December 20th, 2008


"Keynes, if he was alive today, would not share your view..."

...Infrastructure is to economists what billiard balls are to physicists. You don't see many economists digging ditches, just like you don't see many physicists in pool halls, but certain things make it into text books, and then get repeated zombie-like throughout the ages by academics reading from those same textbooks.

Keynes wrote GT at a time when Federal taxes were very low, the Govt was a small fraction of the economy, labor was fungible, and the US had no roads. Today, Federal taxes are high, Govt is a large fraction of the economy, labor is specialized, and the US has a fair amount of infrastructure. But the cry goes out "dig ditches" as if nothing has changed since the 1930s.

If the last 12 months have proven anything, it's that academic macroeconomists have no clue what they are doing. All the output from that profession has been, essentially, phrenology. Now these same witch doctors parrot what was written 80 years ago, and the press and pundits parrot the professors. It certainly beats trying to understand what is actually happening.