Inducing the Madness of Crowds « unsettling economics

unsettling economics:

After losing a fortune speculating in the South Sea Bubble, Isaac Newton reportedly said that he could calculate the motions of heavenly bodies, but not those of the madness of crowds.

Today, millionaires and billionaires are pretty much united in the proposition that even kind of social provision must wither in order that the state can afford to clean up the mess that the wealthy have created. In addition, raising their taxes is not only unfair, but destructive of health of the economy. Yves Smith’s opinion piece in the Times, largely lifted from her wonderful book, ECONned, reports how corporations are hoarding their cash. They have also been investing in their own stock, which raises executive bonuses, which helps to amplify the obscene redistribution of income.

Of course, common sense shows that austerity is the worst policy in the face of an economic decline. In a market economy, without consumer demand, business activity dries up.
I can understand why the millionaires and billionaires promote their self-interested ideology. I can also understand why the democrats have joined in the millionaire and billionaire ideology rather than upset their base — the millionaires and billionaires.
What I cannot understand is why more people have not caught on to this game. Yes, a small number of sensible economists have spoken up, but without any real effect. Instead, supposedly progressive people go along with the Democrats on the ground that the Republicans would be worse. But again, why have so few people seen behind this good cop/bad cop game?
The New York Times can publish an article describing how destructive austerity has been in Ireland
Alderman, Liz. 2010. “In Ireland, a Picture of the High Cost of Austerity.” New York Times (29 June): p. A 1.
http://www.nytimes.com/2010/06/29/business/global/29austerity.html?ref=business&pagewanted=all

However, buried within a mass of millionaire and billionaire ideology, such information has no effect.

Of course, people are angry, but the millionaires and billionaires have been able to divert this anger for their own purposes. Of the 538 members of Congress, none of them gives any indication that they have a clue. Of course, some of them know very well what is happening, but fear speaking out, lest the millionaires and billionaires come after them.

Given this mess, we live in an era of induced madness. Virtually nobody gives any indication that s/he has the sense of Isaac Newton to recognize this as madness, which now appears as common sense. Congratulations to Pete Peterson and his ilk — at least until this mess you are creating falls apart.

Posted via email from Jim Nichols