The horizon is not so far as we can see, but as far as we can imagine

The Bailout Caused the Sucky “Recovery”

This will be another brief post.  Bailing out banks, brokerages and so on in the way it was done had the following effects:

1) Fewer, larger financial institutions.  Too bigger to fail.

2) Rewarding people for outright fraud and insane risk taking. Remember, they kept their bonuses and salaries, they are rich, even if they belong to one of the few companies that went under.

3) A huge overhang of bad debts which has to be worked off.

4) An understanding that financial profits are still the way, you, personally get rich.

5) Making the rich, richer (yes, they are richer now)

The reason the economy has not recovered and will not recover for at least a generation is because of the overhang of bad debt, the glorification of financial “profits” (they aren’t), the failure to de-financialize the economy and the confirmed control of government by the rich.

In other words the bailout caused the sucky “recovery”, or, if we are to be honest, the current long Depression.

The standard argument is “we had to do something”.  Yes and no.

1) We could have done something else, like nationalizing the banks, making bondholders and shareholders eat their losses, taking what remains and putting it in bad banks, then breaking the banks up and re-privatizing them.

2) Actually, if we’d just let them go under per the law, with the FDIC taking them over, things would have been worse initially, but there would have been an actual, robust recovery when it occurred.  By now you’d be better off.  And the shock could have been cushioned with generous EI, letting people stay in houses and so on.

TARP, though it actually wasn’t the key bailout (those were done mostly through the Fed) is when Obama said “I am going to keep the same people who caused this mess in power in the financial system, make sure they don’t lose their money, and that’s just too bad for everyone else.”  When he confirmed that Bernanke was to stay on, he confirmed that he was, essentially, ok with what had happened.

The bailout decision did not “save the world” instead it doomed a good chunk of the world to twenty years of a shitty economy, minimum.  Forget the unemployment rate, the percentage of Americans employed hasn’t recovered, and won’t, and that’s before we talk about Europe.

This is the first of Obama’s legacies.


Progressive Blog #Fail: Moral Failure or Demographic Doom?


Why Obama And Democrats Don’t Do Much of What Liberals Want (Netroots Failure: Part 2)


  1. Jerome Armstrong

    It’s bigger than just the first of Obama’s legacies, it’s the September 2008 ideological bridge, from Bush to Obama, that sealed the deal to elect a like-minded, fully compromised President to enact this agenda.

    There were a lot of things that could have been done other than giving the Wall St. gambles 100 cents on the dollar for their losses.

    It’s nonsense that they were too big to fail. There was more than enough smarter money on the sidelines to scoop up their loss for another’s gain. Banks go down? Too bad, .10 cents on the dollar is what you get. Some will lose millions– that’s the way it works (you’ll get the max of what’s insured by the Gov’t’s backing). It would have been a one-time flush-and-done. For the truly innocent caught up in the banksters scheme, it would have been fine, and popular, to see the politicians provide government influx of capital through public debt.

    I don’t trust a single politician or person that was complicit, in deed or word, that rowed alongside this fear-mongering money-grab. Because you are right Ian, instead, it’s 20 years of financial pain across the population, hurting the earning power and upward mobility for a generation.

  2. Ian Welsh

    People forget that at that point the election was in flux, it was close at that moment (I remember it was the only period when the Obama campaign reached out to us, they were worried)

    McCain blinked. I honestly believe that if he’d come out hard against TARP he would have won.

  3. David Shaughnessy

    Since I’m here …

    Yes, the “recovery” simply isn’t.

    Obama’s economic plan has two components: 1) asset bubbles; and 2) cheap carbon fuel. That, of course, is not a long-term economic strategy. It doesn’t even pretend to be. Instead, the Confidence Fairy was supposed to swoop down and sprinkle happiness so the American People would rush out to the malls and spend money we don’t have. Just like in the Good Ol’ Days under Bush. But the Confidence Fairy never showed because people now realize that income is not the same as asset inflation. What comes next? Well, since the asset bubbles have been inflated like never before and are still being inflated every second of every day by the Fed, they will, presumably, keep expanding until they inevitably burst. And guess what? There are no financial gimmicks left to paper over the collapse when it comes next time. The Fed is out of ammo.

    I agree re: the bailout. It would have been far better to let the banks fail because the alternative is much worse. We have locked ourselves into this pattern where the bailout never ends and now the Fed is TOO FRIGHTENED to stop QE. I had several screaming arguments with Barney Frank’s staff about it but the Very Serious People were all in agreement that it had to be done. A sure tell that a grievous error is being committed.

  4. RJ

    When over 8% of the US economy is devoted to shuffling money around, you know something is wrong. The definition of parasitic rents. The linked picture only goes to 2008, but it was still north of 8% in 2012. It also looks like if you remove the Great Depression, 1900 to 1980 averaged around 3 – 4%, which still seems high but not crazy.

  5. Pachacutec

    People forget that at that point the election was in flux, it was close at that moment (I remember it was the only period when the Obama campaign reached out to us, they were worried)

    I remember well. I was talking and sending posts you wrote about this in real time to Michael Strautmanis and lobbying to get these ideas into the conversation of the campaign, if he could. He was the one sent to deal with us. I still have the emails. He was just handling us and trying to use engagement with us to keep tabs on any negative press.

    It was not a sincere effort.

  6. Ian Welsh

    David: yeah, at the time my stuff was going to Dodd’s office, I know that for a fact. Didn’t do any good.

    The funny thing is that that Wall-Street hates Dodd-Frank. It’s irritating to them, but doesn’t stop much that matters. Dodd was relegated to shilling for non-financial firms post-Congress. He might as well have written a good bill, he got no credit from the financiers for pulling his punches and the other side hates his guts for prior behaviour.

    RJ: and the percentage of profits is much higher, which distorts the economy massively.

  7. Everythings Jake

    The moment he voted to let the telecoms off, it felt evident that something was terribly wrong, kudos to Paul Street, Adolph Reed and others who sussed that out much earlier. Then, the announcement of his transition team was a kick in the head.

    I hope a part of his legacy is a backlash against propaganda. This administration often sees better PR as the solution, and it feels to me like its wearing thin, even among those of my friends and acquaintances who were his most ardent supporters. It’s taken 5 years, but I’ve finally started to see mainstream journalists start to parse the language used in press briefings (we “are not and will not” spy on Merkel prompted at least one reporter to wonder about the lack of past tense). I don’t think they’re going to rise to that level where they agree on the underlying ideology, but it’s something, a welcome moment.

  8. Greg T

    I recall reading that Barney Frank had cut a deal with hank Paulson to allow mortgage writedowns in exchange for TARP funds. Paulson agreed only if Barack Obama , then a presidential candidate, agreed to it. Obama refused, thereby providing evidence he was Wall Street’s preferred candidate from the off.

    The unconditional bailout was the worst policy decision that could have been made. There was no meaningful quid pro quo at all. And the lesson learned by these criminal bankers is that crime pays if you control the government .

    I suspect another financial crisis isn’t too far off since nothing was done to actually reform the way business is done.

  9. Joe

    Just to make everybody’s head explode here, and tie this into earlier conversations…

    You could circulate this at your average Tea Party gathering, and probably get 60-70% of the people you encountered to agree with this, including the part about the alternatives.

    You could circulate this at a Gary Johnson event, and the figure would be close to 100%.

    I think there are 2 choice before everybody here:

    1) Obsess about who you will or won’t ally with, and who must get credit for these notions.

    2) Focus on making this a meme of common currency, and offer boosts and support (even if just links, reach–outs, etc.) wherever it will spread, especially to audiences you would normally consider hostile. Then share across those lines re: efforts that are reaching beyond the Internet medium, and successfully embedding it.

    What you do with success once #2 is achieved is another topic. But one prescient commenter mentioned in a different post that help with the deconstruction may be more viable than a construction alliance.

    Fine. I think the nexus point we’re hitting is serious enough that you’ll find agreement from other parts of the spectrum that the deconstruction is important enough to be its own closed chapter, regardless of where things go from there.

    So, it isn’t an alliance, exactly. More like co-belligerents. And that’s OK as a starting point.

    One more shot at making everyone’s head explode… right under “co-belligerence,” file “conversation” as goal #2. Why? Because your notions have failed on a massive and immoral scale. And so have theirs.

    You can’t bring back the 1960s, and they can’t bring back the 1980s. We start from a place where the resources each solution implicitly depended on are no longer in place. We are confronted with a deep systemic crisis, and need to think anew. Both sides are going to have to swallow hard and reconsider some deep points. But rather than doing that confrontationally, what if we begin with “people have intrinsic value, and are to be governed not ruled”? That’s a productive beginning that can lead to very good conversations, if we can move forward from that into “ok, how did we get here, and what’s the core problem set?” “How do we prevent a gattaca panopticon future?” “What does “better” look like?”

    That conversation is unlikely to build one ideology. It may build 2, or 3. But if each one of them retains a connection to the founding “people have intrinsic value, and are to be governed not ruled”, and is adapted to where we begin from now, they will ALL be better than the options currently on offer. Along the way, tactical victories improve the odds of a better future for all no matter who wins, and may help lay the foundations for a variety of things the different sides see as positive (possibly for different reasons, but fine).

    Final point… look at the disaster unfolding over the 1-party implementation of Obamacare. ANY of the major reforms y’all are contemplating are AT LEAST that big. Which means the only possible way to get there is “Conyers-Amash,” or some variant of the principle that’s even more inclusive.

    Think about it. You may end up with more friends than you think.

  10. Indulge me as I toot my own horn. About a month after Bare Sterns collapsed, I posted Euthanize Wall Street to save the economy, which included a link to something Ian wrote on The Agonist. Remember those days? Impose a tax on speculation

    Once we have eliminated the big Wall Street institutions that have been essentially looting the economy, and redirected the financial system back to providing capital for capitalism, we need to ensure that speculation does not again become a problem. The best and easiest way to do this is simply to tax speculation. In Why Financial Crises Will Keep Happening Ian Welsh explained how returning the top income (incomes over $5 million) tax rate to the 75% or even 91% of the 1940s to 1970s will eliminate much of the financial manipulation that ultimately saps the strength and vigor of the real economy.

    Reading Ian’s great posts of the past week or so, on creating a new ideology, and on how the progressive bloggers lost, I am left wondering if we really have any idea of what it takes to when. Frankly, no one I’ve seen yet is directly challenging the underlying paradigm of neo-liberalism by putting forward the simple truth of how much rebuilding we need to do, and how much employment will be created. People ARE challenging neo-liberalism, but by harping on its flaws and ill consequences. But, actually, we need to, and can, paint a picture a bright and promising future. As I wrote a month and a half ago, in We have the skills needed. But what future are we building with them?:

    …the inadequacy of our public discourse would be comic, were it not paralyzing us by foreclosing entire menus of policy options. On the left, the increasing numbers are allowing themselves to be seduced by Marxist and socialist critiques, willfully ignoring the surfeit of failure of those schools of political economy. Even the best, most progressive economists, such as Robert Reich, Paul Krugman, or Joseph Stiglitz, are simply not thinking in large enough terms to be truly useful. Look at the myriad postmortems of the financial collapse this past week, the fifth anniversary of the implosion of Lehman Brothers. Did Obama save us from a Second Great Depression or not? Was the $750 billion stimulus program enough, or not enough? (Or, as the hopelessly misguided wrong-wingers choose to believe, too much?) In point of fact,the International
    Energy Agency estimates a serious effort to combat global climate change will cost $45
     And that is to meet a goal of only a 50 percent cut in

    ….We need to generate, allocate, and distribute something on the order of $100 trillion in credit and financing to build the new, sustainable economy we need over the next ten to twenty years – in addition to and while maintaining present levels of financing of day-to-day economic activity. Yet the screech monkeys on the conservative side assert we’re already spending too much?!?!  Given the proper understanding of the technological and environmental crises confronting us, promoting the general welfare absolutely requires we find the means to spend that kind of money.

    $100 trillion sounds like a lot of money. But spread over ten or twenty years…. And, always keep in mind that Wall Street and the futures pits in Chicago turn over some $4 trillion to $5 trillion each and every day.

    Now, excuse me, but I really do not think we need to create a new ideology. All we really need to do is resurrect the ideas and ideals of the American Revolution. In The Federalist No. 10, Madison argues that economic inequality will arise because of “different and unequal faculties of acquiring property”, but the price of preventing economic inequality  — ending liberty — is too high. Madison’s discussion here implies a crucial point that most people, including scholars, pass over. Madison is not arguing that economic inequality is desirable or even acceptable. Rather, he is arguing that it is inevitable, and, moreover, economic inequality is so dangerous and so pernicious, that the entire framework of government is being erected with an eye toward checking and corralling its political effects.  Just look at the first words of the last sentence from this passage:

    So strong is this propensity of mankind to fall into mutual animosities, that where no substantial occasion presents itself, the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts. But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government.

  11. draftmama

    We’ve just about given up. We are 60 ish, ie I’m on Medicare and have finally got a new hip which was denied for two years on private insurance, my husband is younger and fit as a fiddle. We live on 10 acres in the west, raise all our own food, realize that we are on our own and can’t change anything substantive. Lucky for us we live in a valley with no industrial agriculture and no oil and gas reserves so are unlikely to be poisoned. We do however feel bad for our children

  12. S Brennan

    Will Obomer’s final act of cutting SSI & Medicare effect you?

    As for me, a little younger but not by much, my shaky future was turned into a “work until I drop” by my business losing all of my distributors/customers during the downturn, appendix burst w/ the insurance-pre-existing fraud, inability to find work until 2011, think what 3 years without income would do…and remember, no safety net for the self-employed. All my savings/home equity wiped out.

    I know Clinton opened Pandora’s box by rescinding FDR’s carefully constructed financial firewalls and by allowing CDO’s / CDS’s to go unregulated [h/t to Eric Holder], but there is a special place in hell for the siamese twins…Bush/Obomer, both of them, merciless sociopaths.

    Fortunately, Bush’s cheerleader have wised up, but Obomer can still count on his cheerleader to help him in his final push to destroy/”privatize” Social Security / Medicare.

    A new definition for insanity might be…voting for Bush/Obomer twice.

  13. S Brennan

    FYI, the final cost is not in, [for me], but ObamCare/Romney Care/GingrichCare/HeritagefoundationCare, will cost me between 350-550/month. That’s to maintain my doctor, my insurance premium increase is steep and because Canadian drugstores packages are starting to get intercepted by an invigorated enforcement by the Obomer admin. I can still drive across, but rumor is, Border Patrol are soon to start asking about prescription drugs. That’s quite a hit to my savings plan.

    One thing I find puzzling is the belief that older are being subsidized by the young. The truth is all those unable to insurance at work because they are seriously ill people, will be supported by those who have to buy “independent” policies [15% of the population will be responsible for 100% of the sickest patients who don’t qualify for Medicaid]. FYI, none of exchange plans in my state had my medical group / Doctor in plan…except the medicaid based plans for people with income below $1,700.00/month.

    In 2008 Obomers biggest donations were from; medical insurance 20 million, FIRE sector 17 million, Pharma 12 million…so the only free loaders were DoD contractors who got a continuation of Bush’s endless wars as a surprise bonus with Obomer.

  14. Lambert Strether

    Mission accomplished!

  15. Lambert Strether

    @tony Yes, because TINA. I view Ian’s posts as part of an effort to think through alternative(s). That’s a good thing.

  16. Ian Welsh

    Old ideas lose their power in the forms they are in and need to be recast for the times.

  17. S Brennan

    Agree/Disagree Ian,

    In my time the most important development was the rejection of FDR policies in favor of a return to 19th century economics…sans mercantilism. This “markets always do the right thing…greed is good…drown the government in a bathtub” was repackaged as “new & improved” by Milton Friedman. Within a decade, it had returned the USA to economic boom and bust, blatant public corruption, environmental disaster and a headlong race to the bottom for workers.

    Countries that continued with a well regulated market system performed better overall, but in 2007 were dragged down by US toxic/fraudulent financial paper.

    The “new & improved” 19th century economics of Milton Friedman was still the same old shit, countless of my friends were taken in by this…and almost none of them can remember their hand in this huge reversal of fortunes for the US.

    A lot of “new & improved” is just repackaged crap…just look at a lot of software “upgrades”. CONSERVE that which is good, while analyzing/testing new ideas on a small scale. In the USA, a good future relies on returning to the social structure that worked for forty years and was rejected during a malaise caused by skyrocketing oil prices and a large population entering their peek consumptive years.

  18. Ian Welsh

    I’ve written extensively about the end of New Deal in other posts and other blogs, you know this Brennan.

  19. S Brennan

    No doubt Ian..and you have also correctly pointed to the 1970’s as the time when we got off trail. My point is that we need to get back on the trail to progress…why did we stop dreaming? Because we got lost.

    Neil DeGrasse Tyson is on this subject and has a message that is pretty close to Jerrome’s on the close mindedness [some of it purposely orchestrated by DLC types] of both sides. There are plenty of conservatives [not right wingers] I met in the south that share the majority of my views. Bernie Sanders is down in Mississippi working it, while many commentators here think he’s nuts…I don’t.

    Until Democrats give working class a reason to vote, they’ll stay home.

  20. Formerly T-Bear

    Tony Wikrent October 30, 2013

    You will need lot less brain bleach using Bear Sterns rather than bare Sterns, but it does bring a smile.

    My opinion is that you’ve touched upon some underlaying problems of the times. The absence of any competing economic doctrine is the result of three generational assault to discredit and eliminate Keynesian economics from conscious considerations, the work of the Chicago School of Economic Phrenology abetted by the Harvard School of Business Perfidiousness and London School of Economic Legerdemain. They have succeeded, TINA.
    The Keynesian record still exists though and can still be accessed, dated as it now is, and from that evidence, look anew at the economic process, and what has changes since Keynes observed, analysed and recorded the economic dynamics of his day and the shifts that have taken place since. This is not a place where ideology or opinion have much to contribute to obtain a current perspective of economic dynamics, from which reconstruction can be based. The major obstacle is displacing the neoliberal edifice that has been constructed, vested interests will not allow modifications perceived as detrimental to those interests and will protect their position to their dying dollar, their grip on power is impossible to overcome. The only possibility to defeat such forces seems to be allowing for their collapse through the economic contradictions inherent; these interests can only be defeated by themselves. In the meantime, TINA must be removed and an economic system put in readiness to install when the mandate from heaven has passed the present regime. Be very careful of what you choose as your enemy, the danger is that you tend to become like that enemy, you don’t want to become the face of corporate, hierarchical authoritarianism although all three are necessary tools of power; knowing those tools, controlling those tools and using those tools correctly is required; history contains many examples of both what and what not to do, giving invaluable guidance. Also of great danger will be the political/economic demagogues along the way, offering facile and wondrous economic elixirs guaranteed to solve all problems – read the guarantee carefully, not all guarantee is worth the paper its written upon, too good to be true is just that.

  21. John Mc

    I agree the bailout caused a “sucky” recovery. And your points are spot on:

    1) TBTF & Monopolies – less stable and more concentrated power
    2) Perverse Incentive Structures & Greshman’s Dynamic (bad money pushes out good)
    3) Externalizing Debt onto the Public (Socializing losses)
    4) No underlying changes of behavior (Profit first, Privileging private wealth above all else)
    5) Wealth accumulation inequalities

    However, I think the most problematic aspect of what has happened since the 2008 crisis level events occurred is that “trust” is being manufactured in ways that mask or pretend that fraud did not occur. Maybe this is a desired outcome for those who excel at gaming the system (see LIBOR, Bid rigging, HFT, and commodity manipulations).

    However, one question that does not get asked enough is: How can trust be regained in rigged markets? This is where our history can help us – Ferdinand Pecora. Only once we remove those elements which are fraudulent and hold them accountable as a signal to others will a recovery begin to be remotely possible regardless of the details of the current marketplace (i.e. TBTF/incentives, pay-to-play ideology etc.)

    I liken it to a surgical procedure (angioplasty), where debt is a metaphor for cholesterol. It is this false belief that the patient (banking system) nearly died, but we are all better now since one artery has opened up. Cardiac output is stabilizing and the patient whose vessels were internally inflated can now rest assured he is on the road to recovery. The underlying root causes are neither discussed except as a called for an individual to make better decisions.

    There needs to be a signal to market participants and the public (as I wrote on Yves Smith’s blog) that behavior has to change. Specifically, system participants like accountants, lawyers, appraisers, loan originators, government agency employees, task force regulators, brokers, bank employees, business journalists, and media need to see what is happening with their eyes wide open as many of these professions were suborned into facilitating fraud and then covering it up in the name of saving system or pretending that there is no problem. Unless we go to the heart of the problem, control fraud, we risk it occurring again and again, this time with monopolies who have greater power, system understanding and stable supports.

  22. LorenzoStDuBois


    As a long-time reader, just want to say I’m glad your blog has recently come alive again. It’s always a treat to see you come up on the RSS.

    I also want to give my two cents about moderating non-spam comments: I just don’t see the upside. The downside is a waste of time for you and for legitimate dissent to be suppressed. The upside is we’ll have to scroll past morons. Sticks and stones man. I don’t see the cost-benefit. Maybe it’s an American-Canadian cultural difference? (I’m from NY.)

  23. Ian Welsh

    I’ve been doing some light moderating. The rules aren’t steady yet, but straight up bald faced lies and/or ad-homs or truly vile speechmay get someone’s comments deleted. Or it may not.

  24. Marcum

    I always wonder if/how/when the Great Recession would have unfolded if Gore had won in 2000. Neo-Liberal Crotch-Rot had already infected Team D. Lack of Iraq War expenditures may have eased budget issues plus A gentler Bankrupcy Code for the millions losing their jobs. But I still think we would have had the same implosion.

  25. LorenzoStDuBois

    Thanks Ian. Love what you do.

    I hope your book has good editing… let me know if you need any help.

  26. Ian,

    Of course I agree narrowly with the points you make about the response to the crisis, but here’s a stab at the larger perspective.

    As a PhD economist I’ve had a lot of brainwashing to undo….

    IMHO now, I believe the underlying problem is fiat money central banking, which enables easy-money-through-leverage-to-those-who-can-get-it, which enables concentration of income and wealth and cooptation of the political system, which enables deregulation of the financial system and gross exploitation via TBTF, and so on. And in America it’s getting worse, not better.

    And now the whole developed world has adopted our monetary system at the national or bloc (EU) level.

    We are likely to experience a monetary Tower of Babel before our lives are over. I and others have called it the Supernova of Bretton Woods II (post-Nixon).

    Last time we were here it was a prelude to war. Maybe this time the ultimate collapse will be so bad and *knowledge so great* people will refuse to go. See Mikio Kaku on The power of public protest at


  27. S Brennan


    Good point about being brainwashed into an Economic belief system, but I add, what happened to you in the extreme, has been done wholesale to the US Citizenry.

    The timing of the propaganda campaign defies coincidence, shortly after the last of those who were working adults during the Depression exit the US workforce [with the help of Social Security & Medicare], a “novel new” approach to 19th century economics was put forth. Sans mercantilism, everything that had failed so miserably before would now work…it only seemed to lack common sense and morality, “but who cares” Milton asked, “if everybody would be better off?”.

    At the time I watched many elders try to school people my age on the dangers of Milton Friedman’s thinking and ceaseless propaganda, but more often than not, an overly confident and historically ignorant young Friedman acolyte, would loudly berate the elder for being a Cassandra type…which indeed they were.

    “And you came out of the war [II] with the widespread belief that the war had demonstrated that central planning would work. It reinforced the lesson that had earlier been driven home, supposedly, by Russia…Hayek and others felt that the world was turning toward planning and that somehow we had to develop an intellectual current that would combat that movement.” – Milton Friedman 1947,

    Milton Friedman was commenting on the Mont Pelerin Council and the determination to create an effective propaganda meme to combat the widely held belief that government can be made to work. That is why I laugh when I hear [not as often anymore] that Economists are like scientists. Consider, here’s a group of men sent as representatives of world’s wealthiest men, contriving to create a “theory” that contradicts widely observed phenomenon, to throw back, as it were, a Copernican revolution…the very antithesis of scientific thinking.

  28. markfromireland

    @ Benign Brodwicz November 2, 2013

    Not just you. When I was a cadet I was packed off to take first a batchelor’s and then a masters in Public Administration [basically a mix of economics and law]. At the time I found it horrific how little dialogue there was – we were taught Chicago School and that was it. If you tried to bring up neo-Keynesian or New Cambridge work you could expect to be shot down. My fellow students were destined for the upper echelons of the Dept. of Finance, and the other major economic ministries such as Industry and Commerce, Agriculture, and of course the Central Bank. Or we went in to law if we couldn’t stomach the ‘voodoo economics’.

    That was a generation ago and the process has continued there was a largely successful conscious effort in Irish academe to wipe out all but one school of thought. Similar processes were attempted with varying success in other EU countries.

    Economics as it is now, is so far as I can determine, a pseudo-science akin to astronomy or perhaps phrenology used by the ruling class to keep the apparatchiks in thrall.


  29. Ian Welsh

    I have no innate interest in economics beyond some intellectual curiosity. I took the time to study it because it became clear to me that how we were running our economy wasn’t working.

    I use the model of Roman Haruspices: it exists to give an excuse to do what those in power want to do already. That’s not to say there are no insights, but they are weighed down by fantasies unmoored from actual historical experience.

  30. S Brennan

    Ian, I’d conjecture that auspices would be predicated on a more accurate understanding of the natural world.

    My only interest in “economics” is based on the desire to incapacitate those who use it an intellectual shield for our rulers tyranny. All the worthwhile ideas within the religion of “economics” precede it’s incorporation by thousands of years…it has yet to produce ONE worthwhile idea in it’s existence. Even astrology yielded a treasure trove of celestial observations…and a better record of predictions than economics…but so too, would a coin flip.

    That’s why there is no Noble Prize awarded in economics, only a yearly ritual of fraud.

  31. markfromireland

    Ian – Are you familiar with Terry Pratchett’s discworld books? In one of them can’t remember which one right now he mentions ‘reverse phrenology’. Now phrenology as I’m sure you know was the science of determining which character flaws (or otherwise) people had by dint of examining the lumps and bumps on their skull. On Pratchet’s discworld a reverse phrenologist was a medical specialist who used a hammer and a chisel to …

    When I’m in a sufficiently bad mood I have to admit to wishing that it worked on our world and not just on Pratchet’s one!


  32. Ian Welsh

    I haven’t read most of them. That’s an amusing image, however.

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