YspeopleExplore tab

 
Stranger

Traditional economics are bull!


Thumb angry biker showing middle finger with both hands 000078716059 small

About Subversive

Do you have your own gripe with your local or state government? And what are the streets like in your part of town, in your home state?

If you'd like me to fire a rocket up them, or a shoddy business, I'm listening! You can email me here.


The supply-and-demand theory no longer applies.

Our politicians are forever talking about economic principles. We are forever confronted in the media by economists sprouting economic theory, while predicting the outcome of  policies and initiatives with varying levels of accuracy.

For some time, I have wondered whether any of these politicians and expert economists really understand what they are talking about. I have concluded that they do not. Many just seem to like feeling that they we have some control and the insight to predict. Or perhaps they just like the sound of their own voices.

I used to wonder whether traditional economics were valid any more. Can we really depend on the utterances of Milton Freedman, Adam Smith or John Maynard Keynes? I have concluded not. They seem to me to be working hard to make sense of what makes no sense.

Let’s take two examples:

  • Economic growth
  • Supply and demand
  • We hear an economist or politician talk each day about the importance of economic growth, as if perpetual growth is either possible or truly desirable. In the short term, economic growth may well drive employment and wealth, but in the longer term:

  • It is not sustainable. We will eventually run out of the required resources, which are available in limited volumes.
  • Perpetual growth, even if possible, is not at all desirable – as evidenced by the mounting pollution around the world and the threat it poses.
  • Many days, we also hear politicians and economists talking about supply and demand – one of the basic tenants of traditional economics. Just last week, I heard Scott Morrison talking about the shortage of affordable housing in Australia being a supply side issue, while the ALP contends it is more about accelerated demand fuelled by negative gearing.

    For supply and demand to be valid as a theory, it requires:

  • Perfect information
  • Perfect access
  • Perfect rationality
  • And the facts are that no one has perfect information, few have perfect access and very few people make decisions on purely rational grounds. Some 80% of purchase decisions are made in the reptilian brain – with little, if any, rational thought.

    Traditional economics are bullshit .... we need a new paradigm!

    Banner 1
    | Your rating
    No ratings yet


    Related stories

    Op shops can be a lifesaver when it comes to saving on work clothes.

    Beware the hidden costs of earning money

    The new year is traditionally a time to instigate change. Thinking about working less? It costs money to earn money, and this...

    Business Work Money
    Expand
    14 days ago
    (Money & Business)
    Need help learning about Bitcoin? (Image: Shutterstock).

    Confused by Bitcoin?

     

    Are you a bit flummoxed by the Bitcoin phenomenon? This video may help.

    Investment Finance Money
    Expand
    14 days ago
    (Money & Business)
    Disruption and Innovation.

    The big lesson from disruptive innovation.

    Disruption and disruptive technology are not always about business.

    Technology Politics Business Social Issues
    Expand
    About 1 month ago
    (Money & Business)
    Diversification will ensure you don't sink in a crisis.

    Insurance against the black swan

    How to protect your portfolio from a black swan event.

    Retirement Ageing Money Superannuation
    Expand
    About 2 months ago
    (Money & Business)
    Steve Jobs came along changed the world forever.

    Live your life, not someone else's

    These pearls of wisdom from Steve Jobs and Frank Sinatra should inspire you.

    Social Issues Business Relationships
    Expand
    About 2 months ago
    (Money & Business)
    There are many ways to re-invent your home after your kids have left the nest.

    Make the most of your home when kids leave

    What to do with your house when the children move out.

    Ageing Property Money
    Expand
    About 2 months ago
    (Money & Business)
    Ask the moral question.

    Big issues require brave questions

    The questions we should be asking about the environment, animal welfare and religion.

    Expand
    About 2 months ago
    (Money & Business)
    Dame Judi Dench did not hit fully her stride until her 60s.

    11 reasons why it pays to hire older workers

    Like Hollywood late bloomers Morgan Freeman, Bryan Cranston and Dame Judi Dench, mature workers have their best work ahead of...

    Health Business Work Ageing
    Expand
    About 2 months ago
    (Money & Business)
    There's been plenty of confusion among those nearing retirement.

    Where's your retirement income?

    Mixed signals from the stock market are sparking confusion among those nearing retirement age. Here's what to look for.

    Retirement Ageing Money
    Expand
    About 2 months ago
    (Money & Business)
    Let's take on these crap telcos! Picture: Shutterstock.

    Fools in charge of the telco asylum

    The NBN is just the tip of the problem. Who else is sick of Australia's piss-poor telecommunications services?

    Money Politics Business Technology
    Expand
    2 months ago
    (Money & Business)
    Trending stories
    When it comes to great bloggers you can connect with, this list has you covered.

    20 mature bloggers worth following

    Looking for Australian...

    (Entertainment & Culture) 10 months ago
    Pure.

    BMW delivers a drive in its purest form

    Pure {adjective}: not mixed...

    (Pastimes) 4 days ago

    Watch: Kitty Flanagan on panda porn

    Should we be worried about...

    (Entertainment & Culture) 7 months ago
    Top Indonesian chef Chandra Yudasswara will be cooking up a secret storm for Taste Great Southern.

    Celebrity chef set for a Secret Affair in Great Southern

    Take one of Indonesia's top...

    (Epicure) 3 days ago
    A pleasure to drive.

    Review: 2017 Land Rover Discovery Sport HSE

    This seven-seat SUV market,...

    (Pastimes) 7 months ago
    Weekly Poll
    Haiku of the week
    Qcnq3xgd6xtqpb5yioih
    Memory lane
    Diaxvffncbtxbtuyzd1v