the business cycle reflects fluctuations in the rate of technological progress, which are amplified by the rational response of workers, who voluntarily work more when the environment is favorable and less when it’s unfavorable. Unemployment is a deliberate decision by workers to take time off.

Put baldly like that, this theory sounds foolish — was the Great Depression really the Great Vacation? And to be honest, I think it really is silly. But the basic premise of Prescott’s “real business cycle” theory was embedded in ingeniously constructed mathematical models, which were mapped onto real data using sophisticated statistical techniques, and the theory came to dominate the teaching of macroeconomics in many university departments. In 2004, reflecting the theory’s influence, Prescott shared a Nobel with Finn Kydland of Carnegie Mellon University.

Meanwhile, saltwater economists balked. Where the freshwater economists were purists, saltwater economists were pragmatists. While economists like N. Gregory Mankiw at Harvard, Olivier Blanchard at M.I.T. and David Romer at the University of California, Berkeley, acknowledged that it was hard to reconcile a Keynesian demand-side view of recessions with neoclassical theory, they found the evidence that recessions are, in fact, demand-driven too compelling to reject. So they were willing to deviate from the assumption of perfect markets or perfect rationality, or both, adding enough imperfections to accommodate a more or less Keynesian view of recessions. And in the saltwater view, active policy to fight recessions remained desirable.

But the self-described New Keynesian economists weren’t immune to the charms of rational individuals and perfect markets. They tried to keep their deviations from neoclassical orthodoxy as limited as possible. This meant that there was no room in the prevailing models for such things as bubbles and banking-system collapse. The fact that such things continued to happen in the real world — there was a terrible financial and macroeconomic crisis in much of Asia in 1997-8 and a depression-level slump in Argentina in 2002 — wasn’t reflected in the mainstream of New Keynesian thinking.

Even so, you might have thought that the differing worldviews of freshwater and saltwater economists would have put them constantly at loggerheads over economic policy. Somewhat surprisingly, however, between around 1985 and 2007 the disputes between freshwater and saltwater economists were mainly about theory, not action. The reason, I believe, is that New Keynesians, unlike the original Keynesians, didn’t think fiscal policy — changes in government spending or taxes — was needed to fight recessions. They believed that monetary policy, administered by the technocrats at the Fed, could provide whatever remedies the economy needed. At a 90th birthday celebration for Milton Friedman, Ben Bernanke, formerly a more or less New Keynesian professor at Princeton, and by then a member of the Fed’s governing board, declared of the Great Depression: “You’re right. We did it. We’re very sorry. But thanks to you, it won’t happen again.” The clear message was that all you need to avoid depressions is a smarter Fed.

And as long as macroeconomic policy was left in the hands of the maestro Greenspan, without Keynesian-type stimulus programs, freshwater economists found little to complain about. (They didn’t believe that monetary policy did any good, but they didn’t believe it did any harm, either.)

It would take a crisis to reveal both how little common ground there was and how Panglossian even New Keynesian economics had become.

V. NOBODY COULD HAVE PREDICTED . . .

In recent, rueful economics discussions, an all-purpose punch line has become “nobody could have predicted. . . .” It’s what you say with regard to disasters that could have been predicted, should have been predicted and actually were predicted by a few economists who were scoffed at for their pains.

Take, for example, the precipitous rise and fall of housing prices. Some economists, notably Robert Shiller, did identify the bubble and warn of painful consequences if it were to burst. Yet key policy makers failed to see the obvious. In 2004, Alan Greenspan dismissed talk of a housing bubble: “a national severe price distortion,” he declared, was “most unlikely.” Home-price increases, Ben Bernanke said in 2005, “largely reflect strong economic fundamentals.”

How did they miss the bubble? To be fair, interest rates were unusually low, possibly explaining part of the price rise. It may be that Greenspan and Bernanke also wanted to celebrate the Fed’s success in pulling the economy out of the 2001 recession; conceding that much of that success rested on the creation of a monstrous bubble would have placed a damper on the festivities.

But there was something else going on: a general belief that bubbles just don’t happen. What’s striking, when you reread Greenspan’s assurances, is that they weren’t based on evidence — they were based on the a priori assertion that there simply can’t be a bubble in housing. And the finance theorists were even more adamant on this point. In a 2007 interview, Eugene Fama, the father of the efficient-market hypothesis, declared that “the word ‘bubble’ drives me nuts,” and went on to explain why we can trust the housing market: “Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.”

Indeed, home buyers generally do carefully compare prices — that is, they compare the price of their potential purchase with the prices of other houses. But this says nothing about whether the overall price of houses is justified. It’s ketchup economics, again: because a two-quart bottle of ketchup costs twice as much as a one-quart bottle, finance theorists declare that the price of ketchup must be right.

In short, the belief in efficient financial markets blinded many if not most economists to the emergence of the biggest financial bubble in history. And efficient-market theory also played a significant role in inflating that bubble in the first place.

Now that the undiagnosed bubble has burst, the true riskiness of supposedly safe assets has been revealed and the financial system has demonstrated its fragility. U.S. households have seen $13 trillion in wealth evaporate. More than six million jobs have been lost, and the unemployment rate appears headed for its highest level since 1940. So what guidance does modern economics have to offer in our current predicament? And should we trust it?

VI. THE STIMULUS SQUABBLE

Between 1985 and 2007 a false peace settled over the field of macroeconomics. There hadn’t been any real convergence of views between the saltwater and freshwater factions. But these were the years of the Great Moderation — an extended period during which inflation was subdued and recessions were relatively mild. Saltwater economists believed that the Federal Reserve had everything under control. Fresh­water economists didn’t think the Fed’s actions were actually beneficial, but they were willing to let matters lie.

But the crisis ended the phony peace. Suddenly the narrow, technocratic policies both sides were willing to accept were no longer sufficient — and the need for a broader policy response brought the old conflicts out into the open, fiercer than ever.

Why weren’t those narrow, technocratic policies sufficient? The answer, in a word, is zero.

During a normal recession, the Fed responds by buying Treasury bills — short-term government debt — from banks. This drives interest rates on government debt down; investors seeking a higher rate of return move into other assets, driving other interest rates down as well; and normally these lower interest rates eventually lead to an economic bounceback. The Fed dealt with the recession that began in 1990 by driving short-term interest rates from 9 percent down to 3 percent. It dealt with the recession that began in 2001 by driving rates from 6.5 percent to 1 percent. And it tried to deal with the current recession by driving rates down from 5.25 percent to zero.

But zero, it turned out, isn’t low enough to end this recession. And the Fed can’t push rates below zero, since at near-zero rates investors simply hoard cash rather than lending it out. So by late 2008, with interest rates basically at what macroeconomists call the “zero lower bound” even as the recession continued to deepen, conventional monetary policy had lost all traction.

Now what? This is the second time America has been up against the zero lower bound, the previous occasion being the Great Depression. And it was precisely the observation that there’s a lower bound to interest rates that led Keynes to advocate higher government spending: when monetary policy is ineffective and the private sector can’t be persuaded to spend more, the public sector must take its place in supporting the economy. Fiscal stimulus is the Keynesian answer to the kind of depression-type economic situation we’re currently in.

Such Keynesian thinking underlies the Obama administration’s economic policies — and the freshwater economists are furious. For 25 or so years they tolerated the Fed’s efforts to manage the economy, but a full-blown Keynesian resurgence was something entirely different. Back in 1980, Lucas, of the University of Chicago, wrote that Keynesian economics was so ludicrous that “at research seminars, people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another.” Admitting that Keynes was largely right, after all, would be too humiliating a comedown.

And so Chicago’s Cochrane, outraged at the idea that government spending could mitigate the latest recession, declared: “It’s not part of what anybody has taught graduate students since the 1960s. They [Keynesian ideas] are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children, but it doesn’t make them less false.” (It’s a mark of how deep the division between saltwater and freshwater runs that Cochrane doesn’t believe that “anybody” teaches ideas that are, in fact, taught in places like Princeton, M.I.T. and Harvard.)

Meanwhile, saltwater economists, who had comforted themselves with the belief that the great divide in macroeconomics was narrowing, were shocked to realize that freshwater economists hadn’t been listening at all. Freshwater economists who inveighed against the stimulus didn’t sound like scholars who had weighed Keynesian arguments and found them wanting. Rather, they sounded like people who had no idea what Keynesian economics was about, who were resurrecting pre-1930 fallacies in the belief that they were saying something new and profound.

And it wasn’t just Keynes whose ideas seemed to have been forgotten. As Brad DeLong of the University of California, Berkeley, has pointed out in his laments about the Chicago school’s “intellectual collapse,” the school’s current stance amounts to a wholesale rejection of Milton Friedman’s ideas, as well. Friedman believed that Fed policy rather than changes in government spending should be used to stabilize the economy, but he never asserted that an increase in government spending cannot, under any circumstances, increase employment. In fact, rereading Friedman’s 1970 summary of his ideas, “A Theoretical Framework for Monetary Analysis,” what’s striking is how Keynesian it seems.

And Friedman certainly never bought into the idea that mass unemployment represents a voluntary reduction in work effort or the idea that recessions are actually good for the economy. Yet the current generation of freshwater economists has been making both arguments. Thus Chicago’s Casey Mulligan suggests that unemployment is so high because many workers are choosing not to take jobs: “Employees face financial incentives that encourage them not to work . . . decreased employment is explained more by reductions in the supply of labor (the willingness of people to work) and less by the demand for labor (the number of workers that employers need to hire).” Mulligan has suggested, in particular, that workers are choosing to remain unemployed because that improves their odds of receiving mortgage relief. And Cochrane declares that high unemployment is actually good: “We should have a recession. People who spend their lives pounding nails in Nevada need something else to do.”

Personally, I think this is crazy. Why should it take mass unemployment across the whole nation to get carpenters to move out of Nevada? Can anyone seriously claim that we’ve lost 6.7 million jobs because fewer Americans want to work? But it was inevitable that freshwater economists would find themselves trapped in this cul-de-sac: if you start from the assumption that people are perfectly rational and markets are perfectly efficient, you have to conclude that unemployment is voluntary and recessions are desirable.

Yet if the crisis has pushed freshwater economists into absurdity, it has also created a lot of soul-searching among saltwater economists. Their framework, unlike that of the Chicago School, both allows for the possibility of involuntary unemployment and considers it a bad thing. But the New Keynesian models that have come to dominate teaching and research assume that people are perfectly rational and financial markets are perfectly efficient. To get anything like the current slump into their models, New Keynesians are forced to introduce some kind of fudge factor that for reasons unspecified temporarily depresses private spending. (I’ve done exactly that in some of my own work.) And if the analysis of where we are now rests on this fudge factor, how much confidence can we have in the models’ predictions about where we are going?

The state of macro, in short, is not good. So where does the profession go from here?

VII. FLAWS AND FRICTIONS

Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch. Even during the heyday of perfect-market economics, there was a lot of work done on the ways in which the real economy deviated from the theoretical ideal. What’s probably going to happen now — in fact, it’s already happening — is that flaws-and-frictions economics will move from the periphery of economic analysis to its center.

There’s already a fairly well developed example of the kind of economics I have in mind: the school of thought known as behavioral finance. Practitioners of this approach emphasize two things. First, many real-world investors bear little resemblance to the cool calculators of efficient-market theory: they’re all too subject to herd behavior, to bouts of irrational exuberance and unwarranted panic. Second, even those who try to base their decisions on cool calculation often find that they can’t, that problems of trust, credibility and limited collateral force them to run with the herd.

On the first point: even during the heyday of the efficient-market hypothesis, it seemed obvious that many real-world investors aren’t as rational as the prevailing models assumed. Larry Summers once began a paper on finance by declaring: “THERE ARE IDIOTS. Look around.” But what kind of idiots (the preferred term in the academic literature, actually, is “noise traders”) are we talking about? Behavioral finance, drawing on the broader movement known as behavioral economics, tries to answer that question by relating the apparent irrationality of investors to known biases in human cognition, like the tendency to care more about small losses than small gains or the tendency to extrapolate too readily from small samples (e.g., assuming that because home prices rose in the past few years, they’ll keep on rising).

Until the crisis, efficient-market advocates like Eugene Fama dismissed the evidence produced on behalf of behavioral finance as a collection of “curiosity items” of no real importance. That’s a much harder position to maintain now that the collapse of a vast bubble — a bubble correctly diagnosed by behavioral economists like Robert Shiller of Yale, who related it to past episodes of “irrational exuberance” — has brought the world economy to its knees.

On the second point: suppose that there are, indeed, idiots. How much do they matter? Not much, argued Milton Friedman in an influential 1953 paper: smart investors will make money by buying when the idiots sell and selling when they buy and will stabilize markets in the process. But the second strand of behavioral finance says that Friedman was wrong, that financial markets are sometimes highly unstable, and right now that view seems hard to reject.

Probably the most influential paper in this vein was a 1997 publication by Andrei Shleifer of Harvard and Robert Vishny of Chicago, which amounted to a formalization of the old line that “the market can stay irrational longer than you can stay solvent.” As they pointed out, arbitrageurs — the people who are supposed to buy low and sell high — need capital to do their jobs. And a severe plunge in asset prices, even if it makes no sense in terms of fundamentals, tends to deplete that capital. As a result, the smart money is forced out of the market, and prices may go into a downward spiral.

The spread of the current financial crisis seemed almost like an object lesson in the perils of financial instability. And the general ideas underlying models of financial instability have proved highly relevant to economic policy: a focus on the depleted capital of financial institutions helped guide policy actions taken after the fall of Lehman, and it looks (cross your fingers) as if these actions successfully headed off an even bigger financial collapse.

Meanwhile, what about macroeconomics? Recent events have pretty decisively refuted the idea that recessions are an optimal response to fluctuations in the rate of technological progress; a more or less Keynesian view is the only plausible game in town. Yet standard New Keynesian models left no room for a crisis like the one we’re having, because those models generally accepted the efficient-market view of the financial sector.

There were some exceptions. One line of work, pioneered by none other than Ben Bernanke working with Mark Gertler of New York University, emphasized the way the lack of sufficient collateral can hinder the ability of businesses to raise funds and pursue investment opportunities. A related line of work, largely established by my Princeton colleague Nobuhiro Kiyotaki and John Moore of the London School of Economics, argued that prices of assets such as real estate can suffer self-reinforcing plunges that in turn depress the economy as a whole. But until now the impact of dysfunctional finance hasn’t been at the core even of Keynesian economics. Clearly, that has to change.

VIII. RE-EMBRACING KEYNES

So here’s what I think economists have to do. First, they have to face up to the inconvenient reality that financial markets fall far short of perfection, that they are subject to extraordinary delusions and the madness of crowds. Second, they have to admit — and this will be very hard for the people who giggled and whispered over Keynes — that Keynesian economics remains the best framework we have for making sense of recessions and depressions. Third, they’ll have to do their best to incorporate the realities of finance into macroeconomics.

Many economists will find these changes deeply disturbing. It will be a long time, if ever, before the new, more realistic approaches to finance and macroeconomics offer the same kind of clarity, completeness and sheer beauty that characterizes the full neoclassical approach. To some economists that will be a reason to cling to neoclassicism, despite its utter failure to make sense of the greatest economic crisis in three generations. This seems, however, like a good time to recall the words of H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”

When it comes to the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly. The vision that emerges as the profession rethinks its foundations may not be all that clear; it certainly won’t be neat; but we can hope that it will have the virtue of being at least partly right.

Paul Krugman is a Times Op-Ed columnist and winner of the 2008 Nobel Memorial Prize in Economic Science. His latest book is “The Return of Depression Economics and the Crisis of 2008.”

This article has been revised to reflect the following correction:

Correction: September 6, 2009
Because of an editing error, an article on Page 36 this weekend about the failure of economists to anticipate the latest recession misquotes the economist John Maynard Keynes, who compared the financial markets of the 1930s to newspaper beauty contests in which readers tried to correctly pick all six eventual winners. Keynes noted that a competitor did not have to pick “those faces which he himself finds prettiest, but those that he thinks likeliest to catch the fancy of the other competitors.” He did not say, “nor even those that he thinks likeliest to catch the fancy of other competitors.”