Saturday, July 18, 2009

Economics Sucks

from The Economist

I'm not saying that all economics is stupid is as stupid does, but let's face it, the people running the major corporations and many aspects our government mislead us, lied, and couldn't predict the recession. Back in my college days, us engineers, pre-law, pre-med, and liberal arts students couldn't figure out why anyone would want to get a major in economics, much less why anyone would be foolish enough to actually pay for an MBA. As it turns out, many of these little economic wonks ended running key aspects of our country - and that we were right all along.

Now don't get me wrong, I know many accountants, auditors, and business leaders who are not only super bright but also some of my favorite friends. I'm talking about the people who brought us the Savings and Loan Crisis, the Dot-Com Crisis, and the Idiot Crisis of 2007-2009, which isn't even over yet.

And then we have government officials like Bernanke, another economics major, who really thinks we can fix the economy and employ more American by using the "manure spreader" method of stimulating the economy. In order to save money we need to ... spend more, of course, and go into debt for at least a generation! That's a liberal view expoused by what we call "Keynesians." Others want more of a freebooter system, I mean less regulation and more global trade, even though global trade is off by some 30 percent. Then you have financial institutions that laugh all the way to the bank, such as Sachs having their best querter in a long time and a need to compensate their fund managers more than ever.

Now tell me if you can make any sense of this mess. I am sure that economic theory is mostly a work of wishful thinking and fantasy. Indeed, economic powerhouses hired those in Game Theory and Options Modellers, statisticians and computer engineers, to explain how even non-rational behavior is rational, and doing so we can reduce risk, make the economy better, and make a ton of money in the process. It resulted in the worst international economic failure in 80 years - and we caused it, all of us together.

But here on our little island off the coast of America, things don't seem so bad. People come here in droves, I guess to escape the mainland and the crappy recession as well. We don't talk much about economics here on the island except for the budget, which is mainly a game for old economics majors who have taken to drink.


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Sildenafil Citrate said...

Economics does suck, I mean when I hear, note I said hear and not listen, guys talking about economy and all this crisis I say oh my that is very boring and I change the channel

Ashutosh Jha said...

It is wrong to assume that economics should be able to predict recessions.Such events are not only due to economic and monetary policies but also financial institution failures, political decisions and everything in between.

As biology cannot predict the next step of evolution because we don't know how would nature behave and which cataclysmic event would occur in between so cannot economics.