More Fluff From the Economic Establishment

December 8, 2021 Updated: December 13, 2021


One of my pet peeves about the economics profession is how often economists decline to speak truth to power. Any economist worth his salt should have a robust understanding and healthy respect for the unique and oh-so-very important functions of free markets.

Yet in all too many cases, economists compromise sound economic principles to provide intellectual rationalizations for politicians to engage in harmful political meddling in markets.

From my perspective, the economics profession permanently got off track in the 1930s. That’s when, after more than five years of massive government intervention financed by deficit spending under Presidents Herbert Hoover and Franklin D. Roosevelt, the renowned British economist John Maynard Keynes published “The General Theory of Employment, Interest, and Money.” That book introduced cockamamie theories purporting to justify such interventions and deficit spending. Keynes basically said to FDR, “Keep doing what you’re doing.”

Well, Roosevelt complied, with the tragic result that the depression dragged on for another six years until World War II broke out.

Despite the incalculable damage inflicted on millions of innocent citizens, Keynes was lionized by the political class for providing intellectual cover for their economically harmful political shenanigans. Since then, ambitious economists wanting to burnish their reputations have sold out to the pols. They help politicians sell their poison to the public rather than decry the economic errors and costs of politicians’ nominally “macroeconomic” (more accurately: “non-economic”) policies.

I’ve written in these pages before about the machinations and obfuscations of the anointed “economic establishment,” and have excoriated that establishment for refusing to teach the inherent unviability of socialism, even though that truth is now over a century old. The latest example of this sorry trend is provided by former Federal Reserve Board vice chairman and current Princeton professor Alan S. Blinder in his recurring Wall Street Journal column presenting the progressive position on economic policies. I refer specifically to his Dec. 5 posting, “Look at Build Back Better’s Benefits, Not Its Price Tag.”

The title itself (which might have been an editorial decision rather than Blinder’s choice, but it sets the stage accurately for his arguments) should raise eyebrows. If there’s anyone who should never suggest ignoring price (especially when the price tag is in the trillions!), it’s an economist. Such a suggestion is professional malpractice. Cost and price are always crucial factors and should never, ever be ignored.

Let’s briefly look at some of the ways Blinder endorses Team Biden’s Build Back Better agenda and gives it an unmerited seal of approval from the economic establishment.

The subtitle of Blinder’s article asserts that Biden’s “bill is paid for.” The extreme “fudging” of the true cost of Build Back Better has been well-documented. Only a politician or establishment economist could assert with a straight face that trillions of dollars of additional spending is “free” or already has been paid for. ’Nuff said.

After telling us not to worry about the price tag of Build Back Better, Blinder says we should focus on whether Build Back Better will “spend public funds wisely” and whether it’s “oriented toward creating a better future.” Blinder then proceeds to ask three questions that he assumes will melt all resistance and end debate.

First, he asks what he hopes is a rhetorical question: “Do you oppose universal pre-K education?” Yes, I do. The Marxian goal of centralizing control over education in Washington (see Marx’s tenth plank in “The Communist Manifesto”) does violence to our federalist system of government. Education policy should be set at the state and local levels. But perhaps even Blinder would oppose mandating universal preschool if he read the Harvard research showing that many children aren’t developmentally ready for today’s pre-K curricula.

The results of placing children in preschool before they’re ready include anxiety and confusion. Worse, there’s a horrible tendency to diagnose kids with attention-deficit/hyperactivity disorder (ADHD) and put them on drugs, when the only “problem” is that they’re just not ready for school yet.

Second, “Are you against more affordable child care?” Of course not, but let markets set prices. Build Back Better would raise the actual price of child care while socializing those costs. Government subsidies don’t lower prices; they raise them. (See: medical care, higher education, et al.)

Third, “Do you think we should ignore global climate change?” “Ignore” it? Of course not, but we can’t afford to accept the green myths that many do blindly accept. Instead, we need to set intelligent spending priorities to lessen pollution and find realistic strategies for coping with whatever climate changes actually happen in the future—highly uncertain and beyond the current expertise of experts to predict. Blinder appears to be on board with the globalists’ agenda to redistribute wealth and establish socialism.

As for his sweeping assertion that Build Back Better will “improve future economic and social conditions,” we should be exceedingly skeptical of grandiose government plans to design a better future. (Again, there’s the problem with establishment economists ignoring the inescapable flaws of socialist planning). Certainly, the green agenda will not improve economic and social conditions for poorer Americans this winter if the price of energy continues to rise due to the Biden administration’s anti-energy policies.

Blinder goes on to double down on the shady accounting that underlies the claim that corporate taxes and taxes on the rich will fund Build Back Better. One of his rationales for raising taxes is that inflation is currently high. And why is inflation high? Because of the multitrillion-dollar federal spending splurge in response to COVID-19. So because government is spending more, the private sector should spend less. Withdrawing wealth from the private sector while increasing public sector spending is the road to socialism. It’s also known as Modern Monetary Theory.

Blinder is a prominent member of the economic establishment. It’s sad to see that establishment aiding and abetting the socialist agenda. They should know better.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Mark Hendrickson
Mark Hendrickson is an economist who retired from the faculty of Grove City College in Pennsylvania, where he remains fellow for economic and social policy at the Institute for Faith and Freedom. He is the author of several books on topics as varied as American economic history, anonymous characters in the Bible, the wealth inequality issue, and climate change, among others.