It just isn’t going to work, and it’s very interesting that the man who invested this type of what I call a voodoo economic policy
-George H.W. Bush, Carnegie Mellon University, 10 April 1980, in reference to Ronald Reagan’s economic policy
Luke Johnson, the head of Risk Capital Partners, a private equity firm in the UK, has a good piece in the FT today in which he says:
I fail to see the point of professional economists. They purport to know about trade and finance, about markets and credit, but I struggle to identify the actual benefits of all their expensive advice and esoteric debates.
Johnson points a disapproving finger specifically at Vince Cable, Paul Krugman and Alan Greenspan. But for all intents and purposes, he is calling economists – the whole lot of them – voodoo people. Before this downturn, many thought economists like Greenspan were magic people who could do no wrong. But I have to agree with Johnson that we are now seeing that the efficacy of mainstream economists in dealing with this crisis and real world problems is looking rather dismal.
When I started this post I was going to go into a long song and dance about what economists are missing. But why? The mindset won’t change. If you want to see why I think economists have it wrong, read the “Origins of the next crisis”. Honestly, it feels like I have covered this ground a hundred times. So Instead I thought I’d give you a visual for how this economy feels.
I think this video by the Prodigy captures people’s mood perfectly. It’s as if we all are blindfolded fools forced to run the gauntlet by our policy makers and economic advisors, the voodoo people forcing us through this deadly pass.
Magic people, voodoo people. The voodoo, who do, what you don’t dare do people.
Source: The dismal science is bereft of good ideas, Luke Johnson, FT