Thursday, June 07, 2012

The Economy Is Slowly Getting Better

Dean Baker points out that the economy is slowly getting better in this article. His analogy is that commentators and economists are like baseball fans cheering a pitcher's pitch when he throws a strike, and groaning in despair when he throws a ball while neglecting the fact that their team is behind 12 points. We are climbing out of a big hole from a $1.2 trillion housing bubble. We could be farther along in the recovery if we were using economic policies that we know work because they worked in the 1930's, but the wealthy want smaller governments because bigger governments would curb their power and wealth accumulation. That could be the possible agenda of government austerity policies.Why politicians would want to dismantle their power base which is the government is beyond me. Another possibility is that conservatives believe that FDR and his advisers were wrong and are trying to prove this belief. They seem to be proving him and Keynes right. It would truly suck if millions of people are harmed presently due to a foolish belief. Millions of people have been harmed by bad beliefs, but usually not all at once. (The exception is idealogical and religious wars.)
Comments:
So true John

When economists become celibrities this is often for the wrong reasons - politicians leaning on economists' credibility to justify the unjustifiable.

Economics is certainly political. A classic case was monetarism as espoused by a University of Chicago economist http://en.wikipedia.org/wiki/Milton_Friedman . His ideas ultimately led to lower taxes for the rich and low spending on health and employment (permitting higher unemployment of the poor) .

What made hime more political was winning the Noble Prize for Economics and overt adoption of his economic theories by Reagan and Thatcher of Britain.

Pete
 
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