Saltwater and Freshwater Economists

 The “saltwater” and “freshwater” classification of economists arose to describe the general geographic locations of American scholars who ascribed to two schools of economic thought. Saltwater economists, generally found near the coasts, describes economists who see the need for active policy to fight recessions. Freshwater economists, often found in the Midwest and including the University of Chicago economists, are neoclassical economists who, at least before the financial meltdown, had complete faith in the power of the market. Freshwater economists are much less likely to ascribe to Keynesian ideas than are saltwater economists. However, many of the characteristics of these schools of thoughts may have changed in the aftermath of the financial crisis; most economists now realize that markets are imperfect.