Economists aren't really in denial, they are just doing their job of giving a false sense of scientific legitimacy to the plan the ruling class will enact anyways: discipline labor, cut social spending, bail out finance when they inevitably crash.
this post was submitted on 21 Aug 2023
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Aye, there's a reason economics is called "the dismal science."
Because it is not a science.
A founding principle of economics is that people make rational economic decisions...
Perfect information is my favourite !
"With perfect information in a market, all consumers and producers have complete and instantaneous knowledge of all market prices, their own utility, and own cost functions."
Pure Economic is a science, but popular implemented Economic is a pseudoscience at best. It has been corrupted by commercial interests.
Different types of science are derivative of other forms of science. Physics is just applied Mathematics, Chemistry is applied Physics, Biology is just just applied Chemistry, Psychology is just applied Biology and Mathematics is applied Psychology.
Pure Economics is an amalgam of Psychology and Mathematics.
Economic Rationalism is a oxymoron because Economic relies on irrational psychology and is subject to change based on observations.
Pure Economic is a science _
A statement is not a fact. Prove your statement.
Pure Economics is an amalgam of Psychology and Mathematics.
This implies Psychology thinks people are rational, it does no such thing.
Economic Rationalism is a oxymoron because Economic relies on irrational psychology
You are almost there:
Economics is a science is a oxymoron because Economics relies on irrational people being rational.
Economics is a science is a oxymoron because Economics relies on irrational people being rational.
That last statement is one view of one theory (that happens to be the predominant one), it's not like this is a fundamental tenet of economics.
But you might like behavioural economics and doughnut economics as alternative views that don't hold the individual as rational actors.
Exactly. There is science-based economics and there's also pseudoscience economics. They exist next to each other. It's a similar situation as in medicine.
Physics will approximate a cow as a sphere, which you can observe it is not.
In science theory you have to make assumptions and approximations to simplify and get at the underlying mehanics. THEN you can complicate everything with the reality of it all.
What got me off conservatism is the fact that even Friedman wanted a Welfare System through negative tax returns.
However that idea was absolutely dismissed by conservatives.
Who's going to fund the new economics building at the University, the working class or some billionaire? Better make sure you don't have any Marxists on staff.
I'd rather my taxes go to better universities instead of the war machine. But that would require the government in this country to do a 180 from where they've had their priorities for the last 70+ years.
Well yeah, universities have been starved of government funding for decades, so they raised tuitions, and have been turning to philanthropy to build new infrastructure. And you can bet that the funding for that new building came with more strings attached than just naming it after John Q Richcunt.
I actually don't think I've seen that many economists (the progressive ones at least) who haven't been making the case for some sort of windfall tax on profits. The Australia Institute have been all over this for years now. Even the more centrist / conservative economists admit there needs to be some sort of intervention to regulate competition in the market. Pretty sure it was the IMF who came up with the approach for calculating how much profit driven inflation there is. Anyone who doesn't recognise this is either on the payroll or selectively ignoring huge chunks of data / evidence.
Everyone that can do anything about it is in charge of trickling down the payroll.
We are generally taught that there's a balancing act going on between inflation and interest rates, but that's not really true. There's a balancing act going on between inflation and unemployment - and interest rates are the way to control unemployment. When the government says that inflation is too high what they're saying is that too many people have money and the way to fix it is to get a few tens or hundreds of thousands of them fired.
I don't know if that's true. They want to get people spending less. Being unemployed is one reason you might spend less. Having high mortgage repayments is another reason.
https://www.abc.net.au/news/2023-06-25/the-rba-wants-more-unemployment-lets-applaud-it/102506500
It's well known that interest rates cause the unemployment level to rise, the RBA governor even covered it in a speech recently (https://www.theguardian.com/business/2023/jun/22/rba-reserve-bank-australia-unemployment-inflation) and they have a page explaining it (https://www.rba.gov.au/education/resources/explainers/nairu.html).
Even though it's been suggested and documented that our current inflation issues are driven by corporate price rises and lingering pandemic supply issues, the government outsources the responsibility for interest rates to the RBA - but the only tool they have is monetary policy.
Related: it's shown that full employment benefits everyone, but it benefits the least advantaged most https://grattan.edu.au/news/when-unemployment-falls-disadvantaged-workers-benefit-most/ so there really is a dichotomy between corporate profits and social wellbeing.
Nice work. It does trouble me that there’s such an orthodoxy in economics going through so much of government.
The theory so often fails, so why not use different theory? It’s frustrating when it’s people’s livelihoods at stake.
smh.com.au
Apt domain name. Smh indeed.
They're ignoring the simple fact that businesses are putting prices up purely to increase profits.
This is incorrect. Yes, greed exists, but it always exists. Even in classical capitalist economics, inflation comes when supply can't keep up with demand. Fiat currencies floating globally, rampant money printing, global shortages and supply chain issues plus corporate greed starts to show a clearer picture
I'd love to spend less money on groceries and every day costs but it's just not possible with the prices of everything going through the roof like you said. People are still spending more because they have to.
The government seems clueless on what to do. Their only action is for the RBA to increase the interest rate and then hold onto their butts and pray.
I'm not saying I disagree or agree, but I've heard a lot of friends and colleagues start to decry inflation as simply a tool of the government. I haven't heard this argument so often before. Am I missing new data or a political trend? I'm not huge in social media or TV news FYI.
You're missing basic knowledge, not new data or a political trend. If you live in the western world, you should know everything is about debt and inflation. How can college cost 75k a year? Access to debt. How could people but housed after 1975? Access to debt, how can people afford health care? Access to debt. Every time a large portion of society gets ahead of the curve, there needs to be price increases to increase the debt. That's it. That's everything in the US and many western countries. The debt has to be increased. That is where the wealthy make the most profit.
Government spend much money. Much money come from tax and borrowing. Let's pretend there's $100 in the economy. Gov't takes 10% in tax. They spend $10, and the rest of the people share $90.
When next year comes, the economy grew to $110 and the government Collect $11 in tax, but actually decide to spend $20. Meaning they borrowed $9.
Year 3, economy grows to $150. Government gets $15 in tax, everyone feels "richer", but government has to borrow to pay the $9 on last year, plus whatever new spending this year. Let's say gov't now owes $50.
So the next year! They create inflation and everyone has lots of money but can't afford shit. Maybe economy balloons to stupidity like $500. Government takes $50, and pays off their debt. Or could.
In in this way, over time, inflation helps reduce the massive debt load incurred by governments because $1 is a lot easier to get in 2023 than it was in 2019.
Your analysis would be true if many people's economies who weren't running up debt vs GDP were doing just fine. They are not. Countries with the same relative debt are way worse off lately.