"The possession of the valuable by the valiant'

"The possession of the valuable by the valiant'

I always enjoy reading Krugman’s NY Times pieces.  It’s nice to see that his economic theories are being painfully validated in light of the Great Recession.  His most recent piece, How Did Economist Get It So Wrong, outlines the shift from the hard learned lessons of the Great Depression, how economist then forgot these very lessons thanks in large part to the University of Chicago, and how we’re now in 2009 learning to deal with them again. 

“When it comes to the all-too-human problem of recessions and depressions, economists need to abandon the neat but wrong solution of assuming that everyone is rational and markets work perfectly,” states Krugman. 

Yet I continually get the sense from Krugman’s writings that the problems we’re facing are simply scientific.  As if what we really need to do is to have a better analysis of the problem and create better tools for understanding economic data. 

Didn’t John Ruskin, by comparison in his Unto This Last, get to the heart of the issue when he quoted a famous economist of his time? “It is indeed true that certain advantages of a general nature may be obtained by the development of social affections.  But political economists never professed, nor profess, to take advantages of a general nature into consideration.  Our science is simply the science of getting rich.  So far from being a fallacious or visionary one, it is found by experience to be practically effective.  Persons who follow its precepts do actually become rich, and person who disobey them become poor.  Every capitalist of Europe has acquired his fortune by following the known laws of our science, and increases his capital daily by an adherence to them.  It is vain to bring forward tricks of logic, against the force of accomplished facts.  Every man of business knows by the experience of how money is made, and how it is lost” (“The Veins of Wealth,” italics mine). 

Ruskin at least had the foresight to see that the issues isn’t a matter at looking at the numbers wrong, but about the cultural impact.  It’s not an issue of good honest mistakes, but a deliberate attempt to usher in capital for a select few. 

True, Krugman does speak about the 90’s and how the world experienced an influx of graduates wanted to go into finance instead of law, politics, etc. simply because it paid better (at least I remember him saying something to this effect) and he has been critical of the executives who pretty much got off scot-free, with perhaps a slap on the wrist.  Yet Ruskin, for better or worse, outlines another vision; a vision that will at least offer an alternative to the dominant mode.  He’s not naive enough to think that just because we can act as better  human beings that we necessarily will.    Some people are just plain nasty or in Ruskin’s speech, lack honor, and this is the economic data that I would love to see Krugman address more often.