Voodoo People
It just isn’t going to work, and it’s very interesting that the man who invested this type of what I call a voodoo economic policy
-George H.W. Bush, Carnegie Mellon University, 10 April 1980, in reference to Ronald Reagan’s economic policy
Luke Johnson, the head of Risk Capital Partners, a private equity firm in the UK, has a good piece in the FT today in which he says:
I fail to see the point of professional economists. They purport to know about trade and finance, about markets and credit, but I struggle to identify the actual benefits of all their expensive advice and esoteric debates.
Johnson points a disapproving finger specifically at Vince Cable, Paul Krugman and Alan Greenspan. But for all intents and purposes, he is calling economists – the whole lot of them – voodoo people. Before this downturn, many thought economists like Greenspan were magic people who could do no wrong. But I have to agree with Johnson that we are now seeing that the efficacy of mainstream economists in dealing with this crisis and real world problems is looking rather dismal.
When I started this post I was going to go into a long song and dance about what economists are missing. But why? The mindset won’t change. If you want to see why I think economists have it wrong, read the “Origins of the next crisis”. Honestly, it feels like I have covered this ground a hundred times. So Instead I thought I’d give you a visual for how this economy feels.
I think this video by the Prodigy captures people’s mood perfectly. It’s as if we all are blindfolded fools forced to run the gauntlet by our policy makers and economic advisors, the voodoo people forcing us through this deadly pass.
Magic people, voodoo people. The voodoo, who do, what you don’t dare do people.
Source: The dismal science is bereft of good ideas, Luke Johnson, FT
Does this make Benanke the Witch Doctor?
The guy in the white jacket is actually Alan Greenspan! And yes, if you want to ue the analogy, he is the witch doctor!
Does this make Benanke the Witch Doctor?
The guy in the white jacket is actually Alan Greenspan! And yes, if you want to ue the analogy, he is the witch doctor!
“But for all intents and purposes, he is calling economists – the whole lot of them – voodoo people. Before this downturn, many thought economists like Greenspan were magic people who could do no wrong.”
The guy who juices the punchbowl is always going to be popular. BTW, just read the link “Origins of the next crisis” and it is wonderful.
Debt is a wonderful panacea for economists and politicians. Economics, which I believe is derived from the Greek word for scarcity, is pretty easy when you don’t have to deal with the trade off of raising taxes to increase government spending. It is something that works marveously for both parties – Republicans get to cut taxes without seriously cutting programs, and Deomcrats get to increase programs without raising taxes. Why make decisions that will p*ss somebody off when you don’t have to? And economists agree!.
Honestly, if economists were in charge of nutrition, there would be pitched battles over the obesity problem:
1. Americans are not fat
2. Our fatness shows how properous we are – people woundn’t sell to us otherwise!
3. Increase ice cream consumption – it takes more calories to digest ice cream!
4. Increase meat consumption – it takes more calories to digest meat!
5. Growth is always good – a 500 pound man eats so much more than a 150 pound man – Eating is life – ipso facto, more eating must be better!
6. Marxists: Exercise more, but not enough that it curtains eating in ANY way!
The idea of eating less would be looked upon the same way that someone proposing amputation for losing weight would be regarded.
Don’t forget that fat is a sign of positive growth and growth is the end
that justifies every means. And of course, fat growth is efficient
growth. Why waste time and energy transporting and distributing food to
multiple consumers when one fat one can do it all in one location and
with less packaging? Growth and efficiency. Nothing else matters.
“But for all intents and purposes, he is calling economists – the whole lot of them – voodoo people. Before this downturn, many thought economists like Greenspan were magic people who could do no wrong.”
The guy who juices the punchbowl is always going to be popular. BTW, just read the link “Origins of the next crisis” and it is wonderful.
Debt is a wonderful panacea for economists and politicians. Economics, which I believe is derived from the Greek word for scarcity, is pretty easy when you don’t have to deal with the trade off of raising taxes to increase government spending. It is something that works marveously for both parties – Republicans get to cut taxes without seriously cutting programs, and Deomcrats get to increase programs without raising taxes. Why make decisions that will p*ss somebody off when you don’t have to? And economists agree!.
Honestly, if economists were in charge of nutrition, there would be pitched battles over the obesity problem:
1. Americans are not fat
2. Our fatness shows how properous we are – people woundn’t sell to us otherwise!
3. Increase ice cream consumption – it takes more calories to digest ice cream!
4. Increase meat consumption – it takes more calories to digest meat!
5. Growth is always good – a 500 pound man eats so much more than a 150 pound man – Eating is life – ipso facto, more eating must be better!
6. Marxists: Exercise more, but not enough that it curtains eating in ANY way!
The idea of eating less would be looked upon the same way that someone proposing amputation for losing weight would be regarded.
Don’t forget that fat is a sign of positive growth and growth is the end
that justifies every means. And of course, fat growth is efficient
growth. Why waste time and energy transporting and distributing food to
multiple consumers when one fat one can do it all in one location and
with less packaging? Growth and efficiency. Nothing else matters.
Excellent article. My characterization of economists would be slightly different. To me, they are the professional equivalent of a jukebox. Whoever puts in the quarters gets to pick the tune. To use the punchline from an old joke: “We already know what you are. Now were just haggling on the price”.
Excellent article. My characterization of economists would be slightly different. To me, they are the professional equivalent of a jukebox. Whoever puts in the quarters gets to pick the tune. To use the punchline from an old joke: “We already know what you are. Now were just haggling on the price”.
I never thought that this was going to be an easy crisis for the majority. In fact it has been made much tougher because of the crass decisions made by bankers and politicians. I would have preferred it if the entrie banking system had collapsed and then it could be started from scratch with much smaller banks, more competition and a much more regulated sector. The problem is that they captured governments everywhere and now we will spend the next two decades picking up the pieces. That said I doubt that we will have to wait that long. I suspect that there will be a serious financial crisis within a couple of years that will test the central banks ability to paper over the cracks. A combination of EU soveriegn defaults will wipe out the big US banks because of credits default swaps.
Economies have booms and recessions and trying to ameliorate the outcomes only allowed bigger bubbles to inflate. The issue for the US is that the Fed have a full emoloyment mandate and they are simply not doing anything that will acheive that. The fact that congress has completely dodged its responsibilities is woeful. Then add in the fact that so many economists believe the Chicago school philisophy means that until they have been so thoroughly discredited will there be no change in policy.
I never thought that this was going to be an easy crisis for the majority. In fact it has been made much tougher because of the crass decisions made by bankers and politicians. I would have preferred it if the entrie banking system had collapsed and then it could be started from scratch with much smaller banks, more competition and a much more regulated sector. The problem is that they captured governments everywhere and now we will spend the next two decades picking up the pieces. That said I doubt that we will have to wait that long. I suspect that there will be a serious financial crisis within a couple of years that will test the central banks ability to paper over the cracks. A combination of EU soveriegn defaults will wipe out the big US banks because of credits default swaps.
Economies have booms and recessions and trying to ameliorate the outcomes only allowed bigger bubbles to inflate. The issue for the US is that the Fed have a full emoloyment mandate and they are simply not doing anything that will acheive that. The fact that congress has completely dodged its responsibilities is woeful. Then add in the fact that so many economists believe the Chicago school philisophy means that until they have been so thoroughly discredited will there be no change in policy.