Sunday, September 18, 2011

The Dismal Science

When John Boehner gave his speech the the Economic Club of Washington, DC, he distilled the Republican dogma of the last 80 years into the catechism: 1/ The problem is the government 2/ The people, that is the businessmen will lead us out of our economic miseries by creating jobs, innovating and riding on on horseback.

The problem with his economic analysis is the problem with economics, which has been called "The Dismal Science" as a proposition: Economics is not a science at all.

In science, you propose a hypothesis: e.g., Government cannot create jobs. And then you test that hypothesis with an experiment. And then you publish your results so everyone can see how exactly you did your experiment and everyone argues about it until the next trial.

But economics does not have laboratories; about the only things economics has is history (which is one long argument) and mathematical models, which stupefy most people and which lend some credibility to economics as a learned profession, because, after all, they have all those numbers.

The closest thing we've got to a laboratory in economics is an individual state, like say, Michigan, where they can try ideas out and see how they work. Of course, if the idea doesn't work in Michigan, you can say, well that's just an isolated state with all sorts of problems peculiar to Michigan, and just because the idea didn't work there doesn't mean it won't work in say, Texas.

But it's the closest thing we've got to a laboratory.

Now Jennifer Granholm, former governor of Michigan has published her report on how she responded to the economic crisis in that state when she was governor: She cut taxes, cut spending, cut government jobs. And what were the results of her experiment? "We did everything that people would want us to do, and yet it didn't work. Laissez-faire, passivity, tax cuts, hands-off does not work. And, really that's the lesson from this laboratory of democracy which is Michigan."

About the only thing that helped was when the federal government stepped in and bailed out General Motors--which the Republicans in their typically snide, cynical way, immediately dubbed, "Government Motors."

Of course, the Republicans say the reason cutting taxes didn't work was she didn't cut them enough.

Dismal science indeed. Not much science. But pretty dismal.

No comments:

Post a Comment