The world economists inhabit is awash in visions of orderliness. Draining Donald Trump’s “swamp” first should begin with draining away bad ideas including over-dependence on a natural law view of orderliness. Then we’ll see clearly, government isn’t the enemy Trump says, but more likely the champion of economic effectiveness.
In Econ 101 freshmen learn saving equals investment. But this is ideological, not pragmatic. It’s a carry-over from majestic Enlightenment contributions by giants including Francis Bacon and Isaac Newton.
Here’s a searing truth, one too often derailing economic understanding. Established paradigms rest upon prevailing views of how the world is thought to work. Newton viewed the physical world through a myopic lens of orderliness, later inherited by moral philosopher-turned-economist Adam Smith.
What if the way in which the “real world works” changes, but the way in which economic elites think about how the world ought to work, doesn’t stay apace?
Here then is a fundamental question buried under contemporary macroeconomics. How shall the profession uncouple how it believes the economic world works, from the way in which the real world actually has come to work?
What if saving ought to be set equal to investment plus some mystery variable? That’s where hoarding comes in. It’s the too-often mysterious source of pseudo-capitalism. It is the source of rigging, gaming and other vulture capitalist schemes.
To drain Donald Trump’s swamp, first this must be done. We must block contemporary hoarding schemes. We must preserve capitalist rewards for those actually delivering in accord with moral philosopher Adam Smith’s vision. The pursuit of self-interest must dovetail with attainment of the common good.