"We're stupid about the economy" is my title for this blog.
The economic conditions in this country are at the absolute forefront of the minds of Americans. Politicians are clamoring for a perch on the precipitous wall of economic recovery. Economists have trumpeted we are on the way to recovery, just one more bend in the road and everything will be OK. Pundits are braying "do more" or complaining about "the do nothing congress" in the feverish belief that if only the government could and would act everything would be fine at last. The "working class" feels besieged and betrayed as the best laid plans of the brightest advisers and administrators yield woefully little benefit, and in fact have begun to erode what little economic security remains through food and fuel inflation. Indicators of economic performance are justly suspect, the reciprocal of unemployment numbers do not indicate how much of our population is employed, just as "core" inflation numbers do not represent the actual increase in the cost of living.
Most of America now expects and anticipates and hopes that the latest scheme to "fix" the economy by applying the best and brightest minds will lift the rampant sense of dispair. We just have to have the "right people". Some believe we need a former successful business exec, others like economist Paul Krugman firmly espouse that we just didn't spend enough money to create the necessary jolt to the nations cardiac system.
This faith on the part of Americans, that we can apply evolved thought processes to solve macro socioeconomic problems is based on the fact that in virtually every other arena of science or technology, we have proven ourselves extraordinarily capable of arriving at new and innovative solutions given enough time, money, and brainpower. So, if we can solve all those other challenges, why should it be any different for an economic challenge. This is the paradigm in which we are stuck. This is the universe in which we bang our collective heads against the stars.
The problem you see, is not one of coming to grasp with mathematical or technical solutions. The problem is our very conceit in believing that we are capable of solving macro socioeconomic problems. The very simple, almost unbelievable concept, that human enterprise freed of all but the basic governance needed for the protection of private property, and contract, will over the course of time yield the greatest benefit to all of society is really hard for most people to swallow. The concept for politicians that they can be a hero by stepping aside rather than actively interfering is anathema to their training. You may have heard an executive in private enterprise protecting a star performer by getting obstacles out of their way. A hero politician would do this today for our economy instead of promising future programs.
This nation does a very poor job of educating our populace about economics, and what we do teach follows the precept of most other sciences. We teach economics today with the notion that we understand the combined micro economic decision tree of over 300 million Americans interacting with several billion more people in hundreds of countries around the globe. F. A. Hayek called it the "fatal conceit".
We're stupid about the economy and woefully ignorant of the unintended consequences of our executive rule making, legislative directives, and administrative arrogance. Unless and until we pledge to stop the spiral of conceit we will continually sabotage our own success.
I have attached a link to the Cato Institute website. In this link John A. Allison outlines his view of the causes of our Great Recession. John was the CEO of BB&T Bank, one of the top 10 banks in the country and I think the only bank and one the few CEO's with courage and compassion enough to talk plainly about the state of our politics. He outlines his dissertation beginning with the FDIC.
Steve
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