Crossposted from The Stars Hollow Gazette
“Neoliberal Economics has as much credibility as Stalinist Genetics.”- ek hornbeck
Some people point out that Evolution is just a theory despite a clear fossil record, the evidence of written history (parts even since 4004 B.C. and so Bishop Ussher approved), St. Bernards and Chihuahuas, corn and potatoes, the Dodo and the Passenger Pigeon.
And Molecular Biology, one of those pesky ‘hard sciences’ with mathmatical models that predict replicable observable results that can be tested by experiment and when tested have proven true.
Economics? Not so much. One could credibly argue that as currently practiced it has all the mathematical certainty of Astrology (the planetary alignment is what it is and stars do chart their courses) and all it’s credulous superstitious magical thinking non-underwear changing during a hitting streak nonsense too.
As practiced currently by the constantly wrong and surprised it’s equal mixtures perfect markets and Jungian mystical mass psychology.
It’s fueled by enormous vanity and a refusal to admit one’s failure in theory given the evidence of experimental results that equals or exceeds the defenders of phlogiston and Ether.
If you come at the current Lesser Depression from my angle, there’s no great mystery. Consistency in modeling isn’t always a virtue, but still, it’s striking how much continuity there is in the analysis of slumps: there’s a clear line of descent with only moderate modification running from Hicks 1937 to liquidity-trap models of Japan (pdf) to models that add in debt/deleveraging. The situation we’re in seems fully comprehensible.
But at Chicago and elsewhere in the freshwater universe they’re playing Calvinball (and what a good coinage that was from Mike Konczal). All kinds of novel and implausible effects – effects that weren’t in any of the models they were using before the crisis – are invoked to explain why we’re in a sustained slump; strange to say, all of these newly invented models just happen to imply the need for tax cuts and a shrunken welfare state.
But I don’t think it’s just political bias: part of what’s happening, I’m sure, is intellectual embarrassment. These people come from a movement that declared, with great arrogance, that Keynesian economics was dead – then failed to produce a workable alternative, and now finds itself in what is very recognizably a Keynesian world. Recognizably, that is, to everyone but them, because admitting that Keynesian-type thinking is useful now would just be too humiliating.
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