- Zombie Economics – a term popularised by John Quiggin and by Paul Krugman to describe economic theories that have been thoroughly discredited by experience in the real world, yet refuse to die. Efficient market theory, for one. “The strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.” (Nowhere are the lies thicker than in banking.)
- Voodoo Economics – a term coined by George H.W. Bush in 1980 to deride Reaganomics, certain tax-cut nutcases living in Laffer’s la-la land, and advocates of willy-nilly deregulation.
- Cognitive Dissidents – I believe invented by Barry Ritholtz. When a person of a given mindset or ideology is confronted with facts that directly contradict their previously held beliefs. “Facts be damned, they will continue to dissent from reality for as long as it takes to get everyone else to believe as they do, no matter how much evidence there is to the contrary.”
- Psychology of Denial – gripping financial markets
- Monetary Mental Disorder – Brad DeLong. On how people put on ‘an astonishingly powerful set of blinders’ when talking about money.
- A policy virus cooked up by the Chicago School – David Cay Johnston
- Post Truth Politics
There will be plenty more of these out there. Now I’ve got one to add.
I’m going to call it Horseshit Economics.
I like it for two reasons. First, as with the above afflictions and notions, it’s all about horseshit: steaming piles of nonsense, blackboard fantasy economics, fruitcake finance theory, cuckoo cash analysis, efficient market madness, and so on.
More interestingly, though, it chimes with a quote I like – which has been attributed to the economist J.K. Galbraith (but reading Galbraith himself, I wonder if it pre-dates him):
“The horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows.”
So Horseshit Economics is really another way of talking about trickle-down economics and all the nonsense that lies behind it. The Galbraith (?) quote neatly captures the cynicism, and I think it captures the folly too.
H.E. comes in many variants, of course. You see it all the time in the newspapers (particularly in the U.S.) where the Wall Street Journal and others repeat again and again how cutting taxes on ‘productive’ wealthy people will make everyone better off; meanwhile those on benefits should have the taps turned off. Galbraith described this particular dissonance quite nicely, in the context of supply-side theory which he suggested was a cover for trickle-down:
“Let us take supply-side theory at its face value, however modest that may be. It holds that the work habits of the American people are tied irrevocably to their income, though in a curiously perverse way. The poor do not work because they have too much income; the rich do not work because they do not have enough income. You expand and revitalize the economy by giving the poor less, the rich more.”
In Treasure Islands I have quite a bit of fun with Dan Mitchell of the Center for Freedom and Prosperity, looking at his arguments in favour of tax havens and his assorted words of wisdom. Most of his arguments fit, one way or another, into the ‘trickle down’ box, so I’m going to put them in my ‘horseshit’ pile, if that’s OK. (In defence of Dan, he struck me as a genuinely nice guy when I met him in Washington. I kind of hate to attack him like this. But he is perhaps the most prominent defender of tax havens, so he has to be taken to task.)
Since tax havens is my preferred topic these days, I’ll now point you to a place where I skewer (or shovel?) a whole lot more H.E. Here.
Update: I have just found this article, headlined Horseshit Economics: A supply side parable. I haven’t read it yet. But I don’t think it’s making the same point at all.