I was listening to radio new this morning as I worked, and the voice said that Mitt Romney had topped Newt Gingrich in the Iowa caucus polls. What he forgot to say was that those two were in second and third place behind Ron Paul.
Second, Ron Paul is an economic idiot. I know that neoclassical or Randian economics makes sense at the personal level, and that is why it is so attractive to people who tend to react to surface phenomena. It just sounds right, which is why they are always referring us to Econ101. But at the national level, things don’t behave at all as they say they should, and because we are in such a mess right now, and because they cannot see that their neoclassical economics got us into this mess, and because wealth inequality leads to fascism, I can only conclude that the people who follow the neoclassical school, the Randian school, the Austrian school, are stupid. The leaders of these school are … useful idiots? Perhaps scheming fascists.
But Paul appears to be an honest man, and has said some plainly true things – that the US is hated because of what we do, that we should not be attacking other countries, that civil liberties are important. It is clear from how other candidates are treated that the opinion makers do not care about economic positions of candidates, which are all pretty much alike. So I can only conclude that it is Paul’s straight talk about American foreign policy that leads to failure even to mention his name when he is in the lead in the Iowa caucus polls.
Piece of Mindful 
I think if you’re going to label things you may want to do it better.
http://www.econlib.org/library/Enc1/NeoclassicalEconomics.html
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I don’t invent the labels. As your link indicates, neoclassical eonomists label themselves such. And if it were a simple as saying “look at the mess we’re in!” then I would say “Look at the mess we’re in!”
I like the line in No Country For Old Men, where Sherriff Bell says something like “if it ain’t a mess it’ll do till the mess gets here.” It didn’t arrive on a machine from outer space. It happened because of neoclassical assumptions about equilibrium, that if the economy is left to manage itself it will do so. What happens, as we have seen, is chaos. We needed a government agent to manage things like financial instruments and base wage rates, to eliminate wealth concentration via progressive taxation of income and high estate taxes.
But since the neo’s are pretty much lockstep with the wealth accumulators, they reasoned themselves into our mess. Neoclassical economics is weak science, treating the economy like a household rather than a dynamic fluid system that never comes to rest, cannot be predicted and can only be kept tame by harsh management of the extremes – the accumulators. Capitalism is unbridled insanity and doesn’t work – that is, if left untamed, devolves into utter chaos. That is why I say that Paul is an economic idiot. I chose the words I meant to use and then used them.
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Which is at it’s core a neo-classical concept using marginal analysis. A better comparison would be laissez faire vs managed economies. It just seems that you’re misapplying the label.
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Neoclassical economics, as I understand it, are built around assumptions that do not bear out in the larger economy, including marginal analysis, which predicts price, wage and consumer behavior as if these things behave in the macro world as they do in the micro. They do not. The fundamental underlying assumption might sound like laissez faire, and it does quack that way, as it merely posits that an economy left to its own devices self-regulates. This is why there is so much opposition to unemployment insurance, socialized medicine, Social Security – these things are supposed to take care of themselves in neo-world. They do not. Unregulated economies devolve into chaos, to wit: the 1930’s and 1980 forward.
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No, neo-classical economics speaks to the allocation of resources given marginal changes in variables. You say that we need to regulate and progressively tax to prevent the accumulation of wealth. That is fundamentally neo-classical marginal analysis (an increase in tax produces a decrease in wealth concentration.)
Neo-classical economists do not necessarily believe that markets will self-regulate to optimal equilibrium (aka Pareto Efficiency). Keynes, for example, in his General Theory said that since wages were “sticky” the labor supply/demand curves will prevent the market from achieving optimal equilibrium and therefor needs intervention. But his analysis included the same players of marginalism such as households, government institutions, market psychology, natural resources, etc.
You’re confusing the term over what you correctly view as economics predictive ability – or lack thereof. But you are making a prediction that wealth will not concentrate if high marginal tax rates are imposed. You may not be willing to put a number on it – which then you agree with the Austrians – but you’re making a directional prediction of economic outcomes. A marginal analysis if you will.
The most highly interventionist economist use the same variables as those in the laissez faire school only they change the assumptions. What’s most interesting to me is that you say that economic forecasting is almost useless. That idea, that we don’t know enough about economics to use it to fine tune economic activity, is the core of The Austrian School.
This is contrary to both supply siders (Say’s Law – if you build it the market will buy it) and demand siders (Keynesians – if you create or redistribute demand people will build it.) But they are two sides of the same coin.
I don’t object to the idea that macro is both near useless and is little more than rationalization for ideological tenets. Both may be true. I just think that argument can be made better without the mixing up of process over point of view.
The real question remains of how you think economic policy should be set. What tools would you use both to measure past policies and to set future ones?
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Let’s just say that Say’s Law doesn’t describe anything real, that marginal curves don’t exist in macro-world, and that my remedies concerning high marginal taxes and estate taxation coincided with relative stability up to 1980, so that I am not unreasonable to suspect correlation,
thoughthough it could of course be wrong. Since market-based economies spin out of control without intervention, it’s merely a question of effective intervention. I’m not genius, and am only going on past behavior here and current behavior in other economies. I could be full of shit.How about this: The “science” of economics is merely cloaked ideology, which is why it has not advanced. Keynes was on to something but has been trashed and abused, made into something he was not.
If economics had advanced as a science, say, like meteorology has, it would be constructing theories to deal with chaotic and non-stable systems that do not form lines on graphs.
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You’re just showing your bias. Say’s Law has about as much support at Keynes’ General Theory. So, given the evidence, why is Say wrong and Keynes right? Frankly, I think both are wrong – or at least both unproven. Are you saying that because economics is not a real science it doesn’t make sense to make it better?
Let’s say that you’re correct that progressive taxation and market regulating controls work to address the problems of wealth concentration and market failures. What do you propose as the tools used to find the right amount of both? Are you arguing for 100% taxation? If not, what?
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I hereby stipulate that I do not know enough to answer your questions intelligently. I only know about Keynes that he tried to break free of the neoclassical school and was brought back into it by Hicks, who later confessed error. Uncertainty is key to everything.
we agree that the science of economics should be made better. I am sorry that I am not clear about that. I do think that people who can predict weather a week out can also use similar chaos measurement to deal with an economy that is neither static or predictable. The problem is that the neo’s are in charge and do not wish to change. Greenspan was neo as is Bernanke, and neo is all that is taught in the colleges. That it does not serve us well does not seem to matter, which is where I step in and call it disguised ideology, as there is an agenda served by neo policies.
As to levels of taxation, we were not harmed by 95% and 70% was where I stepped in and my millionaire boss responded to that level by sinking oil wells and making large charitable contributions. So the neo predictions of micro behavior do not even pan out in my anecdotal experience, much less macro
If I come off as all-knowing just remember that doubt is the beginning, and not the end of inquiry.
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