Economist doesn’t understand economics

In the first instance there is an economic concern. I explained recently that what economists invariably assume when undertaking their work is that the world always returns to what it calls ‘equilibrium’. You might as easily refer to that as ‘normal’. The assumption is that everything deviates from a mean, to which it returns.

No.

As in, Fuck No.

Equilibrium is balance. The entire point of Keynesian economics, for example, is the proof that there are multiple equilibria and that it is not – necessarily – true that the economy will stabilise at the previous, or indeed any specific, equilibrium.

It is true that there’s an assumption that an economy will return to balance. But absolutely not that it will return to the same balance as before, to normal. If this were so then the entire subject of macroeconomics wouldn’t be worth even thinking about now, would it? Because whatever the hell happens nothing need be done, eh?

It is entirely because there is the possibility of a move to an undesirable equilibrium that there’s even discussion of our having a macroeconomic policy set.

How is it that the P³ always, but always, manages to grasp the wrong end of the stick?

10 thoughts on “Economist doesn’t understand economics”

  1. He has never even looked at the stick. How do you think he could set about grasping it? Orating from a position of total ignorance might seem odd to normal people but el Spud is the leader whom the times demand. He comes armed with certainty. No argument can pierce the armour of his self-regard

  2. ‘… , is the proof that there are multiple equilibria and that it is not – necessarily – true that the economy will stabilise at the previous, or indeed any specific, equilibrium. It is true that there’s an assumption that an economy will return to balance. But absolutely not that it will return to the same balance as before, to normal.‘

    Now replace ‘economy’ with ‘climate’. You have just explained the current fallacy of climate change, that we must stop change to keep it in balance…. some imaginary default, ‘natural’ perfect state. Change of climate is not unidirectional, it has never been a system at rest, but which occasionally moves a bit too and fro around a mean to which it always returns.

    Remarkable that you understand this for economics but do not see the parallel for climate.

  3. Bloke in North Dorset

    “ Orating from a position of total ignorance might seem odd to normal people but el Spud is the leader whom the times demand. ”

    Thar is one lesson that Spud has learned, and learned well, if you’re going to talk bullshit, talk it confidently.

  4. “The P3 is now on the Alex Salmond show on RT”

    Judge a man by the company he keeps. So both of them are vile scum

  5. John B

    I don’t think you’re being fair to our gracious host.
    The alleged climate catastrophe is nowt to do with natural equilibrium being desirable.
    It’s based on a belief that doing bad stuff to the atmosphere etc can change the equilibrium we have to a different one whose characteristics we would deeply dislike because if it’s effects.

    The question is simply whether or not we’re disrupting the equilibrium and if so whether we’ll end up in an unpleasant new one.

    To me the data says nope. Perhaps a bit warmer, for whatever reason, but nothing bad

  6. The ‘Balance of Nature’ is bolx too. Strangely people who believe in in also believe in evolution and survival of the fittest. They also think there is a correct state of ..whatever, nature, climate, the economy and any departure from this state is automatically undesirable.

  7. “Invariably”
    So anyone, such as Tim, who disagrees is defined as “not an economist”
    The Ministry of Truth rules!

  8. Tim

    You need to add either quote marks around ‘economist’ or the adjective ‘self- proclaimed’ and you can substitute in any subject in place of economic, the man’s staggering ignorance is without beginning and apparent end.

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