Hapless or Inept?

Webster’s Dictionary defines Hapless as “Unlucky or unfortunate;” whereas they define Inept as “Lacking in judgment, sense or reason; Foolish.” In the case of the Fed, I’m going with inept.

We expect ineptitude at the county DMV office. However, we should expect more from the highest offices in the land. The Federal Reserve employs slightly more than 400 Ph.D. economists. Four hundred! Their mission is to monitor inflation and economic activity and report to the Board with findings that are important to economic policy. Inflation? Nope, not here; not a sign of it, no-siree. It makes you wonder whether we could simply hire laypeople with loads of common sense to do a much better job of keeping their fingers on the pulse of things. I think I would trust the seasoned intuition of a dozen old-time farmers more. Heck, they could be no worse!

Joe Biden said on July 19th, 2021: “There’s nobody suggesting there’s unchecked inflation on the way, no serious economist.” He must have confused Paul Krugman and his Nobel Prize, who merely agrees with Joe on every topic, with a serious economist. Paul has been wrong about almost every topic he has written about for the past two decades. I admit Paul has been right once. He was right two weeks ago when he published a mea culpa in The Wall Street Journal, wondering how he could have missed something so obvious as inflation. Groupthink, I think, and the power of agreement, even if wrong.

As economic thought has shifted toward mathematical rather than empirical evidence, economic conclusions are at risk of shifting toward “accuracies” while being wrong all the while. The economy functions as a self-aligning organism due to the harmonic motivations of value decisions within each of us. If we turn that into a math equation, we get outcomes nobody could foresee. Imagine if an orchestra required each musician to follow a diagram on the wall to toot here and there, almost like the Guitar Hero video game. That’s great for imitation and beginners, but the harmonies and nuances of music would become sterile, unemotional, and lifeless. There’s a reason every orchestra has a living conductor to augment the sheet music. Imagine the orchestra with 320 million participants. There is no mathematical equation for that, not an accurate one anyway. The same thing is happening in economic thought.

This has become increasingly evident as the response to COVID shut-downs was distributing economic benefits to residents unable to work. Now those workers don’t want to come back. At the same time, they received benefits for producing nothing while still participating in the marketplace with demand for the things they want and need. This will surely lead to supply/demand imbalances. Ya think? Not surprisingly, this has resulted in a shortage of almost everything.

Missing the calls this big brings into question the entire method of analysis, and I suggest we try something very different. I vote for overalls and toothpicks.

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