by Sukrit Sabhlok

Created on: January 06, 2009   Last Updated: January 07, 2009

What fools these economists must take us for! It must surely be obvious from the turmoil of recent months that economists are a notoriously unreliable bunch. Since economics is not a precise science, it is easily perverted by political biases. Most mainstream economists cannot even agree what caused the financial crisis - let alone what we should do to solve it.

Surveys have consistently shown that support for free trade is the only issue upon which economists are in near unanimous agreement. A majority of economists favour abolishing minimum wages, but the agreement on this is less strong than on international trade. On all other issues, there is much disagreement, even over the application of basic principles such as supply and demand to controversial issues (e.g. illicit drugs).

This wide divergence of views makes it easy for governments to pick and choose economists who provide the advice that they want to hear. And so it is with the present economic troubles. Politicians all over the world have been promising to rescue us from another Great Depression, using Keynesian economists as apologists for pork-barrelling schemes that increase their influence.

A crisis, of course, is the perfect time for elites to bamboozle the public. Politicians are able to trot out ways to spend taxpayer money that they had to discard as politically unfeasible during the good times. Prime Minister Kevin Rudd, for example, has been able to get away with a large number of new projects in marginal electorates. In the process, he has blown a massive budget surplus and turned it into an expected deficit. All the lavish appropriations have been justified by saying, it must be done to stimulate the economy and avert a recession'. Truly, it is in a crisis that the ruling class are in their prime.

One might think that the large amount of mathematics that economists use means their discipline is well suited to forecasting events. To the contrary, not only were most economists unable to predict the present crisis, they are also regularly off the mark in more basic forecasts, especially in fiscal policy.

It must be noted however, that there are some economists who have a good track record at forecasting. The Austrian economists', for example, had been arguing since 2003 that the Federal Reserve (America's central bank) was inadvertently creating the conditions for a severe recession. Their predictions were extremely specific, and have now been borne out. In addition the leading light of the Austrian

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