Don't blame the economists. They are carriers of the prevailing dogma, some on the right and some on the left. Economics is not a science. It used to be called political economy and still should.
People listen to economists because they are the high priests who are listened to by the governors of society. And given the rules of the game, their observations and policies seem to work..most of the time. People question the rules of the game all the time: In some countries these people are jailed, in other countries they are simply ignored or appear in church basements. Not that they are wrong, it is just that the prevailing high priests are threatened and the governors don't want to hear about what is wrong or what should be changed since the governors make their way on a wave of "good news". arthur From: [email protected] [mailto:[email protected]] On Behalf Of Ray Harrell Sent: Monday, January 17, 2011 1:38 AM To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION' Subject: Re: [Futurework] The 'New Normal' of Unemployment Arthur, So economics is not an engineering (design) management discipline? It's not about the creation of new and exciting ways of funding and building a vibrant, happy society? If not then what discipline does do that and why the hell are we listening to economists for those things? And what is this BS about "game theory" and why should an out of work person not arm themselves to keep out the sheriff representing the banks? Arthur, my people were friends with the brothers, Frank and Jessie James and Pretty Boy Floyd and that other "ten most wanted" Ben Goldie McCullum. Are we to return to those days when the people who kept the banks away from the families did it by robbing them? Perhaps you may be getting a rational for all of those extra large ammo clips flying off the shelf after the Congresswoman was shot in Tucson. My great grandfather and his younger brother, rode with the 2nd Mounted Rifles of Arkansas and knew the James brothers from the Civil war. He didn't ride with Quantrill but he certainly knew those folks and the problem with the Railroad and the Banks and the Robber Barons. It was a time when Indians fought Indians and none of them bragged about what they had to do. Later in the Cherokee Nation, the ethic of group loyalty would supersede the Cherokee Banker's (one was Will Roger's father) desire for profit. The banks helped the people until there was no poverty in the Cherokee Nation. Later I would see that same ethos from my father on the Quapaw reservation at Picher. Now that is the kind of banker, teacher, businessman and economist that I'm used to from my own history. This new banker and economist that has no loyalty to home, community or nation is a new "bird" in my experience. But the Dawes Commission disbanded the Cherokee Nation and the Cherokee economic system which Dawes and the U.S. Congress claimed was the system of Henry George. Think of that? Obviously times have changed and the Georgists have moved elsewhere in their theories. What we were left with was the crash, the dust bowl, the depression and predatory banks. That was when the families rose up and took matters into their own hands. Once more my family was on both sides. We had family that were lawmen as well as being friends with the people fighting dispossession and abject poverty. My father grew up and was friends with Goldie McCullum and was the man that Goldie asked for when he was to be executed. Dad went to school with Pretty Boy Floyd's daughter in Ada, Oklahoma. Today it's all smelling like a return and with the way the folks out West are arming themselves including my half cousin Senator Tom Coburn who got the law passed to carry firearms in the National Parks. His attitude about what he thinks is coming was obvious this morning on Meet the Press. Coburn is my Uncles' second wife's son and is the father of an opera singer and the half brother of the former head of the Juilliard Opera Center. I've never met the man since he came to the family long after I had left Oklahoma. But from a distance, his taste and economics seems to mirror Harry and Keith. His second degree is in obstetrics but his first was as an accountant. Doesn't this weird world that the discipline of Western economics has brought us [as it has risen to the top of the academic heap], bother you or any of the others? Thus far it feels like Adam pointing the finger at the woman and saying, "It wasn't me Lord, that's not what economics is all about." REH From: [email protected] [mailto:[email protected]] On Behalf Of Arthur Cordell Sent: Sunday, January 16, 2011 9:26 PM To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION' Subject: Re: [Futurework] The 'New Normal' of Unemployment This article contains many flaws. Economics is about the allocation of scarce resources among competing uses. It is not about solving unemployment problems or job creation, although economists can do this. Other people can also deal with unemployment and job creation. That the problem of deficits is old thinking is an ideological statement. All I can say is: Stay tuned. Arthur From: [email protected] [mailto:[email protected]] On Behalf Of Robert Stennett Sent: Sunday, January 16, 2011 1:51 AM To: EDUCATION RE-DESIGNING WORK INCOME DISTRIBUTION Subject: [Futurework] The 'New Normal' of Unemployment http://www.commondreams.org/view/2011/01/15-2 Published on Saturday, January 15, 2011 by the Guardian/UK <http://www.guardian.co.uk/commentisfree/cifamerica/2011/jan/14/economics-ec onomy> The 'New Normal' of Unemployment by Dean Baker The American Economics Association <http://www.vanderbilt.edu/AEA/> held its annual meeting in Denver last weekend. Most attendees appeared to be in a very forgiving mood. While the economists in Denver recognized the severity of the economic slump hitting the United States and much of the world, there were few who seemed to view this as a serious failure of the economics profession. The fact that the overwhelming majority of economists in policy positions failed to see the signs of this disaster coming, and supported the policies that brought it on, did not seem to be a major concern for most of the economists at the convention. Instead, they seemed more intent on finding ways in which they could get ordinary workers to accept lower pay and reduced public benefits in the years ahead. This would lead to better outcomes in their models. The conventional wisdom among economists is that the economy will be forced to go through a long adjustment process before it can get back to more normal rates of unemployment. The optimists put the return to normal at 2015, while the pessimists would put the year as 2018, and possibly, even later. Furthermore, many economists believe that the new normal will be worse than the old normal. The unemployment rate bottomed out at 4.5% before the housing bubble began to burst. If we go back to 2000, the United States had a year-round average unemployment rate of just 4.0%. The optimists now envision that normal would be 5.0% unemployment, while the pessimists put the new normal at 6.0% unemployment and perhaps higher. As a point of reference, every percentage point rise in the unemployment corresponds to more than 2 million additional people without jobs. The willingness of economists to so quickly embrace this darker future is striking. After all, one of the reasons that we have economists is, ostensibly, so that we don't get such unpleasant news about a "new normal". This is like a football team calmly accepting the sports writers' prediction that they would have a winless season, and deciding that their new goal was to minimize the margin of defeat. The prospect of an extended period of higher unemployment would be easier to accept if there was a good argument as to why the economy cannot achieve the same levels of employment as it had in the recent past. Economists really don't have much basis for this lowering of expectations of their own and the economy's performance. The main argument seems to stem from the work of two economists, Carmen Reinhart <http://terpconnect.umd.edu/%7Ecreinhar/> and Ken Rogoff <http://www.economics.harvard.edu/faculty/rogoff/Biography_Rogoff> , who have examined financial crises around the world. Their analysis finds that, in most cases, it has taken countries roughly a decade to recover from the effects of a financial crisis and return to a more normal growth path. There is an important limitation in the Reinhart and Rogoff analysis <http://press.princeton.edu/titles/8973.html> . Most of the crises they examine were in the distant past, before the development of modern economics and its bag of tools. If the thousands of economists gathered in Denver know anything more about economics than those not educated in the field, then it would be reasonable to expect better outcomes than in prior centuries. After all, through most of human history a large portion of children died in their first years of life. However, with modern medicine and good nutrition, infant mortality is a rare event in wealthy countries. By the Reinhart and Rogoff extrapolation, we would still expect most children to be dying before the age of five, based on the historical experience. The methods for generating demand are not a mystery. It basically amounts to the government spending more money until the private sector is again in a position to fuel demand. The fears of deficits and debt that the pessimists promote stem from a misunderstanding of basic economics. Deficits can be a problem when they crowd out private economic activity. In a severe slump like the current one, this crowding-out is not a realistic fear; there are vast amounts of idle resources. Furthermore, there is no reason that the debt needs to pose an interest burden on taxpayers in the future. The Fed and other central banks can simply buy and hold the debt, refunding the interest payments to the government <http://www.nytimes.com/2011/01/11/business/economy/11treasury.html?ref=busi ness> . If economists did their job, they would be pushing policies to get the economy quickly back to full employment. Instead, they just repeat lines about how "we" will just have to accept some rough times. Unfortunately, no one ever asks the economists who preach austerity how much time they expect to spend in the unemployment lines. If they don't know anything, then why should we listen to them? C 2011 Guardian/UK Dean Baker <mailto:[email protected]> is the co-director of the Center for Economic and Policy Research <http://www.cepr.net/> (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer <http://www.amazon.com/dp/1411693957?tag=commondreams-20&camp=0&creative=0&l inkCode=as1&creativeASIN=1411693957&adid=1Q1525S4DMNAXAYFQ8EV&> ( www.conservativenannystate.org <http://www.conservativenannystate.org/> ) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy <https://www.amazon.com/dp/0981576990?tag=commondreams-20&camp=0&creative=0&; linkCode=as1&creativeASIN=0981576990&adid=1RZEQ5WA6XE33K5W9Q5P&> . He also has a blog, "Beat the Press <http://www.cepr.net/index.php/beat-the-press/> ," where he discusses the media's coverage of economic issues.
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