Sunday, February 8, 2009

The Emperor's New Economics

We all know who the victims of this economic crisis are -- WE are (particularly, ME and YOU.) It's not so easy, however, to sort out who the culprits of this crisis are. Are they the sub-prime mortgage lenders? The borrowers, maybe? What about the greedy investment bankers who invested in them?

And let's not forget our favorite blame magnet of the times, former President George W. Bush who de-regulated financial markets until they were as free as the Iraqis are now thanks to Operation Iraqi Freedom.

Blaming these obvious targets may be emotionally satisfying but is not especially helpful. After all, the usually rhetorical question "What were you THINKING?" actually has an answer this time. All of these guys were getting fat on the intellectual fast food that a few fancy economic theorists sold to the world a few decades ago: namely, that greed is good, untrammeled markets can be trusted and cowboys make good world leaders.

Let's face it -- the investment bankers and mortgage lenders are the "practical thinkers" and Bush and his devoted followers are the "madmen in authority" that John Maynard Keynes referred to in his General Theory of Employment, Interest and Money: "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." Year published? 1935.

Now that these economic theories are defunct -- or at the very least -- deflated, it seems that Cowboy/Emperor Bush was in fact marching through his presidential term wearing nothing but a bunch of fanciful theories spun out of thin air.

Have the neo-liberal, free market theories really been shown to be lacking in substance, or are you still a follower? Vote now!

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