Reply #15: Economics vs. Fakeonomics by: Ian Fletcher [View All]

[Demeter]

http://www.truth-out.org/economics-vs-fakeonomics64025

We skeptics of free trade are used to being told, "You don't understand economics." In fact, one major reason I wrote the book "Free Trade Doesn't Work" was simply to expose, once and for all, that there do exist extremely serious and intellectually reputable arguments, within the confines of accepted mainstream economics, which question free trade. And, indeed, they exist.

But I've noticed something. We skeptics are often not really struggling against real economics at all. When I pick up a copy of The Wall Street Journal, or Forbes, or The New York Times, or turn on Fox TV or MSNBC, or read papers issued by the libertarian Cato Institute or the Peterson Institute for International Economics, I don't even find economic arguments. I find a mischievous substitute for economics we can call "fakeonomics."

What is fakeonomics? It sounds like economics to the uninitiated. It uses the same language, addresses the same issues and fills the same logical hole in the national policy discourse. Most people can't tell the difference. But fakeonomics is not the real thing.

How is fakeonomics fake? It tells a story that goes something like this ...

Free markets are always right, always and everywhere.

Anyone who doesn't believe this is stupid. Smart people not only understand that free markets are best; they like free markets because free markets mean opportunities to get rich.

Or maybe they're corrupt. The opposite of free markets is government. Government is always incompetent. It never does anything right. Ever.

Or maybe they're evil. Anyone who doesn't believe in perfectly free markets is a Marxist wannabe or a loser jealous of more successful people.

Free trade is just free markets applied internationally.

Therefore, all smart, good, successful people must believe in free trade.

Unfortunately, fakeonomics is, at best, a crude parody of economics. It is often larded with a thick layer of moral hectoring, courtesy of a certain variety of the American right, which seems to think that economics is its exclusive property, a stick given it by God with which to beat liberals. There is even a whole class of people, known as "libertarians," who elevate fakeonomics to the level of an all-encompassing moral ideology. (Their fundamentalist sect is the old Ayn Rand cult, who call themselves "objectivists.")...The really scary thing about fakeonomics is that it is not just a vulgar version of economics, served up to amuse the audience of Bill O'Reilly's TV show. It is also believed in by people who should know better. Like it or not, fakeonomics is mistaken for real thinking by a disturbingly large number of people with top MBAs, graduate degrees in serious fields, Congressional staffers, etcetera. (I know; my job obliges me to talk to these people all the time, and they tell me so.) Perhaps, it's just laziness on their part, but people who should be taking their bearings from more serious sources - people whose careers depend upon the idea that they have genuine expertise - are drawing their ideas from fakeonomics. These are people who pride themselves on understanding the most sophisticated ideas when it comes to, say, corporate finance, but here they are, relying upon intellectual constructs of a chat-show level of sophistication...