As I have said before (and will probably have to say a million
times more), despite the obvious intellectual advancements made in more
progressive sciences, economists continue to utilize what we might call a
Newtonian Framework that they build their economic models upon. This framework
is one in which it is assumed that our economy is much like a giant machine
that can be analyzed, understood and modeled. That there are specific forces at
work in our economy, and that human beings respond to these forces in much the
same way that Newton proposed that planets and stars reacted to the physical
forces in our universe.
Just as this type of framework misled Newton into thinking of
the universe in terms of absolute space and time, economists continue to be
misled into thinking of our economy in terms of economic absolutes (ex: saving
is always good for the economy, lower interest rates will stimulate demand,
that what is true for one economic participant is true for all others, etc.).
The reality is that we live in a Relativistic world that can only be understood
by looking at the relationships that exist in our world.
Because they believe in economic absolutes, economists
ignorantly believe that they will recognize the “truth” when they see it.They know
there are problems with their current economic models (although they seem to be
rather oblivious to the scope and scale of these problems), but they operate
under the delusion that they will be able to immediately recognize a “better”
economic model when they see it.
If you bother to study the history of science, you will
quickly realize that this type of thinking makes absolutely no sense. Scientists
did not embrace Einstein when he first proposed his theory of Relativity; they
though him to be insane. The leading experts in Edison’s time wouldn’t even
bother attending demonstrations of his work because they felt it to be beneath
them; that it wasn’t worthy of science.
Imagine if we put an elephant in the middle of a small room. There
is a window in each of the four walls of the room and a person sitting in front
of each window looking in at the elephant. From their perspective, each person
can only see one side of the elephant (which cannot turn around) and they
cannot see any of the other individuals.
We ask each of them to write up a one page description of what
they see. We then take the description from the person looking in at the front
of the elephant and show it to the person who is looking at the back end of the
elephant and ask that person if the description seems to be “true”.
Obviously they are going to say that the description is
definitely NOT true because it does not appear to match what they are seeing at
all. The description of the front of the elephant will appear to be utter
nonsense to the person looking at the back of the elephant.
The same is true in the real world. Each of us is so small
that we never get to see the world in its entirety; not even close. So each of
us develops a very different concept of reality. Thus the descriptions that
come from other people often seem to make no sense to us whatsoever.
Through their studies, Economists essentially train themselves
to look through a particular “window”. In doing so, they make it extremely
difficult (if not impossible) for themselves to be able to make sense out of
any other interpretations of our economy. Thus, they continue to ignorantly cling
to their outdated models, naively waiting for a “better” model to come along.
As always, please share with friends so that we can try and restore
some sanity to our discussions about the economy.
#EconomistsAreMorons
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