Capitalism and ignorance

From Three wild speculations from amateur quantitative macrohistory but there is nothing wild about the diagram other than how ignorant most people are about what it shows.

In How big a deal was the Industrial Revolution?, I looked for measures (or proxy measures) of human well-being / empowerment for which we have “decent” scholarly estimates of the global average going back thousands of years. For reasons elaborated at some length in the full report, I ended up going with:

Physical health, as measured by life expectancy at birth.

Economic well-being, as measured by GDP per capita (PPP) and percent of people living in extreme poverty.

Energy capture, in kilocalories per person per day.

Technological empowerment, as measured by war-making capacity.

Political freedom to live the kind of life one wants to live, as measured by percent of people living in a democracy.

Two million years of “human” history where the only tools were made of stone, and then a bronze age, iron age, industrial revolution and now us.

We now have morons [who call themselves “progressives”!] trying to take us back in time to just where I don’t know, perhaps 1890, maybe 1920, but certainly to a time of greater poverty and fewer chances in life. The diagram is only for us because most of those trying to kill off our carbon-based energy sources would be too thick to understand any of it since the basis for their entire ideological view of the world is a hatred for the capitalist system that has transformed the human race.

Using the failure of anti-market policies as evidence markets don’t work

Now here’s an article I find really gets the point. By Per Bylund on Mises Daily with the quite nice title, Economics Is Dead, and It Is Being Killed Again. It’s hard to pick a best bit since you really do need to read it all. But to find someone as on the money as this is a rare event and needs to be brought to the attention of others. Here he is pointing out that the stimulus – as anti-market a policy as there has ever been – made us worse off which the left now uses as evidence that markets don’t work.

You have to applaud the anti-economics left for this rhetorical masterpiece. They have struggled for decades to sink the ship of economics, the generally acclaimed science that has firmly stood in the way of their anti-market and egalitarian policies, hindered the growth of big government, and raised obstacles to enact everything else that is beautiful to the anti-economics left. The financial crisis is exactly the excuse the Left has been waiting for. It is a slam dunk: government grows, Keynesianism is revived, and economics is made the culprit for all our troubles.

We see this now in education, as students demand to be taught (and professors demand permission to teach) a more “relevant” economics. Relevance, apparently, is achieved by diluting economics with a lot of the worst kinds of sociology, post modernism, and carefully structured discourse aimed to liberate us from our neoliberal bias. And, it turns out, we must also teach Keynesian ideas about how government must save the market economy.

We see this same agenda at academic research conferences, where it is now rather common to hear voices (or, as is my own experience, keynote talks) claiming that “it is time” for another paradigm: post-economics. The reason is always that economics “has failed.”

If this weren’t so serious, it would be amusing that the failure of Keynesian macro-economics (whether it is formally Keynes’s theory or post-Keynesian, new Keynesian, neo-Keynesian, monetarist, etc.) is taken as an excuse to do away with sound micro-economic theory to be replaced with Keynesian and other anti-market ideas. But it is not amusing. If most of the discussions heard are to be believed, the failures of central planning is a reason for central planning, just like socialism is a reason for socialism. The success of the market, on the other hand, is not a reason for the market.

It is incredible that economists in general don’t get it, but there is at least one who does.