The problem with economics, the dismal science

Economics has long been known as “the dismal science,� presumably because its predicted outcomes are often so pessimistic. Perhaps. But my own impression is that modern economics is what it is today because as a science (meaning as a scientific method) it is truly dismal.

The same cannot and should not be said about medicine, biology, astronomy, geology and other authentic sciences, where theories and conclusions reached are normally based on, and consistent with, the observed evidence and actual experience.

Economics is the one alleged science which formally allows the practitioner to premise his research and eventually his conclusions on his own initial ideological bias or assumptions — irrespective of observed facts. Data they do have, in abundance. The economist’s task apparently is to massage, re-order, cherry-pick or completely ignore the evidence, until sure enough, the end-result confirms the initial assumptions.

Modern economics, especially in the hands of neocon thinkers, is not so much a science as it is a process of rhetorical construction of myths. The myths proclaim what is “always true,� in some neo-Darwinian sense, even when it isn’t. Here are two typical economic myths:

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Myth no. 1: The deregulated “free� market and profit motive is the best and only determinant of the public good. Sometimes, yes. But always? Doubtful. Free enterprise brought us the sewing machine, yes, that’s good cherry picking. There are endless examples. But how about other developments, like the U.S. Constitution, New York’s Central Park, or your local volunteer fire department? Where would they be if the “free� market and profit motive dictated the shots? Does the wealth of the few always result in the happiness of the many? If “socialized medicine� is so inherently unnatural, then how is it that the health indicators of Sweden and other “socialist� countries so greatly surpass those of the United States of America?

Myth no. 2: Privatization and “free� market competition always lead to greater productivity, and create more jobs and better products at lower prices.

Really? Then why is the United States lagging and losing ground in industrial production? Why do the job losses of downsizing and outsourcing exceed the new jobs? Is making a hamburger really a “construction� job? Are Chinese-made products really better? Given the promise of privatization, how is it that Connecticut’s privatized electricity costs more and more, so that Connecticut now has the highest electrical rates in the nation? By comparison, were energy costs cheaper in California and Texas when ENRON ran the show? Or might there be a flaw in the underlying economic theory?

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Economics is the only self-styled science which analyzes conditions and makes predictions based on such indicators as an unemployment rate which does not actually count the number of unemployed, or a “core� consumer price inflation index which does not include the cost of food or fuel. How many American consumers can survive without food or fuel? Surviving without fuel would be an energy saving, wouldn’t it?

Economists claim there is next to no inflation in this country. Such bright economic news helps buoy up the stock market. But the “anecdotal� (meaning unscientific) experience of nearly every consumer in America is quite the contrary. In the face of such contradictory evidence, all the economist can do is sputter, blink and repeat his initial ideological mantra.

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If economists kept to themselves, all this wouldn’t be quite so bad. But they don’t. They commingle with politicians and business leaders. Bad economics leads to bad policies and worse solutions.

The ever-popular NAFTA/CAFTA-style trade agreements are a case in point. These agreements are perhaps less about actual tariffs and trade as they are about preventing signatory states (including the United States) from protecting their own lands, resources, services, citizens and workers (that is, “protectionism�) from exploitation by de-regulated, global transnational capitalism — in the name of “free� market enterprise.

Just about every prediction that economists have made about the expected impact and outcome of these “free� trade agreements has worked out in quite the reverse. Talk about faulty weather prognostications; just try economics forecasting! Maybe we could use a little more democracy and a little less economic theory in our country.

Now that I’ve ravaged economics as a science and as a profession, perhaps some reader of The Lakeville Journal would rise in defense? I could make a case for law, medicine or biology, but not for economics.

Sharon resident Anthony Piel is a former director and legal counsel of the World Health Organization.