Many are asking, what will happen to Greece and the eurozone and what will it mean for Australia?
It seems to me that economists generally, with some exceptions, do have a bit of a monopoly on delusion. Fallacious assumptions ground their theories, information everywhere seems to be skewed, predictions are made without an acknowledgment of the full extent of fraud and corruption (which is rampant), and conflicts of interest regularly creep in.
I was fortunate to catch up with economist Professor Bill Mitchell at a recent speaking engagement. An economist who doesn't sugar coat statistics is a rare find indeed. I was pleased (and surprised) that our views were quite complementary rather than being at odds.
In high school or university we are taught:
Markets are a system and systems have structure. The structure of a well-functioning market is defined by the theory of perfect competition. Well-functioning markets of the real world are never perfect, but basic structural characteristics can include many small buyers and sellers; buyers and sellers having equal access to information; and comparable products.
It's all bullshit.
What we have nowadays is a market of late degenerate capitalism. Morality is negotiable. Players want to take advantage of economic freedom but don't want to pay the price of their strategic errors. They use political resources to influence peddle and so gain advantages from the governmental process that aren't achievable in the "free market".
We have bureaucrats who transcend political parties and politicians, and a political culture of abuse and misuse of government power for private ends - cheap or free money, speculative assets, tax relief, tax incentives, loan guarantees, market intervention.
"Regulatory arbitrage" (aka dodging the spirit of the law) is the name of the game. Banks bet against investments they actually bundled and sold to their own clients. When it goes belly up, the taxpayer takes the hit and the bankster buys a Bentley.
In a situation where we've already suffered the financialisation of our entire existences, this economic philosophy puts our individual and social existences at risk.
Rational economic policy aimed at true growth has been replaced by greed and the short-sighted quest for "shareholder value". There is a mad obsession with high stock prices. "Eat the cake and have it too."
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