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May 03, 2011

DOOM! -- An experimental one-act play by Ben Bernanke and Timothy Geithner; Barack H. Obama, Producer


It turns out that economists are less like scientists than they are used-car salesmen. That goes double for academic economists. Part of this is because economics has the veneer of the hard sciences about it (math and statistics), but it's really more related to sociology and psychology. And plain old patent-medicine voodoo. Its practitioners (especially in the academy) are more prone than most to fads and ideological philosophies that run counter to plain common sense. The article flenses Joseph Stiglitz, a hard-left Columbia "economist" who exists mainly to push the tired and completely discredited Marxist worldview. (And he used to be "Chief Economist" at the World Bank, which just goes to show how seriously you should take that institution.) The socialist ideology has been defeated in every real-world arena except the University, which only serves to show how little "economics" is actually being practiced.

When an economist (especially an academic) speaks, always remember: just like a used-car salesman, he's trying to sell you something.

In a DOOM! thread last week we got into the relative pros and cons of home-ownership. I asserted that the benefits of home-ownership, while real, have been vastly oversold. Here's another article that makes the same point. The idea was that home-owership would foster character-traits that would benefit society -- stability, thrift, civic engagement. But it turns out many people got the cause-and-effect relationship inverted -- people who exhibit these traits tend to buy homes, it's not the act of owning a home that instills these qualities in them. (And plenty of renters choose not to own homes even though they are thrifty, stable, and civic-minded.)

Teh Bernank isn't convincing many people that inflation isn't a threat. Says Niall Ferguson:

[T]he reason the CPI is losing credibility is that, as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
The Fed is really working hard to make sure inflation stays low, if you know what I mean.

...and so it begins. Calls are going out for tax hikes to pay for bloated public-sector pensions at the state and municipality level. And I guarantee you, the assessment of "fees" for everything from licenses to permits to special services are going to skyrocket too, while the overall service level sinks. We're going to be paying more and more for less and less -- states are going to be spending all their money paying pensions and servicing debt, with little left over for the actual business of government.

Illinois has displaced California as Chairman of the Loyal Order of the Terminally Boned (LOTB). It was a close race, but Illinois has worked hard for the honor. (Related articles here and here.) (Thanks to PensionTsunami.)

California swears to retake the leadership of the group, however.

The US corporate tax rate is the highest in the world. But remember: the Obama Administration is all about economic growth, baby!

[UPDATE 1]: Take another look at this post from Ace on the "stimulus" that wasn't. Obama took a turd and tried to convince us that it was a tea-rose.

[UPDATE 2]: Killerating Osama bin Laden was good for the soul, but it didn't bump the economy. I didn't expect that it would, frankly. Americans tend to hold foreign policy and domestic policy in separate parts of their brains. That's why I don't think any "bounce" President Obama gets from this operation will help him in the 2012 elections, which will turn on domestic economic issues, not foreign policy. (Though the two are inextricably linked in reality.)

I've been growing cats in this here garden for years, but I have to say that this may be the biggest one yet!

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posted by Monty at 09:04 AM

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