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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

“Consistency is contrary to nature”

Which is why you can’t trust nature. Anatole Kaletsky is worried about stagflation. Can this be the same Anatole Kaletsky who only six month ago called for government to “punish savers”?

As I wrote at that time,

[Unsubbed original:] The purpose of banks used to be to make a profit by using the deposits in their care productively at second-hand. That is why they pay interest: to bring in funds to be lent. If they don’t do either then they are no longer banks but state-sponsored rentiers.

Far from encouraging productive capital, Mr Kaletsky’s prescription would have us reverting to a pre-capitalist economy where those with savings dare not recycle them. Their personal cash will end up converted to valuables, hoarded, and hidden to keep them safe from predatory tax farmers. Printing money is also a well-tested means of encouraging the same sort of behaviour.

For a recovery we need capitalism and the market to do their work. However painful, that is better than reversion to the Dark Ages because governments and their advisors want to be seen to be doing *something*. Doing nothing may be the best alternative.

Mr Kaletsky has got what he asked for and now finds he does not want it. Human, all too human.

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16 comments to “Consistency is contrary to nature”

  • Paul Marks

    Kaletsky

    I used to think that Rupert M. kept him around because Kaletsky could always be counted upon to demand “lower interest rates” (i.e. yet more credit money expansion) and R.M. has always been a big debter – although perhaps this is all too cynical.

    After the bust I just assumed that A. Kaletsky had crawled under a stone to die – I am sorry to find out that I was mistaken.

  • Laird

    This man is demented. With governments printing money at unprecedented rates the fear of inflation is “far-fetched”? Locking in mortgage rates which are at three-generation lows, with little or no room to drop farther, is “a mistake”? A revival in economic growth will likely result in “drastic cuts in public spending”? (On what planet?) Current levels of government borrowing “might [my emphasis] become unsustainable by around 2020″, so this is only a “potential [his emphasis] problem”? Bizarre.

  • The Laughing Cavalier

    The other economistrs with foreign-sounding names have got life peerages. Kakaletsky is desperate for one too and will write whatever Brown wants to hear.

  • guy herbert

    Laird: This man is demented.

    If so, it is not a barrier to personal success. According to the Global Speakers Bureau from whom you can hire him to grant you and your dinner-party guests private pearls of wisdom:

    Mr Kaletsky was a full-time journalist for The Times, Financial Times and The Economist from 1976 until 1998, when he expanded his activities to include economic forecasting and financial consulting. During his 30 years as a journalist, Mr Kaletsky has received many awards and distinctions, including Commentator of the Year, Economic Journalist of the Year and European Journalist of the Year. Mr Kaletsky is also a Director of several investment companies. In 1998 he was elected by Britain’s economics profession to a five-year term on the governing council of the Royal Economic Society.

  • the last toryboy

    Kaletsky has the distinction of being consistently wrong in just about every prognostication he has ever made.

    Really, his predictive powers are so abysmal that Private Eye took to satirising them.

  • Rob

    It is amazing that he still has a job.

  • Laird

    Guy, Mr. Kaletsky is once again proving the aphorism (I can’t recall the source of the quote, but I’m trying to find it) that “Economics is the only profession in which one can enjoy a long and successful career without having once been correct.”

  • guy herbert

    It isn’t the only one. Mr Brown has never been unemployed. A qualification is more often a certificate of orthodoxy than of integrity.

    Personally, I would like to know how they do it. I could do with some social acceptance, security and wealth more than I could being right.

  • JerryM

    Mr Kaletsky has got what he asked for and now finds he does not want it. Human, all too human

    Next up: Obama voters.

  • Ivan

    Laird:

    Guy, Mr. Kaletsky is once again proving the aphorism (I can’t recall the source of the quote, but I’m trying to find it) that “Economics is the only profession in which one can enjoy a long and successful career without having once been correct.”

    It’s things like macroeconomics that make me cringe when someone repeats the usual caricatured story of human progress. Supposedly, people in the past were enthralled to religion and superstition, bowing to their spiritual and temporal masters with blind faith, but we have now overcome all that and became all rational and scientifically-minded.

    Yet, what is the exact difference between a medieval doctor giving pronunciations on dogmas of the faith and a modern macroeconomist giving supposedly scientific insights that can’t stand even an a priori logical scrutiny (as evidenced by disagreements among economists themselves), let alone a test of empirical validity — and still getting honored, respected, and well paid as an intellectual authority, and his advice used to steer the fate of whole nations? Am I missing something when I fail to see any less blind faith and superstition in the latter case? (In fact, my impression is that the scholastic doctors’ teachings were far superior when it comes to internal logic and consistency, and at least they admitted that they were starting from premises taken on religious faith.)

    A lot of microeconomics makes sense with its simple and yet powerful models, I’ll readily admit that (even though these models are often used far beyond their limits of validity, and microeconomists are also prone to denial when they produce an outcome they dislike ideologically). But macro? Honestly, is there a single true scientific insight that ever came from this whole field?

  • mike

    “Honestly, is there a single true scientific insight that ever came from this whole field?”

    Hayek and his law of unintended consequences perhaps?

  • Jim

    Laird
    Guy, Mr. Kaletsky is once again proving the aphorism (I can’t recall the source of the quote, but I’m trying to find it) that “Economics is the only profession in which one can enjoy a long and successful career without having once been correct.”

    Shouldn’t it be ‘Politics and economics are the only careers…’

  • Ivan

    mike:

    Hayek and his law of unintended consequences perhaps?

    That’s certainly a valid insight, but it’s hardly original (off the top of my head, I just remembered Adam Smith’s famous “chessboard” passage where he says more or less the same thing). In fact, I’d say that this principle should be blatantly obvious to anyone who is not either stupid or deluded.

    Don’t get me wrong, I’m not saying that Hayek’s message was without value — but the fact that he had to argue it as something controversial and contrary to the prevailing academic wisdom is a good example of how deranged and spectacularly delusional the intellectual mainstream of our age can be.

  • virgil xenophon

    In the military this observable tendency to consistently be wrong yet nonetheless prosper is known as “F**k Up and Move up.”

  • Paul Marks

    There are many valid insights from economics – as long as one stays away from what might be called “university economics”.

    For those fearful of looking at “Human Action” by Ludwig Von Mises (by the way, people should not be fearful – the work is not nearly as difficult as its repuation suggests), I would point you to Henry Hazilit’s “Economics in One Lesson”.

  • mike

    Ivan:

    Oh I quite agree, but seeing as the thread concerned the position of Anatole Kaletsky as one of Britain’s chief economic priests, I rather think the law of unintended consequences is, ahem, shall we say “ahead of its’ time”? I know – it’s sickening to even say such a thing, but there it is.