Counter Economics

Abstract

Economics portrays itself as an objective analytical framework. However, due to those that fund the work of economists this is far from the case. Economists receive funding from concentrated power which perverts the profession totally. In this post we describe these conflict and the shoddy propaganda that passes for economics that is generally practiced.

Who Pays Economists to Write?

Undiscussed, but extremely important is how economists make money and who pays them to write. The truth is that economists are largely employed by power centers. This includes banks, investment banks, governments, think tanks, and to a smaller degree universities. In fact almost all the research that questions the integrity of the financial media system is done at universities, not by private economists or even at think tanks. However economic university research is rarely publicized in the main stream media except when it is cherry picked to find studies and economists that conform to what concentrated power wants. Milton Friedman is the outstanding case of this cherry picking. The idea that economist would not have a bias towards writing what concentrated power wants would not be consistent with general life experience – at least not ours up to this point. Economists who do not write material that supports these power structures won’t be employed by these power structures for very long. Furthermore there are a number of fascia think tanks that create sham economics on command. They are little more than fronts for large corporate interests (as evidenced by their funding). Its relatively obvious that if Exxon writes something about the environment its understood they are biased. However by setting up a front called the American Petroleum Institute or the Independent Petroleum Association of America (these are the actual names) and releasing their idiotic statements through them it is somehow legitimate. This is how concentrated power bends reality and takes control over public discourse and policy. Perfect examples of this in economics and policy include the CATO Institute and The Heritage Foundation. The Heritage Foundation without a touch of irony calls itself “Reagan’s favorite think tank.” Considering Reagan had no books in his reading room, was suffering from Alzheimer’s while in office and would habitually confuse his CIA reports with quotes from Readers’ Digest, this should be considered an embarrassment. Instead, The Heritage Foundation considers it a badge of honor, giving one a good appreciation for their level of intellectual integrity.

Economics Simplified for General Consumption

Economists derive immense pleasure the term “market” to anoint policies and actions they consider to be economically sound, while terms like “non-market” or “structural rigidity” to describe those things they want to undermine. However, what speaks volumes is the areas of the economy which they are silent on, which are in fact completely non-market. This would include executive compensation, oil company mergers, labor competition for medical doctors. Economists concern themselves with those things that are good for the powerful institutions that pay them and this is actually a more predictive way of determining if an economist thinks a policy or action is “market” or “non-market” oriented, or whether they discuss it all. This is why economics as practiced is simply not a field that provides reliable and consistent information.

Specific Examples

This rule applies to international as well as domestic economists. The opinions and statistics from respected economists are purchased at will. A report by the Center for Economic Policy and Research (CEPR) called “Political Forecasting?” The IMF’s Flawed Growth Projections for Argentina and Venezuela, points to evidence that the IMF greatly exaggerated the growth projections of the Argentine economy up to their currency devaluation from 2000 to 2002 (when Argentina was following IMF directives) and greatly underestimated growth from 2003 to 2006 (when Argentina and the IMF had a falling out over policy). The same is true for Venezuela which the IMF also dislikes as it rejects US policy intervention and is using more of its oil proceeds to benefit middle and lower income groups, providing less to the elites with the country. The IMF is filled with economists, however, because the IMF wants to reward countries that follow its advice, and punish those that do not. Because of he political bias at the IMF, it does not make much of a difference how many economists are employed there and what their qualifications are. In fact it would be better if they did not have any as the IMF is using the prestige of economists to lie for them. A related organization to the IMF is the World Trade Organization also displays a pattern of their exaggerating, or lying (depending upon your point of view) about the economic benefits from trade. They have included inflation as economic growth in their estimates of the benefits of trade from Mexico. They also changed the dates they used to calculate growth using numbers before NAFTA was passed and including it in the post NAFTA analysis. Their false trade numbers are then used to justify further trade agreements that consistently underperform the projected benefits economically, all while worsening the environmental and labor standards in developing countries. In Jamaica, the native agriculture has been wiped out by following the WTO’s recommendations and allowing subsidized agriculture products into the island. Having many economists working at the WTO has not prevented these abuses from occurring.

Lack of Historical Context

One thing that these information sources do not do is discuss their track records. Morgan Stanley was pumping up stock into the teeth of the stock bubble, the World Bank and IMF have extremely dubious histories in improving the health and economies of the countries with which they consult. Involvement with the World Bank or IMF is the fastest way towards economic calamity for any country and subordination to external concentrated financial power. Therefore, these institutions receive their status from their brand rather from their performance. In a efficient market where the general public is served, these institutions would go away and be replaced by institutions that have better performance and who produce accurate predictions. These institutions serve the interests of concentrated power, while the general public lacks the critical thinking, support from the media or a cognitive framework to either hold them accountable or to analyze their actual historical performance. Their reports and justifications are written primarily by economists.

Careful Reading

This concept that economic writing is quite politicized and that economists work for concentrated power means that reading of economics and finance writing requires a strong filter. The first question that needs to be asked is what institution the economist works for. Who they work for will predict their opinion far better than their academic pedigree or any math they might include in the article. Secondly one should check it the article is particularly supportive of one of the major financial power structures (banks, IMF, World Bank, investment banks, Federal Reserve Boards, real estate interests) . A recommendation or analysis will be slanted one way or another depending upon who is paying. Examples include:

1. Morgan Stanley is writing recommendations for stocks they think you should buy that they or their investors already own.
2. The IMF is writing briefs on countries which are optimistic of pessimistic, at least in part, which how much that country follows the IMF policies.
3. Economists writing for the National Board of Realtors want to demonstrate that housing prices are rising and will continue to rise.

The advice needs to be reader beware. Economists rarely tell the truth and will lie or omit important data for their employers.