“The Iceman” mummy lived around 5,000 years ago on the Austrian–Italian border. Among his possessions was a complex fire-lighting kit that included tinder fungus, flint, and pyrite for creating sparks. All our ancestors had to know how to make fire. It was not until much later that there was a licensed “fire-maker” for the whole village.
I learned a valuable lesson decades ago. It requires skills and knowledge in numerous fields to survive. But I could not be a master in all. However, I could pay a professional electrician, plumber, mechanic, architect, and doctor to do what I could not do.
The next lesson I learned was that I could not trust them to do the job properly at a fair price. Therefore, I had to know enough to know when I was being cheated. I had to know which questions to ask and what answers were acceptable. If any of these people showed hesitation or gave me a bad attitude, that was not someone I employ.
I had a small wound on my face that did not heal. A doctor told me that surgery was necessary. She would do a biopsy and then cut out the bad tissue. And then do another biopsy. “Why not do the surgery and biopsy at the same time? Why two P15,000 biopsies?” The doctor did not like my question.
The doctor I went to for a second opinion said he would do the surgery and biopsy at the same time and this was without my asking the question. He got the job.
Elected officials are expected to make important decisions about subjects that they know little about. Fortunately, there is a wealth of non-political/unbiased genuine expertise available on almost any concern. These experts work hands-on in their chosen field.
Yet when it comes to economic issues, a bachelor’s degree in economics qualifies a person to be an “economist.” Further, the fact that an economy is made up of businesses and workers does not seem to matter. To be an “economist” does not require ever having owned or operated a business or even worked as an employee in a business.
Here is the work experience outside of government or academia for the past three Federal Reserve Chairs. Ben Bernanke as a teenager waited tables at a restaurant at a roadside amusement park and fireworks store. Janet Yellen never had any job outside of government and academia. Jerome Powell worked at investment bank Dillon, Read & Co 35 years ago. Dillon, Read is known for employing people as a stepping stone to government jobs ever since the son of its founder served as US Secretary of the Treasury under John F. Kennedy.
The economist that every politician adores is John Maynard Keynes who also never worked outside of government/academia. He wrote “The General Theory of Employment, Interest and Money” in 1936. MN Gordon describes it this way: “It provides academic rationale for governments to do what they love to do most—borrow money and spend it on ridiculous programs. Keynes advocated filling bottles with money and burying them in coalmines for people to dig up as a way to end unemployment. This would provide jobs and money for the unemployed.”
Fast forward to Nobel Prize in Economic winner Paul Krugman, whose only job outside of academia is as a newspaper columnist. On July 21, Krugman wrote “I Was Wrong About Inflation” saying he was “fairly relaxed” about the stimulus package. “As it turned out, that was a very bad call.”
“Something was wrong with my model of inflation, a model shared by many others.” Apparently, Krugman’s model of inflation is a huge failure, not forecasting the biggest consumer price inflation binge in over 40 years. If it could not do that, what good is it?
In July 2021, Americans said that inflation was their number one economic concern. August 28, 2021: “Chair Jerome Powell pushed back against concerns that swiftly rising prices could become a feature of the economy, forcing the US central bank to raise interest rates.”
July 28, 2022: “US GDP shrinks for 2 quarters in a row, meeting the bar of what some say is technical recession.” July 28, 2022: “Biden says US not in a recession despite two consecutive quarters of shrinking economy.”
E-mail me at firstname.lastname@example.org. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.