Pharyngula

Posted by: Ashley Moore | December 2, 2008 8:45 AM

The thing I've noticed about US news and Fox in particular is that it is Certainty, not Reasonableness that gets you a spot on a televised opinion show.

Posted by: Geoff Rogers | December 2, 2008 8:53 AM

Heh. Shades of yesteryear.

As soon as these idiots started saying things like "We've beaten the boom-bust cycle", I went and repacked my escape pack. And increased the size of my vegetable garden.

Posted by: Eric | December 2, 2008 8:55 AM

Newscasters don't get paid to be accurate, they get paid to entertain. That's true for all stations, though obviously Fox has plenty of other issues above and beyond that. But none of the news stations get paid more if they're right - they get paid more if more people watch. This is an obvious consequence of that.

Posted by: Tim | December 2, 2008 9:00 AM

I've long considered fox news one of the better reasons for avoiding pay TV, and I remember Rolling Stone magazine's comment on wing-nut economics back in the early 80s being along the lines of "An economy must be based on building tangible things".

Posted by: amphiox | December 2, 2008 9:08 AM

This may be an urban legend. Supposedly someone did survey of three groups of people - professional financial pundits (in some versions it was University tenured economists), undergraduate economics students, and garbage collectors, asking them to predict future economic trends.

The garbage collectors did the best, the financial pundits worst.

Supposedly, through their intimate knowledge of what people were throwing out and not throwing out, and how much, the humble garbageman was able to accuately guage the state of the nation's economy.

Posted by: Chris Davis | December 2, 2008 9:10 AM

If I were that way inclined, I can't help thinking I'd have to conclude that Rupert Murdoch is the Antichrist.

Is there anyone else on the planet simultaneously so horrible and globally powerful?

Posted by: cervantes | December 2, 2008 9:12 AM

Economics is not a science but a branch of theology. The process is not to study the world, gather facts, and then develop a theory to explain them. Rather, economists begin by making a number of assumptions -- every one of which is demonstrably false and does not describe reality -- and then building an elaborate theory on those assumptions. Since the theory, obviously, does not describe reality or make accurate predictions, when compelled, they add epicycles, but most economists don't even bother with the epicycles most of the time, they just make false statements.

The reason this Ptolemaic theory is attractive is because it provides a justification for wealth and privilege. That's why economists are paid higher salaries than other professors to indoctrinate freshmen with their horseshit.

Here's the dirty secret: "Market failure" is not a problem. Markets always fail. The so-called "free market" is a myth, which has never existed, and never could exist. There is no such thing as a transaction without externalities, no such thing as perfect information, no such thing as perfect competition, no such thing as an equilibrium price, no such thing as "utility," providers induce demand almost as much as consumers, and on and on. It's all a load of crap.

Posted by: Naughtuis Maximus | December 2, 2008 9:16 AM

10
Come on, how could people not believe that we could build houses forever? Truely a pathetic state of affairs, from supposedly the richest country in the world to back to almost being a basket case again. At least the coomon sese of the Irish voters will prevail in the long run!!!

Posted by: SC | December 2, 2008 9:19 AM

Just enjoying the few remaining moments of relative rationality before the glibertarians appear...

Posted by: Orac | December 2, 2008 9:29 AM

This is really no different from the same sort of nonsense we heard during the Internet bubble of the 1990s: That everything's great; that the stock market will hit 30,000 (there was actually a book predicting that); that the Internet has "changed everything": that you could make your living as a day trader indefinitely, etc. In fact, if TV and cable news had existed in the late 1920s, the same sort of stuff would have been appeared. I recently watched a documentary about the stock market crash of 1929 and was amazed. The sort of commentary in newspapers and on the radio was eerily similar to what we heard in the 1990s before the Internet bubble crashed and right up until last year before the housing bubble burst and the subprime mortgage crisis kicked in. Meanwhile, in the late 1920s, the average person started to get heavily into the stock market, just like the 1990s, and started to view it as an unending source of low risk wealth for which no work needed to be done.

This is all the same sort of stuff as in 1929, right down to the existence of a few "Cassandras" warning that the good times couldn't possibly last forever and that there would be a day of reckoning eventually.

I guess what I'm saying is that stupidity of this sort is not confined to FOX News; it's the same sort of groupthink and hysteria that accompanies every major stock market or investment bubble before it bursts.

Posted by: Cuttlefish, OM | December 2, 2008 9:31 AM

I watched the nightly business news
(it helped to chase away my blues)
Ben Stein and others helped me choose
When I was buying stocks

The terms I did not know what meant
Did not disturb me, as I spent
On stocks with values in ascent
Or so they said on Fox

The fundamentals still are sound,
Economy's on solid ground
(And look, our jobs are still around!)
We're solid as Fort Knox

There was one voice that cast a doubt,
Who said it's time for getting out
But he was just one single lout
Whom everybody mocks

With grandiose and pompous boasts,
With caviar and champagne toasts
I took the word of game-show hosts
And washed-up former jocks.

The weeks and months, they crept along
I wondered if I'd chosen wrong--
But no, they said--the market's strong
Enough to brave some shocks

And now my stocks are so damned cheap
I use them now to help me keep
The holes plugged, as I try to sleep
Here in my cardboard box

http://digitalcuttlefish.blogspot.com/2008/12/nobody-likes-doom-and-gloomer.html

Posted by: inkadu | December 2, 2008 9:35 AM

If the Iraq war is any example, Peter Schiff has lost all credibility in the press.

Posted by: John C. Randolph | December 2, 2008 9:37 AM

Peter Schiff isn't the only economist who predicted the situation that we're in today. You can find most of the rest of them at mises.org. Start with "The Bailout Reader" here:

http://mises.org/story/3128

Lew Rockwell has had Schiff on his podcast several times. This is the most recent one:

http://www.lewrockwell.com/podcast/?p=episode&name=2008-11-20_072_how_the_government_wrecked_the_economy.mp3

Oh, and SC: you can toss out epithets all you like, but the fact is that Schiff was and is right, and the clowns like Krugman are wrong.

-jcr

Posted by: The skepTick | December 2, 2008 9:42 AM

I particularly enjoyed watching Ben Stein spout nonsense and wonder why he has any credibility at all. That said, Peter Schiff is no economic seer. Much like Nikki, Psychic to the Stars, predicting that Paul Newman should "watch his health" over several years, eventually she will be right. Check out Being Wrong for Five Years Makes Peter Schiff Right Now? for the counterpoint.

Posted by: Christopher | December 2, 2008 9:44 AM

It's just with ID/Creationists. How often do these people need to be wrong or out of their league before people stop paying for their advice?

Posted by: Nick Gotts | December 2, 2008 9:48 AM

I've found a reference for my #2:

Borges, B., Goldstein, D.G., Ortmann, A. and Gigerenzer, G. (1999) "Can Ignorance Beat the Stock Market", Ch.3 in Gigerenzer, G., todd, P.M. and the ABC Research Group: Simple Heuristics that Make Us Smart, OUP.

Posted by: Emmet Caulfield | December 2, 2008 9:49 AM

Thus spake Naughtuis Maximus @15:

At least the [common sense] of the Irish voters will prevail in the long run!

I very much doubt it.

There's been no indication of common sense in the Irish electorate for many years, they re-elected a manifestly corrupt and incompetent party time after time.

Many years ago, I noticed that every government representative, when challenged on hospital waiting lists, school building programmes, or any other shortcoming in government always answered in terms of expenditure -- "But we've spent X billion on Y, five times as much as any previous government!" -- and both the electorate and the opposition failed to apply "common sense", asking the obvious question "If you're spending 5 times as much and getting only very marginally better results, how can you claim to be competent?". Such profligate expenditure without any notable results should be punished harshly by the electorate, but it was instead rewarded, mostly because the opposition failed to point it out.

If there were any justice in Ireland, an angry mob would haul the Cabinet out of Leinster House, and scourge them to the Spire, to be hanged from the portico of the GPO with the entrails of the opposition.

Posted by: John C. Randolph | December 2, 2008 9:57 AM

One silver lining that I find in the midst of this collapse, is that the Federal Reserve is no longer able to hide and pretend that they're "working to control inflation".

When you have people ranging from Jim Rogers to Dennis Kucinich calling for the end of the Fed, we've got a shot at making it happen.

-jcr

Posted by: Nick Gotts | December 2, 2008 9:58 AM

Oh, and SC: you can toss out epithets all you like, but the fact is that Schiff was and is right, and the clowns like Krugman are wrong. - jcr

Love that deep economic analysis, jcr - keep it coming! From wikipedia on the Nobel laureate and clown, Paul Krugman:

"In September, 2003, Krugman published a collection of his columns under the title, The Great Unraveling. Taken as a whole, it was a scathing attack on the Bush's administration's economic and foreign policies. His main argument was that the large deficits generated by the Bush administration--generated by decreasing taxes, increasing public spending, and fighting a war in Iraq -- were in the long run unsustainable, and would eventually generate a major economic crisis."

Posted by: inkadu | December 2, 2008 10:00 AM

Draconiz at #22 -

If you follow the link on Wiki to his thoughts on deregulation, you get the standard conservative economic boilerplate from Schiff:

In 1980, when the U.S. economy was last in serious trouble, Ronald Reagan offered the correct diagnoses that government was the problem and not the solution. His message resonated with voters, propelling him into the White House to implement an agenda of lowering marginal tax rates, reducing government spending and business regulations, restoring sound money, abolishing entire government departments, and basically allowing free market vibrancy to unshackle an economy burdened by big government. Though in practice much of the Reagan revolution never materialized, at least in theory his basic premise was sound.

In contrast, the country has now hitched its wagon to the views of Barack Obama. We don't know much about what he truly believes about economics, but the little that we do know is not encouraging. Obama has repeatedly heaped the blame for the current crisis on the excesses of unregulated capitalism and the greed of the wealthy. For him, the free market is the problem and government is the solution.

...

What nearly all politicians on both sides of the aisle fail to understand is that the current contraction and credit crunch is necessary to restore order to an economy that is horribly out of balance. Years of misguided fiscal and monetary policy and market-distorting regulations have resulted in reckless borrowing and spending on Main Street, pervasive gambling on Wall Street, and rampant fraud and corruption at every intersection. America's borrow and spend economy, and the bloated service sector that evolved around it, must be allowed to topple, so that a more sustainable economy grounded in savings and production can rise in its place. Any government efforts to delay the adjustment and spare us the pain will backfire, turning this recession into an inflationary depression.

He still has ideological blinders about the "free market," making him a stone's throw from a crank in my book.

Posted by: Naughtius Maximus | December 2, 2008 10:03 AM

Emmet,
Sorry, sarcasm doesn't come across very well. I think the Irish voters are up there with the dumbest. It's pure nepotism and parochialism. Vote for the man down the street, I knew his father he was a lovely man, our house always voted this way etc
It's changing slowly, but will still take a while.

Posted by: SC | December 2, 2008 10:09 AM

Ah, well, it was nice while it lasted.

(By the way, thanks for the Molly nom, Randolph. :P)

Posted by: LisaJ | December 2, 2008 10:10 AM

Man, those guys are a bunch of dummies. The part I love the most is how they all act like bully kids on the play ground. Grow the hell up. How Fox News' viewers don't see how childish these 'experts' are, not to mention how wrong they all were (and likely are on a regular basis), just fathoms me.

Posted by: Jon | December 2, 2008 10:24 AM

inkadu, recognize that there is a difference between Reagan's rhetoric and what Reagan actually did. Schiff is complimenting Reagan for what he said, but critical of the way he actually governed. Ron Paul was the same way. Paul was one of only 3 Republican Congressman to endorse Reagan against Ford in '76. He supported him in '80, but by '88 was completely disgusted with him and said he had betrayed the conservative movement, which prompted him to run as a Liberterian. So don't assume that Schiff/Paul are entirely happy with Reagan.

Government has caused the crisis we are in. They demanded that banks like Freddie and Fannie make risky loans, and promised to back them if they failed. They allowed the Fed to manipulate interest rates like central planners, which made for easy money that bid housing prices up to artificial levels. The government tries to go all over the world fixing problems, like Iraq and Afghanistan, all the while it is government meddling over there that has created the very problems that we are now trying to solve. Government is the problem. Schiff and Paul have been right for decades, not years. Obama is too hawkish and too opposed to civil liberties for these guys.

Posted by: Feynmaniac | December 2, 2008 10:27 AM

The only surprising thing about that clip was that Ben Stein didn't link Schiff to Nazism.

Posted by: Emmet Caulfield | December 2, 2008 10:30 AM

Sorry, sarcasm doesn't come across very well. I think the Irish voters are up there with the dumbest. It's pure nepotism and parochialism.

Indeed. Wasn't it Des McHale (UCC mathematician famous for his joke books) who wrote a satirical book about getting elected in Ireland that made exactly that point: the "easy way" to get a seat in Dáil Éireann being to inherit it and the "other way" being to work the party machine, become a councillor, be seen at funerals, etc.

A lot of the problem is the continuing dominance of Civil War politics, leaving two parties without a cigarette paper between them on policy and no kind of competition to propose alternatives to the electorate. If an election were held in the morning, an opposition coalition might win, but the resultant government would be largely identical minus the corruption, which the electorate has already clearly indicated they don't regard as important. Another major problem is the clientelist model of politics, where the local TD is the "go to guy/gal" for a variety of needs, typically getting a medical card for an elderly relative, getting planning permission, or somesuch.

Sadly, I don't think there's much hope for change until both the Civil War and clientelism are taken out of Irish politics, and I see no sign of that happening.

Posted by: Emmet Caulfield | December 2, 2008 10:40 AM

Jon @50,

Even if that were true, it would be entirely irrelevant to my point, which was to refute the implied "either or" choice in your #40 between subscribing to Ron Paul's economic notions or being a dolt who thought the economy was just fine until a couple of months ago. There is no such dichotomy.

Posted by: gazza | December 2, 2008 10:42 AM

jeeez,

Looking through the videos that guy Schiff was just bang on! Regardless of his political orientation, even in economics some things are right and some aren't. At least he offered sound reasons for his analysis - the others just scoff. Clearly they were the 'creationist' equivalents in economics!

It's a similar situation in the UK to the US (not quite the sub-prime issue though). But the basics are similar; that we don't save, but spend on foreign goods consumption, have let manufacturing decay, crazy house price inflation, etc.

I guess we all knew something was wrong when we could see first time house buyers in the UK unable to buy property unless they borrowed crazy multiples of their salary. As an engineer I've often wondered how we could pay our way in the world unless we had a half decent manufacturing base - so much of it had shut down in the UK over the last two decades. Employment growth was in financial 'services' and supermarkets! But we tend to ignore it if the 'experts' OK things on the economic front.

So, back to basics - regenerate high value engineering; sound finance (borrowing with low risk); save more; don't expect to get high interest returns on savings. And, not being a hard nosed conservative, plenty of funding for infrastructure.

Posted by: jenny | December 2, 2008 10:53 AM

@cervantes #20

Sure, there are some people who accept the label of economist who actually study reality, but they are in the minority. The "discipline" as a whole is like religion

So, what, no True Scotsman then?

Actually, as others have noted, it wasn't that Schiff predicted a crash, but that he absolutely nailed the details - subprimes, overborrowing, leading to "financials" being toxic and worthless, and with a result that all credit would seize up. That's not just a stopped clock being right twice a day, at least not to my (admittedly uninformed) eye.

Posted by: frog | December 2, 2008 11:02 AM

Cervantes: Since the theory, obviously, does not describe reality or make accurate predictions, when compelled, they add epicycles, but most economists don't even bother with the epicycles most of the time, they just make false statements.

You are being much to kind to economics in bulk. It's not just that they go from demonstrably false assumptions and build a house of cards on top of it --- no, no, no. That would give them, still, a theory from which to work.

No, they don't build a theory at all! A theory must be a mathematically consistent and powerful structure. Most never bother to build that. They throw to gather an ad-hoc, a set of heuristics that are not consistent or powerful, and use them where they'd like.

Of course, this is true for some but not all --- but the some are the actually influential ones. I read through the Econ 101 textbook by Bernanke --- what a collection of random garbage! I rag on biologists for dismissing the theoretical grounds for their works, but biologists to economists like a physicist to a psychoanalyst.

They're dishonest to boot, by putting on a veneer of "mathematicalness", an academic "scientology".

Once again, some but not all --- there obviously do exist folks who do a good job, but they don't write the textbooks and don't get put in charge of the treasury.

Posted by: toby | December 2, 2008 11:06 AM

A word for the Irish: Ireland did not do to bad in the 20th century. It maintained independence and democracy, though at a cost (turning itself into a Celtic twilight backwater, exporting its surplus population and going along with a lowest common denominator auction type of politics).

Like some of the commenters, I cringe at the glorified Ward Bosses who run Irish politics. Our former Prime Minister was a straightforward central casting version of a Tammany Hall apparatchik. But he did make a major contribution to peace in Northern Ireland, which I suppose will be the great achievement of late 20th century Ireland.

However, I am not without hope. The current crisis and the sudden revelation that the vaunted "Celtic Tiger" and our financial institutions could have been run better by a bunch of semi-competent racing tipsters, has cleared many heads. Some illusions have been shattered, and politicians always suffer when rising expectations have to be damped.

Posted by: Nathaniel | December 2, 2008 11:10 AM

I just listened to the first part of this, with Laffer responding. Did you notice his argument as to why the economy was great?

- There aren't any new taxes coming soon
- Our monetary policy is a good one
- We've got lots of free trade
- etc

See this list? It's not a list of _indicators_, it's a list of _policies_.

He's saying:
"If we follow conservative ideology, the economy MUST improve!"

This is why they are idiots. I have beliefs that the policies are support are the best ones, but
(I hope) I pay attention to how well they work, not take it on faith.

The stupid. It burns.

Posted by: nanahuatzin | December 2, 2008 11:20 AM

After i saw the videos, i was dismayed at the lack of real data to support both sides.

Is really the economy really based in such arguments?

Peter Schiff has his own set of dogmas, yet he has the value of really understand what is going on, but i wonder if he really could probe that his mecanism are the correct.

Does economist have testable hipotesis?
Do they care to try to probe them? or they are always be economc dogmas...

Given the importance of economy, i thing there should be a some ways to test it...

Posted by: Coriolis | December 2, 2008 11:32 AM

The problem william e emba is that physicists usually spend a great deal of time and effort into understanding the limits of their theories (and then trying to overcome them of course). I.e. when can do you need relativistic corrections or when newton's equations are fine, which order of perturbation theory is neccesary for describing what interaction and so on. Knowing the limitations of our theories then allows us to move beyond them.

Economists seem to have a complete lack of this type of thinking. There are a bunch of "schools" (Keynesian, friedman's free market, austrian, marx, mercantilism way back in the day, etc.) each of which claims to have the best theory that explains everything that happens within economics and these schools seem to be constantly warring with each other over what the hell should be done. I haven't heard a single economist trying to instead figure out where (if anywhere) each of these are applicable and where they are not.

In a way it's not surprising that there's so little "science" in economics - it's hard to be impartial when so much money and political interests are inserted into what should be an empirical scientific study. I imagine if all of a sudden you had trillions of dollars riding on whether string theory or quantum loop gravity were correct it would become even harder to get to the bottom of it. But it makes economics quite pointless, for now.

Posted by: Cheezits | December 2, 2008 11:43 AM

What's schadenfreude, a fancy name for 20-20 hindsight?

Posted by: CodeSculptor | December 2, 2008 11:58 AM

Schiff was correct even back in 2002. He said that stocks then were still overpriced. They were, and some still are. He wasn't wrong in 2002, it's just that people kept drinking the kool-aid. The paper values simply held out longer because nobody did the maths.

The correction started in around 2000-2001 and those HUGE dips in the DOW are to the same values our "dips" are now. The difference is that after 5-6 years of inflation, we are at a DOW of 4000.

Despite the "debunking" article, I don't think Schiff ever said to short anything. He spoke only of trends and actual values.

What did he say regarding Iraq? I can't find any mention.

Posted by: ignatov | December 2, 2008 12:14 PM

Did you notice Cavuto smirking, "Peter, I wish we had more time. I know you want to continue that expose of Santa Claus." Smart-ass corporate tool.

Posted by: negentropyeater | December 2, 2008 12:17 PM

Macroeconomics necessarily proceeds by making simplifying assumptions. The field evolves by weeding out assumptions : as time passes, history unfolds itself (it's not as easy to make "experiments" in economics to verify assumptions as it is in Physics or Biology), some of these assumptions prove to be unfounded, while other gain acceptance. This process is far from complete, macroeconomics is still a young discipline, and some major controversies remain.

Probably the most significant area of controversy is between the two main schools of thought in Macroeconomics :
-(neo) Keynesians who believe that markets are imperfect and that Govt has a knowledge advantage, and therefore believe in the need for fairly active policy interventions and regulations.
-(neo) Monetarists who believe that politics and bureaucracy prevent Govt from succesfully dealing with market failures.

Desipte this, there are many areas of macroeconomics on which Keynesians and Moneterists have reached some consensus.

The Continental European economic view has always been more middle ground between those two schools of thought than the Anglo-saxon, which had more or less abandoned Neo-Keynesianism for the last 30 years. It's clear that this crisis is bringing back in force Keynes's ideas in the Anglo-saxon world.
Having said this, my personal view is that Americans should be careful to move from one extreme to the other, and it is absolutely clear that one essential component of this crisis is very different from the Great Depression : the USA is not the main creditor nation anymore, quite the contrary, therefore, noone knows where massive Keynesian stimulus will bring it to.
This is unfortunately, a "new expreriment" in macroeconomics. Only problem is that there are tens of millons of real lives at stake.

Maybe, in the end, we the people will be lucky and our politicians will finally come to the wisdom that the best cure for bubbles is to prevent them from happening and refrain from trying to build fake prosperity riding on their back.