{"id":28249,"date":"2017-11-24T07:44:31","date_gmt":"2017-11-24T12:44:31","guid":{"rendered":"http:\/\/olduvai.ca\/?p=28249"},"modified":"2017-11-24T07:44:31","modified_gmt":"2017-11-24T12:44:31","slug":"will-macro-economists-ever-learn","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=28249","title":{"rendered":"Will Macro-Economists Ever Learn?"},"content":{"rendered":"
\n
\n

WILL MACRO-ECONOMISTS EVER LEARN?<\/a><\/h3>\n<\/div>\n<\/header>\n
\n
\n
\n
\n

As we lurch through successive credit crises, central bankers and economists believe they learn valuable lessons every time, and that the ultimate prize, the suppression of business cycles through monetary policy, will be achieved.<\/strong><\/p>\n

We saw, over Brexit, how wrong the Bank of England\u2019s and the UK Treasury\u2019s models were, and these errors were also evident in the OECD\u2019s model. Brexiteers smelled conspiracy, but in the absence of evidence, perhaps we should give them the benefit of the doubt and assume the errors were genuine. If so, all computer economic modelling has been a waste of time.<\/p>\n

Then there\u2019s the old mantra of garbage in, garbage out, which is certainly true. However, the problem goes deeper than the models, and is rooted in the rejection of classical economic theory. This rejection dates from Keynes\u2019s General Theory, published in 1936, which forms the basis of today\u2019s macroeconomics. Even though macroeconomics began to evolve during the depression years, Keynes\u2019s book really marked the birth of it becoming mainstream.<\/p>\n

The failures are manifest and multiple. And while we have no knowledge of the counterfactual, there is good reason to believe the errors made by following macroeconomic theory are far greater than if we were still basing government policy on classical economics. Admittedly, this is a broad statement that does not allow for differences of opinion between the classical economists of yesteryear, and differences of opinion between economists post-war. But there are some fundamental distinctions between the two disciplines that can be agreed.<\/p>\n

The most fundamental is of approach. Classical economists agreed that demand is subordinate to supply. In other words, the time-line of goods and services acquired by the individual is that his demand for them must be successfully anticipated before being produced and supplied. The reasoning is unarguable.<\/p>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

WILL MACRO-ECONOMISTS EVER LEARN? As we lurch through successive credit crises, central bankers and economists believe they learn valuable lessons every time, and that the ultimate prize, the suppression of business cycles through monetary policy, will be achieved. We saw, over Brexit, how wrong the Bank of England\u2019s and the UK Treasury\u2019s models were, and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7772,7380,3392,17148,17147],"class_list":["post-28249","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alasdair-macleod","tag-cobden-centre","tag-credit-crisis","tag-keyness-general-theory","tag-macro-economists"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28249","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28249"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28249\/revisions"}],"predecessor-version":[{"id":28250,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28249\/revisions\/28250"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28249"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28249"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28249"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}