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Republican Pseudo-Economics

from Peter Radford

I was going to write about last night’s Republican presidential debate. After all it was ostensibly about the economy.

But I can’t. I won’t.

There is nothing to say other than these two observations:

First: the questions themselves were designed to allow the candidates to spout standard Republican ideology unfettered by reality. For instance, early on one question began with a meandering statement about how the national debt is unsustainable, and how the social security system is headed for bankruptcy. Neither is true. Neither is true at all. However, in the tightly controlled and hermetically sealed world of the GOP party base, both those statements are regarded as rock solid facts.

Thus the candidates were able to answer with the necessary Republican critique that we must balance the budget, slash social spending, and cut ties on the wealthy.

In other words the answers were given to questions that did not reference the real economy, but only the make-believe economy that Republicans now inhabit.

Second: this disconnect with reality gets even worse when we take a look at the various tax or economic plans on offer. They are all, without exception, based on the same supply-side twaddle that got us into the mess we are currently digging ourselves out of.

The notion that by cutting taxes on the wealthy we somehow spur investment has been so thoroughly debunked by recent experience that it defies belief that anyone still trots it out as a viable policy. Yet every single one of them does.

Not only this, they all imagine that the magic of supply-side economics will suddenly hurl the economy out of its present torpor and into an unprecedented period of growth such that the massive hole in the deficit caused by the tax cuts, and the subsequent loss in revenues, will be made up for by the lower tax rates being applied to all that new activity. We will, apparently, make it up in volume.

This is, of course, fantasy. It always has been. It always will be. But it sounds nice and plausible. Especially if the people listening focus simply on the tax cut they will receive and not on the flood of red ink it will cascade through our national finances.

At this point I must give Rand Paul some kudos: he, at least, bashed away at the idea – put forward by Rubio – that we can balance the budget and yet increase military spending simultaneously. What, Rand asked, is conservative about hiking any spending if it is not financed by taxes? Rubio blustered in response, presumably because he is unprepared for anyone asking simple questions about his math.

And that’s it.

The Republicans are stuck in a policy cut-de-sac because their base wants to hear certain things even if those things no longer relate to economic reality. So the holy trinity of tax cuts, smaller government, and deregulated business are trotted out over and over even if they are not solutions to what ails us.

They are presumed to be solutions. So we have to assume a set of problems to make them relevant. Hence the questions that were devoid of recent fact.

I doubt any of these people will get elected, but that doesn’t alleviate the problem: the entire Republican party is hiding within its alternative world. So Congress is steeped in these same solutions to the same imaginary problems. We have a Congress and a Republican party that wants to legislate for an alternative world and not the one they actually live in. So when reality and the imaginary worlds collide, and when the legislation has no bearing on what’s going on around us, nothing happens to move the lives of the voters forward.

Hence the gridlock. There will be no change in the foreseeable future. Or until someone in the Republican party returns to earth and comes up with something new.

Don’t hold your breath.

  1. Larry Motuz
    November 12, 2015 at 3:55 pm

    George Monbiot has an interesting take on Moral Blindness to the effects of austerity economics among British conservatives. It’s at http://www.monbiot.com/2015/11/11/moral-blankness/

    It is a good ‘companion’ piece to this post by Peter Radford.

  2. November 12, 2015 at 11:31 pm

    Wow is upon us. The problem appears intractable when a quick glance at republican opposition yields four democracies destroyed and at least twice as many aborted.

  3. November 12, 2015 at 11:42 pm

    Destruction of democracy in the information age must be something like a sin against accelerating cosmic expansion.

  4. Rhonda Kovac
    November 13, 2015 at 12:44 am

    “The Republicans are stuck in a policy cut-de-sac because their base wants to hear certain things even if those things no longer relate to economic reality.”

    I would modify that statement. The politicians are only in part taking their cue re economics from their ‘base’. In other respects, they are actively manipulating the opinion of that base –to align it with the policies sought by their wealthy backers. There is a schism between Republican politicians and conservatives in the general population (which offers at least some ray of hope for sanity in conservative public opinion). See Robert Reich’s recent article in the Huffington Post, “What I learned on my red state book tour.” (http://www.huffingtonpost.com/robert-reich/what-i-learned-on-my-red-_b_8507426.html).

  5. Chris
    November 13, 2015 at 4:18 am

    The more important problem is that pseudo-economics is also spouted regularly by Hillary, the probable Dem candidate. Voters will have little real choice unless Bernie unexpectedly wins the nomination, and, frankly, economics unfortunately isn’t his strong point.

  6. November 13, 2015 at 5:52 am

    Peter, you almost got it right. But not quite. In an interview after he was defeated for re-election by Bill Clinton, George H.W. Bush made it quite clear that he held none of the beliefs you describe above. He called such notions ridiculous and made it clear that the so called leaders of the Republican Party knew these ideas were false and useless. So while rank-and-file Republicans (the so called base) may consider them “rock solid facts” the Paul Ryans and John Boehners know they are BS. Good con job.

  7. November 13, 2015 at 1:45 pm

    Comment on Peter Radford on ‘Republican Pseudo-Economics’

    You criticize the outcome of the recent presidential debate: “In other words the answers were given to questions that did not reference the real economy, but only the make-believe economy that Republicans now inhabit.”

    A presidential debate is about politics, isn’t it? So, strictly speaking, it is not about the real economy at all. And, to be sure, nobody expects a scientifically correct depiction of the economy. It is not such a great revelation that politics is about interests and just because of this the outcome of the debate with regard to the economy is hardly surprising: “So the holy trinity of tax cuts, smaller government, and deregulated business are trotted out over and over even if they are not solutions to what ails us.” (See intro)

    Let us agree on the obvious: in a political debate economic theory and economic data are used for driving home a political point. It is about the-goodies-for-us-the-badies-for-them and this is legitimate in the given institutional framework. The search for truth is supposed to happen elsewhere. The real embarrassment begins when the economist comes in.

    “Apologetics may be a laudable objective. Its practical importance is unquestioned. People need to be shown that the institutions of their own society are good, those of others bad. But there is no place for apologetics in science. Scientific economics inquires only into the How and Why, not into the Good or Bad, of what is. From the scientific point of view preoccupation with Good and Bad is worse than useless since it not only fails to illumine anything but keeps the lightbeam of inquiry from being turned in directions where answers to significant questions can be found. (Murad, 1953, p. 2)

    What the good/bad moralizing member of the economics profession, here Peter Radford, is suggesting is that he — in marked contrast to the presidential candidates and the sheeple audience — really knows how the economy works. But this is not the case, and exactly this is the embarrassment.

    Both, orthodox and heterodox economics is defective, that is, both miss the scientific criteria of material and formal consistency. The fact of the matter is that the representative economist in his manifest incompetence has not yet managed to exactly determine the difference between the pivotal concepts of his trade — income and profit.*

    Therefore, both the professional economist and the layperson, and both the defenders and attackers of the current economic order, have one property in common: they have no idea of what they are talking about.

    The ignorance of politicians and the lay audience is, of course, unsatisfactory but it can be forgiven. Yet, there is no excuse whatever available to the economist.

    “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991, p. 30)

    Walrasianism and Keynesianism are provably false (2015; 2014). These economists are not in the possession of the true theory. They do not know what profit is and therefore miss the essences of the market economy. The representative economist has no ‘solutions to what ails us’, his problem-solving track record is disappointing — to say the least, he has nothing to tell that could command more interest than the opinion of any practiced journalist. After more than 200 years of scientific failure the member of the economics profession is left with a last choice: voluntary retirement or dishonorable discharge.

    Egmont Kakarot-Handtke

    Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
    Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
    Murad, A. (1953). Questions for Profit Theory. American Journal of Economics and Sociology, 13(1): 1–14. URL http://www.jstor.org/stable/3484955.
    Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.

    * For heterodox profit theory see ‘Heterodoxy, too, is scientific junk’

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