Saturday, 8 September 2012

The Iron Bed Of Procrustean Economics

Where is Theseus when you need him?


guerilla surgeon said...

Well at least some economists are beginning to take note of psychology. Amazing that, with psychologists showing that people don't behave in the way that classical economists assume, and physicists showing that the actual equations they based their original theories on our rubbish, it's lasted so long. We live in hope.

Brendon said...

Well written Chris.

We desperately need some heretical thinkers and politicians. In the 1920's and 30s there was John Keynes who argued against imposing excessive war debt onto Germany and advocated leaving the gold standard. These were very anti establishment views but politicians of his day listened and this economic debate allowed Roosevelt the freedom to create the New Deal.

Today it is hard for any economist to even debate the neo liberal establishment. Economists like Steve Keen have been ignored by his intellectual superior colleagues, despite having a better explanation for the current financial crisis.

Draco TB said...


This is wrong. We could rely upon democracy to shift us from this failed economic model if we had a democracy rather than an elected dictatorship. The answer is to shift the politics and thus change the economics.


This is due to the cult of management. The people who caused the GFC are seen as the only people with the knowledge and skill to correct the GFC. People actually believe that managers got there by being better than anyone else rather than that they're just people who make the same mistakes and got lucky. Of course, what they'll do is exactly what they were doing before and thus we're just on course for more of the same.

Kat said...

"Take two tax cuts and roll back a regulation or two"

Never has a president of the USA been as constrained as Obama. By comparison Roosevelt had a fairly free reign between 1933/1937.

What you seem to overlook Chris is that becoming leader, gaining power, then getting re-elected is a balancing act and at the same time incorporates a fair degree of compromise.

You can't please all of the people all of the time. So better to have someone pulling the levers of power who can please most of the people most of the time than someone who only pleases some of the people all of the time.

peterpeasant said...

Hopefully it will be southern Europe does the job. If Greece, Italy, Spain, Portugal (and Ireland) renege on their "deals" then the US, Germany, China, India might get serious.

Mind you we could always have another world war to bail us out.
Just like the last time.

Oil supplies look problematic.

Perhaps the US and Russia could team up to fight another world war in Arabian/Islamic nations

Anonymous said...

Richard Wolff said likewise recently, saying it was, in practice, the New Deal which rescued capitalism from itself, and that, in the current conditions, capitalism is eliminating the reactive preconditions of a possibility of its continuance.

Parliamentary politics--with all its empty histrionics regarding tax, etc., the dismantling of the welfare state (always intended as a soft compromise backstop for capitalist exploitation by its spineless social democrat engineers), and its uninspiring rhetorical affinities with some supposedly generalisable middle-class bigotry (while the "middle class" dwindles)--died some time ago, and it's only now the stench is becoming unbearable.

The real issue, per Lenin: "it is too late to form the organisation in times of explosion and outbursts; the party must be in a state of readiness to launch activity at a moment’s notice."

Brendan McNeill said...

and the economic solution is?

Galeandra said...

Brandan wants THE economic solution. Q.E.D.

jh said...

The Savings Working Group blamed government policies for high house prices, singling out immigration and tax policies favouring property investors.
The Govenment covers it's vitals with research that concurs with a strong correlation between immigration and house price inflation but can find no evidence on the ground. The government therefore concludes the Savings Working Group are wrong and gets away with it because Labour changed immigration policy in the 1990's and the Green's are proud that their policies are "the opposite of Winston Peters" and "based on an objective analysis" of what is "excruciatingly difficult to figure out (a sustainable population). So immigration even to gateway cities like Auckland doesn't price Kiwis out of their nest and this despite Harcourts at Shanghai showcasing $800million of property (that we know of). So it is (to quote an expert):
" the issue was captured by an elite of politicians, public servants, academics and vested interests, and that as long as there was a consensus across the political parties to stick to the mission, the voter had very little say in the matter"

jh said...

When you hit limits you run out of the usual options,but while the Greens readily admit peak oil they wouldn't view Pacific Island populations as post sustainability or (perhaps) apportion the blame for boat people on large populations.
Instaed they would say that there is plenty for everyone except that Uncle Scrooges are hoarding.

Unknown said...

The economic solution is some common sense. Common wealth is a great generator of long term, sustainable prosperity. We need the bottom sector (the benefit-dependent poor, the working poor and the lower middle) to have purchasing power. Through lower taxes, a full employment policy, collective bargaining, judicial labour dispute arbitration and much lower house prices.

Shift investment away from real estate and finance which drains this aforementioned sector of their ability to participate economically.

Imagine all the people who can barely get by on their $500 a week wage package, the people who think they can't work and the debt laden middle class having enough hope to live full economic lives. To have spare cash. To be freed from huge mortgages. This will boost jobs.

We need a strong state presence not just in the essential non-profit making services but in profit generating enterprises.

We should be swapping our energy company shares with Chinese companies, not flogging them off entirely in a bad market.

These are just common sense things, it doesn't take a Keynes, Hayek or Marx to figure it out.