Paul Krugman had a lengthy piece in the Times over the weekend–something to the effect of what’s wrong with the economics profession. Having the attention span of a gnat, I could not even begin to read the whole thing, but I did manage to get through a couple of paragraphs when I got to one that forced me to stop and read no further. Instead, I shot off the following email to Professor K., who doesn’t seem like a bad guy to me. His biggest problem is that he’s an economist. What an embarrassment that must be. I’m glad I’m not an economist.
Anyway, here’s the email.
Dear Professor Krugman-
Statements like this one drive me crazy– “They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation.”
This crash was anything but unpredictable. It was a natural consequence of normal long term economic cycles. Capitalists are by nature scoundrels and crooks, not rational actors interested only in maximizing long term corporate profits. The only profits they are interested in are the ones they can skim to line their own pockets.
Over time the biggest crooks accumulate the most power to influence and control government resistance to such behavior, eventually co-opting the politicians and bureaucrats, who themselves are often scoundrels and crooks by nature. The most manipulative psychopaths rise to the top virtually assuring their own self destruction and the destruction of the system over time. All except the Austrian and Kondratieff schools of economics ignore these natural processes. Those who observed these processes saw them coming years before the crash.
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Unfortunately the cleansing necessary for the system to begin to rebuild has yet to occur. The same people are in charge, the same corrupt and unimaginative political class is making the decisions to keep the criminals who caused the system to collapse in charge.
The US government has now transferred massive amounts of private risk unto itself, and by extension the American people and generations of Americans to come. The Treasury and the Fed are using the same techniques to hide bad debt on and off the balance sheet that they learned from the private sector. What is gained by this other than to put the very credit of the US government at risk of collapse?
As a result of simply moving the same failed, corrupt, fraudulent policies from the private sector to the public sector, an even greater cleansing lies ahead, and we go back to watching the process of self destruction unfold over time. Mainstream economists will never get it, because they are an integral part of this corrupt system. If you are paid not to see, then you won’t see.
Editor and Publisher
The Wall Street Examiner
Today I got wind of a piece in the Huffington Post that does an incredible job of detailing how mainstream economists are indeed on the take. I highly recommend it.
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