The Nobel Prize in economics is not one of the prizes established in Alfred Nobel’s will. It came later. It is also described as a prize in “economic science” and therein lies a problem. Today’s standard economics is not a science. Far from it.
This year’s award illustrates the problem. One recipient, Eugene Fama, is most famous for saying that all available information is already in the stock price, so that picking individual investments cannot succeed. Another recipient, Robert Shiller, is known among other things for arguing the reverse. It is hard to defend Fama’s position during today’s bubble era. How can markets be “efficient” when the government keeps interfering with, manipulating, and controlling market prices?
Shiller is also one of today’s leading Keynesian economists, part of the group that wants more “stimulus,” that is, government borrowing to spend, and also applauds the Federal Reserve frantic creation of new money. For this group, more borrowing and spending is always good, no matter what the quality of those loans or spending is.
All the government’s deficit spending has helped big business achieve record profits while the economy limps and the average American’s real (inflation adjusted) income keeps falling. Federal Reserve money creation has given us the bubbles and made Wall Street richer and richer. All of this translates into more and more money flowing back to Washington in the form of campaign contributions. In addition, as the government, financed by all the easy money, takes control of more and more of the economy, private interests are increasingly motivated to try to take some control of the government. In this way, bad economics fuels crony capitalism.
What is most characteristic of Shiller and other Keynesians is that they do not bother to offer facts or logic in support of their Keynesian ideas. They simply assume that they are self-evident and that anyone who questions them is a crank. Nor do they choose to be specific. We are told we need even more stimulus, but we are never told exactly how much or why. This is certainly not “economic science” and it is leading the entire world, not just the US, to economic ruin.