The 3 most ridiculous things said by economists so far in 2020
#3. Joseph Stiglitz. Referring to the concentration of economic power in the technology industry: “they have the power to raise prices well above the cost of production.”[1]
I know your head is stuck in Das Kapital, but it is the 21st century, man. Get with it. No one talks about the cost of production in the tech business. The old industrial mindset impairs your ability to see the modern economy for what it is:
▪︎ Economics is about scarcity and rising prices.
▪︎ Tech is about abundance and falling prices.
You can argue about many aspects of the tech industry, but it is silly to criticise them for raising prices; it is just the opposite. Think about the value that is delivered to people even just through their smart phones, let alone the free services available via the web.
What socialist dinosaurs like Stiglitz don’t understand is that the only reason there is not hyperinflation right now, thanks to his central bank friends’ insane money printing, is the deflationary effect of technology on the economy.
His innovative solution? Tax Big Tech. Of course.
In reality, he and his fellow Keynesians should just be thankful for the tech effect.
#2. Paul Krugman. On twitter: “Repeat after me: debt is money we owe to ourselves. It doesn’t make the nation as a whole poorer.”[2]
Well, Paul’s ivory tower is obviously built on an island somewhere, but, in the real world, economies are connected. We don’t owe the money just to ourselves. Actually, we owe 35.3% of it to foreigners.[3]
Oh, and then there is the bond market, which gets a say. And what it has been saying, post the crazy amount of money printing, is that debt will now cost more. A lot more: longer dated and higher risk debt yields have risen significantly. I know, Paul: darn it, those annoying market mechanisms. If only there were an economic model that dispensed with markets ….
If debt didn’t matter, Greece or Argentina would be stellar economies, wouldn’t they, Paul?
His post-Coronavirus goal: assist Marxist, err I mean Modern, Monetary Theory ideologues make Keynesian economics look prudent in comparison.
#1. Kenneth Rogoff. In an impassioned plea, he wrote, “A once-in-a-century (we hope) crisis calls for massive government intervention, but does that have to mean dispensing with market-based allocation mechanisms?”[4]
How poignant, I thought, and read on.
Then it hit me what he means by a “market-based allocation mechanism”.
You need to sit down.
He means the Federal Reserve Board. 😂😂😂
Specifically, he means the 12 bureaucrats on the FOMC who set the price of money in the supposedly capitalist US economy. That is what he thinks a market-based allocation mechanism is. I mean, he actually wrote that down. Presumably not under duress. It is not like he was drunk at a dinner party and he just mis-spoke.
But, in a sense, he is drunk. On the Kool-Aid of being an out-of-touch, Ivy League professor who only talks to people who think like him. You really need to drink a lot of the stuff, though, to believe that the Federal Reserve politburo is a market-based mechanism.
The Coronavirus is a tragedy. But, at least these 3 economists have helped us by lightening the mood a bit. We could all use a good laugh.
I write about money, banking and cryptocurrency.
Twitter: https://twitter.com/res_crescofin
LinkedIn: https://www.linkedin.com/in/robert-sharratt-1887a4129/
[1] The Logic podcast, 21 May 2020, minute 5:50.
[2] Twitter, 22 May 2020.
[3] US Federal Reserve Board, via Bloomberg.
[4] Project Syndicate, 4 May 2020.
