The dominant economic current, as pseudoscience, leads us to the abyss

Mainstream economists have become a serious problem for society. Some of his proposals, ideas, recipes or economic policy recommendations show a degree of psychopathy difficult to find in other professions. This comes as a result of certain tweets made by the former International Monetary Fund economist, Olivier Blanchard, the same one who in May 2008 assured us that the global macroeconomy was in the best of all possible worlds. Now he returns to the fray and offers us his recipe to fight current inflation, increase unemployment. I’m not surprised. In a previous article, Orthodoxy, responsible for inflation, will generate mass unemployment, we already warned about what they were going to do, they would aggravate the inflation that they have generated with a deliberate increase in mass unemployment. It will be the posthumous work of some sadists.

Let me refresh what those tweets, posted by Blanchard himself on July 22, said. The thread, I open quotes, said the following: “A reflection on the fight against inflation:

1. When inflation stems from overheating, convincing workers that the economy needs to slow down, and unemployment needs to rise to control inflation, is difficult, but at least the logic can be explained.

2. When inflation comes from rising commodity and energy prices, convincing workers that unemployment has to rise to control inflation is even more difficult. “Why should I lose my job because Putin invaded Ukraine?”

3. This makes the work and communication strategy of central banks very difficult.”

Orthodoxy, in addition to inflation, will generate unemployment

Don’t say that I didn’t warn you. The neoclassicists, in addition to inflation, seek to generate unemployment. The whole lot. Couldn’t be more useless. They did not foresee the Great Recession, the work and grace of the largest private debt in history, around different bubbles. And now, this, inflation and unemployment, the result of their recommendations. But they are all still there, occupying positions of responsibility in different multilateral organizations, advising different governments, occupying television sets, attending different radio talk shows, allowing financialization to run rampant and ruin millions of families.

The recipe is much simpler: re-regulate the markets derived from raw materials; end the marginalist electricity pricing system; go to sack for the pure benefits derived from the increase in market power in the different economic sectors; break up companies and banks that have accumulated excessive market power; protect the human rights described in the founding charter of the UN from the dirty hands of financialization… And a final piece of advice, please leave us alone.

The question I ask myself over and over again is why all these simple and applicable solutions were, are, and will be ignored? Why does everything always happen by applying unnecessary harm to citizens? If it were due to incompetence, which it is, there would have already been a policy change. But the reason is different: by class instinct and protection of the ruling elite. And for this they need the cooperation of a well-paid but absolutely inoperative economic technocracy, which makes the system seem even good and healthy.

Economics, in its current state, is a pseudo-science

We are immersed in a deep crisis of vision of modern economic thought. Already in 1995, Robert Heilbroner and his pupil William Milberg published a book with a very suggestive title, which warned us of what was to come, “The Crisis of Vision in Modern Economic Thought”. The crisis in question was a consequence of the absence of a vision, of a set of those shared political and social concepts, on which the economy ultimately depends. The decline of the economic perspective has been followed by various trends whose common denominator was an impeccable elegance when exposing the terms, accompanied by an absolute ineffectiveness in their practical application. And from those muds, these muds.

All economists belonging to the dominant current show a herd behavior, difficult to eradicate. However, there are exceptions, and therefore some hope. One of them is the former Nobel laureate in economics, Paul Romer, who at the time took a step forward, abandoning the dark place of orthodoxy. The economy, at the present time, represented by the dominant current is still a pseudo-science. In The Trouble with Macroeconomics, Romer sings a mea culpa, and gives us a summary that is not wasted. “For more than three decades, the macroeconomy has been going backwards. The ID treatment is no more credible now than it was in the early 1970s, but it escapes the challenge because it is so much more opaque. Macroeconomic theorists dismiss bare facts by feigning obtuse ignorance about such simple statements as “tight monetary policy can cause a recession.” Their models attribute the fluctuations of the aggregate variables to imaginary causal forces that are not influenced by the action of any person. The parallel with string theory in physics points to a general failure mode of science that is triggered when respect for highly regarded leaders turns into deference to authority that displaces objective facts from their position as ultimate determinant of scientific truth (gregarious thinking). And there we continue.

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The dominant economic current, as pseudoscience, leads us to the abyss