Economic Ignorance and Ignorant Economists

For the past few years, the self-styled 'Economics profession' has faced a direct challenge from the students who formed the Post-Crash Economics Society in Manchester. Their network is growing and spreading worldwide. Several years before that society emerged from classroom frustration at the real-world irrelevance of much that the professors asserted, George Soros - the man largely responsible for Britain having to crash out of the European Exchange Mechanism [ERM: forerunner to the euro] when John Major was the prime minister - funded an institute for new economic thinking which has dissipated the founder's concept by engaging Economists who have released no significant alternative thought. In recent days a well-funded group of recognised Economists [including a couple of holders of the pseudo-Nobel prize] has been set up in recognition of the fact that Economics as taught by the Econocracy does not offer even a sensible explanation of how modern mass poverty has occurred. There might be a slight hope that this group may provide some new insight that is of practical utility; but the experience of similar initiatives is not encouraging.

There is a widely-recognised perception among the general public and much of the commentariat, that formal Economics does not address the issues of living humans in the real world; but that has not led to mass resignations by professors who have become ashamed to draw salaries for preaching irrelevant dogma. Nor have the professors gone into purdah to think anew and recast their propositions: no, they continue to assert them with absolute confidence in the 'scientific rigour' of their abstractions. There is a widespread assumption that groups like Soros' institute and the new 'commission' might just add something to the existing corpus of Economics that will enable the professors and their students to carry on teaching and learning the same stuff; to which a new wrinkle will be added that vindicates the mass of the subject and resolves the outstanding issues without anybody having to eat humble pie.

That will not happen.

Meanwhile, practical politics is bedeviled by the impact of Economics upon it. The rise of 'populism' in the USA, in Europe and in other parts of the world is largely associated with the failure of economic policies based on established formulas that have been formed with the participation of the Econocracy. It has been manifest in the USA for almost three decades that redundant steel workers in the rustbelt states do not mutate into migrants who mystically acquire the skills to gain employment in silicone valley that pays them all enough to get new houses [at Californian prices] and live a west-coast lifestyle. That is what the professors say should happen in a fully-fledged free-trading economy; but it does not happen. People have families and associations and familiar landmarks in the places where they [or their parents] have been settled since when times were good: so they mostly stay there. The brightest graduates, the prettiest girls and other identifiable groups who have characteristics that support social mobility may move on in significant numbers, but they are a minority; and the core population will be left in misery awaiting a saviour: who appeared in the US  rustbelt in the highly improbable shape of Donald Trump. Trump will fail, as both Bushes and Obama and even Clinton failed, to turn round the march of economic events and the persistence of people in refusing to behave as textbook specimens.

In the UK the practical irrelevance of Economics has become acute, as the head-banging Brexiteers [mostly in the Conservative party] cite the views of extreme Econocrats: such as Patrick Minford, a Thatcher guru who has suddenly returned to prominence with his confident assertions about how good the world will be for the UK if we leave the European Union with no deal. Minford and his little friends have claimed that the British economy could grow by some 7% if all the restraints [and advantages] of membership of the Union were simple sloughed-off. People who try to form a mature and balanced view of the probable impact of Brexit see summaries of these assertions, and the fact that their advocate is Professor Minford: and they wonder whether they should just dismiss his propositions; might he be right? Might the UK be passing-up a great opportunity if we try to stay close to the European Free Trade Area?

The answer is, of course, on the ground all over the UK. The factories and mines and dockyards that were abandoned at the behest of the Thatcherites may have been prettified into tourism sites like the Titanic area of Belfast; but even there a significant proportion of the consumer-facing staff on minimum wages are immigrants who came to the UK prepared to do such work [and they are mostly better at it that taciturn under-educated Brits]. There is no well-paid long-term highly-productive employment for the rising generation in any of the despoiled regions that were once world-leading hives of industry. The formula didn't work in the nineteen-eighties or the 'nineties: and it is even less likely to apply to the real world now. if the headbangers win, mass misery is the only probable outcome: and the growth in new, longer-term non-employment will be well over 7% per year for several years.

Ecological Disaster

Almost certainly, the most important news from Europe this week is the result of a long-term study of insect life in the German countryside. This has shown that over the last 30 years - an incredibly short period in evolutionary terms - up to 84% of the TOTAL of insect life, over almost all species, has declined when the incidence of creatures is counted at the peak of the summer [when the populations of most insects should be at the highest level].

The importance of insects in the crop cycle for most plant types has been recognised by humans for millennia, and it has been re-emphasised as the population of bees has declined over recent decades with a whole series of diseases and alien species destroying the populations of hives and also the survival and reproduction of solitary bees. That this catastrophe has befallen almost all European insects in a very short period is truly alarming. Insects and plants have evolved symbiotically over millions of years; and mammals are utterly dependent on that symbiosis for their foods.

The culprits are well recognised, especially a small range of herbicides and insecticides that are used in massive quantities - particularly in Europe - with the desired effect of protecting crops in the short term. The lobbies for these substances to be banned will grow larger and louder from now on, with many farmers joining in as the risk to pollination of their crops hits their pockets.When the necessary measures have belatedly been taken, nature will almost certainly act as it usually has, and provide the climatic and other conditions in which populations can rebuild themselves quickly. But it may not work that way: the ecological disaster may already have gone so far that the spaces left by the vanished insects could be taken up by alien species that do not support the main farmed crops, and present health hazards to human beings.

There have been many, crystal clear warnings from various ecological pressure groups, not least the ludicrously-named 'organic' movement [who ever saw an inorganic cabbage?], and they have been ignored. The German data are incontrovertible, and are largely replicated across the continent: so something most be done, and will be done, and things may just turn out all right.

A parallel crisis has been reported from the mass use of antibiotics in cattle and other mammalian species of farmed animals and in zoos: the powerful chemicals become dispersed in the waterways and thus return to the life-cycle of which humans are a part: accelerating the rate at which viruses and bacteria evolve to counteract the effects of the drugs on their own ecology. The British medical establishment has warned that when the rate of evolution of bacterial and virological resistance to antibiotics outpaces the development of new and replacement antibiotics, it will become unsafe to perform almost any form of surgery. I include viruses alongside bacteria here because it has become common to give antibiotics to people experiencing virological attacks because in many cases patients find it has a placebo effect: thus they demand antibiotics and doctors often succumb to such demands in order to avoid complaints from patients. This matter has been presented to the media for several years, and the impact of the message has somewhat been muted by the development of more advanced antibiotics; but there is no assurance that the pharmacologists will continue to outpace the evolution of bacteria, and it is irrational for people to assume that science will always triumph.

There is nothing new in the reported decline of insect species: the decline in several bird species has been associated with the decline of their prey for several decades. But nothing adequate has been done about it, and now the 'eleventh hour' has passed and Europe is in the twelfth hour. This is a far more massive challenge than Islam, Jihad, populism, Putin or Trump: and it cannot be avoided.

Classic Cocking Up

Greece
Now a turn-up for the books! No serious commentator thought that Greece would ever be able to squeeze living standards cruelly at the behest of the EU - and of Germany, in particular [as displayed in the viciously silly 'Nazi' propaganda]. Nobody could say exactly how the impossibility would be articulated. Now we know!

In a brilliant piece of intuitive populism, the Greek government has opted for a referendum. This will enable the vast majority of the population to refuse to give effect to the EU requirements. The country will have to default on its public debt, and drop out of the Eurozone. Within the zone, all hands will turn to preventing contagion from running to Italy: 'the markets' will not focus on Spain or Portugal, but go for the big scalp. The EU and the Eurozone should be able to defeat the markets if they really summon up the will and exercise the relative power of governments. More of that in the coming days.

As far as the Greeks are concerned, they will be on their own: presumably within the EU on a similar footing to Romania [unless they opt out, which is unlikely]. They will be subject to the Laws of Political Economy, which few [if any] of their Economists understand. The experience will be painful.If any reader wants to get ahead of the game, and learn the Laws, link to Personal Political Economy via this site.

Saint Paul's Cathedral
has now endured all the reputational risk that is available in the present incident: so the only sensible course is to achieve the removal of the 'protesters' and the attendant mob within a few days. The incident will then be a single event in the popular memory, over and done with [ideally] in three weeks.

Then the toil will begin.

The Bishop has taken charge of the cathedral, and has indicated that his priority will be to restore the church's role as the leading commentator and preacher on Ethics in business and public life: as Dean Inge was in Saint Paul's pulpit in the interwar years, when he became a nationally known irritant to the powerful and complacent. His books of sermons and his essays sold hundreds of thousands of copies.

This prophetic reality will not be achieved quickly: it will take the cathedral years to recover from its concentration on magnificent services and raising tens of millions of pounds for a magical restoration. The Bishop has a formidable intellect and a great presence: but even his abilities [as well as his time] will be stretched, and he must stay the course in his new leadership role.