Wednesday, November 10, 2010

Just Say No to the Pro-Bailout Media

Gregory Wyche of Perfect Pitch Media Relations wrote a piece on Kitco concerning a Wall Street Journal event he attended surrounding the author of the book Freakonomics.  Wyche was surprised that the author, when questioned by a member of the audience, averred that gold investing is right in the sense that a broken clock is right twice per day.  My suggestion to Mr. Wyche was that he might consider improving the quality of his associates:


On October 19th I was invited by The Wall Street Journal to attend a book party here in Manhattan for the launch of the illustrated edition of “Super Freakonomics” I had just seen and liked the movie “Freakonomics” on opening day two weeks before. When it came time sit down for the presentation I was thrilled to be four rows back from one of the stars of the movie and co-author of the book Stephen Dubner. This guy has become successful by challenging conventional wisdom in way way out methods. To say he has hit the ball out of the park in his ability to look outside of the box is a total understatement...(read the whole thing here).

My response:

Thanks for your Kitco article, which I enjoyed. I had read Freakonomics when it came out and thought it was good. Four points:

1. Economics is not a science and the way that economic theory is practiced is not bounded by testable reality. Hence, in economics thinking outside the box is not a meaningful achievement. For example, deconstructionism is an academic theory that the meanings of texts can be derived by reanalyzing words in ways that reveal power relationships. The conclusions deconstructionism draws cannot be tested against reality. It is like astrology. The same with economics as is practiced in universities. Saying that an economist "thinks outside the box" is like saying that a deconstructionist in an English department or an astrologer thinks outside the box. "Geminis really aren't mercurial." "Wow, he thought outside the box." The problem is that there is no testable or "falsifiable" body of knowledge to contradict claims. Keynesians claim the bailout and the stimulus worked. Monetarists claimed the bailout worked but not the stimulus. Sane people wonder what they are talking about, turn off the TV and do not purchase the Wall Street Journal.

2. It is not necessary to think outside the box with respect to economic history and macro-economic issues. Keyensian economics failed in the 1930s; it failed in the 1970s; and it failed in the '00s. It fails every thirty or forty years. Arguing for Keynsian economics means thinking outside the box in that reality has never confirmed it, hence the Keynesian argument is unbounded by reality. Nor does the anti-Keynesian argument require thinking outside the box. It is a very old argument, nearly but not quite as old as the mercantilism of which Keynesian economics is a restatement.

3. I'm puzzled as to why you would think that anyone associated with the pro-bailout media such as the Wall Street Journal would have anything to say in opposition to the pro-Wall Street monetary expansion. The argument for gold is an argument against both monetarism and Keynesianism; against supply siders and deficit spenders.

4. Since economics as practiced by academics is superstition, akin to astrology or palm reading, it is puzzling to me why you would hope that a speaker that the Wall Street Journal sponsors (or anyone associated with the Wall Street Journal) would have anything useful to say.

Not meaning to be prickly, but maybe the lesson you are suggesting is that it might pay to use some common sense and use the dollar you would have spent on the Wall Street Journal to do something more useful, like saving up for a martini at your local bar.

Best wishes,

Mitchell Langbert

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