The PJ Tatler

Two Newspapers in One! The Telegraph Gets Confused About Economics!

This time from The Telegraph, for whom economics is not just a dismal science but apparently an inscrutable one.

First we have this column from today, Have the austerians* won the day, or will the pragmatists prevail?  [*Cute pun, guys.  Is that all you’ve got?] proclaiming the wrongness of all things based on Austrian economics as opposed to the “pragmatists”:

Ideology is never a good basis for public policy, a truism that Margaret Thatcher repeatedly recognised in her practical decision-making, despite her strongly held free-market beliefs. Yet it continues to be highly influential in the economic sphere – which is perhaps surprising, given the still-depressed state of most advanced economies, and the urgent need for solutions that actually work.

We can argue about what’s appropriate, but when economies become destabilised, state intervention is not just warranted, it’s absolutely necessary. Unfortunately, this remains an issue with which many on the Right still have something of a problem, as the debate now raging in the US about who should replace Ben Bernanke as chairman of the Federal Reserve demonstrates.

In a recent interview, Rand Paul, a potential Republican candidate for president, said that his preferred choice for chairman would be Friedrich Hayek. When it was pointed out that Hayek, the intellectual godfather of Thatcherite economics, was in fact dead, and therefore unavailable for the job, he opted for Milton Friedman, another of the 20th century’s leading free-market economists.

Note the reflexive bow to the safely dead conservative and the attack on the current “menace to be destroyed” including the implication that Rand Paul doesn’t know that Friedrich Hayek, author of The Road to Serfdom is dead.  Knowing Sen. Paul’s background, I’d bet he cut his teeth on that volume, possibly literally.  (What?  My son cut his teeth on The Decline and Fall of The Roman Empire. He didn’t read The Road To Serfdom till middle school.)

Note also that article has more weasel words and undefined thresholds than a presidential speech.  Apparently when economies become destabilised (whatever that means, since no economy is ever static) we’re supposed to have “state intervention” whatever that might be as well (and never mind if the state destabilised the economy to begin with) and this absolutely necessary because…?  As my kids say when they don’t know how to justify something they want and know they lost: “Cheese.  Also lasers.”

We recommend that the Telegraph read the Telegraph of two days earlier, on the thirteenth on the subject of the limits of government intervention and also why it might not be a good idea.

Did QE2 Punish savers for nothing?

Impoverishing savers has been a price worth paying for rescuing the economy – so runs the official justification for the Bank of England’s money-printing programme.

But it turns out that the benefits of printing all that new money may have been negligible. According to a new study by two senior US economists, America’s second programme of quantitative easing, nicknamed “QE2”, boosted economic output by just 0.04pc.

Simply telling the markets that interest rates would remain low was more effective, adding 0.09pc to growth, said Vasco Curdia, senior economist at the San Francisco Federal Reserve, and Andrea Ferrero, his opposite number at the New York Fed.

And, of course, keeping the interest rates low mostly serves to inflate a Wall Street bubble, but never mind.

Apparently the idea that whether they want to consider economics a science economics IS a science and that their intervening according to their blinkered theories will have unintended consequences is beyond the grasp of The Telegraph reporters.  In that, they have a great deal in common with our current administration.

Carry on, you crazy theorists. As a wiser Brit put it:

When all men are paid for existing and no man must pay for his sins,

As surely as Water will wet us, as surely as Fire will burn,

The Gods of the Copybook Headings with terror and slaughter return!

Or you could watch the most awesome video ever made on economics:

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