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Economics is Useless

September 16, 2009 Leave a comment Go to comments

Before I start here I should say that I really don’t know an awful lot about economics but I’m going to criticise it anyway. I’m quite prepared to be corrected on any points I make here but I think I do have reasonable cause to think a lot of what I’m saying is true.

The aspect of economics I’m most suspicious of is the market, specifically the idea that the market should be left alone to achieve the best outcome for society in general and that the market makes the best decisions based on its inherent processes.

A couple of recent news articles have lead me to doubt this idea. Actually, to be more honest, I’ve always been deeply suspicious of the concept of free markets being the best model for economic welfare. Anyway, the two articles were these: first, a survey in the US showing people didn’t want free market models to control greenhouse gas emissions and preferred government regulation; and second, a reminder of how the 2002 Nobel prize for economics was awarded to a psychologist for a theory (Prospect Theory) which effectively showed the standard economic free market model doesn’t work.

If the people of the US, which is usually thought of as the home of the free market, don’t trust it then who does? It seems that in the US big business has hijacked the “democratic” policy and it is now far from being “the land of the free”. In fact its more like the “land of the slaves of big corporations”. I know I’m reading a lot into a survey on a single issue which Americans don’t even think of as being the most important current problem although they do accept it as being real, but I think there’s ample evidence from other areas that this is happening.

And how many subjects hand out Nobel prizes to researchers from other subjects which cast a lot of doubt on the central tenets of that area? For example, has there ever been a biologist given a Nobel prize for showing a major physics theory is probably wrong? There’s none that I can think of. To me this shows that economics isn’t really a strong science (maybe not a science at all) and our whole understanding of the area should be re-examined. I do realise that some economists do doubt the standard free market model but the majority seem to support it, seemingly without any real evidence to show that it works.

I have done some brief research on the theory the Nobel prize was awarded for and it seems to basically show that people do not make sensible choices in a free market situation. The collapse of the global financial system seems to be in agreement with this idea. Its only through constant intervention (effectively corporate welfare handouts) that the whole system is propped up – until the next time it fails.

But even if the model worked without periodic collapses it still wouldn’t really be a suitable model for our whole society. Despite what many people will say it is based on short-term, self-centered greed. Its really quite a tribute to the propagandists who support the system that so many people support this as being OK and even admire the people who effectively parasitise off the rest of us.

So we really need to throw out the whole competitive, private enterprise model and look for something better. The first step would be to make the ridiculous system of trading currencies and imaginary financial packages illegal. We then need to find a model for financing things that really matter, such as long term scientific research into areas with no immediate pay-off – perhaps with no financial payback at all.

Here’s some example projects I would throw whatever money is necessary into: fusion energy, colonising other planets, stopping global warming. It doesn’t matter what these cost really, just find the money. If hydrogen fusion cost a trillion dollars that would be nothing compared with the advantages. Why has the US spent that much on saving some useless financial institutions instead? Simply because our whole economic system is wrong. Let’s start ignoring the economists and business leaders and let’s make some real progress instead. Following the current path will only lead to disaster.

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