Do Economists Hate Cats and Dogs?

March 19, 2009

For decades, Bob Barker ended “The Price Is Right” show with the words “Help control the pet population; have your pet spayed or neutered.”  His replacement, Drew Carey, has continued the tradition.  And the world seems to agree.  You’re not a responsible pet owner unless you have Fido fixed so that he/she can never reproduce. 

Beyond wondering why Barker and Carey would use their very public forum with such a large audience to advocate for such a trivial issue, I’m also perplexed that economists haven’t spoken out against this movement.  After all, economists believe that rampant human population growth drives economic growth.  Wouldn’t it be reasonable to conclude that unlimited growth in the pet population would do the same?

Think about it.  Every new pet would consume more dog food and cat food, more dog houses and cages, more collars and leashes, more chew toys and catnip, and more veterinary services – including a booming business in euthanizing them at the end.  Sales of plastic baggies for scooping poop would soar.  Soiled carpeting would need to be replaced, as would chewed-up shoes.  Even strays would contribute to the economy with an expanded need for dog catchers and dog-pounds, not to mention shovels and incinerators to dispose of them.  They’d be a great source of food for some cultures.  Just imagine the boost to the economy!  How could the government have missed all of this in the economic stimulus package? 

I don’t understand this species-oriented double standard.  What are economists afraid of?  That the pet populations could grow to the point where they’d consume all of the planet’s food resources?  That they’ll lap up all the fresh water?  That the planet’s remaining oil resources will be consumed in making plastic chew toys?  That the pet population will become so dense that the per capita consumption of cages will begin to decline?  Don’t be ridiculous!  Their human owners are ingenious enough to devise new technology to conquer all these obstacles to further growth in the pet population.  After all, that’s what economists believe about the human population.  How can we be smart enough to devise technological solutions to human overpopulation but too dumb to manage additional cats and dogs? 

I’m afraid there’s only one conclusion that we can draw from all of this:  that economists hate cats and dogs.  Great, just what the rest of us needed – one more reason to hate economists.


Examples of “Kooks” We Should Pay Heed

September 22, 2008

http://money.cnn.com/2008/09/19/news/economy/siklos_shadowstats.fortune/index.htm

 No sooner did I finish my previous post, suggesting that our next president needs to begin listening to economists who, until now, have been dismissed as “kooks” and “weirdos” by the now-discredited high rollers like Paulson, Greenspan and Bernanke, when along comes this Fortune article with a perfect example – economist John Williams of http://www.shadowstats.com/, who coined the term “Pollyanna Creep” to describe the phenomenom of revising economic data to make things appear rosier than they are. Williams contends that today’s economic melt-down has roots that go back much further than the mortgage crisis, that we’ve been deluding ourselves for many years that the economy is in much better shape than it really is.

No shortage of villains stand accused of igniting the brushfire raging across Wall Street: greedy lenders, gullible home buyers, negligent regulators, numbskull credit ratings agencies, and vicious short-sellers, for starters. Maybe they share the blame. But what if the underlying problem goes deeper? What if the reality is that the US economy has been a lot worse than was thought for a long time, and now the chickens are finally coming home to roost?

That’s the dark thinking beyond what is known as “Pollyanna creep,” a phrase coined by an economist named John Williams and supported by a cadre of other macroeconomic dissidents.

Williams, who lives in California, runs a Web site called Shadowstats.com that trades in the idea that key government statistics have become so optimistically misleading as to become essentially useless. Yes, this sounds a bit like the thinking of the black helicopter crowd, or the plotline of a Matrix movie. But given what’s gone on in the financial sector of late, it doesn’t sound quite so fringe.

The article singles out GDP (Gross Domestic Product) and CPI (the Consumer Price Index) as a couple of macroeconomic statistics that are especially worthy of scorn – overly optimistic to the point that they have been rendered useless, the very point I made in the first chapter of Five Short Blasts. If you’ve followed this blog for any length of time, you know that another favorite of mine is unemployment. To suggest that our unemployment rate is only 6.1% (the current “official” rate) is ludicrous when the annualized rate of weekly jobless claims is closer to 16%. In the past, while still chairman of the Federal Reserve, Alan Greenspan claimed that unemployment rates of 5% or less represented “full employment” and worried about the inflationary potential, all while weekly jobless claims still hovered above 300,000 and while thousands of people in manufacturing were losing their jobs ever week.

Another fringe economist cited in the article is Kevin Phillips, former Nixon advisor and author of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.

In his recently-published and rather depressing book “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism,” onetime Nixon White House adviser Kevin Phillips discusses Pollyanna creep as part of an era of “Bullnomics: the pied-piping of America toward a misleading financial ideology (the efficiency and reliability of markets), buttressed by a spectrum of dubious thinkers, doctrines and enablers.”
Phillips contends that some of the biggest changes to CPI calculation took place between 1997 and 1999, “while the public and the politicians were preoccupied by bull market euphoria and the actions in Congress to impeach Bill Clinton.”
In their effort to reduce Social Security outlays – and buttressed by a belief that CPI overstated inflation – government economists with backing by Federal Reserve Chairman Alan Greenspan implemented controversial modifications to CPI that, among other things, tried to measure increased satisfaction from goods.

 

This Fortune article may be a good sign that, already, the Paulsons and Bernankes of the world are being pushed aside while we begin to look to the “fringe” economists, the “macroeconomic dissidents,” for real answers.

The Pollyanna creep crowd ….  may have some currency. Amid the talk of hundreds of billions in financial market clean-ups, a debate over the accuracy of economic bellwethers may be a can of worms worth opening.


Economists: America’s Worst Villains?

July 29, 2008

http://www.city-journal.org/2008/18_3_economics.html

America is on the brink of what may be history’s greatest economic collapse, similar to but greater in magnitude than the pre-Nazism collapse of Germany. And we have economists to thank – economists advising our leaders and formulating economic policy. This article is a good summary of the sorry state of modern economics. It’s pretty lengthy, so I’ll just comment on a few noteworthy passages, especially the point dealing with free trade.  (It should be noted that the author of this article, Guy Sorman, is a French economist and that France enjoys a large trade surplus with the United States.  No suprise that he’s a big fan of free trade!)

The uncontrolled printing of currency destabilized Weimar Germany, facilitating the rise of Nazism.

History is repeating itself in the U.S. today. The uncontrolled printing of currency to counter the effects of our enormous trade deficit is undeniably destabilizing America. The only question is what will arise in America when the economic collapse happens. Will it survive at all?

Opening economies and promoting trade have helped reconstruct Eastern Europe after 1990 and lifted 800 million people, many of them in China, Brazil, and a now-license-free India, out of poverty. Even in Africa and the Arab Middle East, nations that have embraced capitalism have begun to escape from the terrible underdevelopment that has long plagued them.

Behind all this unprecedented growth is … a scientific revolution in economics, as yet dimly understood by the public but increasingly embraced by policymakers around the globe. … No longer does economics lie; no longer would Baudelaire be able to write that “economics is a horror.” For the mass of mankind, on the contrary, it has become a source of hope.

Here, the effects have been correctly identified, but not the cause. All of this rise in wealth around the globe has been bought and paid for by America – by the transfer of $9 trillion from America’s economy to the rest of the world through its staggering trade deficit. No wonder the rest of the world is thriving! Economics now perpetrates the biggest lie in the history of the world on the American people. It has graduated from being a liar and a “horror” to an abomination.

2. Free trade helps economic development.As Smith observed when his native Scotland began to benefit from free trade, it is through access to the world market that poor nations become rich. … Free trade also makes rich countries richer, economists agree.

We now know that free trade helps poor, overpopulated nations become rich, and wealthy, overpopulated nations to become even richer at the expense of wealthy, less densely populated nations like America.

By importing less expensive goods made in low-wage nations like China, wealthy nations effectively increase their own citizens’ income—and the main beneficiaries are poor and middle-class people, who can buy cheaper clothes, electronics, and myriad other goods.

The evidence speaks otherwise. Incomes in America have been steadily declining since free trade took root and began wiping out millions of high-paying manufacturing jobs. And when incomes decline faster than prices, people are poorer. Period. Regardless of the price of junk at Wal*Mart.

In fact, economists have long understood the law of comparative advantage: whenever differences in the cost of producing goods exist between two countries, both will benefit from free trade, a mechanism that allocates their resources most effectively.

That law has now been disproven by the rapid decline of America’s economy. The “law of comparative advantage” breaks down between two nations grossly disparate in population density. Since it doesn’t even consider the role of population density, it is not a law at all but a flawed, incomplete theory at best. At worst, it’s a failed theory that belongs atop history’s scrap heap of failed theories.

Free trade not only generates the greatest possible growth; it tends to distribute it widely, both within nations and among them. For evidence, consider the emergence of vast middle classes in all free-market societies, as well as the economic convergence among nations that have embraced capitalist economics. After less than 20 years of market-driven growth, Brazil, China, and India—whatever their injustices—are closer to the Western level of development than they were before that growth got under way.

This does not mean, as some observers fret or gleefully predict, that the United States is about to stop leading the world economically. Other nations may draw closer to it—Western Europe in 1950 had a per-capita income half that of the U.S.; now it’s 80 percent—but the American economy has remained the world’s most vigorous for more than a century because of its superior efficiency, demographic dynamism, and innovation.

This is the biggest lie of all. In spite of the listed advantages of the American economy, it has lost badly to predation by the parasitic economies of overpopulated nations. We now stand at the precipice of total economic collapse, our economy having been drained of trillions of dollars of wealth and our assets sold off and placed in control of the parasites. We’ve been transformed from the world’s greatest industrial power – the wealthiest and most envied nation on earth – into the world’s economic laughingstock, a pathetic, hollowed-out shell of what it once was.

There are a very few good, open-minded economists who objectively evaluate the destruction of America’s economy and acknowledge the folly of unfettered free trade. This is not an indictment of them. But the remainder are an absolute disgrace, clinging like drowning rats to the sinking ship of their failed 18th century theories of Smith and Ricardo, in spite of the mountain of evidence piling up to discredit the very “laws of economics” they use to rape and plunder America’s economy. If America survives, a very open question, they will likely go down in history as America’s greatest villains.


The Rising Birth Rate

December 22, 2007

There was much ado on the national news last night about the fact that the birth rate in the U.S. has ticked slightly higher, to 2.1 children per female.  It was explained that “economists” see this as a good thing, because we need more younger people to support the older generation in retirement, alleviating (at least slightly) some of the huge projected social security / medicare deficit. 

It never to ceases to amaze me that “economists” can’t look far enough down the road and question what will happen if we keep “growing” the economy in this way.  It’s because they don’t understand that a smaller population will actually benefit the economy through improved per capita consumption.  In the meantime, slightly higher taxes and tariffs on over-populated nations is all that’s needed to eliminate the projected ss/medicare shortfall.