Paul Krugman gave an outstanding talk to an English economics conference about the current "little depression", or great recession.. take your pick. To encourage you to read it directly, I will try to be brief myself. We are reliving the essentials of the great depression, and had even gained a more recent preview via Japan's meltdown and stasis over the last two decades. Yet our central bankers declare themselves "puzzled", and worse still, we are all forced to relive the intellectual battles from great depression which had already been won by Keynes.
Economists have forgotten a great deal. However painful it is to realize, the ideology of ever-increasing progress in education and intellect seems to not be true- it is possible for whole institutions and generations to revert to prior ignorance, at the hands of lazy textbook writers, ideologs pushing simplistic mantras, and greed posing as enlightenment. The paradigmatic case is of course the fall of Rome and the ensuing descent into metaphysical darkness. Krugmann's message, at the end, is that the forgetting of Keynes may be a history we are doomed to repeat, over, and over, and over, and over ...
"By ―unstable, I don’t just mean Minsky-type financial instability, although that’s part of it. Equally crucial are the regime’s intellectual and political instability."
"If we’re living in a Dark Age of macroeconomics, central banks have been its monasteries, hoarding and studying the ancient texts lost to the rest of the world." ... "... sooner or later the barbarians were going to go after the monasteries too; and as the current furor over quantitative easing shows, the invading hordes have arrived."
Such mantras as crowding out, Say's law, monetarism as the sole regulatory tool, and most flagrantly, the government-as-household analogy, are all convenient, easy to teach, and easy to digest fallacies, shown to be fallacies by Keynes 75 years ago. But understanding Keynes is hard- it is often counterintuitive. Thus people, even economists, and most especially economics journalists, fall back into intuitive, relatively mindless slogans that may work on the micro level, but are inapplicable, even dangerous, on the macro level.
This has religious implications, if I may digress. Religion represents easy intuitions and superficial analysis perpetually competing with difficult to understand, or at least difficult to stomach, concepts of realism- of the void and of our true place in the universe. And especially the projection of whatever we value most, fear most, or most hope for onto the cosmic tapestry. In a similar way, classical economics, as Krugman presents it here, is a projection of micro-thought to the macro level.
So the problem is very similar- how to preserve learning, especially counter-intutive learning, in the face of our intution which is always gets the first at-bat? Our most important, devilish problems are precisely those with counter-intuitive forms or solutions. The easy ones were dealt with long ago. Quantum mechanics, religion, most of the remaining problems of philosophy, and macroeconomics are prime examples. When easy intuitions converge with the agendas of interested parties, like the rich in the case of anti-Keynesianism (taking a myopically short-term view of their interests), or the clergy and their brainwashed sheep, the retreat into ignorance can look inevitable and tragic.
- Krugman on greedism.
- Romney- just as nuts as the rest of them.
- Republicans attach sign to self: "We are idiots".
- Al Gore, on science, reason, and the media.
- The importance of better batteries.
- As far as I am concerned, no fish are OK to eat, ever. But if you need a fix...
- RIP Clarence Clemmons.
- But in a bit of positive economic news, another economics quote, from Bill Mitchell
"The news from those that opposed the MFI [Milton Friedman Insitute, at the University of Chicago, which was just closed] is that the University of Chicago has had trouble raising funds to support the institute partly because of the 'declining value of the Friedman name and reputation'"