11 Big Myths About the Economy That Are Destroying America

Posted by on July 11, 2013 in Economy with 0 Comments
Print Friendly, PDF & Email
 Robert Atkinson, Michael Lind| AlterNet | Jul 11 2013
dollar-fireForget the dumbed-down garbage most economists spew. Their myths are causing tragic results for everyday Americans.

In the Middle Ages, people looked to the Church for certainty. In today’s complex, market-based economies, they look to the field of economics, at least for answers to questions concerning the economy. And unlike some disciplines, which acknowledge that there’s a huge gap between the scholarly knowledge and policy advice, economists have been anything but shy about asserting their authority.

As we can see from the current dismal state of economic affairs, economies are incredibly complex systems, and policymakers who are forced to act in the face of this uncertainty and complexity want guidance. And over the last half century, neoclassical economists have not only been more than happy to offer it, but largely been able to marginalize any other disciplines or approaches, giving them a virtual monopoly on economic policy advice.

But there are two big problems with this. First, despite economists’ calming assurances, we still know little about how economies actually work and the effect of policies. If we did, then economists should have sounded the alarm bells to head off the financial collapse and Great Recession. But even more problematic, even though most economists know better, they present to the public, the media and politicians a simplified, vulgar version of neoclassical economics — what can be called Econ 101 — that leads policymakers astray. Economists fear that if they really expose policymakers to all the contradictions, uncertainties and complications of “Advanced Econ,” the latter will go off track — embracing protectionism, heavy-handed “industrial policy” or even socialism. In fact, the myths of Econ 101 already lead policymakers dangerously off track, with tragic results for the economy and everyday Americans.


Myth 1: Economics is a science.

The way economists maintain stature in public policy circles is to present their discipline as a science, akin to physics. In Econ 101, there is no uncertainty, only the obvious truths embedded in supply and demand curves. As noted economist Lionel Robbins wrote, “Economics is the science which studies human behavior as a relationship between given ends and scarce means, which have alternative uses.” If economics is actually a science, then policymakers can feel more comfortable following the advice of economists. But if economics is really a science – which implies only one answer to a particular question — why do 40 percent of  surveyed economists agree that raising the minimum wage would make it harder for people to get jobs while 40 percent disagree?  It’s because as Larry Lindsey, former head of President Bush’s National Economic Council, admitted, “the continuing argument [among economists] is a product of philosophical disagreements about human nature and the role of government and cannot be fully resolved by economists no matter how sound their data.”

Myth 2: The goal of economic policy is maximizing efficiency.

Economists have one overarching principle that shapes their advice: maximize “efficiency.” As economist and venture investor William Janeway notes,

[read full post here]

Tags: , , , , , , ,

Subscribe

If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS FeedConnect on YouTube

Leave a Reply

Your email address will not be published. Required fields are marked *

FAIR USE NOTICE. Many of the stories on this site contain copyrighted material whose use has not been specifically authorized by the copyright owner. We are making this material available in an effort to advance the understanding of environmental issues, human rights, economic and political democracy, and issues of social justice. We believe this constitutes a 'fair use' of the copyrighted material as provided for in Section 107 of the US Copyright Law which contains a list of the various purposes for which the reproduction of a particular work may be considered fair, such as criticism, comment, news reporting, teaching, scholarship, and research. If you wish to use such copyrighted material for purposes of your own that go beyond 'fair use'...you must obtain permission from the copyright owner. And, if you are a copyright owner who wishes to have your content removed, let us know via the "Contact Us" link at the top of the site, and we will promptly remove it.

The information on this site is provided for educational and entertainment purposes only. It is not intended as a substitute for professional advice of any kind. Conscious Life News assumes no responsibility for the use or misuse of this material. Your use of this website indicates your agreement to these terms.

Paid advertising on Conscious Life News may not represent the views and opinions of this website and its contributors. No endorsement of products and services advertised is either expressed or implied.
Top

Send this to friend