“Are economists idiots?” he asks

This is the title Are Professional Economists Idiots? and this is how it begins:

Taleb, a libertarian, aims his critique of intellectuals yet idiots (IYI) broadly but particularly at the contemporary economics profession. His targets are those described by the Mises Institute:

“The professional economist is the specialist who is instrumental in designing various measures of government interference with business.”

The economics profession in the U.S. today is mostly involved in research and education that broadly investigates “market failures” or is directly engaged in public action – regulation, tax, expenditure and off budget guarantees – to manage industries and the macro-economy purportedly in the public interest. This is the opposite of laissez faire economics, political advice to a 17th century French minister to “let it be” later developed into an economic theory by the 18th century philosopher Adam Smith and popularized by 20TH century economist Milton Friedman, a libertarian and cofounder of FFE (and my advisor, twice removed). How and to what end did the economics profession evolve from a philosophy of leaving economic decisions to individuals in the marketplace with few exceptions to public economic management of the United States and global economy?

The real answer is that economists are like everyone else, that they will follow their own self-interest. And if people demand idiotic answers to their questions, they will supply them. For proof, see modern macro.

Bryan Noakes (1930-2020)

The less anyone notices the workings of the Industrial Relations system, the better it is actually working. Bryan Noakes passed away yesterday and this is in memoriam. I will just add that no one has had more influence on my professional life than Bryan who employed me at the Confederation of Australian Industry in 1980 where I continued as its Chief Economist until 2004. And as a personal memory, it is Bryan sitting across the table from Bob Hawke negotiating some agreement. You need a phlegmatic personality and a cast-iron constitution to sit through such moments – which I do not have – without getting angry but just get back into it for hours on end. Bryan did enormous amounts on behalf of this country that no one outside a small group within the “Industrial Relations Club” will ever have the slightest idea about.

One of Australia’s leading employer advocates both nationally and internationally, Bryan Noakes, died on Tuesday at the age of 89 after years of ill-health.

Noakes served in leading and senior positions with the Australian Chamber of Commerce and Industry (ACCI) and its predecessors from the 1960s through to the early 2000s.

In 2001, when he retired as ACCI’s director-general (industrial), he said the highlights of his career had been the achievement of labour market reforms in the 1980s and 1990s and steering the Confederation of Australian Industry’s 1991 landmark policy shift away from support for a centralised IR system.

His ACCI successor Peter Anderson, now a Fair Work Commission deputy president, said Noakes’ contribution to the national IR system had been formidable.

Even after his retirement he had continued to be a source of counsel to many, “myself included”.

“He was a serious man but did not take himself too seriously,” Anderson said.

“With his passing, and that of Bob Hawke and George Polites in the same 12-month-period, it is the end of an era of three industrial relations giants of our past generation.”

Bryan Noakes joined the Australian Council of Employers’ Federations (ACEF) in the early 1960s as an IR advisor on major construction projects, after cutting his teeth on the Snowy Mountains hydroelectricity project.

He eventually became the director-general of the Confederation of Australian Industry (which succeeded the ACEF) after the retirement of George Polites in 1983 and continued in a leading role with the formation of ACCI in 1992.

In a statement this week, ACCI described Noakes as a “significant, respected and well-liked figure across the political and industrial divide”.

He had worked “tirelessly” to represent the business community over a period of profound challenges in Australian industrial relations and resulting legislative reform under the Hawke, Keating and Howard governments.

Another FWC member and ACCI colleague, Deputy President Reg Hamilton, said Noakes’ advocacy had played a major role in tribunal decisions and the major legislative changes of 1988, 1993 and 1996.

“He was able to judge proportionality well and avoided the obvious mistakes of appeasement or extremism.

“He also had good personal relationships with nearly everyone.”

While Noakes retired from ACCI in 2001, he completed his term (in 2004) as a member of the governing body of the International Labour Organisation, representing Asia-Pacific employers.

Deputy President Anderson said it was in the international arena where Noakes’ “star shined most brightly” and his “patient but firm advocacy” prompted governments to improve law and practice on industrial issues.

In its statement ACCI said Noakes won recognition for his significant work protecting the fundamental rights of both employers and trade unionists throughout the world through the ILO’s Committee on Freedom of Association (CFA) and had been instrumental in the creation of an employer voice for the Asia Pacific region, through the Confederation of Asia Pacific Employers (CAPE).

ACCI workplace relations director Scott Barklamb said the perspectives Noakes developed from four decades at the peak of Australian and global IR continued to inform the work of ACCI.

“Union and employer colleagues throughout the world ask after Bryan to this day and express their profound respect and appreciation for his work, particularly as a leading figure in the ILO’s Committee on Freedom of Association (CFA).”

In 2003 Noakes became an Officer of the Order of Australia (AO) for his “service to industrial relations in Australia and overseas through policy development, fostering improved relations between employers and employees and as an expert in the area of international labour law” (see Related Article).

In February last year he attended a memorial celebration following the death of his former colleague and leader George Polites who he described as an influential figure who “always had a solution and it always worked”.

Just three months later he was paying tribute to another contemporary, former Prime Minister and ACTU secretary Bob Hawke.

“It is a cause for pause and reflection that two of our nation’s greatest industrial figures, Bob Hawke and George Polites respected differences, found common interest and have now passed at grand ages within months of each other,” he said in a personal statement following Hawke’s death.

The Harding recovery of 1921

From The Mises Institute: “The Forgotten Depression of 1920” by Tom Woods. At the height of the GFC in 2009 as public sector spending to cure the recession was moving into high gear, he wrote:

Little, if any, public mention is ever made of the depression of 1920–1921. And no wonder — that historical experience deflates the ambitions of those who promise us political solutions to the real imbalances at the heart of economic busts.

So what did Harding do, and how did it all work out?

The conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery — at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–1921, and recovery was in fact not long in coming.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

According to economist Benjamin Anderson quoted by Wood, a name you will not know, but an active anti-Keynesian from the 1940s:

“In 1920–21,” writes Anderson, “we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921 we started up again.… The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise. It was not based on governmental policy designed to make business good.”

Harding had done what he said he would do. More from Tom Woods:

In his 1920 speech accepting the Republican presidential nomination, Harding declared,

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn’t been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.

Wood goes on:

Many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that “government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed.”

Australia, by the way, did the same with the same result in the 1930s. Who remembers? Unless it’s true in theory it can never have been true in practice.

Why is Robert Skidelsky speaking at Mont Pelerin??

I’m off to the regional meeting of the Mont Pelerin Society in Palo Alto which is the meeting of the remnants of the last few remaining supporters of market economies not only as the means to prosperity, but also as a necessary element in the preservation of political freedom.

So imagine my astonishment to see this as one of the sessions being on offer:

1:15 pm – 2:30 pm Lessons Learned from History for the Future of Freedom
Gabriel Calzada, Universidad Francisco Marroquín (Chair)
Victor Davis Hanson, Hoover Institution
Amity Shlaes, Calvin Coolidge Presidential Foundation
Robert Skidelsky, Warwick University

This is from Robert Skidelsky’s Wikipedia page:

In September 2015, Skidelsky endorsed Jeremy Corbyn’s campaign in the Labour Party leadership election, writing in The Guardian: “Corbyn should be praised, not castigated, for bringing to public attention these serious issues concerning the role of the state and the best ways to finance its activities. The fact that he is dismissed for doing so illustrates the dangerous complacency of today’s political elites. Millions in Europe rightly feel that the current economic order fails to serve their interests. What will they do if their protests are simply ignored?”

As a minor matter next to this, but not minor to me, is that he is the most prominent defender of Keynesian economics, along with Paul Krugman, anywhere in the world. There is also a fact virtually unmentioned on his own Wikipedia page but mentioned here in relation to a disgraceful book he published at the start of the GFC: Keynes: The Return of the Master.

Keynes: The Return of the Master is a 2009 book by economic historian Robert Skidelsky. The work discusses the economic theories and philosophy of John Maynard Keynes, and argues about their relevance to the world following the Financial crisis of 2007–2010.

I’m not surprised he is reluctant to have the book mentioned. Want more? From the same source:

Chapter 8 sums up Keynes’s relevance to the current age as of 2009. The author suggests that Keynes would likely advise us to rethink macroeconomic policy, with a greater emphasis on balanced growth and with a somewhat large role for government in ensuring there is a smooth flow of investment to help protect the economy from unpredictable shocks. Macroeconomics should be reformed so that it again recognises the role of uncertainty and so it draws on other areas of knowledge such as history and International political economy, with a less central role for maths. The global savings glut needs to be addressed. Ethics should once again have a role in guiding capitalism, as should Keynes’s vision of harmony, where differences are cherished rather than pressured to conform, as can be the case with current concepts of “social cohesion” and “consensus”.

Why is such an out and out socialist being allowed to speak at Mont Pelerin? And on that minor matter of Keynes, this is the most recent cover description for my next book which I have just sent to the publisher.

Classical Economic Theory and the Modern Economy’

Steven Kates

Economic theory reached its highest level of analytical power and depth in the middle of the nineteenth century among John Stuart Mill and his contemporaries. This book explains classical economics when it was at its height, followed by an analysis of what took place as  a result of the ensuing Marginal and Keynesian Revolutions that have left economists less able to understand how economies operate.

Chapters explore the false mythology that has obscured the arguments of classical economists, clouding to the point of near invisibility the theories they had developed. Kates offers a thorough understanding of the operation of an economy within a classical framework, providing a new perspective for viewing modern economic theory from the outside. This provocative book not only explains the meaning of Say’s Law in an accessible way, but also the origins of the Keynesian revolution and Keynes’s pathway in writing The General Theory. It provides a new look at the classical theory of value at its height that was not based, as so many now wrongly believe, on the labour theory of value.

A crucial read for economic policy-makers seeking to understand the operation of a market economy, this book should also be of keen interest to economists generally as well as scholars in the history of economic thought.

 

Hayek was a John Stuart Mill classical liberal

This is an exceptionally interesting article, that needs to be considered among us on the right side of the political ledger: F.A. Hayek & Social Justice: A Missed Opportunity and a Challenge. They argue that Hayek’s views were left incomplete, but what’s worth, because they do not conform to some commonly accepted modern version of conservative thought, Hayek is being abandoned by those who ought to turn to him for sound advice. Start here which is where the authors start with a critique of Hayek by Professor Edward Feser:

Dr. Feser argues, of “economism”:

This subjectivism about value has great utility when our focus is merely on satisfying the material needs and wants people actually happen to have. Hayek’s purely procedural conception of just action, however, effectively treats value subjectivism as a completely general principle of social organization. The rules that govern capitalist societies must not treat any of the diverse ends people happen to have as objectively better or worse than any other. To acknowledge that there is some objective fact of the matter about what people ought to want, or some standard of value independent of the market, would open the door to justifying interference with the choices of economic actors, and thereby destroy the price mechanism.

This is the point that Professor Feser makes which I happen to agree with:

This subjectivism, Dr. Feser contends, is an acid that will eat away at capitalism itself: “If there is no standard of good apart from what people happen to want, how can Hayek complain if what they happen to want is an egalitarian redistribution of wealth, or freedom from religion and traditional family arrangements?”

But this was no more Hayek’s position than it was John Stuart Mill’s. It is the modern libertarian position as best I understand it, but it is not the view of we classical liberals. I think this is an absolutely valid criticism.

This is what they conclude from the book they are discussing:

Hayek does not have an “objective notion of the good as such” when it comes to the substance of a society (or at least a large and complex society). But it is not clear he was entirely subjective about justice or even that he would necessarily limit it to the personal sphere. Even with regard to the distribution of goods, he is not averse to the idea that there are “smaller scale orders in which it is possible to distribute goods on the basis of various interpretations of justice, taking into account effort and need.” They argue that Hayek did have a conception of an objective nature to justice in the personal and even business realm, explaining, for instance, how “an employer should determine employees’ wages according to known and intelligible rules and that it should be seen that all employees receive what is due to them.

That could just as easily have been said by Mill. There are no absolute criteria available from any source that will lay down what the answers to these issues is, but must emerge through a process of trial and error as events are examined over time and in different circumstances. Freedom sits at one pole and justice at the other, but these are only words until attempts are made to transform such ideas into practice. What the authors see as “the Great Forgetting” which they blame on Hayek’s “incompleteness” is their own failing because they see the answers in some libertarian set of principles which Hayek did not accept.

Comments, thoughts and suggestions welcome

You may have noticed my lack of regard for modern economic theory which the following might help you understand more clearly. This is the draft of the cover text for the book I have just completed and sent off to the publisher. Comments, thoughts and suggestions would be welcome. My disdain for Keynesian economics I have discussed on many occasions. My attitude to “marginal” analysis I mention far less often which is why certain passages below are highlighted in bold.

‘Classical Economic Theory and the Modern Economy’

The book starts with two premises: First, that economic theory reached its deepest level of understanding in the writings of John Stuart Mill and the classical economists of his time, and then, secondly, the author of this book has understood Mill and has accurately explained what the classical school of the late nineteenth century wrote. From these premises, this then follows.

If you are to have any hope of understanding how an economy works, and how modern economic theory became the dead end it has become, you will need to read this book.

The classical economists, and John Stuart Mill in particular, lived through the Industrial Revolution, saw its astonishing economic transformation before their eyes, and explained, so others could understand for themselves, how their prosperity had been created through the emergence of the market economy.

Mill, the greatest utilitarian philosopher of his age, refused to use utility as part of his theory of value. Mill explicitly and emphatically denied any role for aggregate demand in the creation of employment. In reaching these conclusions, there was no disagreement among the entire mainstream economics community of his time.

First through the Marginal Revolution of the 1870s, and then through the Keynesian Revolution of the 1930s, the entire edifice of classical theory has been obliterated. From a classical perspective, modern economic theory is Mercantilist trash nonsense. If you are interested in how economic theory became the wasteland it has become, and wish to understand the classical theory no one any longer has the slightest clue about, this is the book you must read.

If you are interested in understanding all this more completely, you will have to read the entire book when it is finally published sometime this year.

A how-to guide to economic policy

For any single business, higher demand all other things being equal makes them more money and can often lead to an increase in the number of employees.

For an entire economy, higher demand has no bearing either on real incomes or on the level of employment.

This is straightforward and for me anyway, as obvious as the morning sun. It is the conclusion that comes from a proposition that now goes by the name Say’s Law.

There have been many examples in history where Say’s Law was shown to be an absolute truth in an economy. There have been even more where attempts to raise an economy from recession through increased public spending – through an increase in aggregate demand – have been abject failures. No stimulus in history has ever succeeded in pulling an economy out of recession, NOT A SINGLE ONE! The sad story since the GFC is the most recent, but there have been lots. Every single one made economic conditions worse.

On the other hand, we had the Peter Costello/John Howard years from 1996 to 2007 of the best economic management ever seen, possibly anywhere. Not only did we balance the budget for years on end, we ended up with zero national debt! Because of the idiocies of modern economic theory, even though this was done right there before our eyes, bad theory remains. Modern macro is economic poison, but it’s often lots of fun for both governments and the people who they spend the money on. And for everyone else, it looks sensible since higher demand must create higher levels of production. In reality, it is higher levels of production that allow for an increase in demand. That is why we are so much richer than a century ago. We produce more so that we can demand more.

We were reminded of all this here: John Howard and Peter Costello urge PM to keep building budget surplus.

John Howard and Peter Costello have urged the Morrison government not to squander the budget surplus on a short-term stimulus, while doubting whether monetary policy is still a useful economic instrument given the reduction in interest rates to historic lows.

“The government is absolutely right to be returning the budget to surplus and I think it’s right to anchor­ its fiscal policy to producing surpluses over the next four years,” Mr Costello, the nation’s longest-serving treasurer, told The Australian.

Treasury is filled with people who have no idea why this is the way to prosperity. Reserve Bank as well. A bit more here:

As forecasts for economic growth, household consumption and wages have been downgraded, and $21.6bn wiped from future surpluses, Mr Costello said he doubted whether monetary policy was still a useful economic lever.

“Monetary policy has run out of puff,” he said. “Once you get interes­t rates at near-zero levels, whether they’re at 0.75 per cent, 0.5 per cent, 0.25 per cent, it just doesn’t matter, it’s lost its power as an economic instrument and that is why when the Reserve Bank cut rates during the course of (last) year it had no discernible effect.”

Low interest rates are the other side of the Keynesian economic model, a disastrous shambles of a policy, which inevitably puts money into the hands of many more people who will not earn a productive return on investment relative to the proportion of borrowers who will do so if rates are higher. Interest rates are near zero everywhere and no economy has found low rates of any benefit. Only value-adding investment can raise living standards. High levels of public spending and low rates of interest will not do that, just as they never have.

An outline of my economic beliefs in an email to an American colleague

A letter I sent to an American economist who had sent me two books to read. This is my reply.

I read the books you sent with great interest, one which I thought was part of the problem as I see it and the other of sublime excellence, better even than the authors know. But to help you understand where I am at, I will put in the cover note for this next book of mine that I have written but not yet submitted to the publisher [ie the book’s been submitted but not my version of the cover text]. I have highlighted the part of what I do that puts me outside the norm even among we on the free market side of things.

‘Classical Economic Theory and the Modern Economy’

The book starts with two premises: First, that economic theory reached its deepest level of understanding in the writings of John Stuart Mill and the classical economists of his time, and then, secondly, the author of this book has understood Mill and has accurately explained what the classical school of the late nineteenth century wrote. From these premises, this then follows.

If you are to have any hope of understanding how an economy works, and how modern economic theory became the dead end it has become, you will need to read this book.

The classical economists, and John Stuart Mill in particular, lived through the Industrial Revolution, saw its astonishing economic transformation before their eyes, and explained, so others could understand for themselves, how their prosperity had been created through the emergence of the market economy.

Mill, the greatest utilitarian philosopher of his age, refused to use utility as part of his theory of value. Mill explicitly and emphatically denied any role for aggregate demand in the creation of employment. In reaching these conclusions, there was no disagreement among the entire mainstream economics community of his time.

First through the Marginal Revolution of the 1870s, and then through the Keynesian Revolution of the 1930s, the entire edifice of classical theory has been obliterated. From a classical perspective, modern economic theory is Mercantilist trash. If you are interested in how economic theory became the wasteland it has become, and wish to understand the classical theory no one any longer has the slightest clue about, this is the book you must read.

I think of the Marginal Revolution in much the same way I think of the Keynesian Revolution. It shifted focus to the demand side of the economy, lost touch with actual measurable quantities, and replaced an utterly meaningless concept – utility – for what had mattered to the classicals, production costs relative to demand. They have rendered much of economics into a series of abstraction with little concrete to examine. So to the books.

The one I didn’t especially like was Economics and Free Markets which I won’t go much into. Starts with marginal analysis and then goes through supply and demand omitting the single most important element, which everyone else omits as well: no seller ever knows the position or shape of the demand curve for any product they are selling. Demand curves are not concrete entities but are nevertheless treated as if they represent known matters. In reality, everyone in an economy travels blind and has to guess their way into profitability. Some parts of the book were all right, but really, to my mind part of the problem.

On the other hand, I thought Applied Mainline Economics was excellent and even better than the authors themselves understood, which I hope they will forgive me for saying. And what they have done is put together a classical text without knowing it which they describe as “mainline economic thinking”. I wrote a blog post to myself on it which I hope will be sufficiently clear to see what I’m saying.

This is an astonishingly excellent text which understands a great deal but misses the most important part. This is the text: Applied Mainline Economics: Bridging the Gap between Theory and Public Policy by Matthew D. Mitchell and Peter Boettke. And there we find (pp. 2-3):

And though mainline concepts are constantly evolving, they draw their inspiration from, and are intimately connected with the enduring lessons of early economic thinkers. A line connects the contemporary variants of these ideas to insightes of Thomas Aquinas of the 13th century; the Scottish Enlightenment thinkers, such as Adam Smith of the 18th century; and the Neoclassical school of the early 20th century. Thinkers in the last few decades have extended this line of inquiry, including Nobel laureates F.A Hayek, James Buchanan, Ronald Coase, Douglass North, Vernon Smith, and Elinor Ostrom.

Let’s see who’s included which adds in those mentioned in ftn 5 of Chapter 2:

  • Thomas Aquinas of the 13th century;
  • fifteenth and sixteenth century scholastics;
  • the Scottish Enlightenment thinkers, such as Adam Smith of the 18th century;
  • 19th century French liberals Jean Baptiste Say and Frédéric Bastiat;
  • the Neoclassical school of the early 20th century
  • thinkers in the last few decades, including Carl Menger, Ludwig von Mises, F.A Hayek, James Buchanan, Ronald Coase, Douglass North, Vernon Smith, and Elinor Ostrom

Now let’s see who is missing? Who is missing in particular is the English Classical School of the mid-19th century and especially John Stuart Mill.

And then there is a list of characteristics that have been suggested over the years that breed strong economies which include everything discussed by Mill and the his contemporary classical economists:

  • specialisation and the division of labour
  • institutional structures
  • natural endowments
  • geographical advantages
  • capital accumulation and growth
  • cultural inheritance
  • personal traits such as attitudes to thrift and hard work
  • technological sensibilities
  • individual liberty
  • social attitudes to commercial activity

And yet it is Mill and the Classical School whose perspective is the perspective most congruous with these characteristics which is left out. And you know why that is? Because no one has any idea what they said. There is a gap between Ricardo, who died in 1821 and the coming of the Marginal Revolution in 1870 that is almost entirely unknown to economists today.

My specialty is that gap. That is what my books are about and especially my textbook which is Mill’s Principles for the twenty-first century. I will leave you with the bits that I included in my Christmas letters to friends who are economists; no one else would be even slightly interested while my economist friends are slightly interested, mainly to see just how absurd my economic views have become, although I am happy to say some of my friends even agree with me. Hopefully you will also see my point.

I have finally submitted the full text of my next book in the proper format which is very nice but took a month of fiddling to get it exactly right and ready for publication, and that was after the two years it took to write. This is what it’s about via the blurb they put together:

“Economic theory reached its highest level of analytical power and depth of understanding in the middle of the nineteenth century among John Stuart Mill and his contemporaries. This book explains what took place in the ensuing Marginal Revolution and Keynesian Revolution that left economists less able to understand how economies operate. It explores the false mythology that has obscured the arguments of classical economists, providing a pathway into the theory they developed.”

There is also the second book I have been finishing off which I finally completed today. It is a near-definitive collection of all of the anti-Keynesian articles and excerpts from every anti-Keynesian book of any importance ever written.

Not entirely best-seller material, but fascinating to me. Since the basis for everything I believe about an economy is based on John Stuart Mill’s Principles of Political Economy which was the most used text in English from 1848 till around 1890 and remained as a major text used everywhere until around 1920 I am following along after someone who ought to have a few street creds you might think. But then classical theory went out of fashion and then there was the Keynesian Revolution and then economics became mathematical and then diagrams infested economic texts page after page and then economic students became illiterate and beyond that, reading nineteenth century prose became impossible to almost everyone, specially economists and even then Mill is beyond just trying to read Trollope and Dickens and even then Mill, who wrote his 1000-page text in around 18 months so his is not exactly a polished account filled as it is with 100-150 word sentences and worse, often going off on tangents to explain what he is getting at using examples that can go on for five pages where if you don’t already know what he is getting at cannot be followed. But I love what he says and how he says it. It is pure common sense to me – highest IQ of the nineteenth century; fifth highest of all times if you take these things seriously – and since nothing about how an economy works has changed all that much at a theoretical level since around 1776, I remain possibly the only economist, even among historians of economics, who understands not just what Mill was getting at, but also agree with virtually everything he says. So while my projections and forecasts have never been wrong, no one pays any attention to me because my reasoning is so foreign to everything an economist thinks, or is supposed to think. Since in my books it is not just Keynesian macro but also marginalist micro that I throw onto the dust bin of history, there is not much of “that modernist stuff gone sour and silly” left around by the time I am through with it – the quote, btw, is from Keynes in 1946 looking at what had become of The General Theory by the time it got into the hands of Joan Robinson.

If you are still with me, I will leave you this which was published this year as a tenth anniversary reminiscence following an article I wrote in 2009:

It starts with a quote from an Australian Senator who was querying me during some Committee meeting in 2009 about my opposition to the stimulus which really does capture where I am:

Why have the IMF, the OECD, the ILO, the treasuries of every advanced economy, the Treasury in Australia, the business economists around the world, why have they got it so wrong and yet you in your ivory tower at RMIT have got it so right?
—Question to Steven Kates from Senator Doug Cameron, Senate Economic References Committee, September 21, 2009

Funny to me but no one pays any attention. To be right too soon makes everyone think you are wrong in principle. All they remember is that they disagreed with you about something, but what it was they never remember.

My aim is that eventually, around fifty years from now, when economics returns to where it once was, that someone will discover my book and say, look, this guy Steve Kates, he got it nearly right fifty years ago. “Nearly” because everything is always a little off centre and no two economists ever think about anything in exactly the same way. On the other hand, by then every economy in the world may be like Venezuela is today and no one will even be able to understand a word, just as no one can understand Mill today.

An example why Quora will provide you with nothing worth knowing

Did I ever mention that Quora deleted my answer to the one time I put something up on The difference between Keynesian and classical economics? One day it was there and the next time I looked it was not. Obviously offended someone, but I thought the point was to have all perspectives there so that others could think things through.

This was a Quora answer that has just been forwarded to me that is unlikely ever to come down. How would anyone know any better if they didn’t actually already know any better? Is there another answer somewhere on Hitler of a similar calibre? The more information we have, the less it is we seem to know.

Yes.

  1. Stalin was kicked out of seminary for passing out Marxist literature.
  2. Some people talk about socialism but don’t do anything. Not Stalin, he helped the Bolsheviks rob banks to get the necessary funds to continue their efforts.
  3. Stalin had the resolve to commit to the 5 Year Plan. Without this the USSR, which was 100 years behind the West in industrialization, would have certainly fallen to Hitler. And this would not have meant just being conquered. Hitler believed Slavs were inferior to Aryans, so he would have done more extermination. Jews, communists, gypsies, all sorts of people would have been exterminated.
  4. Armchair historians, knowing what happened after the fact, like to judge Stalin. But we must consider he lived during a time of great turmoil. There were many plots against the Soviet Union, both from within and from without. Lenin had been shot three times and ultimately died from his wounds. Stalin would eventually be poisoned. The purpose of the purges was to protect against these threats. Later historians that had access to documents not available until after the fall of the Soviet Union concluded that Stalin was as much reacting to events as causing them. His power was not quite as consolidated as imagined. Many officials below him were engaging in acts on their own, apart from Stalin’s command.
  5. There were also many lies perpetuated against Stalin for political purposes. The Holomodor was a result of drought, the peasants intentionally destroying their harvests, a population boom, and the increased urbanization (needed to fulfill the industrialization to be prepared against German attack). The Nazis perpetuated lies about the famine being intentional to increase Ukrainian nationalism because they were later to attack. This information was spread by the Nazi supporting newspaper magnate William Randolph Hearst. The major historians, such as Conquest and Pipes, were anti-communists. The Cold War also perpetuated anti-Stalin propaganda. Kruschev ruled after the death of Stalin. He hated Stalin because Stalin refused to intervene when his son was on trial for murder. Kruschev gave a devastating speech after Stalin’s death, accusing him of many lies. Subsequent fact checkers disproved those lies.
  6. The gulags were necessary. There were some who refused to live under communism. They were actively seeking to destroy the society all were attempting to build. The gulags served as a prison. But only 5% of those in the gulags were political prisoners. And these were not extermination camps. Most people came home. The death rate was 6%. Most were violent criminals.
  7. Revolutions are bloody. It was bloody for Lenin, too.
  8. There are some that say that leaders after Stalin could maintain order without engaging in purges, gulags, etc. But it is impossible to say this for certain because you cannot go back in time and test that hypothesis. We do know that Lenin also faced horrible resistance from imperialist nations and former Tsarists upset about their land being taken, as well as kulaks that refused to share their grain.

Seriously, is this a parody joke reply or is it meant to be taken as a genuine answer?