Jeffrey Tucker is the editor in chief at the American Institute for Economic Research where the article discussed below has been posted. A bit, actually quite a bit, more charitable about the New York Times than I would ever be, but let that go. He is discussing the miracle of the market economy that goes along without any serious appreciation of its role or any understanding of how it works. “Socialism” as it exists today is based on the market economy. He is also talking about role of the mainstream media as “we watch freedom going down the drain”.
I have meshed my classical understanding of the operation of an economy – what it means to be an actual liberal – with what needs to be done to get our economies moving forward in this post of mine at the AIER: This Economy Can be Revived. This comes at an opportune time: Trump to announce council for “opening our country” next week. This is how my article begins:
In my previous article, “A Classical Economic Response to the Coronavirus Recession,” my aim was to discuss why modern macroeconomics cannot explain the nature of an economy, and more importantly cannot provide a sound analytical basis for policy. If we follow modern macro in dealing with the coronavirus, we will leave our economies mired in slow growth, higher unemployment and even deeper in debt.
That, however, is not the full story, but you will have to read right to the end to find out how things could turn out well if we understand what needs to be done.
Here we are in the midst of a new kind of policy, something never experienced anywhere ever before, where the deliberate aim of government policy has been to slow the rate of growth, raise the level of unemployment, and rack up much higher levels of debt.
We are on the breathtaking edge of a global consensus on entering a socialist compact to manage the economy from the centre, or at least, for the time being from each nation’s own economic centre. Global government perhaps is now on the horizon if things continue as they are. It is a truly terrifying prospect, made all the worse because of how complacently it has all been accepted.
The ease with which all this has come about is in part because of the way the role of the dead hand of government has already been meshed into the prevailing theory of the economy as a whole, which is a direct descendant of the Keynesian theory brought to life with the publication of Keynes’s General Theory in 1936.
I will state the problem in a single sentence and then elaborate from there. Modern macroeconomic theory looks only at the money value of what is being bought and sold at the present time and virtually never looks at the economy as a whole in structural terms nor over the longer term.
If you are interested in the full explanation of the way our economies are structured as a pathway towards understanding how we can revive our economies from here, just go to the link.
And in getting an upturn in place, there should be no doubt that many have been very badly damaged by this programmed downturn and many may never recover from the losses they have sustained. But if we go about this in the right way, in about a year our economies will be trundling along as if nothing had ever happened. At the very height of what must not be done is to start from the premise that was is needed now is a stimulus of any kind.
I might add that the picture below is the one that accompanies my article and seems quite a appropriate for both Easter, and the theme of freedom which comes with Passover, which we are also celebrating at the moment. My best wishes for the holiday to you all in the hope that our present political disease will soon be passed and that our freedoms will be taken back with this knowledge of how they can be stolen almost in a fit of inattention.