Economists live in Fantasyland where exponential growth can go on forever
January 12th, 2009 by Jim JustWant to see why economists live in Fantasyland? Take a look:
This is the latest January 8, 2009 CBO projection of output under current law – that is, without any new stimulus package. Once we get past this little rough patch, we’ll soon be back on the economic growth path within a couple of years and will have made up lost ground by 2014 or so. Business as usual, on into the future.
Obama is offering a $775 billion plan to get the economy back on the growth track sooner rather than later. Noble prize winning economist Paul Krugman argues that that’s not enough – it won’t get us back on the growth track soon enough:
The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job.
In the economists’ world, there are no resource constraints such as the peaking of oil and other fossil fuels, uranium, and some metals and minerals (including copper, platinum, silver, gold, and zinc); the peaking of agricultural production due to peak phosphorus, depleting and eroding soils, desertification, and the exhaustion of aquifers; and the collapse of the world’s fisheries. There are no “sink” restraints such as the ability of Earth’s atmosphere and oceans to absorb carbon dioxide and other wastes.
Dmitry Orlov says economists are no better than astrologers:
To build support for his plans, Mr. Obama must rely on the consensus advice of mainstream American economists. These astrologers to the wealthy, with their fancy astrolabes they call “models,” may be popular during flush times, in spite of the feeble predictive abilities of their “science,” but they start to seem downright foolish and feckless once the economy starts to implode. Still, these pseudo-scientists, with their pseudo-Nobel prizes and their tenured faculty positions, are quite entrenched, and will be difficult to dismiss, because the fiction they spin is so much more cheerful than the physical reality it is designed to obscure.
Orlov is right when he points out what we call the “economy” is no longer connected to anything real; that what is needed is a concerted effort to build a new, vastly different economy, not to squander remaining resources on attempts to resuscitate the current, moribund one. And as he says, politicians are beholden to the system that got them into power.
Orlov’s advice seems apt: grow potatoes.