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Source link: http://archive.mises.org/8227/mccain-on-economists/

McCain on Economists

June 25, 2008 by

“You know the economists?” McCain said June 12 at Federal Hall, near the New York Stock Exchange. “They’re the same ones that didn’t predict this housing crisis we’re in. They’re the same ones that didn’t predict the dot-com meltdown. They’re the same ones that didn’t predict the inflation that’s staring us in the face today.”

{ 18 comments }

Fephisto June 25, 2008 at 10:18 am

I know this is the rhetorical thought the author is imposing, but I’m saying it anyways:

You’re listening to the wrong economists.

RWW June 25, 2008 at 10:21 am

That’s incredible.

JaylieWoW June 25, 2008 at 10:29 am

Reminds me of the joke picture about gas prices:

LOL = Regular Unleaded
OMG = Midgrade Unleaded
WTF = Premium Unleaded

Except in McCain’s case I would simply run them all together… LOLOMGWTF?!

Amazing and scary all at the same time. You would think common sense would be saying, “find the economists who DID predict these things and start listening to them”… however, since those same economists also advocate little to no regulation, I need to find someone who doesn’t advocate such things who also predicted these things. How’s that for irony?

magnus June 25, 2008 at 11:04 am

McCain’s grand economic vision extends as far as hiring Jack Kemp to do all his thinking for him.

Kemp is the man who gave us Reaganomics, which as far as I can tell, involves cutting taxes drastically while blithely running up huge deficits.

In other words, this is the man whose policies gave us the greatest sustained inflation tax in modern American history, a situation which, dare I say, is still with us today.

If, by some cruel twist of fate McCain is elected, Kemp is likely to be our new President’s chief economic adviser. The man whose Wikipedia page, in an effort to bolster his credibility, relies on the assertion that “in high school [Kemp] read history and philosophy books.”

Well, gee whiz. He read “history and philosophy books” in high school. Golly.

This is a man whose greatest career success was as a quarterback in the NFL. Whose highest level of education is a physical education degree from Occidental College. Whose business experience consists of being a figurehead for several of those strange, mysterious organizations you find littering the offices of Washington, D.C. — the non-profit “advocacy group” that, despite being not-for-profit, still manage to find themselves flush with cash all the time.

And yet despite not actually producing any products or services since his low-paying days as a football player in the 1960s, he somehow managed to become so rich that he could endow an institute at Pepperdine.

I guess it pays to be a Washington insider.

fundamentalist June 25, 2008 at 11:45 am

McCain is right. Mainstream economists can’t predict anything because their model is so horribly wrong. Unfortunately, their bad economics taints good economics because they’re the majority. Mainstream econ is such a mess that Arnold Kling over at Library of Econ and Liberty recommends students not take the class. I agree. Mainstream macro causes brain damage.

As for the stupid comment that trading junk does nothing for the GDP, that’s because the GDP doesn’t include sales of used items. However, the economist who said that is wrong. People who sell used cars, clothes and houses reduce the cost of searching for such items and create a liquid market for them. So they definitely contribute to the GDP.

On the other hand, state spending figures heavily in GDP when it actually hinders the private sector. Increased state spending lowers growth in the private sector dollar-for-dollar. But the stupid logic of GDP math hides that from everyone.

McCain should realize that the same economists who can’t predict anything are advising him to have the state to borrow more and spend it “helping” small businesses. He should extend his logic one step further and realize that those same economists can’t predict the results of such action. However, Austrians can predict the outcome: increased state spending reduces investment in private enterprise. That happens whether the state gets the money from taxes or from borrowing. Taxes directly reduce funds available for investment, while borrowing absorbs savings that would have gone to investment in private enterprise.

Back at ya John June 25, 2008 at 1:15 pm

“You know the politicians?” A sane man in Anywhere USA said June 12 at his local diner, near the town gas station. “They’re the same ones that didn’t predict this housing crisis we’re in. They’re the same ones that didn’t predict the dot-com meltdown. They’re the same ones that didn’t predict the inflation that’s staring us in the face today.” He further added, “Now, they claim to have the solution and want adoration. Interesting proposition considering they caused the inflation and housing crisis.”

Scott D June 25, 2008 at 2:24 pm

“As for the stupid comment that trading junk does nothing for the GDP, that’s because the GDP doesn’t include sales of used items.”

I think that the comment was even more stupid than that. Here it is:

“In terms of jobs, there’s no net increase in GDP that comes from trading stuff that’s already made,” said Stevenson, author of a study on the Internet and employment levels. “New people selling stuff out of their closet on EBay isn’t growing the economy.”

In other words, since used goods aren’t included in GDP, they might as well not exist. We would be better off to throw away used goods and just produce and buy more stuff, since the new stuff adds to GDP.

This is pure Keynesian idiocy. Proof once more that mainstream economists simply don’t think outside their models, even with the falsifying evidence staring them in the face. Buying used goods certainly represents an exchange of (subjectively determined) value, even if it is not tallied in the divinely-inspired GDP number.

Then there are the comments about “junk” near the end of the article. These are the comments of people who have obviously never even visited the site to see the kinds of high-quality goods that are routinely sold. Again, stupid beyond words.

Carlos Xuma June 25, 2008 at 4:33 pm

What you have to agree with McCain on that one. The economists have not been doing their job properly. But McCain needs to walk the talk when he is President and assemble economists who are not incompetent.

olmedo June 25, 2008 at 6:30 pm

advice to mcain,

talk to your former running mate ron paul, he predicted all that.

Mr.huh? June 25, 2008 at 7:32 pm

This reminds me of what a godsend my discovery of Austrian Economics was. Not only did Economics make sense since it dealt with people and not faceless numbers, letters, and graphs, it also proved to be quite prophetic. Ludwig Von Mises predicted the collapse of socialism, the coming Great Depression, etc. and the Austrian Economists such as Ron Paul have predicted things like the dot.com bubble, and the Housing Crash only validates them in my eyes even further (and makes anti-Austrian economist Paul Krugman look more and more like an @$$). It’s truly sad that it’s always been sort of an outsider school in spite of the fact that it’s also the most anti-war and writes some of the most enlightening history books (Murray N. Rothbard is my favorite historian). At the very least, the presidency of Ron Paul has helped bring a whole lot of mainstream attention to the Austrian School of Economics. Although not enough as this quote from John McCain shows, just think of how many people, young and old, have been exposed to the anti-war, yet capitalistic Mises Institute, Rothbard’s “America’s Great Depression”, Hazlitt’s “Economics in One Lesson”, etc.

Jane June 25, 2008 at 9:38 pm

This most likely was a well thought out statement. He knows full well that the delegates could still nominate an economist.

Miklos Hollender June 26, 2008 at 12:05 pm

Can someone please give me direect links to Austrian predictions of the dot-com meltdown and housing crash? I’d like to blog about it at another website.

olmedo June 26, 2008 at 12:26 pm

there are a few “austrian financial” websites who were able to predict the housing bubble and credit crash stuff.

among them;

peter schiffs

http://www.europac.net/

or doug noland credit bubble bulletin:

http://www.prudentbear.com/index.php/CreditBubbleBulletinHome

unfortanately, they are not academics so they dont spend much time among the nitty grity of theory.

and, the people who should do it, full time austrian academics, with few exception, waste most of their time aswering the nonsense of mainstream economists and not enough understanding the real mechanics of inflation in a real world.

olmedo

FrancisD June 26, 2008 at 1:06 pm

Hmm. In fact, selling old junk out of closets does indeed eventually increase GDP.

Junk in a closet is inactive assets, if you manage to sell them you get capital to get something produced for you, or use this capital to produce something yourself.

IMHO June 26, 2008 at 1:32 pm

“They’re the same ones that didn’t predict this housing crisis we’re in. They’re the same ones that didn’t predict the dot-com meltdown. They’re the same ones that didn’t predict the inflation that’s staring us in the face today.”

For the most part, people weren’t listening to economists. They were listening to their financial advisors, their accountants, their friends, and the infomercials; because they didn’t want to believe that the party was going to come to an end. I worked for a financial advisor who wanted to believe that there was no limit to what tech could do. At the time that I left his employ (about two months before the dot com bubble burst), his clients were so heavily invested in tech, that it hurts to think about it.

Scott D June 26, 2008 at 2:11 pm

Miklos, check these out:

2000s Housing Bubble:
http://blog.mises.org/archives/003566.asp
http://blog.mises.org/archives/002621.asp

1990s Stock Market Bubble:
http://mises.org/daily/284

Pablin June 27, 2008 at 10:49 am

Wow…

And again…wow. My head hurts, considering I had heard several economists (Both Mainstream and Austrian) talking about the housing crisis long before it started.

Miklos Hollender June 29, 2008 at 10:14 am

Thanks, Scott!

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