Economic theory’s dark age

Look, forget the Superbowl. The Argos, the beloved Toronto Argonauts, won the Grey Cup this year. OK, it was in November. They hold the game a bit earlier in Canada since if you waited for February it would be a bit frosty. But let me however point out that Canadian rules football is a more open and exciting game but why get into an argument. What American even knows the Canadian game exists.

As for the Superbowl, it was a quite extraordinary game but that is not the most notable event of the afternoon by any means. What really is of interest was the failure of the stadium lighting system in the middle of the third quarter. The United States is developing a third world infrastructure because it is wasting its capital in various government-directed forms of expenditure of which the loss of lights is merely an example of what will become a more general case in many different areas.

The maddening uselessness of modern macroeconomics, which looks almost entirely at current production, ignores the deterioration of capital stock and thinks that just because private sector inflation is low for the moment things are on the right track. It’s not inflation per se that will kill you but the public spending that the government-controlled money creation system allows to go on almost till an economy is over the cliff.

Losing the lights in the middle of a football game is the least of it. As the capital stock and infrastructure crumble the US will find itself poorer and its population less wealthy than in the past. But as I continuously try to point out, it’s economic theory that is fundamentally at fault. If the Treasury, here or in the US, keeps insisting that worthless forms of public spending are good for growth, you can be sure that politicians as economically unsophisticated as a Gillard or an Obama are not going to go against such advice since this is exactly what they believe and anyway want to hear. But it is terrible advice and we will pay for it well and truly.

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18 Responses to Economic theory’s dark age

  1. Rafe

    I just want to know what happened in the trial game between the mighty Parramatta Eels and Newcastle on the weekend. Not reported in Perth for some strange reason.

  2. stackja

    ..they believe and anyway want to hear.

    Ray Nagin Ex-New Orleans mayor charged with bribery, fraud.
    And they get paid for this!

  3. Elizabeth (Lizzie) B.

    They get the bad economic advice, and then something somehow manages to arrive to save them and the whole lumbering edifice of taxing and spending staggers on to live another day. Shale oil is part of it at the moment, plus the inherent capacity of about half of Americans to call horse manure and get on with it anyway, plus the impetus of immigration and population growth, plus the demographics of China, plus plus plus.

  4. Skuter

    The maddening uselessness of modern macroeconomics, which looks almost entirely at current production, ignores the deterioration of capital stock and thinks that just because private sector inflation is low for the moment things are on the right track. It’s not inflation per se that will kill you but the public spending that the government-controlled money creation system allows to go on almost till an economy is over the cliff.

    This is the money quote. Lefties/Keynesians just don’t get the concept of consumption of capital. Was it Ricardo who spoke of eating the seed corn? In fact, they don’t understand capital at all. Here’s a hint…complementarity as opposed to substitutability…

  5. Token

    …which looks almost entirely at current production, ignores the deterioration of capital stock and thinks that just because private sector inflation is low for the moment…

    Every corporate raider who is looking to strip assets and sell the chunks for maximum profit uses that tactic (not strategy).

    Is it any surprise that the parties populated by ambulance chasing lawyers and crony capitalists are using those tactics?

  6. NoFixedAddress

    and Andrew Bolt, unfortunately, has demonstrated the fundamental misconception….

    http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/a_tax_on_prudence/

    I would like to see Costello answer questions before a jury that is 50:50 peers and betters.

    Andrew thinks a broader swathe of the political commentary spectrum will fix it!

    He is forgetting that it is not the consumption that is infecting the ABC and the likes of Fairfax… and that is just a mere 2 corporations….

    What he forgets is that it is the PRODUCTION that really counts.

    Ahhh well!
    You win some… you lose some.

  7. .

    JC and Sinc ought to clip him over the ears.

  8. johno

    I hope the AFL Commissioners have considered what happened with the Super Bowl.

    No night time Grand Finals please.

    Saturday afternoon is perfect. Preferably the last Saturday in September.

    Don’t muck around with tradition.

  9. eb

    Sorry NFA, I don’t understand what you’re talking about. Have you got a couple of issues confused? What’s Costello’s article got to do with the ABC?

  10. NoFixedAddress

    g’day eb,

    seriously sorry, I didn’t go to journalism university of the modern age.

    I thought that I had neatly segued from Costello to Andrew.

    I was referencing an article on Andrew’s Blog.

    Some conservatives do not always have to agree with him.

    I think that he does enjoy a well reasoned argument!

  11. Dan

    Sure, but Tatts don’t offer odds on the Canadian League therefore I would not have got $3400 betting on the equivalent of the Ravens.

    BRAG

  12. “I hope the AFL Commissioners have considered what happened with the Super Bowl.

    No night time Grand Finals please.

    Saturday afternoon is perfect. Preferably the last Saturday in September.

    Don’t muck around with tradition.”

    Too late for rugby league. They’ve had night grand finals for years. Thankfully, so far the only victim has been Billy Idol. Next time i don’t think we’ll be so lucky.

  13. Rabz

    Thankfully, so far the only victim has been Billy Idol.

    One of the greatest moments in this country’s cultural history. The look on Idol’s face as he stormed off the ground was priceless.

    And no, I’ve never been able to find it youtube. Perhaps someone has uploaded the footage since…

  14. Night grand finals are shit.

    Too right. No man can be expected to wait until night time to get drunk on grand final DAY.

  15. Septimus

    Night grand finals are shit.

    They certainly are. Last year I had to inform fellow Cat people more than once of the time that Channel 9′s telecast started. Very confusing.

    It should be played at 3.00pm.

  16. Wish I could write like this:

    Steven Horwitz letter to an editor

    Excerpt…

    In fact, consumers cannot spend what they haven’t earned, and government cannot spend what it hasn’t taken from producers through taxes, borrowing, or inflation. Rawlins falls for one of the oldest fallacies in economics and one that has to be pointed out every generation. Demand does not create wealth, the production of wealth creates the ability to demand.

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