B4022-4 Moron Economics: Galbraithian Nonsense

    A colleague of mine used to patronize the people who assembled machine tools in a large machine tool manufacturing facility.  The colleague was an electronic technician who was responsible for debugging and testing the machine tool electrical controls.  Frequently, the assemblers asked him how the control “knew” where to move, say, the table or the slide of the machine tool.  An adequate explanation would have taken more time than it was worth.  So, the technician simply told them that “it was all magic.”  They never accepted that explanation and they always wanted him to explain things further.  “Well,” he say, “it’s like putting your tooth under the pillow at night and finding a quarter there instead in the morning.  It’s a Tooth Fairy sort of thing.  And it’s all magic.”
    Much of what passes for economics today is that Tooth Fairy sort of thing.  Your car won’t start?  Try pushing it off a fifty-foot cliff unto the jagged rocks below.  It didn’t start?  Okay, try pushing it off the 100-foot cliff nearby.  What?  It still didn’t start?  We need a 200-foot cliff, folks.  The “stimulus package” wasn’t big enough.
    I’m sure that there is a Miss Romer somewhere dug into her stuffy Keynesian burrow who is wondering why the United States’ stimulus plan didn’t work.  Somewhere, a Mister Summers is scratching his head over the same issue.  “If only we had spent more!”
    Now, a fool comes out of Texas with an absurd reprise of France’s 35-hour workweek (1998-2008).  Remember that?  Let’s reduce the workweek hours and spread the jobs around.  Today this Texan fool says let all of those older folks retire who want to retire, and let the younger unemployed take their jobs.  It’s a win-win for everybody.  Well, except if you work the mathematics:  The person now working pays a portion of his salary into Social Security and Medicare “trust funds.”  That person retires and begins to draw down those “trust funds.”  The younger person begins his new job and starts paying the same fees to the “trust funds” as the older person did.  No matter who works the same fund amount is contributed.  But in this case, an additional person is drawing funds out of the “trust funds.”  Can’t bankrupt the Social Security and Medicare “trust funds” fast enough?  Try getting more people to draw out of the system.
    Tooth Fairy economics.  Put your tooth under the pillow and tomorrow there will be a coin there.  It’s all magic.

B8005-5 Arguments: Clarification of Opinions

THE CLARIFICATION OF OPINIONS: We could say that some arguments serve to establish particular opinions in others where no such opinions existed previously. To “win” an argument, thus, is to form or affect a new opinion in another person.

TRIVIALITY: But let us understand, first, that all arguments that seek to change opinions are, by their very nature, trivial. While it is true that the arguments themselves may seem very important to the persons arguing the particular cases, in any reasonable scheme of things it makes very little difference whether I believe, say, that the moon is either made of Green Cheese or if it is made of Compressed Twinkies. In either case my opinion - along with one American dollar - will get me a coffee at McDonalds, and very little else; i.e., my opinions, like the arguments themselves, are ipso facto trivial.

THE NATURE OF OPINIONS: Since opinions are philosophically identical with contradictions, there can be no “correct” opinions. Instead, there is nothing out there but a bewildering array of competing opinions, each of which is valid for his owner, but not necessarily for others. Listening to others bray about their opinions is very similar to flipping through a catalogue of highway signs: each sign wags its scolding finger in your face without any practical effect. At the end of the day, the catalogue - and your interlocutors’ opinions - can be tossed into the trash can.

THE FUTILITY OF ARGUING AGAINST OPINIONS: In any really objective sense of the word, it’s a hopeless task to badger another person with relentless ferocity in order to change his opinion. Far better, one should allow the other to steep in his delusions until he, himself, comes to the conclusion that his opinion is unwarranted by existing conditions or facts. Don’t change the opinions of others; let the conditions change the opinions:

EDUCATION: We often hear an array of arguments about spending additional sums on education. Almost always such arguments take the form of what will happen to "our children" if we fail to spend less than x-dollars per pupil. It is a fruitless task to counter such arguments with economic specificity. Rather, it is always a more effective approach to give the education leeches precisely what they ask for in the hope that eventually they will build such a large edifice that the salaries, operating and maintenance costs will simply overwhelm the system. Currently, many state governments are operating with budgets severely in deficit because of past excesses in granting every silly educational demand that was placed upon the state legislature. For years conservatives have argued for some kind of restraint, and they have made those arguments to no avail - until now. Once the critical mass has been reached with extravagant spending (as it is today), further arguments are no longer necessary because everyone from the smallest child to the oldest man can see that the budgets are not sustainable under any taxing scheme. The educational establishment is ready to become undone by its past "successes."

KEYNESIAN ECONOMICS: At the present time we are participating in an economic experiment. Some, like the Captain Ja-Boom Tisch's (i.e., Obama's) administration, have argued for stimulus spending to give a Keynesian boost to the economy. Huge sums of money had been spent in the attempt to prove that Keynesianism actually does something. To date, however, the results are exceedingly unsatisfactory. The amount of money that's been spent is slowly crushing the private sector, and less charitably, is destroying the United States of America. Yet the persons responsible for continuing to support these silly Keynesian ideas are not dissuaded by the results that we are now seeing. Instead they firmly believe that we need to spend more to make this work. Or as one wag put it so well, "If you failed to fly after you jumped off a 10-foot step ladder, perhaps you could try jumping off of the roof of your house." There will come a point, obviously, when it is no longer feasible to pretend that additional deficit spending will stimulate the economy. The problem, however, is that the United States may no longer exist when these economic morons finally come to their senses.

KILLING ME SOFTLY WITH HIS WORDS: Second, all arguments that seek to change opinions are never attempts to discover objective truth itself, but instead, are always attempts to squeeze some gritty exudate through the grille surrounding the opponent’s head. The end of such argumentation is to smother the opponent in a virtual helmet of irrefutable logic, from which he cannot see or breathe or even speak. All in all, the argument seeks to conclude with one party silent and unable to speak.

B1006-6 Captain Ja-Boom Tisch

     Sometimes a comedian’s act is accompanied by a small band.  We see this quite often on late-night television programs here in the U.S.A.  The drummer in the band accentuates the comedian’s “punch line” with a roll on the snare drum, followed by a single bass drum thump, and a stab at the cymbal.  If you listen carefully, the effect sounds like “Captain Ja-Boom Tisch.”  Say that a few times out loud and you will hear the drummer’s “raspberry.”

     President Obama is the personification of that drummer’s flourish: “Captain Ja-Boom Tisch.”  Yesterday, at his news conference, he tried to explain an economic principle.  He struggled to put the concept into words because, frankly, he doesn’t understand economic concepts.  As my friend said, "Listening to him explaining economics is like listening to my old lady explaining how a nuclear reactor works."

     Captain Ja-Boom Tisch reminds me of a young man I met years ago who was attempting to teach industrial hydraulic maintenance procedures to a group of grizzled, old maintenance men.  He kept saying things to the men that were patently false or absurd.  The men hooted at his foolish suggestions.  Finally, a colleague told him to sit down.  “You’re embarrassing yourself,” he said.

     Yeah.  Captain Ja-Boom Tisch.  Economist extra ordinaire. Have a seat right here, Mr. President.

B1042-7 Walking the Plank

       Well, another economic advisor is getting ready to jump Captain Ja-Boom Tisch’s ship.  What does that make now, four people?  Or is it five?  All of them curled up in the corner like last Fall’s leaves, wondering if spending another half-trillion dollars, or a trillion dollars, or two trillion dollars would have put the “economy” back on its feet.
    Once again, children, Keynesian economics does not work.  You have all the evidence that you need to realize that Keynesian economics does not work.  Pay attention now.  Let me say that again, “Keynesian economics does not work.”  You cannot spend yourself into prosperity.  Were that true, every Greek would equal Croesus in wealth.
    All of those so-called “economists” will return to their tenured academic posts to infect future generations of students with their failed notions of how the world works.  It’s too bad that someone doesn’t stop them at the front door and redirect them to the abundant employment opportunities available at Walmart.

B4022-3 Moron Economics: Keynesian Spending

“You don’t have to be an orthodox Keynesian to understand that as long as the private sector is deleveraging the public sector has to borrow and spend in order to keep the economy moving forward.” (Robert B. Reich. "The Necessity of Obamanomics," The Wall Street Journal, 5 February 2010, p. A17)

Well. If it’s that simple, why doesn’t the “public sector” borrow, say, 20 trillion dollars and just forget about the stingy “private sector” altogether? Twenty trillions of dollars would buy a whole bunch of economic activity. That way we would not have to worry about the deleveraged private sector skimping on its end of the economic balance of power.

For some crazy reason we do not do that.

But here’s a flash for Professor Reich: The “public sector” always spends the wealth of the “private sector.” Always. There is no wealth that belongs to the public sector, per se. All of it, always and everywhere, belongs to the “private sector.” What we pretend is the “public sector” is nothing more than the laws, institutions, and controlling forces that deprive the “private sector” of its rightful property, by its own consent, until such time as that is no longer practicable (viz., today). Then - as in the past - the people will rise up to sever the relationship between a rapacious “public sector” and themselves. Look for it. That time is coming. See Virginia, New Jersey and Massachusetts for recent pertinent examples

The deleveraging Mr. Reich speaks about in his essay - a deleveraging that resulted from the collapse of housing evaluations - really means that the private sector (in other words, you and me) has less liquidity with which to spend on discretionary items. How is it possible to take wealth (i.e., taxes) that the private sector does not have because of the collapse of values and spend it to keep the economy moving forward? Ah, by borrowing those funds from our future earnings, or more properly, by borrowing the funds that belong to our children and grandchildren or China. But it’s all coming from the private sector. All of it.

Why is it so difficult for Keynesians to see that?

Some wag has said: “You can pull on your boots as hard as you want. But you’re not going to lift yourself off the ground.”