When the Economic Titans Disagree… Then What?

I have listened with attention to Paul Krugman (nobel laureate), Joe Stiglitz (nobel laureate), Nial Furgeson, historian of Empire and Simon Johnson past chief economist for the International Monetary Fund. They are all good. They all know their stuff. And; they disagree.

They disagree most vividly the need for a new stimulus, and yet agree on others items.

But before getting into the weeds of acute analysis of macro economic theory, let us look at a similar area of complexity. If you are of a certain age, you are more familiar with doctors than economics. We would never think of asking a surgeon about how to treat a rash. Nor would we ask a dermatologist as to how to treat a tummy ache. The same complexity engages the study of economics. Yet economics as most college graduates must know, are merely divided between macro, and micro economics.

Why should you listen to me: the self named carpenter economist on this subject. Aside from my university thesis, my awareness comes from working for a decade in the university textbook world over five states and I have had many, many discussions with economic professors, whom I submit, love to profess. I managed a present day anthropology of the economics profession. There are dozens and dozens of economic journals, which is to say they are as disciplined as cats. Yet in the academic world of endowed chairs, many economists have taken the bait of market fundamentalism, as George Soros has so well named. Think Tanks have called it ‘Free Markets’ and they have been impelled with tens and hundreds of millions of dollars which result in many endowed chairs. Their wind has been felt on trade policy ( laissez faire my patoot) as well as in the instruction of MBA’s and economics majors. I have seen the gears of this self generation of ‘policy’.

Back to the subject, namely that economics is as complex as medicine and to divide it into macro and micro and call it good, is as competent as to divide medicine into gastro enteritis or dermatology and consider you have mapped the territory. Knowing this, I am not at all surprised that the three luminaries named above have coherent and yet conflicting views.

These four, Krugman, Stiglitz, Ferguson and Johnson live in different timezones and scales, all of which are valid. Ferguson looks in terms of decades if not centuries, and observes the structure by which empires decline. Johnson worked with the I Stiglitz whose thesis was on the asymmetry of information, i.e. imperfect access to information, has worked internationally as chief economist at the world bank, and has a different perspective from Krugman, who is centered on US history and current macro economics.

Again I must state my bonafides in contrast to these titans, all of which I admire. I wrote my thesis in 1978 on the consequences of nature’s cost on the monetary system as advised by Gregory Bateson who had a remarkable influence on late twentieth century thought He is the one who put the Macys conference together when Weiner and Von Neuman coined the term ‘cybernetics’ which was the mother of automation, and that the mother of robots, which is the building block of what today we call: ‘production’. He was the first to apply information science (also known as system science) to living systems.

What Krugman sees as a period, a quarter, Ferguson sees as a millisecond. What Krugman sees as the way back to some pump in the economy, which is necessary to have some circulation of funds, Ferguson sees as

So I am not upset that these titans do not fit ‘global warming’ into their economic models. While in my opinion it is ignorant, their ‘science’ of economics has proven itself quite fallible of late, so from a theoretical point of view, I understand why they would prefer to keep it as simple as possible. However not attending to that variable is akin to playing cards on the tracks and not noticing the train.

YET, they have to deal with concrete political thinking, that is equally outside the science of economics to deal with all this talk of deficits, and more resembles a train than any sense of logic.

You see economics is very plastic. It is complex, and usually has enough variables to mask any shortfall. Politics is less so. The unfortunate fact is that the majority of people can be: wrong. That was proved in 1936 when FDR cut the stimulus too quickly in response to ‘common sense’ objections to deficit spending…. and re-triggered the depression. For economics works on a slow cycle, and the political topic can have changed a dozen times before economic action creates any economic result.

Thus while each of these titans covers the macro world of economics, they do it from different perspectives, and actually agree more than would a family practitioner, an acupuncturist or an ayurvedic physician, who, like our economic titans all look at the whole body of their medical field.

The debate that rages today: Cut the Deficit, or Spend more on Stimulus is an apparent conflict point among our titans. I hope a new cleavage can separate this debate into a more sensible and fruitful discussion. Stay Tuned.

Why We Must Reduce Military Spending.. a bipartisan plea

by Representatives Barney Frank and Ron Paul
Posted: July 6, 2010 09:02 AM Huffington Post

As members of opposing political parties, we disagree on a number of important issues. But we must not allow honest disagreement over some issues to interfere with our ability to work together when we do agree.

By far the single most important of these is our current initiative to include substantial reductions in the projected level of American military spending as part of future deficit reduction efforts. For decades, the subject of military expenditures has been glaringly absent from public debate. Yet the Pentagon budget for 2010 is $693 billion — more than all other discretionary spending programs combined. Even subtracting the cost of the wars in Iraq and Afghanistan, military spending still amounts to over 42% of total spending.

It is irrefutably clear to us that if we do not make substantial cuts in the projected levels of Pentagon spending, we will do substantial damage to our economy and dramatically reduce our quality of life.

We are not talking about cutting the money needed to supply American troops in the field. Once we send our men and women into battle, even in cases where we may have opposed going to war, we have an obligation to make sure that our servicemembers have everything they need. And we are not talking about cutting essential funds for combating terrorism; we must do everything possible to prevent any recurrence of the mass murder of Americans that took place on September 11, 2001.

Immediately after World War II, with much of the world devastated and the Soviet Union becoming increasingly aggressive, America took on the responsibility of protecting virtually every country that asked for it. Sixty-five years later, we continue to play that role long after there is any justification for it, and currently American military spending makes up approximately 44% of all such expenditures worldwide. The nations of Western Europe now collectively have greater resources at their command than we do, yet they continue to depend overwhelmingly on American taxpayers to provide for their defense. According to a recent article in the New York Times, “Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism. Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella.”

When our democratic allies are menaced by larger, hostile powers, there is a strong argument to be made for supporting them. But the notion that American taxpayers get some benefit from extending our military might worldwide is deeply flawed. And the idea that as a superpower it is our duty to maintain stability by intervening in civil disorders virtually anywhere in the world often generates anger directed at us and may in the end do more harm than good.

We believe that the time has come for a much quicker withdrawal from Iraq than the President has proposed. We both voted against that war, but even for those who voted for it, there can be no justification for spending over $700 billion dollars of American taxpayers’ money on direct military spending in Iraq since the war began, not including the massive, estimated long-term costs of the war. We have essentially taken on a referee role in a civil war, even mediating electoral disputes.

In order to create a systematic approach to reducing military spending, we have convened a Sustainable Defense Task Force consisting of experts on military expenditures that span the ideological spectrum. The task force has produced a detailed report with specific recommendations for cutting Pentagon spending by approximately $1 trillion over a ten year period. It calls for eliminating certain Cold War weapons and scaling back our commitments overseas. Even with these changes, the United States would still be immeasurably stronger than any nation with which we might be engaged, and the plan will in fact enhance our security rather than diminish it.

We are currently working to enlist the support of other members of Congress for our initiative. Along with our colleagues Senator Ron Wyden and Congressman Walter Jones, we have addressed a letter to the President’s National Committee on Fiscal Responsibility and Reform, which he has convened to develop concrete recommendations for reducing the budget deficit. We will make it clear to leaders of both parties that substantial reductions in military spending must be included in any future deficit reduction package. We pledge to oppose any proposal that fails to do so.

In the short term, rebuilding our economy and creating jobs will remain our nation’s top priority. But it is essential that we begin to address the issue of excessive military spending in order to ensure prosperity in the future. We may not agree on what to do with the estimated $1 trillion in savings, but we do agree that nothing either of us cares deeply about will be possible if we do not begin to face this issue now.

David Adds. This is a clarion call. We either pay for bombs in Asia, or teachers in Oregon. You communication will get this wheel rolling…