"The problem of official US statistics not fully reflecting the actual economic situation is reasonably well-documented and accessible to any literate person. ... Peer pressure discourages negativity and outlying opinions amongst many economists, so trend changes and innovation in ideas become particularly problematic. ... Noriel Roubini is hailed as a prophet for predicting a downturn that common sense and an examination of the statistics should have made it obvious to a first year economics student in March at the latest. Roubini was a maverick in that as a tenured professor with a reputation he dared to state the obvious before it became painfully obvious to everyone. ... Meredith Whitney and Yves Smith are two outstanding examples of those who are led by the data, who are remarkable in the integrity of their thought processes, even when they might be incorrect as we all are. ... It fosters an ideological balkanization of knowledge, and the tendency to impress and intimidate rather than illuminate, because the person understand they simply do not know the answer, but can never admit it. Perhaps that is why some of the best information has been coming from those who have less vested interest in the established order. ... Then there are the economists who act as hired opinion slingers or unpaid angry villagers for ideological causes and think tanks, tending to dominate the landscape in the short term because it is easier to declare yourself and work for a group whose first principles you embrace. ... Change is coming, and a renewal of thought is in the air. It may be time for a radical change in rethinking old ideas of how an economy can operate efficiently, ironically by often viewing even older ideas in the light of new experience", my emphasis, Jesse, 7 December 2008 at http://jessescrossroadscafe.blogspot.com/2008/12/jobs-picture-even-worse-than-painted-by.html.
In 1958 I read a piece about the US balance of payments and why despite all mainstream economists said about Europe's "dollar shortage", the US's negative balance of payments was unsustainable over the long run. It was put out by the American Institute of Economic Research (AIER), Great Barrington, MA 01230. I have read AIER publications, on and off for 50 years. That's right, 50 years! The AIER was founded in 1933 by EC Harwood (ECH), an engineer, not an economist and initiallly operated from MIT's campus. What brings the AIER to mind now? Jesse's comments in bold. You can buy AIER publications at http://www.aier.org/. Some items worth considering:
Cause and Control of the Business Cycle, 1974, by ECH.
A Current Appraisal of the Behavioral Sciences, 1973, by Rollo Handy and ECH.
Reconstruction of Economics, 1970, by ECH.
Useful Procedures of Inquiry, 1973, by Rollo Handy and ECH.
I don't agree with everything in these books, but each is worth reading. Cheapskate alert, these books are between $6 and $15 each.
6 comments:
IA... interesting thought place... like the price of the books...
They might want to distribute through Amazon for greater readership...
I'm glad Jesse and others are cooking up some new thinking...
America is in the midst of a change as substantial as the industial revolution and our politcal philosophy is kinda past tense... and equality and fairness certainly will not fall from the sky... it must be imagined and argued...
Keep bringing us the new ideas IA...
Me, rant? LOL
It brings to mind a comment made to C.S. Lewis, the noted Oxford don and sometime christian apologist in his day, about a person who was at the same time a christian, but still unable to suffer fools gladly.
"Yes," said Mr. Lewis, "but think what a son of a bitch he would be if he were NOT a Christian."
Jesse and IA, my favorite ranteurs.
My view of the turn forward in economics is looking toward what gold really represents, and it is a combination of the following:
1. The cost of labor. You want your piece of gold, it will have to be dug out and processed.
2. The cost of ingenuity. The incremental extraction cost is always modulated by man's ingenuity, whether using cradles, monitors, or in situ cyanide extraction, etc.
3. The ability of people to have surplus income -- trade. You cannot buy gold if you have no money to buy food. Outside of stored value, the only use for gold is ornamentation, and that is derived from the need to carry portable wealth, eg. the pirate's earring was to provide decent burial, the Indian's wife's legacy.
4. The measure of society to desire wealth. An example is the current limitations on the areas of land available for gold extraction, the environmental limits. These are all repudiations of society's will build wealth. The green movement is a repudiation of wealth and freedom, replaced by an embracement of slavery. Gold extraction is a measure of human will.
5. Gold is essentially indestructable. Even if your house burns down, you can retrieve your gold stored inside.
Gold is a scale, a measure as it were, immutable. All other forms of money measure are mutable and destroyable.
The problem that we have now in economics is that all the numbers that economists derive are based on abstractions, whether it be unemployment, the value of the dollar, or the cost of living.
Until economics can move from the abstract to the concrete, it will be a fraud.
Printfaster:
Thanks, but don't slight Yves Smith, she's A-OK by me. Have you read von Mises "Theory of Money and Credit", 1912? It contains a "regression theorem" to derive gold's value. The book is worth reading. You can find references to the "regression theorem" at the Mises website.
When you write, "all the numbers that economists derive are based on abstractions", you are touching on von Mises "index number problem" which is in "Human Action", 1949. Human Action is a must read. Be warned: it took me six months to get through it. Consider, Isaac Newton (1643-1727) was Master of the Mint and put England on the gold standard in 1717. Did Newton, mathematician, philosopher, physicist and all around smart guy, figure out whatever we are trying to figure out today?
IA
You are right about Yves, she is one of the best in getting things out about Wall street and the economy.
The one thing that I am looking is a worldwide perspective, someone that has Jim Rogers scope. We in the US tend to be too self centered. The US is gradually losing its centripetal force on the worlds economies.
Should the renminbi revalue to anything realistic relative to the dollar, China will instantly be the world's largest economy. Only by holding its currency value down, does China escape being preeminent.
Printfaster:
I agree with you and noted this in my 13 December 2008 post on foreign policy. Americans have no concept that their actions have consequences in the rest of the world. A Harry Truman (HT) story will illustrate. In 1946 HT supported tobacco import quotas to get Dixiecrat support. In 1947 the Greek and Turkish governments fell. Connection? Greece and Turkey depended upon tobacco revenues. The revenues fell then the governments did. We make cocaine sales illegal and create a nightmare in Colombia. Zimbabwe Ben runs his printing press 24 hours a day and we create political instability in China. Americans want easy answers. One they don't want to hear: consume less.
I agree with you about Jim Rogers. Marc Faber and Chris Wood also have worldwide perspectives on things.
I also agree, China should stop supporting the dollar. We supported the pound from 1924-29. Look what that brought us.
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