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Forum Post: Market failure of the economics profession

Posted 1 year ago on July 15, 2012, 3:24 p.m. EST by Misaki (893)
This content is user submitted and not an official statement

Most normal people intuitively understand that inflation is harmful and think the government should try to avoid it.
http://www.politonomist.com/gdp-deflator-and-measuring-inflation-00491/

It prevents people from saving money in a bank; wages tend to rise slower than inflation so real purchasing power goes down; and it forces people to invest in the financial markets where most people will underperform the market or even lose money.

This transfers money from people who try to save to financial workers (such as hedge fund managers), which leads to a short-term increase of spending, higher GDP and employment if unemployment is high, so most economists think inflation is good for 'the economy'.

Any reasonable person will admit that governments provide some useful services, but also waste money. This is why when asked how much money the US government wastes, people answer that it is about half for the federal government and somewhat less for state and local governments, instead of saying that it wastes 0% or 100% of what it spends. People do not feel the need to distinguish between political corruption and wasteful spending, because it is difficult for anyone outside of the government to do so.

It is therefore not possible to either eliminate all wasteful spending when unemployment is high or spend enough to fix unemployment through fiscal stimulus. Since political corruption rewards unethical actors while taxes punish everyone, a spending deficit is the natural result of this conflict.

Because inflation from spending deficits also raises GDP via the financial sector, many economists do not see any benefit to the economy from raising taxes to pay for spending and prevent inflation. This means any economists that do suggest raising taxes will not get any support from the rest of the profession and the proposal will basically be ignored by everyone.

Another poll:

Q12b Would you say that your vote is more FOR Barack Obama or more AGAINST Mitt Romney?
Results shown among Obama voters
More for Barack Obama .........................................72
More against Mitt Romney ......................................22

Q12c Would you say that your vote is more FOR Mitt Romney or more AGAINST Barack Obama?
Results shown among Romney voters
More for Mitt Romney .............................................35
More against Barack Obama ..................................58

Barack Obama's approval ratings high: 47% very positive, 21% positive, 12% neutral, 9% negative, 10% very negative, February 2009. Compare overall low for any president: George W. Bush in October 2008, 15% negative, 45% very negative.

President Obama had hope for the nation. He was let down not by his economic advisors, but by the economic profession as a whole.

Job creation without higher government spending, inflation, bubbles, or trade barriers: http://jobcreationplan.blogspot.com/

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