Who is the world’s best economists? The alchemists of the middle ages believed they could turn base metals into gold and their kings paid them to try. All had confidence in the science. Who would have been the best scientist? Would it be the alchemist employed by the king or some commoner who went around telling everyone the alchemist’s basic assumptions were flawed and there was no chance to succeed?
The commoner would have been right and a scientist who operates with bad assumptions does more harm than good.
The economists of today, who everyone admires and respects, are the equivalent of the alchemists of the middle ages. More recent examples are the physicians who put leaches on George Washington.
When economists such as Ben Bernanke talk of stimulating the economy and policies which create economic prosperity there is no chance such actions will have a positive influence.
What are the flawed assumptions economists make?
I will cover just one today and perhaps it is the most important.
It is almost 100% understood that standards of living and general prosperity are highest in a free market setting. Odd as it may seem, in a free market economy uncertainty is always at a maximum for everyone who participates. Anything government does to attempt to insert certainty into the economy requires dismantling some free market aspects since something other than price is used to allocate resources. The result of government intervention is a less efficient less productive economy. There are no exceptions. When governments attempt to create economic certainty they unwittingly do the opposite. Uncertainty in economics is normal, a constant and unavoidable.
So, what economics text book did James Quillian use to extract that kind of information? No textbook, this comes from simple observation.