Economics is a Religion

4/12/09 – Easter

In most universities one can get as BS in economics. Of course, economics not only has been describe as the “dismal science”, but has also proven not to be very scientific to the general public. In other universities economics can be earned with a BA. Here we have to note that beauty and art is seen only in the mind of the beholder and to many economics is not very attractive, certainly with the current financial crisis.

I would like to suggest an alternative. Economics is a religion. Not only is this based on the fact that many early economists were theologians, but it is also based on the concept of the “rational expectation theory.” That is, if one does not have faith in an economic theory or economic policy, it will not work.

Points to Ponder

  • Did society have faith in Reaganomics, the Laffer Curve or the trickle down concept?
  • Where does saving and speculation fit in the American culture?

Genesis 41

And Joseph said unto the Pharaoh,
29 Behold, there come seven years of great plenty throughout all the land of Egypt:
30 And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land pf Egypt; and the famine shall consume the land.
34 --- Take up the fifth part of the land of Egypt in the seven plenteous years.
35 And let them gather all the food of those good years that come, and lay up corn under the hand of Pharaoh, and let them keep food in the cities.
36 And that food shall be for store to the land against the seven years of famine, which shall be on the land of Egypt; that the land perish not through famine.

This lesson is not just for government, but the saving/thrift ethic that “We the People” seemed to have lost is just as big a problem. Severance tax should be variable and used like the Alaskan (pseudo) Permanent fund that “saves” for a rainy day.

(Note: Joseph was a speculator in corn.)

  • Following the Pharoah’s policy of planning ahead would minimize knee jerk reactionary solutions. It is stable and sustainable policy.

Matthew 7

24 --- a wise man, which built his home on rock:
25 And he rain descended, and the floods came, and winds blew, and beat upon that house; and it fell not: for it was founded upon a rock.
26 --- a foolish man, which built his house upon the sand:
27 And the rain descended, and the floods came, and winds blew, and beat upon that house; and it fell: and great was the fall of it.

Policy must be built on rock. Because “Shit Happens” and without that rock solid foundation, great will be the fall of it.

Ecclesiastes 1:9-14

What has been will be again. What has been done will be done again. There is nothing new under the sun.

To bring these words to a more modern context, we all have heard George Santyana’s quote that “those who do not study history are doomed to repeat it.”

On the other hand, Mark Twain noted, “History does not repeat itself, but sometimes it rhymes.

Truly these are appropriate admonitions for any forecaster, decision maker or policy maker.

Economic Growth

Economic growth is a moral issue, and therefore I address it here. In the guise of global environmental angst, can society limit the developing nation’s access to energy to fuel their economic growth? Most of the world envies the developed world and strives to lift its standard of living to this model.

Without causing WW-III, I think the answer is no. Therefore, energy supplies will be continually stressed. The global society needs to have policies that will encourage the development of every BTU possible. The good news is that these developing nations can take advantage of new technologies and leapfrog many of the steps the developed world took to get where it is today.

Be it the spaghetti distribution above or the scooters at the starting line for work in the smog below, growth will use energy.

It is the economic ladder that will increase energy consumption, but will be done in an every increasingly more efficient manner.

Indulgences

In Step – 9, 9.9.19.2 I offer the following religious justification of this concept. This section deserves repeating here.

“Yet another example of the futility of government programs is the concept of carbon offsets and carbon trading. This concept is not new, as I am reminded by John Baden of FREE.

In the 1500s, Pope Leo X developed the idea of indulgences that could be bought from the holy (the church) to assure one’s entrance into heaven. Such purchases did result in good works such as new churches, but the reward of heaven will only be known to those who actually get there.

Certainly one will be rewarded in heaven for minimizing his carbon footprint. But there must be better ways to modify behavior than these modernday indulgences.”

Click here for more information about Confessions of an Energy Price Forecaster: A 12 Step Program to Enlightenment

Click here for John Tobin's full bio

 

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