6 ways economists are ruining the country
These guys get it wrong all the time. So why do our lawmakers put so much stock in their words?
The country's economic policies have led us down a dreary path littered with foreclosures, debt and joblessness. Good economists should have sounded the alarm bells well before we got to the Great Recession, no?
Can we blame the economists for this? Perhaps. But our lawmakers should have taken a more skeptical view of the over-simplified picture economists were presenting over the years instead of blindly accepting and acting upon their words.
Salon describes 10 ways economists and the basic economic principles they espoused ruined America. Here are six of them:
1. They present economics as a science. That makes lawmakers feel better about following their advice. But if economics was truly a science, asks writers Robert Atkinson and Michael Lind, why do so many economists disagree about raising the minimum wage and other policies?
2. They pursue efficiency over innovation. Economists are obsessed with making everything as efficient as possible. But rather than make the current system run in tip-top shape, why not look for better systems? That will drive prosperity.
3. They focus too much on markets. Economists focus so much on the markets that, in some ways, the economy is considered a synonym for the market, Atkinson and Lind argue. That overlooks some decidedly non-market factors shaping the economy, such as government spending and household production.
4. They think prices reflect value. When housing prices saw an incredible run-up a decade ago, economists everywhere celebrated the strong market fundamentals on display. Wrong. Rising home prices didn't signal anything strong about the market, as we all found out.
5. They think all profit is good. The economy certainly benefits from productive activities like farming, manufacturing and the like. But does it benefit from what might be considered phony gains in real estate appreciation and stock market manipulation? Economists look at all profit favorably.
6. They think low wages are good for the economy. Higher wages equal less demand for workers, which leads to more unemployment, the thinking goes. But is this true? Higher-paid employees with more skills and technology can outproduce poorly paid workers with no skills. Also, higher wages tend to push employers to cut costs with new technologies.
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Economists also say to produce goods where it is cheaper, therefore increasing buying power. Unfortunately, they don't look at international/political consequences - such as quality control (lead & cadmium in toys, melamine in milk), trade imbalances (where China owns our a**), nationalistic monetary policies that value and devalue currencies on a whim, and, most important, losing the production jobs that solidify communities and create new buying power. Service jobs don't create wealth - they spread around the same dollars. Manufacturing and production jobs use products with resources from the earth and create new dollars and buying power.
As an economist now retired who worked in the field for 35 years, I agree with all these six critiques.
I would like to add that many economists are hired and work to shill for economic interests, similar to atttorneys working for corporations. Most economists are so imbued with promoting capitalism or working for some commercial outfit with a point of view and fail to remain objective. Others let ideology
affect their views.
However, in general objective economists often get things right. Not always, but often. For example, many macroeconomists with applied models predicted that Obama's stimulus package would not lift the economy and substantially reduce unemployment. Obama and his economic advisors ignored that advice, and we are today stuck in low growth and high unemployment.
Also, some economists forget we live in an imperfect world of "second best," and the world is far more complicated than a simple computer model. Humility goes before the fall.
Economists tend to ignore that which they can't measure. They'll come up with some models that calculate the value of timber in a forest, but their models will exclude the cost of the cut down forest. In California economists can come up with all kind of models to calculate the value of the water exported from the SF Bay delta, but their models exclude the costs associated with rivers that no longer have water in them, fisheries that are decimated, and the ground pollution associated with large scale irrigation. If economics was a real science, these economists would be scoffed and laughed at.
The outsourcing of American manufacturing jobs to Communist China and other third world countries is the primary and main reason for the decay and downfall of this country.
Corporate greed and avarice a long with Wall Streets lust for unbridled profits in conjunction with outsourcing of jobs is sending this country into decay.
Obviously, long-term theories that have prevented a repeat of the Great Depression are worth building-on, but not for short-term predictions.
They problem with all forecasts is that the other side, after the Fact, can always say their plan was better. The problem is you can never prove that statement. It's impossible to rewind the clock and try out your economic plan. Maybe your plan would have worker and maybe your plan would have caused a Great Depression.
Home prices rising wasn't per se the problem. Creating 500-700 Trillion in Scam Derivatives based on homes values however was. It's the problem that will literally never go away. It's the reason the Global FEDS keep printing. It's the Problem of the Century that most folks never talk about. Not even most famed economists.
I think every economic advisory board should have one or more "Real people" sitting in to speak for us average Joes. So when the top dog economists make their point about low wages being good for the economy, some of "Our " people can interject and paint a picture of how those decisions would affect real life for most Americans.
Was Bernanke elected by the people? No.
Economists do not think all profit is good. Economists see profit and loss as equally important factors in the economy. Just as motivating as profit is, loss is just as important for the same reason. Without the threat of loss, innovation is hindered and the value of risk is removed.
What economists do not like is the use of government to prevent losses.
Economists have to say something when they`re on TV.Imagine if they were asked what
the market is going to do and they said "I don`t know".They only remember when they`re
Our current bunch of economists in the media are nothing more than confidence men pushing their delusional view of how the world works, ignoring, completely, the fact that reality has shown again and again they have nearly no ability to predict anything! Fools!
Why? For the same reason astrology has a following. It, however, unlike economics, dare not speak its name in business and government circles where there's smart talk and witty repartee.
If someone cannot forecast correctly more than 50% of the time (at LEAST), and cannot speak of that forecast in plain and unequivocal words, you know you're dealing with a Pseudo.
There is a lot to be said for these views, and a lot to be said for the way the media kowtows to them and their views. The media will do ANYTHING to keep certain stories from 'dying'. Their venue seems to be to startle, to create anxiety and pressure, to make the general public read, listen, view as much 'bad' publicity as possible.
The media has slipped away from 'informing' to 'inducing' panic and action. The media believes that they are more important than truth, and the scramble up the ladder of success has turned into a bloodbath for those who WANT to be responsible journalists and reporters.
At the bottom of this is the age-old lust to be 'known', to have one's opinion count more than common sense. It's all about the 'me' and 'who' I am; how 'important' I have become in the world at large. How many people will flock to listen to my viewpoint, MY opinion.
I'm a writer, and this is one reason I became so disenchanted with the 'news' world at large, and my urge to share my 'opinions' have waned. I do not have a blog, nor do I want one. There are too many voices out there willing to share their lives, their opinions and offer their options.
Granted, there are many who are on target, who see the reality of the world, but these are so far and few between. Most of all we see in the news, and all that ever brought down civilizations is doom and gloom. Projections of failure, seers who forecast nothing but the disintegration of civilization.\
It seems to be a sad part of human nature to look for the worst, and make it come true. We are victims of our own negative thinking, because mankind loves failure, not success. The only success we pay attention to is that of the marketplace, and how much we can get from it. Thus the media follows that trend, hoping to cash in before the final crash.
If we, individually, can take a breath, pause before accepting what the media tells us is truth, then maybe we can overcome the doom and gloom and do SOMETHING positive in our little worlds, the ones that surround us DAILY. IF enough people did this, perhaps the media, perhaps the economists would not have such a hold on our minds, our spirits, our consciousness.
Just my opinion. This is probably the only time I will ever share it too, at least publicly. Right now I use my writing skills to produce books. I read media every day, and choose to ignore the doom and gloom by focusing on the good that people do for each other, to each other. I sure hope there are others out there like me, who are not as reclusive and who are willing to lead people of the same ilk. We need you.
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