economics is politics in disguise

jayhanson | The economist's political agenda is pretty simple: establish a global self-regulating economic system.  In order to convert economic students into lifelong politicians, they are programmed via circular argument and "post hoc, ergo propter hoc" (after-the-fact) reasoning to believe the most flagrant violations of reality.  Consider five of the most outrageous.

#1. Economists are trained to believe that people are "rational utility maximizers" (calculate decisions according to "Bayes' Theorem"; i.e., Bentham's old "Felicity Calculus" in a new bottle). Although this belief was common one hundred years ago, only economists are still taught it: "Neoclassical economics is based on the premise that models that characterize rational, optimizing behavior also characterize actual human behavior." (R. Thaler, 1987).  This premise was shown to be false several years ago. [[11]] Thus, the entire modern economic edifice is nothing but junk!

#2. Economists are trained to believe that "money" has nothing to do with politics and is simply a medium of exchange.  But even the casual observer can see that money is social power because it "empowers" people to buy and do the things they want -- including buying and doing other people: politics.  Money is, in a word, "coercion", [[12]] and "economic efficiency" is correctly seen as a political concept designed to conserve social power for those who have it -- to make the rich, richer and the poor, poorer.

#3. Economists are trained to believe that people always "benefit" from free market transactions.  Nobel Prize-winning economist Milton Friedman explains: "Adam Smith's key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit." [[13]]

Since economists do not explicitly define "benefit", one wonders how Friedman could possibly know?  In fact, he doesn't.  Friedman is brainwashing his students to further his own personal political agenda.  Economic professors like Friedman resort to meaningless, circular arguments to turn his students into robotic broadcasting devices.

Economists assume people make "rational" [[14]] decisions but abstain from testing that assumption.  Instead of testing, economists invoke "revealed preferences theory" which states that choices are rational because they are based on preferences that are known through the choices that are made. [[15]]  In other words, meaningless, circular arguments.

#4. Economists are trained to believe there are no "limits to growth".  Because they abstract everything to money, even leading economists like William Nordhaus can't imagine an economy that is physically limited by energy.  The best Nordhaus can do is to model increasing energy prices:

"The estimate is based on an energy model I constructed several years ago.  To estimate the drag on economic growth, I calculated the difference between the economic growth rate with actual energy supplies versus a case in which current (low cost) fuels were available in infinite quantities.  In the first case, energy prices would be rising, while in the second case of superabundence, relative energy prices would be constant.  This study indicated that the resource-limited case would lower net output in the middle of the next century by about 10 percent." [[16]]

Although Nordhaus thinks he is modeling "energy", he is actually modeling "energy prices".  There is a big difference!  What would have happened if he had modeled declining energy inputs instead of rising energy prices?  We already know the answer to that one:

"In late 1973 the first OPEC oil shock struck, as oil prices quadrupled and the general inflation indexes shot up to 11 percent.  More important, gasoline lines appeared.  Waiting in line to buy a basic commodity like gasoline is something that no American had ever experienced.  Shock and irritation were high, but those lines were like the first small heart attack -- an indication of mortality.  Maybe the American economy was growing old and becoming vulnerable.  Maybe the American economic dream of an ever rising standard of living was over.  Small may be beautiful, but if that phrase meant a lower standard of living, then the average American considered it a nightmare.

"The Nixon-Ford Administration responded with oil and gas price controls.  As a vehicle for holding down prices, controls were bound to fail.  For one thing, world prices would have to be paid on that part of consumption imported from abroad; for another, controls make it too easy for oil companies to hold oil in the ground or not to look for new supplies of oil until prices rose.  When controls did fail, the public's feeling that the federal government and its economists were incapable of managing anything efficiently was further reinforced.

"What was worse, economists could pose no solution to the energy problem. Influential professionals, such as Milton Friedman, predicted that the oil cartel would quickly fall apart.  It didn't.  Other economists recommended that prices be allowed to climb to world levels, but that wasn't a solution to the problem faced by the average American.  Higher prices would force him to change his life style.  He might respond to higher prices with smaller cars and colder houses as economists predicted, but he liked doing neither and he could vote.  No one considered a forced change in life style a solution.

"Once again, falling back on the principle that higher unemployment would produce lower inflation, monetary authorities tightened the rate of growth of the money supply in an effort to slow the economy, raise unemployment, and push inflation out of the economy.  This time the policies produced a credit crunch.  For six months in late 1974 and early 1975 the GNP fell at the fastest rate ever recorded.  Even the rates of decline in the Great Depression had been less precipitous -- although of course longer and deeper.  Anxieties quickly shifted from an unacceptable inflation rate to an unacceptable unemployment rate, and the term 'stagflation' was born.

"Stagflation was both a term and an indictment, since economists had taught that the phenomena -- slow growth, rising unemployment, and rising inflation -- could not all exist at the same time.  Yet they did." [[17]]

#5. Economists are trained to believe that we will never "run out" of a commodity.  This is because as prices increase, we will use less-and-less of it, but there will always be some available at some finite price.  Practically every economics textbook teaches this.  But every economics textbook is wrong because "energy" is fundamentally different from every other commodity.  There is no substitute for energy.  Energy is the prerequisite for all other commodities, so if we "run out" of energy, we will "run out" of everything else too.

By definition, energy "sources" must produce more energy than they consume, otherwise they are called "sinks".  By definition, energy sources have "run out" when they consume more energy than they produce.  This universal energy law holds no matter how high the money price of energy goes.  Economists completely overlook this basic energy law and have misled government regulators all over the world.