Knowing the Correct Nothing is the surest way of advancing in economics and politics

Probably it has been remarked elsewhere that ignorance is no barrier to advancement. This is certainly true of the economics. Despite the subject matter of economics being the stuff of existence, economists have little knowledge of the real economy. There are two explanations of this ignorance.

One is the age old bane of economics and that is economists of previous generations have already established all the fundamental truths of the subject and all the current generation of economists need to do is to refine the ideas and practices of the past. They are literally standing on the shoulders of the giants of the past, giants such as Ricardo and Marshall.  Economists established in the nineteenth century that the truth that the free market was the best possible economic system and their contemporaries today see their role as providing the necessary information and advice to enable policy makers to make the imperfect market nearer to the free market ideal. They do not see any need develop and advance the study of economics through a study of the real economy, as they already know all they need to know. The fallacy of this approach can be demonstrated by the famous question the Queen asked of economists after the crash of 2008/9, which was why did none of you know it was coming? The inward looking nature of the subject means they will always be caught by surprise by events in the real world.

The other explanation is that the practitioners of economics in the real world are politicians and all they want is winning slogans that will enable the to win elections. Slogans that mask the truth, that is the very vacuous nature of their economic policy making. Rather than truth what matters is appearance, what sounds right or appears right. These politicians have no interest in those few economists that talk about the complex nature of the economy and the difficulty of effective policy making. They prefer the economist that in Mrs Thatcher’s words ‘give answers’, and these economists tend to be the apostles of a simplistic Neo-Liberal economics. There are dozens of economic thinks tank that for the right money will come up with a simplistic solution, that can be sold as a winning economic policy.

One of such of these simple sellable solutions is the need to cut of government bureaucracy. In this vein both the Labour government of Gordon Brown and the coalition government of David Cameron have boasted about the number of civil servants they have cut from the payroll. It’s a simple solution that everybody knows is right, as if you employ less civil servants you reduce the cost of employing civil servants and you reduce taxation. In such a scenario everybody is a winner, except no politician have ever considered that some of these civil servants they dispense with may perform a service that is essential for the maintenance of the good society. 

Now with the Treasury and every other government department are lacking the core of experienced civil servants that in the past would have advised on policy making. Now they have to buy in the expertise that would formally been provided in house. The bill for consultation on the proposed High Speed Rail link has cost £1/4 billion pounds and is rising, much of this money has been spend on outside advisers from various think tanks and consultancies. One wonders how much less the bill would have been,  if much of this work had been provided in house. 

Perhaps the supreme example of this folly is the reducing the number civil servants is at the tax collecting body that is ‘Her Majesties Revenue and Customs’.  There are only 300 tax inspectors employed in the investigative body that collects taxes from the rich and powerful. Constantly these overworked and under resourced tax inspectors are out manoeuvred by the accountants of the rich and powerful so they frequently fail to collect the tax owed.  In consequence the IMF has laBelled Britain the world’s largest tax haven.

In practical economics that is politics what matters is not being right or having tge correct understanding economic reality, but a sharing the common fallacy and ignorance of the real economy that passes as the public debate. If one listens to the economic spokesman of either party they in the essentials relaying the same message. It never matters in politics if the economics spokesman is wrong, only that they share in the general consensus of wrongness.    

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