SAVANTS INSULAR

Savants Insular

I read Paul Krugman’s “How Did Economists Get It So Wrong?” in the 2 September New York Times Magazine in which the Nobel Prize winner in Economic Science tried his best to bring us up-to-date on the latest battles within the ongoing Macroeconomics intellectual wars. I will bet the entire sum of the $787 Billion “Stimulus” that just the mention of Macroeconomics was enough to cause you to quickly look over what’s on TV tonight. Mr. Krugman’s riveting account of how our Economic Savants, who are in charge of the economy nowadays, mussed up nearly everything concerning the current financial crisis and his dissertation about this situation should be cause enough for citizens to once again examine the wisdom of permitting Insular Savants (the inward-looking community of Profoundly Trained Experts) to be at the helm of our economic or any other state ship for that matter. As I tried my best to understand all of the esoteric economic babble that was being sprayed about in Mr. Krugman’s piece, an old saw surfaced from my memory, to wit: War is too important to be left to the Generals. I believe the saying about war and the Generals came to mind because I saw a corollary between the practice of war and the practice of economics where the practice of war employs insular military Generals to guide and direct the combat and the practice of Economics employs Insular Economists to guide and direct the financial system. The reason that Generals and Economists are insular is because, by necessity, both profoundly practice their professions exclusively within their respective professional communities and this situation promotes an intellectual isolation (insular) that makes it very difficult for them to consider the entirety of the state when practicing their respective professions. So, I believe that it is just as profound to say, “The economy is too important to be left to the Economists.” I say this because the practice of war and a practice of economics can both be summed up very nicely by what Sun Tzu said about war well over 2,000 years ago, to wit: “War is a matter of vital importance to the state; the province of life or death; the road to survival or ruin.” Or, in other words, war, and/or the economy, both affect the entirety of the state in much the same way so the entirety of the state must either support the morality and justness of the two enterprises or failure and ruin will be the inevitable result. In the case of the economy, if the Economists are at the helm of the economy, it’s unlikely that the entirety of the state will be considered in their practice of economics and there is little doubt, that at some point in time, events will overwhelm the knowledge available and ruin will follow as surely as day follows night, to wit: War and the Economy is too important to be left to the Generals and Economists. A case in point about Economists and the Economy is that throughout the entirety of Mr. Krugman’s dissertation about the failure of the Economists to get it right, not one mention was ever made concerning money. This omission is both important and revealing because money is to the economy as electricity is to an electric motor, i.e., if you are to understand and design a predictable and workable motor you need to fully understand electricity and if you are to understand and design a predictable and workable economy you need to fully understand money. Money, that invention in antiquity to facilitate commerce (not to facilitate politics), is suppose to be a medium of exchange that represents real value, like property or labor. Money is the raw material of the Economy just like is electricity is the raw material that makes the electric motor work. Here is an example about the importance of understanding money. The Financial Services industry accounts for over 21% of our economy. The product of Financial Services is new money that adds no value to real money, in short, they only make money off of money and produce nothing of real value. This created money can only devalue real money, and thus release an infinite number of human responses into the economy. Today’s Economist’s are now trying to codify these infinite number of human responses into a workable economic theory by injecting a continuing load of psychobabble about human responses to changing economic conditions. This is the height of foolishness because without an understanding or control over the value of money (e.g., letting the Financial Services Industry continue to create financial derivatives, leveraging, claims on claims, etc., and thereby create and inject worthless money into the economic system) you have no control over the most important element within the Economy (the human response). In other words, you have a non-controllable and continuously variable element (human responses) that you yourself are creating by your lack of understanding and control of the most important element of all, the value of MONEY. Good luck with that. To read Mr. Krugman’s article for yourself, click the following: http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?_r=1&scp=5&sq=paul%20krugman&st=cse