Today, I will focus on another piece of news: a report on the Stiglitz Commission appointed by President Sarkozy of France to find out a way to measure happiness and well-being, so as to replace the standard measure of GDP. Amartya Sen is also a member of this commission.
To begin with, such statistical measures are only required by central economic planners. Sarkozy, Stiglitz and Sen all talk this language of statism; they are opposed to free markets. In the report cited, Sarkozy is quoted as saying:
In the speech presenting the findings of a committee headed by Nobel Prize-winning economist Joseph Stiglitz, the president said new measures are needed in the wake of the financial crisis, which was triggered by an over-reliance on free-market principles. "If the market was the solution to all problems and was never wrong, then why are we in such a situation?" asked Mr. Sarkozy. "We need to change criteria."
Stiglitz and Sen must have influenced the French president to think along these totally erroneous lines. And I wonder how much these two Nobel laureates in economics received from the French taxpayers for their wrong-headed opinions.
First: The financial crisis did not occur because of “over-reliance on free market principles.” There is a worldwide recession today only because governments interfere with money and credit, thereby creating bubbles that invariably burst. The real mischief is not the bust; rather, it is the boom – a government creation. Sound money and legitimate free banking are the only solutions to this.
Real Capitalism.
With real capitalism, The State has no role to play in the market; there is a Market-State divide; and The State has only one role in society, which is to bring outlaws to book. This requires judges, policemen and magistrates. No economists are required. No economic statistics either.
The classic example of such a policy is colonial Hong Kong, where Sir John Cowptherwaite refused to set up a bureau to collect statistics fearing that these may fall into the hands of some evil economic planner some day. And see how the little island flourished.
Further, as far as the utility of statistics is concerned, there are unbridgeable differences between economists of the Austrian School and the rest, who subscribe to “positivism” – by imitating the method of physics, which is measurement. As an adherent of the Austrian School myself, I can only laugh at the attempt by economists to “measure happiness.” And surely “per capita happiness” must be a meaningful average!
Much nonsense, on very big stilts.
however,i wonder what will incentivize the state to just restrict itself to booking the outlaws.the minarchist position is on a slippery slope .even friedman for all his freedom-loving ideas could not resist keeping the monetary control with the central planner.
ReplyDeletePrecisely: Friedman was a "positivist" favouring measurement; only he would measure different things - like money supply, the rate of inflation and the rate of unemployment - to advise the monetary central planner.
ReplyDeleteThe global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution...
ReplyDeleteThe mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
Read this link on Rolling Stone magazine; it's by MATT TAIBBI. I don't think the government's at 100% fault, like how you portray it to be on your one-sided, blind blog.
http://www.rollingstone.com/politics/story/26793903/the_big_takeover/1
@ Rishikesh:
ReplyDeleteIf gold and silver were money - as nature had intended them to be - no government, no crooks, and no businessmen or bankers would be able to artificially "stimulate" economies by "increasing the money supply." Since there would be no booms, there would be no busts. Growth would be steady and uninterrupted.
For further reading and reference i'm posting one of sauvik's article on Sir John Cowptherwaite.
ReplyDeletesee below:
A case for liberalism
Guest Columns by Sauvik Chakraverti,
The Newindpress on Sunday, 2007-2008
http://chandra-armyofman.blogspot.com/2009/06/case-for-liberalism.html
This comment has been removed by a blog administrator.
ReplyDeleteCaught an interesting side insinuation from your article. Are you suggesting that a completely free market would make economists completely irrelevant? That a free market, devoid of statism, would make economics a profession for watchdogs, rather than researchers.
ReplyDeleteMaybe im reaching. But id like to know what u think about it.
white templar,
ReplyDeletemurray rothbard already addressed this question. free markets would have use of economists.but as teachers. they could explain the working of the market meachanism. great articles like 'I,Pencil' could be penned.people like bastiat would be revered instead of krugmans and g'spans. they clearly would not have advisory roles -especially to the govt.
researchers obviously will continue to have a role.it is not as if all that is to be understood in economics is already known. people like Marx etc will continue to be born and as long as freedom of speech exists all sorts of ideas can be propounded.Only their influence on govts/money would be zero.they may influence people's outlooks and behaviour (dont libertarian writers like sauvik do?),but they would not be in a position to impose anything thru state violence
to add further, the real reason I see economists being in so much demand is because banking is so big. in a free market,especially if FRB is outlawed(not a strict requirement in my mind -the market will take care of it),bank profits will be inline with the value of the services they provide and not derived from their position in the money chain (ie Central bank-commercial bank-big business-big labor------pensioner).
ReplyDeletethe bogus need for highly trained physicists moving to wall street will be eliminated.
Excellent rebuttal, Dyslexic.
ReplyDeleteAll I can add is that the role of economists as teachers will be most important, for the truths of Catallactics must be conveyed to every living mind, again and again, generation after generation.
The greatest task is education - but this certainly does not require The State.
It requires a widespread awareness that this is a subject of vital importance, concerning survival itself.
Just as you learn to climb rocks, pitch a tent, shoot straight and wield a knife to survive in the jungle, you need to know Catallactics to survive in The Market.