As not­ed in an ear­li­er blog post (A Galilean Ges­ture: Eat­ing with Dr. Steve Keen), one of the atten­dees at the talk Jim Stan­ford and the  Cana­di­an Cen­tre for Pol­i­cy Alter­na­tives orga­nized for me in Toron­to was the blog­ger Genevieve Tran, whose cause is improv­ing finan­cial lit­er­a­cy. She per­suad­ed me to take one day off from the Fields Insti­tute while  to vis­it Toron­to’s Cen­tre Island–a com­bined park and nature reserve just a kilo­me­tre or so off­shore. As we wan­dered among the ducks and geese (but com­plete­ly failed to con­nect with the pea­cocks), she grilled me about strange species of which I am unde­ni­ably one–the Tyra­nosaurus Econ­o­mist. Here’s her take on the con­ver­sa­tion (you can read more of Genevieve’s take on mon­ey, the uni­verse, and every­thing at her blog Mon­ey Big and Small).

Rock Star Economists: On Grass with Dr. Steve Keen

In case you haven’t heard, our beloved nerds over in Pale­on­tol­ogy have recent­ly dis­cov­ered that sev­er­al species of dinosaurs, which up until now had been thought to be sep­a­rate, were actu­al­ly baby vs. teen vs. adult ver­sions of just one!

And that the bone struc­ture of a dinosaur was liable to change so much as to con­fuse non-dinosaurs.  Now usu­al­ly, dur­ing the reg­u­lar day-to-day, these sci­en­tists com­pete the crap out of each oth­er to race to dig sites in case they might be the ones to name a new­ly dis­cov­ered species of ol’ lizard bones; hop­ing to ful­fill a child­hood pact-to-self, no doubt.  Elbows out!  Shoes affixed with back-blow­ing torch­es!  Col­le­gial coop­er­a­tion be damned.  But, I imag­ine that, just per­haps, such a dis­cov­ery in the field must have been a rare uni­fy­ing moment among pro­fes­sion­als.

Maybe so!

But not so much over here among our beloved nerds in Eco­nom­ics, whose in-fight­ing rivals the Des­per­ate House­wives of Juras­sic Park.  (No joke, they insult each oth­er by call­ing each oth­er “econ­o­mist!”).  With the Glob­al Finan­cial Cri­sis: fresh insights, books and revised the­o­ries are pop­ping up every­where bring­ing a renais­sance to this pre­vi­ous­ly office-car­pet­ed field.  This would seem to be a cause for col­lec­tive cel­e­bra­tion!  But not so.  And I think it’s because indi­vid­u­al­ly, econ­o­mists have nev­er had it so good.  Now more than ever, they are being treat­ed like Rock Stars: they have brand name blogs and book deals; British peo­ple invite them over­seas for a chat; they have giant web­site fol­low­ings with­out hav­ing to strip on cam­era (?); they are in essence, body-surf­ing over this grow­ing mosh-pit of fans inter­est­ed in Eco­nom­ics.  These lat­ter-day Rock Stars are tak­ing it all in!

Woe unto he or she who dares steps in the path of their light!

Believe it or not, Eco­nom­ics wasn’t always this sexy.  Back in the day, we had guys like Hyman Min­sky, who few under­stood and few­er dat­ed.  Or there was John May­nard Keynes:

‘Nuff said.

It’s too bad that mod­ern econ­o­mists’ Day in the Sun hap­pens to cor­re­spond with the Glob­al Eco­nom­ics equiv­a­lent of an out-of-con­trol genet­i­cal­ly engi­neered T‑Rex run­ning through the streets, fore­clos­ing its jaws on us, because, we kin­da need them all to unite, NOW!—to become a Super Col­lec­tive Brain Fight­ing Machine!

(How­ev­er, com­ing from Tokyo, I can tell you that any con­cert­ed response of Peo­ple Who Should Know How, to effec­tive­ly bat­tle an indus­tri­al-sized Godzil­la is just tru­ly fic­tion­al indeed.)

This past week, as I have been vor­texed into all these inter­views, debates and doc­u­men­taries of talk­ing heads (I <3 youtube!), I real­ized some­thing: there is some straight-up math that can­not pos­si­bly work out in this mod­el of fame: as these econ­o­mists gain Rock Star sta­tus, they can’t pos­si­bly have time to write their col­umn, blog, work on their next book, pre­pare their next radio show or TV appear­ance, work on their next for­mu­la­tion, do inte­grat­ed research with oth­ers, read each oth­ers’ crit­i­cisms, respond to them prop­er­ly, trav­el, attend con­fer­ences, pre­pare and give speech­es, accept awards, run for office, look good, eat well, sleep well, bathe, tend to their fam­i­lies, their plants, their pets etc. and tru­ly be able to think straight.  It’s just not human­ly pos­si­ble.  It’s the Para­dox of the Thought­ful Econ­o­mist.

But, strange­ly, in this equi­lib­ri­um where:

fame= no time, and

no time = no time to think,

but no think­ing = no fame,

Dr. Keen, who is Busy-As‑F@#&, man­aged to spend a whole day out with me on Toronto’s Cen­tre Island!  Kin­da just hang­ing out!

Here he is with some Cana­di­an Geese.

Here he is lean­ing on a wall.

And open­ing up his sushi ben­to.

Get­ting him out of the city, in the mid­dle of Lake Ontario, had him speak­ing to me in ways I under­stood!  Maybe it was the fresh air!  Maybe it’s because we are both parsel­mouths.  (OMG I did it: Chi­nese Horo­scope x Har­ry Pot­ter x Eco­nom­ics!!)  Sor­ry.  Here is an inter­view I caught of him after he fin­ished eat­ing his sushi, whilst wear­ing his Alpha Wol­fram swag (don’t ask):

So, after my close encounter with this Eco­nom­ics Glitterat…o(?), I want­ed to know who else in the field  was mak­ing sense (or not) regard­ing their solu­tions to end the Glob­al Eco­nom­ic Cri­sis.  So, I stud­ied up!  Here is my guide to:

The Rock Stars of Economics!

dis­claimer*

Wild­ly pop­u­lar among many of the young, but con­sid­ered sil­ly among the polit­i­cal and eco­nom­ics estab­lish­ment. Peren­ni­al appear­ances on TV, despite being dis­missed as passé in the 90s. Sin­cere effort to inspire the young to think what it means to fun­da­men­tal­ly be Amer­i­can. But it all might be a zip­per suit, just to stay in spot­light.

US Con­gress­man Ron Paul points out egre­gious con­tra­dic­tions to the US Con­sti­tu­tion in pre­vail­ing eco­nom­ic pol­i­cy such as hav­ing the Fed monop­o­lize the deter­mi­na­tion of the amount of mon­ey in their econ­o­my and the inter­est rates—which he right­ful­ly says no one (per­son) is smart enough to do; and that pur­pose­ful infla­tion is steal­ing from the val­ue of hard-earned mon­ey and sav­ings.  He thinks a small­er gov­ern­ment that doesn’t spend on stu­pid wars or bailouts or sticks its expen­sive nose in oth­er world affairs would great­ly reduce the debt and pro­mote a bet­ter image of the US abroad (tho, can you imag­ine any­one ever dare touch­ing the Fed, the US war machine or its pres­ence in the Mid­dle East?  ‘Xact­ly).  In a debate with Dr. Paul Krug­man,  he rails against print­ing more mon­ey to solve the Debt Cri­sis:

“[The US] still [has] a lit­tle lee­way because the world still trusts our dollar…but that just means it’s a big­ger bub­ble for our bonds and our dollar…we don’t know [how much print­ed mon­ey it would take get out of the crisis]…if you con­tin­ue to believe that the world will take our dol­lars no mat­ter what our debt is, then Amer­i­cans shouldn’t have to work any­more because we can just print all the mon­ey!”

Weird thing is, he IS the estab­lish­ment: a rich con­gress­man.  And he still might end up sup­port­ing Mitt Rom­ney, whom he con­tra­dict­ed on every­thing, includ­ing eco­nom­ic pol­i­cy in the Repub­li­can pri­maries, just to stay in the polit­i­cal main­stream.  He’s like that.

Anoint­ed by high­er pow­ers / IS a high­er pow­er (?) Sug­gests high­ly pop­ulist pol­i­cy meant to ease the pain of peo­ple in the here and now. Great book sales. Accused of being “social­ist”. His ideas involve para­dox­es and counter-intu­itive think­ing. Not the best pre­dic­tor of major moments (in Eco­nom­ics) through the years, but loved nonethe­less by Lib­er­als. Jok­ing­ly rec­om­mends Armaged­don to keep life excit­ing.

Pro­fes­sor Paul Krug­man, who won a Nobel Prize by him­self, rec­om­mends spend­ing to get out of debt, on a gov­ern­ment lev­el.  Many com­plain that this is counter-intu­itive most­ly because it will add to future debt and cause the same prob­lem lat­er.  But, Dr. Krug­man points out that if we don’t spend the mon­ey now some­how to build, roads, schools etc. and get banks to lend to small busi­ness­es and get peo­ple work­ing for their sanity’s sake and put some dis­pos­able income in their pock­ets, the econ­o­my will just remain at a standstill—in which case there will be no future to speak of.  Dr. Krug­man ref­er­ences the suc­cess­ful big war spend­ing that hap­pened after World War 2 and his nos­tal­gia for that Amer­i­ca, and has jok­ing­ly(?) sug­gest­ed that an Alien Inva­sion / War of the Worlds would get the mon­ey cir­cu­lat­ing just like that, why not!  I kind of think that he has a loose respect for the Fed’s han­dle on the mon­ey print­ing press and fig­ures that if the Fed was able to print out a bunch to bailout banks a few years ago, with the mer­est tin­kle of the but­ler bell by bank­ing heav­ies, what’s real­ly stop­ping it from doing the same to make sure social ser­vices are being pro­vid­ed at such a dire time for the peo­ple?  How­ev­er, those sick of the cul­ture of prof­li­gate spend­ing and the obese Amer­i­can debt are not amused–and refuse to be cat­e­go­rized as heart­less because of it.  As well, the Fed (and oth­er cen­tral banks he has pub­licly “encour­aged”) seem to ignore him, so as to main­tain their image of Know­ing What They Are Doing! Don’t‑Tell-Us-What-To-Do!  Still, he ser­mo­nizes every week.

Rep­re­sents a class we are all inher­ent­ly afraid of. He pro­pos­es nat­ur­al selec­tion at its best, an econ­o­my with prey and preda­tor mix­ing freely, a la Meso­zoic Era, or as nature would have had it. Despite being a suc­cess­ful beast on the whole (=mil­lion­aire), he lost a sen­a­to­r­i­al race in the US and there­fore has small polit­i­cal appendages. In a way, he speaks the truth about the real nat­ur­al order of things. How­ev­er, com­plex erring humans have been com­pli­cat­ing his plans, how­ev­er deli­cious they may be.

Mr. Peter Schiffpre­dict­ed back in 2006–7, using his big boss heuris­tics, that this crazy spend­ing habit of Amer­i­cans would be catch­ing up to them soon.  Like Ron Paul, he doesn’t fig­ure that the Amer­i­can dol­lar can just ride on its rep­u­ta­tion of “What-Exact­ly?” for much longer.  So, the Chi­nese and Japan­ese house­wives who have been lend­ing Amer­i­cans their hard-earned sav­ings, via their gov­ern­ments who buy Amer­i­can dol­lars, will one day be tired of it all and demand it back.  No one will want to accept Amer­i­can “paper” in exchange for goods for much longer.  More to this, the type of spend­ing that the US has being doing on this bor­rowed mon­ey has been most­ly for con­sump­tion (i.e. on import­ed new cars, new clothes) and not on pro­duc­tive invest­ments (i.e. fac­to­ries, new tech­nolo­gies) which would cre­ate jobs, exports to sell and income to pay off debt.  This means that Amer­i­ca can’t even pro­duce enough goods itself to be self-suf­fi­cient (and has to import) nor has the sav­ings to draw from to pay for what it needs.  He fig­ures Amer­i­ca needs to stop bor­row­ing mon­ey, admit that it can’t pay the debt it has now in full (this is the big ele­phant in the room).  Then, in order to redeem itself to the world, it needs to make an hon­est effort at cut­ting spend­ing (i.e. social secu­ri­ty, edu­ca­tion etc) and pay­ing down what­ev­er­tril­lions it is that it owes.  Any pro­long­ing of this will just make it worse.  Mr. Schiff would like to see all the reg­u­la­to­ry gates and tax­es low­ered, which cur­rent­ly may dis­cour­age com­pa­nies from doing busi­ness in Amer­i­ca, which would be a mass incen­tive for busi­ness to boom again.  He went down to Occu­py Wall St. to say he is with the pro­test­ers, though that there should be MORE cap­i­tal­ism, not less, much to everyone’s con­fu­sion.  He points out that the leaching/leeching comes from a cul­ture of both social and cor­po­rate wel­fare.  Oy…Mr. Schiff.  Give me a minute, all this is giv­ing me indi­ges­tion like a piece of unreg­u­lat­ed meat…

Brought 3D to the world of Eco­nom­ics mod­el­ing. The Steam­boat Willies of yes­ter­year are resent­ful of his new-fan­gled Pixar-esque tech­nol­o­gy, which reveal nev­er-before seen fac­tors in Eco­nom­ics, wow­ing the kids. You’ve seen him around a few times now…looks famil­iar lurk­ing around here, doesn’t he?

Pro­fes­sor Steve Keen, back in 2005 pre­dict­ed the 2008 crash using his­tor­i­cal data and math.  The fac­tor of huge pri­vate debt (not just gov­ern­ment debt), not con­sid­ered by oth­er econ­o­mists, appears in Dr. Keen’s cal­cu­la­tions.  He reveals how this debt bears an uncan­ny resem­blance to the cir­cum­stances sur­round­ing the Great Depres­sion, only huge‑r!  Pri­vate debt (held by house­holds, busi­ness­es and the finance sec­tor) is the real, under­ly­ing rea­son behind lack of demand and a slowed economy—so, no mat­ter how much mon­ey a cen­tral bank prints, the old prac­tice of then hand­ing it to the banks to make loans is futile as a stim­u­lus because peo­ple have so much debt already, they aren’t inter­est­ed in any more.  And like oth­er real­ists, Dr. Keen thinks that “a debt that can’t be paid off, won’t be paid off”, so it’s time to come clean as a soci­ety and have a debt jubilee (i.e. using gov­ern­ment mon­ey to pay down pri­vate debt), which would free up people’s mon­ey and the psy­cho­log­i­cal con­sti­pa­tion of spend­ing among the pop­u­la­tion.  This is high­ly con­tro­ver­sial and con­fus­ing because gov­ern­ment debt would rise some more!  But Dr. Keen insists that pri­vate debt is the true “Clear and present dan­ger” (to mis­ap­pro­pri­ate Dr. Krugman’s assessment)—at 300% to GDP, (at least 2x, 3x that of pub­lic debt).  Plus, Dr. Keen has laid out a plan that doesn’t have any­thing to do with emp­ty­ing bag­fuls of mon­ey out of heli­copters, whilst shout­ing WooHoo!  Fur­ther­more, this plan weak­ens the posi­tion of banks, who will sud­den­ly see their loans/assets paid down and there­fore have less excuse to be lever­aged.  The whole prob­lem, as seen through Dr. Keen’s 3D glass­es, is that the whole cul­ture of over-lever­aged banks (who, for decades now, have pushed peo­ple to bor­row more and buy big­ger assets like hous­es, in addi­tion to then turn­ing around and spec­u­lat­ing wild­ly on deriv­a­tive mar­kets using those assets’ mort­gages as col­lat­er­al) is the prob­lem.  And that when we allow for infi­nite debt as accel­er­at­ed through this machine of over-lever­ag­ing (which is the case now) (1D), we math­e­mat­i­cal­ly approach a dan­ger­ous black­hole of no income (2D) and no employ­ment (3D).  If nothing’s done, the mar­ket could pos­si­bly self-cor­rect through mass bank­rupt­cies.  But that would take at least 15–20 years, involve tons of social unrest (and vio­lence?) with­out the added ben­e­fit of being able to cor­rect the over-lever­aged banks.  [Hmm, come to think of it, could this be the math behind why there’s the Occu­py Move­ment in which a broad sam­ple of peo­ple are see­ing an end to their income poten­tial and employ­ment prospects because cur­rent­ly ‘noth­ing’ is being done about this out-of-con­trol debt?].

Cap­i­tal­ists and econ­o­mists like to ignore left­ies like her, but can’t deny that the nat­ur­al reserves of the plan­et that she speaks of are awful­ly use­ful in their econ­o­my. She rep­re­sents the used and burnt up raw mate­ri­als, the pressed and oppressed sweat and tears of Moth­er Earth, who we all for­get to call ‘cuz we’re too busy. Her gooey “social­ist” appeals for a more qual­i­ta­tive (not just quan­ti­tia­tive) approach to macro­eco­nom­ics makes a lot of peo­ple feel dirty.

Ms. Mar­i­lyn War­ing was named by Wired Mag­a­zinethis year as one of the 50 peo­ple who will change our world.  Once an MP in New Zealand, she for years now has been seek­ing to include women (those ‘nother 50-per­centers) and the envi­ron­ment in eco­nom­ic mea­sure­ments and con­sid­er­a­tions.  Prob­lem is, GDP when strict­ly deal­ing with *stuff* is easy to count, where­as econ­o­mists (and we in gen­er­al) are noto­ri­ous­ly bad at being able to quan­ti­fy the val­ue of non-oily pen­guin down, still-pris­tine Philip­pine jun­gle, or women who stay at home and raise the future pop­u­la­tion.  So, eggheads stick to their equa­tions that omit such non-essen­tials.  And yet, and yet, it is the love­ly coast of north­ern Scot­land that Don­ald Trump is fight­ing to keep wild and nat­ur­al (save for his golf course); it is to the incom­pa­ra­ble beach­es of Thai­land at which one finds an exot­ic under­aged fish or two; and it is to our moms we run cry­ing when our invest­ment banker has put our entire retire­ment sav­ing up his nose.  And don’t for­get that War Machine!  One nuclear sub­ma­rine = the annu­al edu­ca­tion bud­get of 23 deve­olp­ing coun­tries com­bined (=160 mil­lion school aged chil­dren).  War and the threat of war is big busi­ness, not only the sale of arms, but all the destruc­tion that will require rich, for­eign Bene­fac­tors to bid on.  In fact, Ms. War­ing nar­rows all this mod­ern day hula­baloo in Eco­nom­ics down to a tiny WW2 pam­phlet, enti­tled “The British Nation­al Income and How to Pay for the War”, writ­ten by Keynes and Richard Stone.  Stone lat­er went on to remix this for the UN in the ear­ly 1950s, who used it as the cor­ner­stone for eco­nom­ic stan­dards required of new mem­ber coun­tries who wished to be includ­ed in the pro­tec­tion and lend­ing pool (World Bank, IMF) of the now 193 mem­ber states.  Thus, the prob­lem with the world’s macro­eco­nom­ics for­mu­la is that it fails to cal­cu­late huge swaths of real things that mat­ter and instead overem­pha­sizes stuff like war spend­ing, anti-depres­sant sales, nail art and Chi­nese sou­venirs.  This is the qual­i­ta­tive inher­ent prob­lem with our econ­o­my that no one seems smart enough to be able to include in Eco­nom­ics. [On the point of war spend­ing: fun­ni­ly enough, Ms. War­ing’s whole point of view is that there are so many @$$holes in the world (=more rea­son to ramp up the defense?)].

*     *     *

Maybe it’s a good thing all these Rock Stars have solo careers.  The hair pulling could get nasty.  Still, if I believed in Human­i­ty, I could imag­ine that every­one here gen­uine­ly wants a brighter future for the world and for each coun­try faced with crip­pling debt.  It’s as if they each rep­re­sent­ed very dif­fer­ent stages in think­ing of the same Super Thought­ful Econ­o­mist.  They are Rock Stars because clear­ly, they have the artic­u­la­tion and argu­ments to persuade–so, why wouldn’t they think about get­ting togeth­er to form a Super Solu­tion?  I need to write a hap­py end­ing:

Every­one wants to alle­vi­ate the pain from debt.  Every­one knows that the cen­tral bank as a print­ing press works some­how, but as a pos­si­ble mas­ter­mind to solve this thing?  No.  Every­one knows the huge mech­a­nisms of the econ­o­my, how­ev­er imper­fect, will move on com­mand.  But what are the right com­mands?  Dr. Keen has the clear­est math so far.  He can con­vince the oth­ers, with his super­mod­els, that pri­vate debt (more than gov­ern­ment debt) is to be in the cross-hairs; Dr. Krug­man can get his gov­ern­ment spend­ing and see it go direct­ly to the ben­e­fit of peo­ple, with 3D mod­el­ing to prove to him that we would be mov­ing away from zero employ­ment and zero income, when it’s done like this.  Ron Paul and Peter Schiff will be hap­py to know that the era of bail­ing out casi­no-banks is over and that going for­ward, financ­ing spec­u­la­tive activ­i­ties is out; pro­duc­tive invest­ment is in, restor­ing their country’s rep­u­ta­tion in the world.  Ms. War­ing can add a 4th dimen­sion (or a vari­able, with a giant coef­fi­cient??) to Dr. Keen’s mod­el to show the inverse rela­tion­ship that stuff-cen­tred eco­nom­ic activ­i­ty has with social / envi­ron­men­tal well-being and can only be reversed by equal and oppo­site reme­di­al activ­i­ty to restore civ­il equal­i­ty and the envi­ron­ment, which, if inno­v­a­tive enough, gets added back to the GDP and rep­re­sents sus­tain­able growth, there­by pay­ing down both sov­er­eign and pri­vate debt.

Sce­nario a) “??! ???????! ???????????”
(trans­la­tion: “Godzil­la size and stim­u­lus pay­load mis­cal­cu­la­tions.  Over.”)

Sce­nario b) The Tam­ing of the Beast by Super Econ­o­mist

What will it be?  You’re wel­come 

*UGH!!!!*  I just total­ly remem­bered now that there is a whole lay­er of politi­cians to get through to enact any of these ideas!  F$%^ing bureau­cra­cy and pol­i­tics!  🙁  No won­der the dinosaurs died out.

R.I.P. Rod­ney King.