Summary: The madness of early 21st century America will baffle future generations. Esp our determination to spend ourselves to destruction, borrowing to maintain a lifestyle beyond our income.
Our cure requires looking at ourselves, seeing past our optimism and hubris to the causes of our problems: as Michael Jackson says, the man in the mirror. These posts illustrate the madness, esp the later ones written in the midst of a destructive cycle of debt deflation whose end we cannot see.
Here we see posts by Glen Reynolds, the Instapundit — a sample of a great many such posts. I use them not because he is foolish (he’s not), but because he is an intelligent man — a law professor at the University of Tennessee — who runs one of the most important nodes on the Internet. His views are influential, his access to information beyond those of almost everybody. As such he illustrates an important aspect of America’s problems.
This is astonishing, cheering for exactly the opposite of what an over-indebted, over-shopped nation needs. Perhaps he considers these to be funny. Perhaps they are, just like passing out booze at meetings of Alcohol Anonymous — and cheering the resulting drunkenness.
Think of these posts when next you read that our problems result from corrupt or stupid leaders, or evil plutocrats. These posts reflect our attitudes. They reflect reflect an important aspect of America.
Perhaps you too find these funny, or trivial. Bookmark this post. In a few years, after going through the economic destruction already descending upon us, I suspect the madness of these will become obvious to all.
The Instapundit urges salvation through shopping, a peculiarly American insanity
2 November 2002: RETAIL SUPPORT BRIGADE SITREP: (Wow, it’s been a long time since I’ve done one of these). Judging by the crowd at Toys R Us today, and the mall parking lot, predictions of a disappointing Christmas season may turn out to be premature. There was a whole lot of shoppin’ going on. And Christmas is a long way off.
30 November 2003: THE RETAIL SUPPORT BRIGADE appears to be crushing the morale of America’s enemies.
11 September 2007: And special thanks to the Retail Support Brigade for its work in those dark days after 9/11. I credit Scott Norvell!
25 November 2007: THE RETAIL SUPPORT BRIGADE CONTINUES TO OUTPERFORM EXPECTATIONS (Plus, praise for consumers):
The nation’s retailers had a robust start to the holiday shopping season, according to results announced Saturday by a national research group that tracks sales at retail outlets across the country. According to ShopperTrak RCT Corp., which tracks sales at more than 50,000 retail outlets, total sales rose 8.3 percent to about $10.3 billion on Friday, the day after Thanksgiving, compared with $9.5 billion on the same day a year ago. ShopperTrak had expected an increase of no more than 4 percent to 5 percent.
15 November 2008: People like Anand Gupta saved us after 9/11. I hate to call upon them again, but America is in need. Will they answer this time? … We shall fight them in the strip malls, we shall fight them in the restaurants, we shall fight them online – we shall never surrender!
16 November 2008: THE RETAIL SUPPORT BRIGADES ARE OUT IN FORCE! In Pigeon Forge with the family to take advantage of the fact that no one is supposed to be shopping this year. Everyone else had the same idea. Itâ€TMs packed. Heh. Plus, from the comments: “All of the shopping plazas around here have been crazy packed, too. It seems very odd.” Probably all the deep discounts from retailers worried that no one would be shopping . . . .
24 November 2008: WELL, THIS IS OKAY WITH ME: Black Friday Sales Intensify in Downturn. Retail Support Brigades, take note!
24 November 2008: THE RETAIL SUPPORT BRIGADE CONTINUES TO EXCEL: Despite Economy, Malls and Stores Jammed. I admire their courage and self-sacrifice. But will this continuous hard service produce a broken consumer army? There are already ominous signs of strain . . . .
29 November 2008: ANOTHER UNIT CITATION FOR THE RETAIL SUPPORT BRIGADE: Early Data Shows Strong Black Friday. “Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets.” Thanks, folks: You may have saved the economy! The only bad news is, the discounts may not be as deep after this weekend . . . .
28 November 2008: The Retail Support Brigades may save the economy yet!
28 November 2008: BLACK FRIDAY UPDATE: “November and December sales at stores open at least a year may rise 1 percent, the smallest gain since 2002, according to the International Council of Shopping Centers, a New York-based trade group.” Not exactly Depression territory, but anemic. It’s up to the Retail Support Brigades, once again! The Insta-Daughter and an Insta-Niece hit the mall at 5 a.m. this morning (without me, fortunately) and, having returned, report lots of bargains but only an average number of shoppers. Then again, it was 5 a.m.
Afterword
If you are new to this site, please glance at the archives below. You may find answers to your questions in these.
Please share your comments by posting below. Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).
For more information from the FM site
To read other articles about these things, see the FM reference page on the right side menu bar. Of esp relevance to this topic:
- about the Financial crisis – what’s happening? how will this end?
- about the End of the post-WWII geopolitical regime
- some Good News about America!
Situation reports on the FM site about the crisis:
- The US economy at Defcon 2, 11 March 2008 — Where are we in the downcycle? What might the world look like when it ends?
- The most important story in this week’s newspapers, 22 May 2008 — How solvent is the US government?
- Another warning from our leaders, which we will ignore, 4 June 2008 — An extraordinarily clear warning from a senior officer of the Federal Reserve.
- High priority report: a geopolitical sitrep on the financial crisis, 15 September 2008
- A new sitrep, as we move into phase 3 of the financial crisis, 19 September 2008
- A sitrep on the financial crisis: why has the treatment been so slow, so small?, 8 October 2008
- Status report on the financial crisis: we’re at a critical point in time, 10 October 2008
Prisoner, “Gitanjali“, Rabindranath Tagore
From Wikipedia: Rabindranath Tagore (7 May 1861 – 8 August 1941), also known by the sobriquet Gurudev, was a Bengali mystic, Brahmo poet, visual artist, playwright, novelist, and composer whose works reshaped Bengali literature and music in the late 19th and early 20th centuries. He became Asia’s first Nobel laureate when he won the 1913 Nobel Prize in Literature.
FM, I wonder if you are familiar with Greer and his theory of catabolic collapse.
“How Civilizations Fall: A Theory of Catabolic Collapse“, John Michael Greer, 2005 — (PDF version, 14 pages) — Abstract:
Ever since reading that, I have come to see shopping and the whole idea of consumption to be just a manner of creating waste. Greer argues that one method of avoiding a “maintenance crisis”, where all production is used just to maintain the current quantity of capital, is to instead turn some of the capital to waste. In our complex and highly specialized economy, we would quickly saturate markets and be overwhelmed by “maintenance” if we didn’t have such an efficient process of converting all of our production into landfill material that the present consumer culture delivers.
grondeau: you point to the deeper problem of capital in the last thirty years – the surplus of cash that needed to be invested over profitable areas of investment. This imbalance led to deregulation (to reduce the costs of doing business); to privatization (to open up previously public services to private investment); to globalization (open up foreign markets to domestic investment); to financialization (suspend normal constraints of risk to allow capital to gamble for profits.)
The consumer was merely a pawn in the last two of these phases, lured into the game (the game you correctly identify as waste-creation) by artificially low interest rates.
So all we have to do now is stay away from WalMart? Eureka! Mission accomplished.
.
.
Fabius Maximus replies: I think you have misunderstood what is often called rule #1 of problem solving:
That does not get you out of the hole, but marks the shift from problem-making to problem-solving.
Working on the assumption that
a) “Economics” is an attempt to quantify that which is most reasonable in society and that
b) It’s current state of the art is roughly equivalent to that of medieval medicine
may I suggest that our efforts would be better spent proceeding directly toward diving that which is reasonable without reference to how it might be presented in terms of economic numerology.
A useful tool in our efforts would be to resurrect the trivium: grammar, rhetoric, and logic. How to speak and to hear clearly, well, and correctly. The trivium once was the foundation of all education. While I could criticize the trivium as an overly bookish approach, it nevertheless would be a massive improvement over what we now have.
A concise presentation of the trivium is The Trivium: The Liberal Arts of Logic, Grammar, and Rhetoric by Sister Miriam Joseph and Marguerite McGlinn.
.
.
Fabius Maximus replies: A wonderful comment! I have a post in the pipeline, going up before Christmas, that is a great follow-up to this!
Fabius Maximus replies: A wonderful comment! I have a post in the pipeline, going up before Christmas, that is a great follow-up to this!
To flesh out my potential criticisms that the trivium may be too bookish, the seminal work would be Walter J. Ong’s Orality and Literacy.
Ong and other member of his school are discussed in the scholarly online journal Oral Traditon. This topic relates to a strong personal interest I have in Homeric epic, Anglo-Saxon alliterative verse such as Beowulf, traditional English ballads, Celtic bards, and other forms of expression that rely upon memory rather than upon having been recorded in written form.
Duncan: you don’t think that people like Thomas Friedman understand the arts of rhetoric and logic? I’d rather re-read Orwell’s “Politics and the English language” than waste time on the trivium.
Remember, the point isn’t to understand the world, but change it.
.
.
Fabius Maximus replies: The last line is a sentiment with which I totally agree. However we should at least be aware that this is perhaps the difference between the modern world and the classical or ancient age — during which they (generally speaking) did not believe that the world could be changed in essentials. Understanding was the best that could be hoped for.
Totally agree with Duncan and FM. I’m working too on something related to non-quantitative economics.
Here I just want to show you a text estremely pertinent: “Overcapacity“, Steve Randy Waldman, posted at interfluidity, 13 December 2008:
.
Fabius Maximus replies: I don’t get it. Overcapacity means, in the general usage, overcapacity to produce specific goods. It can even mean overinvestment so as to produce too many of many things (e.g., excess capital investment across industries).
Different goods are not fungible. The folks who have money for shoes only need so many shoes. They might want more leisure time or leisure suits, but that does not help the folks owning (or working in) shoe factories.
In a healthy world economic ecosystem, new products would emerge through innovation in the first world economies and production of boring old products would move to emerging economies. Supersonic planes would be made in the U.S. and regular jets would move to China and India. The problem is We’re not coming up with the new stuff, so we stubbornly persist wanting to make the old stuff. This leads to overcapacity for old stuff, and no new stuff. We have the same problem as a jungle where evolution has halted at the top. Animals at the top of the food chain are competing more and more with up and coming genetic hybrids, and they aren’t making the leap to higher function themselves. They still dominate, but only to the detriment of lower species in a zero sum game.
bc: your observation makes sense, if economies were like evolution, always tending to the improvement of the species. But our economies are driven by the needs of a few, at the expense of the many. The needs of the few are the maintenance of a certain level of profit, and survival in a struggle against other members of the few. These are basically irrational goals, from the viewpoint of the whole society, and they lead to situations like the one we are just passing through, where the sexy new product of the first world were hedge funds and derivatives, and the boring old products of the second world were consumer goods dependent on bubble-based first world economies.
When the personal computer came along, you had hundreds of venture capital backed start up’s each claiming they would capture 10% market share. This was part of the lead up to the tech bubble of the ninety’s. IMO, this is a classic symptom of the larger problem I’m talking about. Our list of cool new projects to work on is too small. We need dozens, perhaps hundreds of new economic vertical markets to pursue like the PC was in the early eighty’s. We had such a killer list coming out of WWII. If not, we’re going to be all dressed up with no where to go, as my mom used to say.
Duncan: you don’t think that people like Thomas Friedman understand the arts of rhetoric and logic? I’d rather re-read Orwell’s “Politics and the English language” than waste time on the trivium.
Senaca:
I honestly don’t understand you. It would not surprise me if Friedman were actually well polished in the Ciceronian sense — which is neither here nor there since I am more concerned with people’s ability to respond to Friedman that whatever he may be.
Two thoughts about Orwell’s “Politics and the English Language.”
1) Orwell is discussing written English. As I stated above, I am also very interested in Oral Tradition and criticize the trivium for being too bookish.
2) Orwell seems to be discussing Grammar more than Logic or Rhetoric. ( Grammar is not a trivial subject. E.g., I once heard someone assert that Francis Bacon’s philosophy of science was a species of Grammar. ).
Here is Dorothy Sayers’ essay about the trivium, The Lost Tools of Learning.
The decline of manufacturing and dearth of innovation (not so sure the second is borne out by statistics) is primarily due to our litiguous society.
Just look at America’s light aircraft industry, where manufactures were getting sued (and losing) for making improvements to their products, on the theory that an improvement was, a priori, evidence of a defect in the previous version.
This madness was somewhat reversed with litigation reform. Yet, many other industries have no such protection. I would venture that much innovation is stifled by concerns over getting raped by the tort lobby.
Furthermore, this most hurts the small inventor, with no deep pockets to launch a new product without armies of lawyers to defend it.
Speaking as an inventor who did some projects from start up, the biggest barrier to innovation is the criterion for funding. Computer stuff gets/got funding because the development cycle is so short. Software especially is quick to return on investment. Chemical process and machine design (my areas) both take way too long to attract venture funding. Many other projects don’t pass muster for the same reason. In WWII, government stepped in as both investor and customer for long time horizon projects, culminating in everyone’s favorite example, the Manhattan project. It is so bad now, you seldom hear entrepreneurs talk about their ventures as being projects. It scares off investors to call it a project, so this word is dropping from the lexicon.
Update: the final touch showing the absurdity of the “retail shopping brigades”
From the Census Bureau, 14 January 2009 — Excerpt:
This is the largest YoY percent decline since 1992 (the earliest data online at the Census website). The Liscio Report (the go-to site for analysis of economic stats) says that these were the 11th worst year over year sales change since 1947, with auto sales being the worst on record.
For an excellent graph of this data see “Retail Sales Collapse in December“, Calculated Risk, 14 January 2009
Thanks for a straightforward look at a very real problem. It’s such a fixed idea for Americans that buying stuff “supports the economy”. And in the short run, it does. We are now pulling past “the short run”.
When the going gets tough, we go … the MALL!
[youtube=http://www.youtube.com/watch?v=91xWXTIwTwM&hl=en_US&fs=1&]
Wheeee!
Maybe, it would be useful to re-read (or to read for the first time) a great Russian sociologist, founder of the Department of Sociology at Harvard University, but now almost forgotten: Pitirim A. Sorokin. In his “Social and Cultural Dynamics” (1937-1941) he classified societies according to their ‘cultural mentality’, which can be ideational (reality is spiritual), sensate (reality is material), or idealistic (a synthesis of the two).
He suggested that major civilizations evolve through these three in turn: ideational, idealistic, sensate. Each of these phases of cultural development not only seeks to describe the nature of reality, but also stipulates the nature of human needs and goals to be satisfied, the extent to which they should be satisfied, and the methods of satisfaction.
Sorokin has interpreted the contemporary Western civilisation as a sensate civilisation dedicated to technological progress and prophesied its fall into decadence and the emergence of a new ideational or idealistic era.
Any civilization is produced by a kind of inner entelechia, a principle of order which he names “Arché”; which directly produces and causes its undoing, its principle of disorder, or “Anarché”: because any social system underlines just an aspect of reality, and being partially blind to reality (it is partially true (partially Order, or Arché) and partially false (partially disorder, of Anarché). When Anarché grows, the civilization grows more and more false, until it reaches a saturation point which leads to the transition to another civilization.
In his classification, Europe and the West in general are in a period of Anarché – crisis and transition – since 1914. He puts the turning point about at the end of XXI century, or the beginning of XXII. (Unfortunately, he foresees that our civilization will undergo other terrible totalitarian experiences, too).
I can’t make other people learn; all I can do is learn myself. So how can I take my learning and act independently upon it without reference to whether others learn or not?
.
.
FM reply: This is THE great division between the ancient world and us. The ancients believed that reform of society was impossible, and philosphy allowed one to adapt to a harsh world followed by death. The modern world began with the break, the recognition that social change was possible, the creation of praxis. Collective action was the key, how to spark and guide it is the challenge.
Near as I can tell, this is what goes wrong:
1. A subset of society known as, “The Rich”, accumulate an ever larger share of society’s wealth, culminating(right before the crash) in the top 1% owning about 24% of the wealth. This became true in 1929, and it’s true today. This unfortunately includes private ownership of land.
2. In the end game, “The Rich” use their money to influence public policy. Specifically, they discourage taxation of land, and of rents on land, and of interest on debt used to acquire land, preferring to tax labor, because the rich don’t labor, they live off of rents.
3. The taxation of labor discourages productive endeavor, while encouraging land ownership. This increases asset values for land justifying higher rents. This in turn creates the illusion that land is a good investment, causing land prices to spiral upward, seemingly making the rich even richer. This is an illusion. You can’t own more than “everything”.
4. Eventually this illusion collapses(crashes) since a sovereign state whose primary economic activity is owning its own territory and renting that land back to itself creates no wealth.
As a side effect, creating no wealth for prolonged periods induces a nation to borrow wealth short term to make up the difference. Glenn Reynolds exhorting us to consume wealth we don’t have is not really our big problem. We have a boomer generation that thinks it’s wealthy. It thinks it’s going to get $50 trillion or so in goodies from CALPERS and the like’s investments in guess what? That’s right, real estate. Or it thinks the money will come in transfer payments(Social Security, Medicaid) funded by taxes on labor, but factories, and the skilled labor to design and run them haven’t made economic sense here for fifty years. That’s why we’re screwed.
This is the theory of Michael Hudson. http://www.michael-hudson.com/interviews/0902TaxProgramRecoveryItulip.html
All very clever , but if spending decreases, how you going to redistibute money ; and if shopping decreases , how you going to occupy all those people employed in retail and manufacture ? Nobody except me and Mao wish to see them hoeing cabbages .
Surely what matters for the economy is ‘ buy national ‘ .
(In my memory , the UK economy has been regularly apparently rescued by a Buy British campaign . Now us nationalists have to do this covertly , I think otherwise face some sort of discrimination tribunal .)
The problem is not spending the problem is borrowing and spending that. The behavior is a corollary of the belief in the American financial myth that all have an equal opportunity to strike it rich. It is spend now strike it rich later because Americans “know” that big break available to Americans is coming their way next.
Until that myth gets debunked once and for all the spendthrift culture will thrive.
.
.
FM reply: Nicely said! However, excessive borrowing is only half the problem. We need a robust savings rate to fuel investment. Returning to the levels of the early 1980’s would give America a sounder economic foundation.
Please all read Steve Keen’s blog (he’s arguably Australia’s and I’d personally argue one of the World’s greatest economists) latest artile at http://www.debtdeflation.com/blogs/
His latest post is brilliant, nearly as good as his ‘Roving Cavaliers of Debt’ article. He puts it all in context what has happened and includes US data. That includes you FM, put him on your list of ‘must reads’.
.
.
FM reply: I am unfamilar with his work, but from what I’ve seen it’s nice but nothing special. There are many other economists writing similar things, such as those at the Levy Economics Institute of Bard College (esp note their Minsky Conferences). Many Wall Street economists have written about these things for many years. Jim Walker (ex CLSA, now Asianomics). Mark Faber. Albert Edwards of Société Générale. George Magnus of UBS (who coined the term “Minsky Moment” for the transition from phase 2 to 3 of the cycle).
One clear indicator of a 2nd tier player (in any field), IMO: one who writes without mentioning peers doing similar work, giving laypeople the impression that he’s a Lone Ranger. That’s almost always false. I’ve read few of Keen’s articles to say, but he seems to ignore his peers in this manner.
Most important, based on my few readings he seems to ignore other factors (all single-factor models are trash). Most importantly the global overcapacity in manufacturing, similar to the overcapacity in agriculture before the Great Depression. The clearest explanation I’ve see of that is “Structural Problems in the Economy and Unemployment“, interview with Bruce Greenwald (Prof Finance at Columbia U), Advisor Perspectives, 10 November 2009.
I like Greenwald’s emphasis on the global nature of the crisis.
Keen is a very good speaker. I’m getting started now on my 1.3 km ball of gold.
Agree with oldskeptic…as usual. Joke from the 70’s:
I’ve read Greenwald. Productivity gains in agriculture by chemical fertilizer and mechanized farming did require re-allocation of labor from farming to manufacturing, but you can only grow so many kinds of food, and we can only eat so much. There is no corresponding limit to what can be manufactured, other than our imaginations, and the cost of energy. Too much car making capacity? Fine. Make robots. Hell, make Fembots. Then, when civilization collapses, Greenwald’s theory that too much productivity is our problem might make sense.
.
.
FM reply: That’s a long-term view, like God’s, from which there are no economic problems — as they’re all assumed away. As John Maynard Keynes wrote in 1923:
In the real-world manufacturing capacity utilization is at post-Depression lows in the US. China’s situation is horrific and getting worse, as described in this report: “Overcapacity in China: Causes, Impacts and Recommendations“, European Chamber of Commerce, 26 November 2009. Like all problems, it too shall pass. But how quickly, and with what degree of disruption to the global economy? Those are the question for people living in the here and now.
Of course, nobody does it like Zongker
[youtube=http://www.youtube.com/watch?v=yL_-1d9OSdk&hl=en_US&fs=1&]
See http://isotropic.org/papers… for a PDF
No limit to what can be manufactured? He he. Good one. Just keep pouring money on that tree, in the long run, maybe it really WILL grow past the moon. :P
Re28:
Then you really should appreciate Steve Kean. His Academic research is focused on the time dependent behavior of economic models away from equilibrium. He shows that systems of coupled ordinary differential equations with non-linearity result from simple modeling of economies if cash flows are treated as time dependent variables. These models give rise to “strange attractor” type behavior in phase space similar to “predator/prey” population gyrations seen in “chaos theory”. His work is quite unique in this regard, and IMO as a stability theory guy myself, he is no slouch.
In the public sphere, his complaint is that this approach is being ignored even though it uniquely offers the hope of dealing with whirlwinds like the one we find ourselves in now.
FM: “One clear indicator of a 2nd tier player (in any field), IMO: one who writes without mentioning peers doing similar work, giving laypeople the impression that he’s a Lone Ranger. That’s almost always false. I’ve read few of Keen’s articles to say, but he seems to ignore his peers in this manner.”
But his peers are neo-liberal economists .. do I need to say anymore. I’ll add their, unending, messages: “efficient market hypothesis’, “private debt doesn’t matter”, “all Govt spening is wasteful (well it is if it is hospital or a school, but not a war or a Wall St bailout)”, “financial regulation is bad, the market is always right (for me, you and your wages are going down and your retirement is toast) “.
But follow the money like a detective. All the funding to University economic depts, ‘think (I prefer thunk) tanks’, etc was from those people and organisations that personally benefited from creating a ponzi economic system.
Actually he does mention a lot of others .. to state they are wrong.
And it is a ponzi system that has been created. Where is the education (amazingly CUBA can train so many ,very good, doctors that they can send all over the World to help 3rd World countries, the US and Australia send bombs), where is the nuclear plants, where is the (region permitting of course) solar/wave/wind/etc power, let alone where is fusion power?
Where is total resource recycling? Where are discussions about what is the ‘good life’ is, instead of a life of endless consumption and walking round malls like a zombie. Where is our art, our music, or debates, or travel, or compassion, or help to others?
Where is our wonder of the World and the Universe, or abhornace to war and torture and poverty? God, if we followed out better past, we would have to hang ourselves for our own crimes.
Meaningless under our system. Consume rubbish with borrowed dollars while your salary ever declines. Sell out your parents as you sell out your children and grand children. Burn irreplacable (and massively subsidised) coal (and oil and gas) to produce electricity when there are far better and more economic alternatives (without all the pollution by lead, mercury, sulpher dioxides, radioisotopes, etc, that kills us). Et all.
Don’t worry (be happy) your money is going to:
Wars
0.001% of the population, so they can be on the celeb pages.
No Steve is right .. and, at least sometimes, so am I.
.
.
FM reply: You just made my point.
“Actually he does mention a lot of others .. to state they are wrong.”
That’s the Lone Ranger mindset at work. “I’m right, everyone else is wrong” or “I will not acknowledge others doing similar work.” This is IMO almost always an indicator of a 2nd or 3rd tier player.
If you actually believe Keen, about everybody else being wrong … that’s sad. Probably reflecting your ignorance of current economic thought (as seen in the names I cited).
But the thing, was the vast majority of economists were wrong. Only a few, Rubini, etc, including Keen were making warning signals before the event.
“Dirk Bezemer in his research [96] credits 12 economists with predicting (with supporting argument and estimates of timing) the crisis …” (http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932009). Yep Keen was one of them.
The list, for the lazy was: Dean Baker (US), Wynne Godley (US), Fred Harrison (UK), Michael Hudson (US), Eric Janszen (US), Stephen Keen (Australia), Jakob Brøchner Madsen & Jens Kjaer Sørensen (Denmark), Kurt Richebächer (US), Nouriel Roubini(US), Peter Schiff (US), Robert Shiller(US).
Keen is highly regarded in quite a few circles (Hudson was over just recently in Oz thanks to Keen’s help). Don’t forget, Mynsky (US) was not well regarded in his time either .. but he was right.
Plus, and this is another reason why I admire him. He is working towards creating dynamic (and non linear) economic models, so hopefully one day, when someone in power actually listens, we avoid this sort of nonsense again.
Going back to his credentials (and buy and read his book, his mathematical destruction of Say’s Law is lovely … as confirms what every mathematician/physicist/etc who ever looked at economics thought). In his own words (in 1996) about one of the causes of the collapse:
For the rest: http://www.debtdeflation.com/blogs/2008/06/20/my-submission-to-the-wallis-committee/
Oh, FM you can’t be prejudiced because he is ….. an Australian. Oh god call in the ‘political correctness squad” (the modern “Spanish Inquisition” .. bring out the “comfy seats”). Gasp ….FM is a ….. closet anti-Aussie. “Comfy seat” for you my boy, or it’s our new genetically engineered attack kangaroos and koalas. And just wait till we send in the Funnel Web spiders .. the ultimate WMD.
.
.
FM reply: This displays a stunning (but common) misunderstanding of economic theory — and of the views expressed on this website.
(1) Forecasting
Pointing to economists who predicted an event tells us nothing. Any more than looking at the winning bettors at the Derby. The ability of economists to accurately forecast has been carefully studied for decades, and nobody has shown a statistically significant track record.
Successful forecasting lies beyond the current state of economic science due to immature theory, bum data, and a rapidly evolving world.
(2) “….FM is a ….. closet anti-Aussie.”
Bizarrely wrong, as shown by the 3 major posts discussing Austrian theory (2 by economists of the Austrian school).
* “A depression is for capitalism like a good, cold douche.”, 17 December 2008
* Economic theory as a guiding light for government action in this crisis, 10 March 2009 — By Andres Drobny.
* Geopolitical implications of the current economic downturn, 24 January 2008
The last post expresses my view, often expressed here: “We need a fusion of Keynesian and Austrian economics?”
(3) “you can’t be prejudiced because he is ….. an Australian”
These days accusations of bias are the last refuge of scoundrels and fools. Oldskeptic is neither, so this is must be a joke.
Duh it was a joke .. as I’ve said before, humour and its handmaiden, irony, is definitely not one of your strengths.
And Professor Steve Keen is inventing new economic theory, his work on non-linear models is frankly breathtaking. Trust me on this .. I wish I was younger so I could work on this stuff.
And I just realised that someone in the US DOD who reads this stuff (if they can read at all) will probabaly start up a project on using funnel web spiders in the ‘long war’. Senator Dropkick will (after being ‘briefed’ on this .. translated told he wil not get any campaign contributions from Lockheed unless he ‘earmarks’ a new spending bill) will add this to the ‘endless’ list of military spending. Ron Paul will object .. but will be ignored .. as usual.
After the usual poltical wrangle a 100 billion dollars are appropriated, DOD/CIA officers will start rounding up every funnel web spider in Australia (FWS in new DOD terms, or as thy will rename it … ELAAD).
As usual the Australian Govt will agree to everything the US wants. But Average Australians will object, naturally they will be oppressed by the Austrlaian Govt. The Oz Govt then gives US agents total legal immunity to use any force they require to get more ELAAD.
But when US agents start shooting ordinary Australians when they object to US agents coming into their property to rip up their gardens to get more FWS then it is on. The Australian Govt falls (after the Army revolts) and the new one says ‘no more’. Plus ordinary Ozzies start killing US agents on sight, naturally being Ozzies lots of Aboriginies get killed “by mistake”.
Naturally the US calls Austalia a ‘hotbed of terroism’ and bombs Sydney, Melboure, etc.
Naturally we sink some of your carriers (heck we’ve being doing that for decades in exercises)..and then asks China for help.
Hey I should write a book about this scenario .. the “Funnel Web Spider War”. Sadly the World, and the US is now so weird, that something as crazy as this could actually happen.
I had a sudden thought .. if it happens is it my fault?
You would need to include an evil empire of aliens, robots, orcs, or maybe, uh Americans? And some cute blue people with furry tails. Especially the chicks!
Especially them.
Interesting, obviously everyone know what an ELAAD is.