Wednesday, June 3, 2020

THE PRAIRIE EDITOR: What Do Economists Know?

Economics is considered a science, but it is concerned with
variable human behavior, past and future, and complicated
by a great number of variations of economic systems. Unlike
physics or biology or chemistry, it has no single or dominant
set of rules or laws which all its practitioners follow, but
rather, it includes a number of competing maxims and
theories, many of which contradict each other.

Further complicating the practice and understanding of
economics is its role in partisan politics where the veneer of
expertise is often employed for more ideological than
scientific goals.

We have, for some time, lived in an age in which “experts”
are regarded as dispositive. But experts often disagree among
themselves robustly, particularly about the future.

This has been made clearer than ever by the current pandemic
crisis. Many medical experts were routinely wrong about its
immediate impact when they tried to contrive models .Some
were more useful by setting down varying scenarios. Everyone,
of course, was guessing.

With the current stage of the pandemic beginning to diminish,
the economic experts are stepping up with pronouncements
--- mostly of already irreversible dire consequences of the
business shutdowns. A few contrarian economists, however,
are suggesting that if the nation’s commerce reopens now,
there will be a quick rebound. (The current stock market rally
appears to agree with the latter.) Of course, if the economy is
shut down long enough, it will collapse. (It is worth pointing
out that for many retail businesses a huge percentage of their
annual revenue is received in the holiday shopping season
between Thanksgiving and Christmas.)

In any event, a carefully managed reopening now designed
with consideration for the health and safety of the public is
likely to restore jobs lost in the shutdown --- and restore
much consumer confidence and resources.

The full extent of any economic damage will not be known
until 2021, although some businesses have closed or will
close permanently, precipitated in many cases by the
shutdowns. Small businesses, as I have written previously,
are particularly vulnerable. It must be remembered,
however, that in a free market economy, individual
businesses fail all the time, including during boom periods.

Stimulus payments to individuals and companies can be
necessary and helpful in the short-term, but beyond that
restoring jobs and re-employment is the key to any real
recovery. In the intermediate and perhaps longer term,
the conditions of the workplace might be changed,
especially for white collar office jobs. Returning to “normal”
will not, in many cases, be returning to jobs just as they
were. In some cases, the emergency will provoke innovation
or improvement --- just as often happens during and after

Economics can be a useful subject and practice. We need
talented and thoughtful economists.

The truest economic experts will now take U.S. ingenuity
and optimistic spirit into their forecasts. That’s not exactly
scientific either, but it is what has happened at critical
moments time and again for 244 years and counting......

Copyright (c) 2020 by Barry Casselman. All rights reserved.

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