Friday, February 6, 2009
Economists and the Corporate State
The ongoing debate about the stimulus package illustrates to this writer the utter futility of politicians invoking economists to support their arguments . Economists pack the upper echelons of government, academia and wall street and their assumptions drive policy like no other discipline. Economics has evolved over the years with one school of thought such as Keynesian Macroeconomists slugging it out with the Neoclassical economists over how to manage capitalistic markets as these markets with a mind of their own lurch from one extreme to the other. The economists using their particular econometric models try to prove what is most important in a particular situation: demand! No supply! No!:Fiscal policy, monetary policy! No! tax policy! So I will not mince words. Economics is a social science and as such, it is descriptive. It begins with assumptions and incorporates observations of patterns using historical perspective. With the advent of applied mathematics and statistics and behavioral psychology and modeling theory and better data handling, its priests have endeavored to become prescriptive movers and shakers in government and industry. And they have succeeded. My conclusion is going to be seen as harsh. This is a stature that they do not deserve because the field of economics is too inexact to be utilized as the driving discipline in formulation of economic and social policy. I will state my background is in science. The scientific method also utilizes assumptions but then performs tests and experiments to prove or disprove those assumptions. The results are examined and subjected to statistical analysis and peer scrutiny and then if possible, replicated by other scientists. If the same results are obtained by others, you now have a body of work you may be able to hang your hat on. If enough people can verify the work, it can become a defined principle or even a law. The same can be said of other disciplines which have a scientific basis such as engineering. They have a certain body of laws and principles that allow you to build a skyscraper, a bridge or an airliner. The same cannot be said of economics and many of the other social sciences. As such, any conclusions they offer may have value or may not.There is no way to know. George Bush Sr used the term "voodoo economics" to deride Ronald Reagan's trickle down supply side ideas in the 80's during a campaign. Old George got that right. The problem is that economics is little removed from voodoo. Economists on one side of the argument can argue with each other and reach opposite conclusions. Thus there is no way to prove which opinions are correct. Today we hear our political and financial corporate leaders saying things like"If such and such a program isn't enacted in this time frame, then the result will be such and such." And the incredible thing is, almost no one questions these assumptions! As John Stewart said recently, these people live in Bizarroworld !!! So I must conclude since there is no way to test most of their assumptions, there is no way to know whether they know what they are talking about and therefore there is no way we can trust their decisions. The Kenesians think they know. The supplysiders think they know. They all behave like doctors and high priests. They have a religion with a body of dogma and they act on it. This body of dogma has become incorporated into the genome of our Military Corporate State to justify and augment their power and wealth at the expense of the rest of the population. The large corporations and the financial establishment marshal armies of lobbyists many of whom are former politicians to provide the care and feeding of the current politicians who write the laws to benefit the corporate state. I can only conclude that the Military Corporate State is the government and the government is the Military Corporate State. And the corporate media controls and modulates the flow of information you read and see and hear to protect the corporate state, hopefully distracting the baying sheep outside the palace walls with infomercials of consumerism, reality games and fostering a cult of trivial celebrities. Now that the wheels are starting to come off the wagon, we had a new election based on "change you can believe in" and the bankers and economists who were architects of the current debacle, the Rubins and Summers and Paulsons and Geithners of the banking world are the very people in charge of formulating the solutions in the new Obama administration. This is NO change you can believe in! Is it then any surprise that the solutions offered by bankers have been"Save the banks and the bankers!" The country has binged for almost 30 years on easy credit, lax lending and debt assumption and the solution these voodoo bankers are offering is more credit, more lending, more tax cuts and more mindless consumption, more consuming??!! And how are these monsters of industry and government proposing to do this? By borrowing from our children and our children's children. By assuming more debt! What other word can you use to describe these people except to say they are insane. They propose to utilize the same policies that caused the current blowup but are hoping for a different result. That meets the definition of insane. I hope in future blogs to compare and contrast how other nations have met similar crises in the past and try to see if we can learn from their actions but in the back of my mind I know I may be relying on the voodoo science of economics.!!