Economists have no idea how capitalism works
The experts have been asking these exact same questions for at least five years, maybe longer.
At a certain point any unbiased critique would have to conclude that the experts either don't care what the answer is (in which case they aren't experts at all), or they are completely incompetent (in which case they aren't experts at all).
Take for example, this classic moment from last month.
When will people finally start getting meaningful pay raises?Jerome Powell, the chairman of the Federal Reserve, had no satisfactory answer.
Powell acknowledged that he couldn't say for sure why wage growth remains generally tepid. He said he "certainly would have expected pay raises to react more" to falling unemployment.
"So it's a bit of a puzzle," the chairman mused, somewhat philosophically. "I wouldn't say it's a mystery. But it's, it's a bit of a puzzle."
The banker that all other bankers listen to can't explain something critical about the economy.
That's forgiveable if this was a new trend, but it's not.
The Mystery of Puny Pay Raises
Economists are stumped: When the economy is this good, wages should be rising much more.
"The lack of wage growth at the aggregate level despite the declines in the unemployment rate and strong job gains remains a mystery," Joseph Song, U.S. economist at Bank of America Merrill Lynch, said in a note to clients.
The U.S. economy is behaving mysteriously. Usually when the job market is tight: Employers have to pay more to attract and retain workers.
The Mystery of the Vanishing Pay Raise
Many economists don’t expect real wages to pick up until the job market tightens further. Federal Reserve officials hoped wages would begin rising at today’s 5.1 percent, but economists are increasingly saying the rate might need to fall to 4.9 percent or lower to push wages higher (although some fear that inflation will climb if the jobless rate is that low).
Three theories about today's biggest economic mystery: If unemployment is shrinking, why aren't wages growing?
And that's just wages. Economists are equally stumped by the labor participation rate and lack of inflation.
Politico: The mystery at the heart of the 2017 economy
FinancialTimes: Nobody seems to know why there’s no US inflation
2015, WSJ: U.S. near full employment, but inflation hasn’t risen as predicted; Fed officials can’t figure out why
Year after year, economists are mystified about why the economy doesn't act the way it's supposed to.
Yet there is no attempt at re-examining basic assumptions about capitalism.
This is a full decade after the near universal failure of economists to see the 2008 Crash coming.
In February 2008, with the economy already three months into recession, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson testified before Congress that "the nation will avoid falling into recession."
The Council of Economic Advisors estimated the economy would grow by 2.7% in 2008.
It wasn't just Bernanke and Paulson.
Economists – as reflected in the averages published in a report called Consensus Forecasts – had not called a single one of these recessions by April 2008.
But hey, who could have predicted a recession in 2008?
It was impossible.
That's what we've all been told.
Oh, wait. 77% of regular working people without degrees in economics predicted it.
Only 19 percent of 1,000 Americans surveyed believe the nation will avoid a recession, while 57 percent believe that there will be a downturn this year. Another 19 percent believe the nation is already in a recession.
This survey came out three weeks before Bernanke and Paulson testified before Congress.
So Joe Blow Average can identify what the economy is doing and where it is going better than nearly 100% of economists.
How is that possible? Let's put it delicately.
Economics is driven by ideology – it is ideology, not science, which drives them to assert that bank bailouts are tolerable but policies that protect the poor aren't. Unsurprisingly, these flawed theories and models are a great comfort to financial elites – which is why so many economists are hired and funded by big banks, corporations and the wealthy
This ideological pandering to the wealthy (i.e. selling out) manifests itself in a way so that levels of private debt is not even considered in any economic model. And why should it be a problem when you approach the world from the point of view of a banker?
Comments
Something's Going to give,
Something's Going to give, not gotta give, Going to give in a major way. The kind of pressure that has been building to this point for so many years. . .
What's going to trigger the break? The midterms? This next recession/depression? Both?
Another war?
Place your bets and stash your ?
Ya got to be a Spirit, cain't be no Ghost. . .
Explain Bldg #7. . . still waiting. . .
If you’ve ever wondered whether you would have complied in 1930’s Germany,
Now you know. . .
sign at protest march
Teachers.
It seems that they have found a chink in the armor.
Yay!
dfarrah
We are right on the trendline for another recession
if we look at unemployment rate that predicted the last two (yr 2000, yr 2008).
Bonus predictor: Jim Cramer says Buy! Buy! Buy!
Donnie The #ShitHole Douchebag. Fake Friend to the Working Class. Real Asshole.
Coming recession
When my 401k from 2 yrs ago was rolled over to an IRA, and I was charged $300 for the honor, I told my son I should just cash it out since it was only $900 or some such. He asked why. I said because another crash was coming. He said, "That's why poor people stay poor. And how do you know there will be another crash?"
I'm clueless about all this stuff, but I do know that what goes up, must come down, unless it's prices. Also, the market appears to be rigged in favor of the rich and those making the deals with other people's money, unless the other people are obscenely rich, in which case they all seem to come out just fine.
Gas is up. Health insurance is up. Drug prices are obscene, and should be criminal! Electricity is up. Food is up. Auto insurance is way up, even with zero claims. My income driven student loan repayment plan went up, even though I make less money than I did at my last job. Oh, and my bank is now charging $5/mo unless you have >$10,000 in a checking account. $10k!!! Used to be >$500. Bastards!
I'm going to predict a recession, because as my grandma would say, "You can't get blood out of a turnip."
Congrats. The economy is working for you exactly
as THEY planned it -- like a blood sucker attached to your jugular vein.
Yeah I'm amazed they say there is no inflation. They must be calculating it by excluding any product or service that has its cost increased.
Donnie The #ShitHole Douchebag. Fake Friend to the Working Class. Real Asshole.
Get a new bank
Check local or regional banks. They aren't as snobby as the big National banks.
If possible, get an account with a Credit Union.
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
Credit union
I found one. It's in a small town, 12 miles away where I work. Plan to do it this week if possible.
My current bank updated its Minor or Kid account terms too. They offer a smaller monthly fee IF the kid uses his/her debit card a certain amount of times per month. Think it was 20 times. They're encouraging spending, rather than saving. Bastards!
I know damned well
why all this zero interest rate, free money hasn't caused inflation: it's being hoarded by the 1%. It never did trickle down. Sheesh.
We wanted decent healthcare, a living wage and free college.
The Democrats gave us Biden and war instead.
Ha Bingo
when the rich fucks don't have to pay interest for their loans but we do, then someone screwed the Pooch. And the Pooch is Us.
Donnie The #ShitHole Douchebag. Fake Friend to the Working Class. Real Asshole.
Wile E. Coyote Economy
I suppose since Ben Bernanke is no longer Chairman of the Federal Reserve, he is able to predict more accurately:
http://thehill.com/blogs/blog-briefing-room/news/391381-bernanke-says-wi...
There is a jokeabout science fiction
That there are 3 types of plot devices: Handwavium, when it's real, but your use of it is at best speculative, Unobtanium, where your plot would work if something existed that did what you wrote, but doesn't, at least as far as we know, and Bullshitium, which is self explanitory.
Government economic statistics are at best handwavium. 2 part time jobs simply are not equal to 1 full time job. 10 jobs that pay $10 an hour simply are not as good as 5 jobs that pay $20 an hour. 5.1% of 62% of the adult population simply is not equal to 5.1% of 64% of the population, and refusing to admit that is bullshitium.
On to Biden since 1973
Economics takes as axiomatic --
that which we know is demonstrably false. Kees van der Pijl explains it to undergraduates here (see chapter 2):
https://libcom.org/files/A%20survey%20of%20global%20political%20economy.pdf
“When there's no fight over programme, the election becomes a casting exercise. Trump's win is the unstoppable consequence of this situation.” - Jean-Luc Melanchon
Economics assumes rational actors.
People do not behave rationally. If they did, Television would not be inundated with stupid ads and iPhones would cost $100 instead of $1,000.
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
Not only that --
the rationality of "economic actors" (and here we are talking about an ideology) is a rationality of "maximizing utility," whereas in real life people make choices having nothing to do with "maximizing utility."
“When there's no fight over programme, the election becomes a casting exercise. Trump's win is the unstoppable consequence of this situation.” - Jean-Luc Melanchon
Exactly!
I like the quote "Man is not a rational animal. Man is a rationalizing animal."
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
Economics is about transfer of wealth
citizens are either consumers or labor. Countries are artificial borders containing variations of economic systems. Economists are orthodox cult members, hashing out variations of religious nuance.
The statistics are lies.
Want low unemployment? Don't count people who have not looked for a job in the last week because they have run out of employers to apply at.
Want low inflation? "adjust" the prices and carefully select your market basket. Steak is too high, substitute hamburger, then ground turkey. Prescription drugs are too high? Weight them less and up the weight of cheap gasoline. Got diabetes? drink some gasoline? Old people can afford their pills? Just drive around, gasoline is cheap. You don't need more Social security.
Look at what you're buying? Are your expenses up 2% this year? or far higher? Plenty of jobs but strangely wages don't rise? Ignore the tens of millions that you say "don't really want a job".
I've seen lots of changes. What doesn't change is people. Same old hairless apes.
Have you ever noticed that when
gas/energy prices drop, food prices go up?
The gouging seems very purposeful to me.
dfarrah
Almost like we are being
subjected to a 'planned economy' 8sn't it?
A truth of the nuclear age/climate change: we can no longer have endless war and survive on this planet. Oh sh*t.
Economists are paid shills for the bourgeoisie.
And economics is just the pseudoscuence of robbing the middle and working classes without either of them figuring it out.
Modern education is little more than toeing the line for the capitalist pigs.
Guerrilla Liberalism won't liberate the US or the world from the iron fist of capital.
Economics is a science, but
Economists are paid shills for the bourgeoisie.
All of the reasons why the field of economics was created have been forgotten
Hmmm
More Scientology than science, I think. (wink)
Economics is a Science Like Alchemy is a Science.
I think we should start putting some teeth on these arguments.
I like the religious angle, and I think it is true. The Volcano God is a good image: in the shape of a Vampire Squid. Present your children to the blood funnel.
Alchemy.
Augury.
Mammon.
Cult.
Hard attacks on the validity of the science and allusion to the religious fervor with which they serve Mammon.
“Tactics without strategy is the noise before defeat.” ~ Sun Tzu
insult to honest Alchemists
That statement is an insult to Alchemy and to honest Alchemists.
No modern reader or writer of Alchemy would deny that Alchemy is a metaphysical branch, and needs to be studied in that light. In fact, many Alchemical texts explicitly state as much. For just one example, the first volume of Secret Symbols of the Rosicrucians of the 16th and 17th Centuries opens with the words: "The Teachings of the Rosicrucians of the 16th and 17th Centuries; or, A Simple ABC Booklet for Young Students, Practising Daily in the School of the Holy Ghost, Made Clear to the Eyes by Pictorial Figures, For the Exercises of the New Year in the Natural and Theological Light...."
source
I have yet to see a work on Economics admit in any way that it was based on theology or metaphysics.
As for the rest of your comment, it was smack-dab on the money, so do please carry on!
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
nice collection of links, nice write-up, n/t
Economics cause my eyes to glaze over
I understand supply and demand, except for when gas, which is refined (on a massive scale) just a 2 hour drive away from my house is more expensive than it is a 5 hr drive away in Dallas. The same goes for tomatoes grown IN California are more expensive there than in Vegas. Both must be transported long distances. Where does transportation costs get figured in?
I did not know that inflation should be incurred as a punishment for full employment. That's insane to me, but again, economics = my eyes glazing over.
Lastly, can someone please explain, in very basic language, how much we'd all have to pay to drive on formerly public roads, paved with collective tax money, if we were to move to the free-market capitalists' wet dream of total privatization? A toll to pull out of my driveway? How much to call 911? How much to utilize air traffic control during a flight? Would there be cheaper flights for those wishing to not utilize air traffic control? Just hope you don't land on another plane trying to take off? Unfettered capitalism and free market just seems like fiction. How could it possibly work?
It's all pretend, isn't it? Or, maybe it's like the rules in English that aren't real -- I before E except after C. Weird means it's bullshit.
Economists are Oracles with a decent Win/Loss Record.
I'm certain that their divination through the magic of number juggling will of course show great economic growth and that the realities of unemployment and high prices are nothing more than the delusions of this transitory world, which bears no relation whatsoever to the world of the High Finance upon which our entire happiness and very lives depend.
I'm With Her.
/snark
I do not pretend I know what I do not know.
Clear as mud, as they say
Thanks, dmw lol.
Parse the Metaphor Game! It's Like a Reading Comprehension
game.
I'll never forget listening to Greenspan drone on and on about the economy and housing markets.
Then I heard him say something about "flexible labor markets" and the constant "churning" that, as a relatively new feature, had been such a massive benefit to our economy.
It hit me: the ease of firing people and breadwinners distraught due to no work was an economic – it was actually a feature of the system.
I completely freaked out. From that point on, my job when listening to a public policy speech on economics is to rip that euphemism apart and dissect the metaphors to reverse engineer the truth and thrust of the argument.
It really is rather naked. The hoo and the hah about how complex and hard it is to understand is bullshit flim flam. Take apart the metaphor and you'll get the uncomfy truth.
Like "Starve the Beast".
“Tactics without strategy is the noise before defeat.” ~ Sun Tzu
Capitalism is a religion.
There's no point in expecting it or its adherents to defend it with reason, or try to explain its mysterious ways.
"More for Gore or the son of a drug lord--None of the above, fuck it, cut the cord."
--Zack de la Rocha
"I tell you I'll have nothing to do with the place...The roof of that hall is made of bones."
-- Fiver
Capitalism = the Volcano God
We must sacrifice our children to the volcano otherwise the volcano god will destroy us. So the priests tell us.
Every once in a while the volcano tries to destroy us, so the priests must be right.
Capitalism is the Utopia of Money
in which everything is totally kewl because we have money. Or at least it's totally kewl for those of us with enough money. Nobody else matters.
“When there's no fight over programme, the election becomes a casting exercise. Trump's win is the unstoppable consequence of this situation.” - Jean-Luc Melanchon
volcano god
We should all worship Odin! My proof:
/snark
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
We could always hire a Frost Giant Patrol.
[video:https://www.youtube.com/watch?v=OkV_ztynYDM]
Modern education is little more than toeing the line for the capitalist pigs.
Guerrilla Liberalism won't liberate the US or the world from the iron fist of capital.
We've reached end game with their silly calculation
of the 'new' unemployment. When you decide to stop counting people as unemployed because they have given up after 2 years of pumping out resumes, then the unemployment rate is meaningless.
BTW, Jim Cramer says Trump is "right on trade tariffs". So we now know with certainty that Trump is wrong.
See you all after the Trump Krash.
Donnie The #ShitHole Douchebag. Fake Friend to the Working Class. Real Asshole.
Jim Cramer
Got that one right!
-- Shakespeare, Macbeth, Act V, Scene 5
source
Complete with real idiot!
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
A lot of economists have nothing to do with the macro economy
I know some and they study esoteric stuff about organizations and game theory and information that has actually been found quite useful by hard sciences like biology as well as math (John Nash). The work I've seen of the economists I know closely never once mentions the words conservative or liberal or capitalism. It's calculus and linear algebra and equations and unintelligible jargon. I really hate the idea that the pursuit of knowledge has to be "liberal" or "conservative". Most especially when it applies to climate science.
Beware the bullshit factories.
unintelligible jargon
In other words:
-- Shakespeare, Macbeth, Act V, Scene 5
source
Twice in one thread! Must be significant.....
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
It's like any field
I spent a lot of years working in biology research and theres a lot of stuff that makes sense to me that would be unintelligible jargon to someone who doesn't work in the field.
Beware the bullshit factories.
old pet peeve
I assume, however, that you didn't choose to publish such unintelligibles to the general public.
It's an old pet peeve of mine. In public-consumption works, using calculus when simple high-school algebra would do (and usually better); unintelligible jargon where plain English would do (and usually better); and so on. It's a blatant attempt to keep real knowledge away from people who need it, and it's wrong. And I disapprove.
Works for in-field consumption are different, of course, as you point out.
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
Sometimes you just have to use calculus to find the truth
The Theory Of Relativity is hard to explain. It's a little easier if you understand calculus but that doesn't help most people. I do agree though that people who do research, especially university professors, need to do a better job of explaining their work to the general public. Most of them grew up as book worms and are not the most extroverted of people. The exact opposite of Trump. We really need to do a better job of hooking up researchers and educators with the general public. My ideal would be to have education fill many of the community roles that are currently dominated by organized religion.
Beware the bullshit factories.
Lol, extroverted instructors
Sorry to laugh, but your comment reminded me of a Cisco instructor of mine, who always spoke to the class with her eyes closed if she was standing. Eyes were open if sitting. Then, I met my son's Cisco instructor at a Meet-the-Teachers night. His eyes were open as he addressed us, but his angst was palpable, and his eyes darted, quickly from side to, never making contact with anyone.
I thought it was a Cisco thing lol.
the difference
I'm not talking about finding the truth; I'm talking about expressing the already-found truth to outsiders to the field. Fuck, even Einstein himself had difficulties with big chunks of the Theory Of Relativity (the pieces leading inexorably to Heisenberg's Uncertainty Principle and quantum mechanics).
In very deed!
"US govt/military = bad. Russian govt/military = bad. Any politician wanting power = bad. Anyone wielding power = bad." --Shahryar
"All power corrupts absolutely!" -- thanatokephaloides
The American concept of
The American concept of economics is just lies and obfuscation:
1) American's calculate unemployment different than the rest of the world. Our unemployment rate is much higher than we actually have when we start to include part-time wanting full and the lower labor participation rate
2) People being employed in part-time crap jobs doesn't make for a good work force. Saying they are employed misses the entire point of being employed in the first place.
3) Good economy often means high stock market, which again means nothing for the vast majority of American society. I believe that like over 90% of all stocks are owned by the top 10%. What good is Amazon's stock shooting up when the vast majority of Americans don't own stocks?
4) The concept of tight labor pool = higher wages is somewhat dead in the modern world. Not only is there this silent agreement between almost all employers to keep wages low everywhere (not necessarily a conscious decision but forges their decisions nonetheless) you now have globalization and immigration. Migrant workers doing carpentry for 60% less? Find a programmer in India to work for 40% less?
They're asking the wrong people.
Instead of asking idiots from the Fed, they should be asking CEOs why they aren't giving their employees decent raises or why they're raising prices beyond what employees can keep up with. Except we already know the answer: GREED.
This shit is bananas.
You see this on arguments against min. wage increases.
The arguments very much fall on class based idealogies. From my reading case studies have shown at worst increase min. wage had no adverse effects. Hambergers didn't to go $50. Put more money in the pockets of the basically the working poor, and local economies will literally collapse. But put money in the hands of the rich through tax brakes, etc, then they will create the daily bread and jobs.
We be better off hiring a Haruspex ...
ha·rus·pex
həˈrəˌspeks,ˈherəˌspeks/Submit
noun
(in ancient Rome) a religious official who interpreted omens by inspecting the entrails of sacrificial animals.
-- I suppose doing animal sacrifice would stir up some shit ... could just do it the Haruspex stuff outside a slaughter house ...
rmm
But then I sigh; and, with a piece of scripture,
Tell them that God bids us do good for evil:
And thus I clothe my naked villany
With old odd ends stolen out of holy writ;