Economics has not been able to achieve the kind of accuracy that characterizes disciplines like, say, engineering. This is regretable, given the kinds of crises that have befallen the US and the global economic systems in recent times. More than crises, persistent weakness and structural problems are likely to mark the US and the world economy in the coming years. Responsible intelligentsia should be honest about the limitations of economics as a subject and also about the seriousness of the problems that face us.
Comforting predictions or projections that try to rely too much on small variations in macroeconomic parameters and that rely on too fine a balancing of small variations in macroeconomic parameters should be viewed with suspicion. A mature economy should be marked by much higher levels of stability and should not be at the mercy of small movements in macroeconomic parameters. However, some attempts to paint optimistic scenarios do rely on calculations that tend to rely on a very delicate balancing of macroeconomic parameters that can not necessarily be guaranteed. Without naming names, one can assert that a lot of superficial analysis about the US and world economy is designed purely to give the impression that things are not really that bad and that the future is going to bring economic recovery and progress. They tend to ignore worst-case scenarios and can be very selective in the kinds of factors they consider. They tend to be analyses that do not take into account radically different economic realities. A lot of it is probably done at the behest of rich interest groups that need the appearance of research, but not actual research. Much of it is probably financed, explicitly or indirectly, by vested interests whose sole purpose is to perpetuate capitalist elitism. Academicians have often churned out dishonest analyses of this kind and have cheapened the public discourse. A lot of the problems faced by the US economy in recent times can be traced to the persistence of elitist policies that serve a particular interest, but pretends to serve the broader public interest. And US public finance is one area where this kind of ostensible expertise is rampant. They tend to perpetuate false and misleading beliefs in the virtues of lower taxes, even though the empirical data of the past several decades shows that the broader economy suffers several negative consequences due to persistence of low-tax policies and that lower taxes have no positive effect on economic output and investment.
The lack of decisive fiscal policy-making in the US and the prevalence of misleading notions and attitudes about the effects of taxes on the economy means that the US fiscal situation will most probably remain very precarious for the next decade. The political establishment in the US, that part of the intellectual establishment in the US that studies economic issues and the parts of the capitalist establishment that try to skew economic policy without regard for accuracy and the interests of US society are responsible for a significant part of this mess. The US public needs to be aware of the kind of apathy that their political establishment has displayed in this matter. It also needs to be aware of the limitations of a system where political opportunism often trumps principles and the public good. And it may well need to come up with new and unprecedented strategies to put pressure on a political establishment that has been this complacent about the fiscal health of the country.
by C. Jayant Praharaj ( send comments to [email protected] )
Comforting predictions or projections that try to rely too much on small variations in macroeconomic parameters and that rely on too fine a balancing of small variations in macroeconomic parameters should be viewed with suspicion. A mature economy should be marked by much higher levels of stability and should not be at the mercy of small movements in macroeconomic parameters. However, some attempts to paint optimistic scenarios do rely on calculations that tend to rely on a very delicate balancing of macroeconomic parameters that can not necessarily be guaranteed. Without naming names, one can assert that a lot of superficial analysis about the US and world economy is designed purely to give the impression that things are not really that bad and that the future is going to bring economic recovery and progress. They tend to ignore worst-case scenarios and can be very selective in the kinds of factors they consider. They tend to be analyses that do not take into account radically different economic realities. A lot of it is probably done at the behest of rich interest groups that need the appearance of research, but not actual research. Much of it is probably financed, explicitly or indirectly, by vested interests whose sole purpose is to perpetuate capitalist elitism. Academicians have often churned out dishonest analyses of this kind and have cheapened the public discourse. A lot of the problems faced by the US economy in recent times can be traced to the persistence of elitist policies that serve a particular interest, but pretends to serve the broader public interest. And US public finance is one area where this kind of ostensible expertise is rampant. They tend to perpetuate false and misleading beliefs in the virtues of lower taxes, even though the empirical data of the past several decades shows that the broader economy suffers several negative consequences due to persistence of low-tax policies and that lower taxes have no positive effect on economic output and investment.
The lack of decisive fiscal policy-making in the US and the prevalence of misleading notions and attitudes about the effects of taxes on the economy means that the US fiscal situation will most probably remain very precarious for the next decade. The political establishment in the US, that part of the intellectual establishment in the US that studies economic issues and the parts of the capitalist establishment that try to skew economic policy without regard for accuracy and the interests of US society are responsible for a significant part of this mess. The US public needs to be aware of the kind of apathy that their political establishment has displayed in this matter. It also needs to be aware of the limitations of a system where political opportunism often trumps principles and the public good. And it may well need to come up with new and unprecedented strategies to put pressure on a political establishment that has been this complacent about the fiscal health of the country.
by C. Jayant Praharaj ( send comments to [email protected] )