And the people bowed and prayed, to the neon god they made. And the sign flashed out its warning, in the words that it was forming. And the signs said, The words of the prophets are written on the subway walls and tenement halls. And whisper’d in the sounds of silence. So sang Sinon and Garfunkle in the 1964 classic.
Amazingly even the innumerate Paul Krugman could not positively spin today’s monthly jobs numbers. Today’s report showed that not only did the economy yet again fail to create a significant number of new net jobs, but that an additional 368,000 people fell out of the labor force bringing the labor force participation rate to 63.5 percent the lowest since the stagflation period of the late 1970s.
To this, the great Keynesian could only whimper No News on Jobs. Well no news in Krugman’s imaginary world where digging holes and filling them in creates wealth and where a space alien invasion can bring lasting economic prosperity and joy (see the classic War Pigs entry below), but yet another blow in the real world where firms and their workers actually produce things.
With the two party conventions behind us, there is more than enough nonsense floating around right now, but it has become obvious to all but the most dogmatic proponents of crypto-Keynesian dogma, that wealth, economic growth and prosperity cannot be created by printing money or by randomly taking resources away from one sector of the economy to give to another. At best there is no impact from these policies, and at worse the economy stagnates and the recession lingers.
Dogmatic policy proposals based on a religious belief in a dead economists writings (be he Keynes, Smith, Hayek or Marx) will never make sense in a complex modern economy. What politicians and pundits seem to always forget is that economists abstract from reality. No matter what one of the big name economists on TV says, our models are broad simplifications. This is why economists’ forecasts are always wrong. It would be like asking a weatherman to tell you what the temperature will be on October 3, 2017. They can give you a broad idea of what a normal reading would be – but there is no way they can predict a snowstorm.
Economics is an excellent tool to use to understand the linkages and structure of an economy. It also provides a wealth of historical knowledge and understanding of how things have worked in the past. Marx provides an excellent understanding of monopoly, Keynes an excellent model of demand, and Schumpeter a very well reasoned understanding of supply. Those economists (and their political masters) who can learn from this wealth of knowledge and apply it to current situations should be listened to. Those who preach gospel – like Dr. Krugman, are best when they are silent.