12 September 2012

The Burden of Knowing Everything Important

They teach the Keynesian B.S. in college macroeconomics courses, if for no other reason than to make students aware that such a line of reasoning actually exists.  What those economics professors fail to say, much less emphasize, is that Keynesian economics does not work.  Worse than that, people who become politicians get degrees in all kinds of fields, including economics, and come away believing in the Keynesian B.S. because no one told them it doesn't work; all the while professors of history were telling them the legends of how FDR saved the USA, if not the world, by applying Keynesian theory.  Worse than that, the true believers of Keynesian B.S. figured that when they got that message there was no point in pursuing economics any further, so they went off to things like ethnics studies, women's studies, the theory of LGBT, and who knows what other productive line of inquiry.

 Worse than that, the people who went on to careers in economics believe the Keynesian B.S. and try to apply it at every opportunity.  So we have the spectacle of Keynesians like Christina Roemer, placed in positions of some considerable authority, making predictions of how things would turn out with and without a government bailout, aka The Stimulus Plan.  Just to make things easier to read, the chart below, when Christina Roemer originally presented it in a press conference had only the two blue lines.  The DARK BLUE line was a prediction for how the US unemployment would recover with the Obama stimulus plan; the LIGHT BLUE line was a prediction of unemployment would recover without the Obama stimulus plan.  The red dots at the top of the chart are actual unemployment experience -- with the Obama stimulus plan.  Now, you can explain that outcome in one of two ways:  1.  Keynesian economics applied to a real world situation does not work, or 2.  it's Bush's fault.  What does the rational mind conclude?



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