Neoliberalism Revealed

I’ll be mountain biking in Gooseberry this weekend so I’m going to leave you with this deconstruction of neoliberalism by Ian Welsh as your reading assignment.

What Economics Gets Wrong (Almost Everything)

“Economics as a discipline is nearly worthless. What it teaches mostly isn’t true.

  • Decreasing price does not always increase demand and increasing price sometimes increases demand (aka. the law of supply and demand isn’t a law.)
  • People do not optimize utility (by any definition that is not circular).
  • People are not rational.
  • The market is not rational.
  • The market does not discount the future well at all.
  • Competitive markets are created by government, and destroyed by private actors.
  • Markets do not and never have properly priced externalities and never will do so while humans remain human. The only way to price externalities properly is thru government or custom (government in drag.)
  • Profit or loss in any enterprise in a modern economy is a social choice, entirely based on government and social decisions and mostly unrelated to fundamentals like energy in and energy out.
  • Railroads are far more efficient, energy wise than roads, but govt. subsidizes roads.
  • The vast majority of profit is based on market position and sustained profit is almost always based on having an unfair advantage that makes the market less competitive and therefore not have the virtues of competitive markets.
  • Genuine competitive markets don’t exist, and no businessman wants them to because they drive profits to almost zero. 
  • The best economies the world ever saw went out of their way to keep wages and prices high, not to reduce them.
  • Any concentration of market power that is not regulated or broken up will engage in practices intended to buy/undermine government and destroy wages. 
  • Higher CEO pay is correlated with lower company performance.
  • You cannot have a good economy for long without keeping the rich poor, weak and under your thumb. It is impossible.
  • Monetary efficiency between countries is bad. It should be hard to move large amounts money in and out of another currency or country. 
  • Financial market efficiency is generally bad, and effectiveness and shock pads should be optimized for rather than financial efficiency.
  • Countries should, if it is possible, make or grow everything important inside their own borders and not trade for it.
  • People perform better when happy, healthy and at least moderately autonomous. The literature on this is so abundant it is silly. Bosses are authoritarian assholes because they like being authoritarian assholes who micro-manage employees. It’s what Bezos gets out of being Bezos.
  • Private money creation concentrated in a few hands is destructive to the economy, democracy and freedom (authority: Thomas Jefferson). It is also anti-competitive market, since you can’t compete with people who create money out of thin air.
  • Moderate levels of inflation are good, not bad, if they include assets, because they take away the control of people who won the past so they don’t control the present and the future. 
  • Taxes should be low on ordinary people and high on anyone rich, including wealth and estate taxes. No one should be rich because their parents were.
  • People who lend money should lose that money if the person who they loaned it to can’t afford to repay it. The function of lending is “I know how to pick people who will use the money well.” If you can’t do that you deserve to lose the money, and govt shouldn’t collect it for you
  • bankruptcy should be easy, fast and leave people whole. Economically crippled people are not in the interest of society as a whole. 
  • A UBI’s main function is allowing people to do what they want to do, and forcing bosses to make jobs good, not shitty.
  • Pensions should simply be handled by government or a general UBI.
  • Comparative advantage is a terrible strategy for improving your economy.
  • Free trade is garbage for most countries.
  • Raising the minimum wage is not correlated with increased unemployment
  • The unemployment rate measures supply driven wage push inflation pressure, not how many peole can’t get a job.
  • Initial capital for capitalism was primarily acquired by theft, first of European commons, then of non-European land, people and resources.

Essentially everything Economics teaches is wrong. If and when their prescriptions for action are followed, disaster ensues. With almost no exceptions every country which ever developed did so by not doing what economists say to do.

Economics also has a morally corrosive affect on those who study it.  People mostly don’t free ride or otherwise act according to the maxims of economics: but people who have studied economics do.

Because economics is wrong and harmful about almost everything, and because economists do not say “please don’t follow our advice”, Economics should probably be banned and all Economics faculties shut down.”

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