Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong – Jesse’s Cafe Americain

A good essay by Jesse whom sees little merit in economic theory as, indeed and regardless of persuasion, in economics as a profession because as he correctly observes: “[…] [economic theory] require[s] an ideal, almost frictionless, objectively rational, and honest economy in order to succeed. […] The greatest flaw in the many studies that come from each of the schools to prove their point is the brutal way in which they flatten the reality of the markets and make assumptions to allow their equations and analysis to ‘work.’ They spend most of their energy showing while the ‘other school’ is a group of ignorant fools, doomed to ignominious failure, in an atmosphere reminiscent of a university departmental meeting.”

This is an essay that resonates with me on many levels and is a subject I have attempted to write about in the past. Originally, my beef was with religion but over the years I came to the realization that human behavior displays very similar dynamics across the spectrum of human endeavor from personal interactions, to driving, to managing business, to religion to, indeed, constructing social and economic models and implementing them.

I have always been a bad “club” member. Very often I have been an undesirable “club” member because belonging to a club requires espousing a set of beliefs and behaviors that cannot vary according to circumstance under penalty of misrepresenting the values the club stands for. Similarly in economics, people get lost in petty ideological battles that have more political merit than practical; ideological battles that have more to do with personal egos than a genuine desire to improve the human condition.

Jesse observes: “[…] inflation tends to satiate the impulse to greed. They [people] don’t care if they can buy more as long as they can say they HAVE more. People tend to be irrational, and there is a percentage of the population that is irrationally greedy and obsessively rapacious. People are not naturally ‘good.”

And that is exactly the reason our governments have made the unilateral and arbitrary decision to adopt a fiat monetary system. And if you have read any of the dozens of essays on my blog, you by now realize that this one single choice, in and of itself, is at the heart of our current predicament. However, for as long as ideologues stay in charge there is no chance that we might attempt solutions that contradict current dominant economic theory and that might just be the appropriate thing to do.

Where I disagree with Jesse is that I think that a spell of Austrian economics would indeed help us re-balance the economy. And although the Austrian solution might be painful, I am convinced that what our leaders are currently perpetrating is leading us straight into a conflict of global proportions.




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