They used to call economics the "dismal science." Actually, it's never been a science -- despite recent attempts to make it so. However, in the last fifty years, the dismal discipline has been elevated to the status of a religion, its practitioners having taken on the role of oracles. Murray Dobbins writes that the discipline went off the rails when its oracles bought into the dogma of neo-liberalism:
If it were a science the facts would long ago have prevailed and they would have denounced the ideology from the rooftops.
But, no, instead we get articles on a weekly basis about Canadians' staggering debt load and the only attempt at explanation is so-called "human nature" -- i.e. "Gee, people just don't seem to be worrying -- they're ignoring the warnings." Then there's the ingenious concept of "recency bias" developed by someone in the field of "behavioural finance" (who knew?). Recency bias means, according to the Globe's Rob Carrick, "People are looking at recent events and projecting them into the future indefinitely."
How are people doing when it comes to living a middle class lifestyle?
Carrick's article detailed just how serious the problem is -- repeating numbers that have been quoted numerous times: over 700,000 people would be financially stressed if interest rates rose by even a quarter of one per cent. One million would face that circumstance if they rose by one per cent. The Canadian Payroll Association regularly tracks people's financial stress and its recent survey revealed 48 per cent of people said "[i]t would be tough to meet their financial obligations if their paycheque was delayed even by a week. Almost one-quarter doubted they could come up with $2,000 for an emergency expense in the next month."
I'm sorry, but that's insane in a country that creates as much wealth as Canada does. But don't expect "the profession" to shed any light on this situation. Why? Because economists suffer from SIB -- Self-Interest Bias, a condition rooted in their elitist role in society. Actually it's not unlike "recency bias" -- they've been doing fine for the past 25 years rationalizing this madness, so they will just project that success "into the future indefinitely."
That's what neo-liberalism is all about: rationalizing madness:
The economic policies [neo-liberals] keep endorsing are a disaster for all but the few. The middle class can only sustain its standard of living through ever-increasing debt; the vast majority of the new wealth created every year (such as it is) goes to the top 5 per cent; the working class has been largely relegated to service jobs (we have lost 540,000 manufacturing jobs since 2000) with no security, lousy pay, no benefits and -- increasingly -- part-time work. There is not a single minimum wage in the country that comes anywhere near a living wage. The gap between rich and poor is now the same as it was in 1928. Young people's university degrees are both outrageously expensive and often worthless.
And small and medium businesses are virtually all struggling because the government's obsession with foreign trade leaves them (over 90 per cent of whom export nothing) on their own to cope with the stagnant incomes of their customers. And what do economists say about all this? Not much. They observe and then move on, waiting for the next batch of statistics proving, once again, that the brave new world of unfettered markets and unregulated corporate power cannot and will not deliver the goods. Of course, if they were honest they would acknowledge it was never intended to: these outcomes were predicted from the start by the handful of heretical economists who choose not to join the courtiers of masters of mankind.
Rationalizing madness. It's gone viral.
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