“Economics is a faith-based pursuit forever in search of a new deity . . . Each of the gods has been worshipped with the fanatical fervour of the convert. What is curious for those sitting outside the sacred circles is that the apostles show not the slightest hint of self-doubt. The Treasury has become to economics what cults such as Opus Dei are to Catholicism.”
Fascinating discussion at the FT about the failures of economics by Philip Stephens. Wondering how “a compassionate God” could “allow such terrible misery to be inflicted on life’s innocents,” Stephens attempts to “square the circle” of ongoing economic errors, suggesting a leap of imagination is whats required.
Monetarist fundamentalism proved a false prophet; efforts to regulate broader measures of credit failed; focus on exchange rates went nowhere; fixing the value of the pound with a cap on inflation did not work; Full independence for the Bank of England failed. Borrow-till-you-are-broke approach failed, as did Austerity. The latest economic catechism is fiscal flagellation. It too crashed and burned.
In the US, we tried sanctifying Markets as all-knowing and all-powerful. They were neither, and collapsed in a heap. The fallout form, the damage they inflicted required a taxpayer funded bailout.
Stephens invokes the idea of the Hedgehog and the Fox by noting “the fervour with which economists propagate this or that theory is usually in inverse proportion to the evidence. Fanaticism is thrown as a cloak over the absence of empiricism.” The concept of the single big idea as the solution to our woes, and the misplaced confidence economists have in those single big bold and typically wrong ideas cannot be denied. Consider that view in context of the politician’s embrace of economists and financiers, from Milton Friedman to Arthur Laffer to Robert Rubin to Larry Summers. Then consider the lasting damage each has inflicted upon the nation, as their flawed philosophies wreak ruin.
Skepticism, and reality based policy is what is required. Not blind devotion to disproven fantasies. The sooner the world’s nations recognize this, the better off we will all be.
What most countries on this planet need is a benevolent technocratic philosopher king — and not yet another partisan meglomaniac . . .
Do not put your faith in the false deities of economists
FT June 18, 2012
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