Calling the American People Stupid
I just read a piece by Dean Baker (he calls himself the following: "macroeconomist and co-director of the Center for Economic and Policy Research
in Washington, DC. He previously worked as a senior economist at the
Economic Policy Institute and an assistant professor at Bucknell
University.") in which he condemns a fellow MIT Economist, Johnathan Gruber, for calling the American people stupid, in Gruber's sense having to do with the Affordable Care Act.
Baker starts out defending the American people as not being stupid but rather simply just "ill-informed." I was immediately hollering bullshit as I read the article, which in a way turned into a defense of Economists. As I have written for six years on this blog, Economics is not a science; it was once studied under Sociology departments as a tool for measuring wealth and poverty in a society using "fact"-gathering observations and statistical conclusions based on "guesstimations."
[What is an Macroeconomist? Well, here's the Wikipedia definition: "Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indexes
to understand how the whole economy functions. Macroeconomists develop
models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets."]
Do you understand the role of statistics in this profession? The first course I took in Economics, before 101, was a course in Statistics. The first book I was given to read in Statistics was entitled, How to Lie With Statistics. In those days before Economics broke away from Sociology to become a part of the Schools of Business, all Sociology and Economics majors depended on calculators (the old fashion kind) to crunch numbers in their statistical studies. For my first statistical problem, I did a paper on "The Infant Death Rate in Texas." My conclusions in this paper were based on guesstimations as to what was behind the infant death rate and what was the solution to lowering the infant death rate neither of which I supplied in my "rigged" paper.
My point: I have called the American people "stupid" for many years now. And they are stupid, I don't care if they have 6 degrees from Harvard and 3 from MIT. Most Americans are stupid not because they aren't smart--there's a difference to me--but because they are full of bullshit reasoning based on their believing in the American Dream (nothing comes from a dream but confusion), believing in gods that don't exist (except in fables, myths, Holy Bibles, and fairy tales), believing we are an exceptional nation, believing that we are a democracy, believing that rich people are the smartest people on earth because they are rich...you know, dumb thinking like that. I call a person stupid who believes in lies over truth (reality is the only truth). Intelligence unused leaves the intelligent one stupid, doesn't it?
The following is an excerpt from a current Counterpunch article by Ismael Hossein-zadeh explaining how classical economic theories are "old-fashioned" (out of date) in terms of what modern economists are calling FIRE (Financial Investing and Real Estate), where investors are investing in financial markets and real estate rather than reinvesting their profits in capital improvements, borrowing to invest in the real economy, the economy of the classical economists. In classical economics, money is considered merely a means of exchange. It was in the late 80s with the advent of desktop computing, that money became a commodity.
"The following are a few additional examples of the
astronomical growth of the FIRE sector during the past three decades or
so: Between 1980 and 2005, profits in the financial sector increased by
800%, more than three times the growth in non-financial sectors. In the
early 1990s there existed only a couple of hedge funds; by 2007, their
number had grown to 10,000. The number of mortgage brokers, replacing
old-style Savings & Loans and regional banks, has likewise
mushroomed in recent years/decades: 50,000 thousand of them, employing
nearly 400,000 brokers, more than the whole U.S. textile industry [emphasis is mine].
As the (unusually candid) manager of the hedge fund Raymond Dalio of
Bridgewater Associates bluntly put it: “The money that’s made from
manufacturing stuff is a pittance in comparison to the amount of money
made from shuffling money around. Forty-four percent of all corporate
profits in the U.S. come from the financial sector compared with only 10
percent from the manufacturing sector."
"As noted earlier, the neoclassical “circular flow” and/or “general
equilibrium” model/theory is built on the basis of a near-barter
economic paradigm, that is, an economy where money is implicitly treated
as largely a means of exchange or circulation, not as an ideal or
ultimate repository of the accumulated or concentrated wealth. In this
model, financial cycles neatly follow real cycles: they expand when real
cycles expand, and contract when they contract. As such, there is
hardly any possibility for financial bubbles to emerge and expand
independent of the real sector of the economy—the financial sector is
treated essentially as a service or subsidiary sector to the real
The circular flow model (like most other models) can, of course,
serve as a useful tool or concept for analytical purposes. It is
designed to show what happens when/if the circuit, or circular flow,
breaks down, and what to do about it. The problem is that mainstream
economists seem to have been stuck in the abstract model, in the earlier
stages of capitalism, unable to see how in the era of giant banks and
other colossal financial institutions finance capital can (and does)
grow independent of industrial capital, thereby leading to financial
inflations, followed by implosions.
"It might be argued: who cares whether a financial bubble follows a
real sector expansion or whether it is formed ab-ovo, i.e., in the
absence of such an expansion. Such a distinction, however, is critically
important to an understanding of how in the age of advanced financial
markets finance capital has become largely independent of industrial
capital, and how it has therefore undermined the neoclassical concepts
of general equilibrium, of circular flow mechanism and of national
savings as the main source of supply of money—in short, how it has
rendered the neoclassical economists’ theory of credit creation, of
investment financing and of money supply obsolete. Sucking financial
resources from the rest of the economy, as well as generating fictitious
capital out of thin air through speculation/gambling, parasitic finance
capital feeds on itself—just like a real parasite. Neoclassical
economists have not, so far, been able to reconcile the financial sector
with their circular flow and/or general equilibrium model. Sadly,
instead of trying to incorporate the financial sector into their real
sector model, they have chosen to ignore it lest it should disturb their
shipshape, convenient model."
Ismael Hossein-zadeh is Professor Emeritus of Economics (Drake University).
Have You Noticed?
My old friend and colleague Barabbas Munn-Dayne noted this to me about how since the Republican sweep of the midterm elections, Koch Industries (yes, that's the evil Koch Brothers) ads are appearing on teevee by the droves. These ads glorify Koch Industries as a great job source, as fueling the rebirth of the American economy, and as providing research and scholarship in promoting new ideas and industries. I happened to catch one the other day during a college football game. It was sickening. What a bunch of self-promoting bullshit. Of course, the autocratic Koch brothers don't write these commercials, a bunch of silly souls like I once was (in advertising for over 30 years in NYC) brain-storming away in the war rooms of the biggest advertising agencies in the country. "How can we make these aristocrat assholes look benevolent?" the account exec swoons. "How 'bout a pack of lies emphasizing the wonders these benevolent brothers do?"
I say, "Fuck the Koch Brothers," but then they are filthy rich so they must be righteous priests in the Money Theology game, the worship of the great god Moolah. Money is the Koch Brothers' GOD; hell, MONEY is the GOD of us all.
for The Daily Growler