"Not enough virgins..."
LOL! How often that lament must be heard all over the world nowadays!
Alas, this is not an article about virgins per se-but it's a great little visual nugget...
"Just as carbon-dioxide theory dominates “official” climate science, so Keynesian theory dominates “official” economic policy. These theories are fiercely defended for the same reason that the geocentric universe and biblical creation were supported by “the authorities;” without them, their authority and power would disappear."
"Economic paradigms are complicated and muddled because people have no intuitive understanding of economics. What understanding they do have tends to be polluted by moral assumptions, which are fondly cultivated by politicians."
"This view of economics is analogous to certain ancient civilizations’ belief that the return of crops/seasons required human sacrifice. How could you doubt the efficacy of such policies? Didn’t the seasons return after the virgins were sacrificed? Bad crop? Not enough virgins!"
"Similarly, some leading authorities maintain that if Keynesian stimulus hasn’t worked, it’s because there wasn’t enough of it. Nobel economist Paul Krugman says that stimulus would have worked if it had been twice as big. Not enough virgins."
There is no empirical proof that stimulus work-and this is to the benefit of the socialists.
We're screwed.
1 comment:
Its no surprise that Keynes is so favoured by the left. First, he was after all a socialist (which in my view disqualifies him as an economist). Secondly, however, his solution to recessions involved giving a lot more money and a lot more power to politicians. Gee, that's a tough sell, eh?
But, the real damage caused by Keynes happened because he removed what he called "animal spirits" from his model. From that point on, economics ceased being a study of mass human behaviour and evolved into a study of government control of the masses.
The irony of it all is that stimulus did work back in the 40's, when Keynes was writing, and even up into the 60's. During that era, a given amount of stimulus would be leveraged via the multiplier effect into a much larger amount of economic growth. However, in this tightly controlled, tightly regulated, welfare entitlement state, there is no multiplier effect. It is simply irrational for businessmen to risk their capital by starting a new business, and just as irrational for people to give up their entitlements by going to work. In this environment, no amount of stimulus is going to produce lasting economic growth.
Krugman, Roubini and the Harvard/Oxford crowd believe the answer is to double down on precisely the same policies that got us into this mess in the first place. However, the free market has other ideas in mind and, as always, the market is going to win this one. The only question is how much pain we all have to endure before this school loses credibility and the economics profession is beaten into a state where they become open to fresh ideas. Maybe then someone can pick up where the Austrians left off and resume studying how human beings react to economic events.
Therein lies the key to salvation. After all, one thing Keynes did get right is that politicians of today are the slaves of some long defunct academic.
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