Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality, and Distorts Policy
John F. Weeks
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How much do economists really know? In most cases, they claim to have profound knowledge but in fact understand little and obscure almost everything. Most people are convinced that economics should be left to the ‘experts’, when they themselves are perfectly capable of understanding it. This book explains that mainstream economics serves the interests of the rich through its logical inconsistency and unabashedly reactionary conclusions. John F. Weeks exposes the myths of mainstream economics and explains in straightforward language why current policies fail to serve the vast majority of people in the United States, Europe and elsewhere. Their failure to serve the interests of the many results from their devoted service to the few.
course, and not notably collegial). The higher incomes would result because, like apples, the demand for the capacity to work is alleged to be “price elastic.” This argument (one cannot compliment it with the word “analysis”) is so absurd that it leaves any economist (in contrast to the econfaker) wondering “what kind of an enterprise I’ve devoted my life to” that would generate such prima facie rubbish. Yes, absurd. Shall I count the ways? The first absurdity is the implicit suggestion that the
women (mostly the former) within institutions with antisocial rules and norms. On the contrary, personification of markets would have us believe that speculation comes from the inexorable operation of the laws of nature that no government can change. This naturalization of speculative behavior manifests itself in assertions that “bond markets want” the US/UK/Greek deficit reduced, or that outrageously high executive salaries result from the impersonal operation of a mythical international market
increases in the deficit prevent the recession from getting worse. As hard as it may be for the young to believe, this heretical blasphemy was the accepted wisdom as late as the 1970s. With these shocking heresies noted, I can return to measurement of deficits. The overall deficit rose from about 1% of GDP in 2007 to almost 10% in 2009, then “improving” slightly to 9.6% in 2010. The primary deficit hung in there at 8.4% of GDP. During the previous 50 years, the primary deficit never exceeded 4%.
funds unemployment compensation. In prosperous times the revenue from the tax exceeds payments, when unemployment remains low. During 2005–2007 the unemployment compensation fund ran an average annual surplus of almost $8 billion (see last column in the table: Net Unemployment Payments [NUP]). Common sense dictates excluding unemployment payments from the deficit measure, because with recovery the net expenditure turns positive. In 2007 the taxes funding unemployment payments exceeded the
“open market operations.” To take a simple example, when the US Federal Reserve lowers the rate at which it lends to private banks, it hopes that the banks will pass this decrease onto their lending rate to businesses and households. The central bank further hopes that the lower lending rate will increase client borrowing and expenditure. Alternatively, the central bank can try to increase and decrease the reserves of banks on which the capacity to lend is legally based. Central banks do this by