The poor and impoverished state of the world is no true wonder given those that have claimed for themselves the “duty” of exceedingly routine disruption and wholesale distrust of markets in favor of their own very narrow interests and abilities. These are the people that give us such incompetence passing as expert and “useful” central planning:

https://twitter.com/mattyglesias/status/666301870521102336?ref_src=twsrc%5Etfw

Nothing like another great war to solve “intractable” economic problems, especially when they are made so by the same people aching for destruction in order to correct themselves. When you put that idea together with this blindness, there can only be long periods of despair:

Venezuela is now the world champion of inflation, homicide, insecurity, and shortages of essential goods–from milk for children to insulin for diabetics and all kinds of indispensable products. All this despite having the greatest oil reserves in the world and a government with absolute control of all state institutions and levers of power.

You can also sense the real nature of what we are being faced with, namely that those claiming economic proficiency and aptitude seem awfully and strangely obsessed with power and control rather than economy and labor. Their view seems to be that their control and power just somehow yield economy and labor as if a byproduct, which is the only way you can get to viewing war as some kind of “stimulus.” At least Krugman”ism” inspired 34,435 people to petition the government to build a death star while the professor himself called upon space aliens. Uselessness knows no boundaries upon orthodox economics.

Maybe there is some benefit to it, after all. War is the ultimate form of dedicated and purposeful redistribution, thus it is in kind with “softer” attempts such as “inflation” and fiscal redistribution. The results, wanton destruction and too many broken windows, are therefore in kind.

An old Chinese proverb claims that, “any fool can throw a stone down a well, but only a wise man can get it out.” Yglesias, Krugman and all the economists-as-philosopher-kings seem to think that they can build a sustained economy by throwing the stone and then digging an endless series of parallel wells and tunnels by which to get it out; repeating the process if necessary. In the end, they have created nothing, and accomplished nothing but waste inordinate time. That is redistribution.

Long before John Maynard Keynes proposed building pyramids in the desert (like a great deal of Keynes, he “borrowed” heavily from others), the man who derived the first form of GDP suggested constructing a useless pyramid on Salisbury Plain. William Petty even proposed transporting Stonehenge to London in order to “unidle” resources. It is never considered, or at least denied in importance or that markets are better to determine, why resources might be “idle” in the first place. What is one economists “idle” is likely the market’s “value”, or really lack thereof.

This reductive presentation of an economy survived even though reference to Petty nearly ceased. The idea of double counting is what generated the emphasis upon national accounts, as does the constant basis of spending as income; transactions above all without reference, curiously, to value. That is what GDP is in all its facets, a tally of transactions without guide as to value upon them, making all transactions simultaneously substitutes.

 

The fact of “why” people engage in transactions is left as at best a peripheral matter. There is just an assumption as a fact of life that trade will occur and will always occur given basis for mixing assets and effort. This notion has acquired some nuance over the decades, as economists (now almost all stranded Keynesians) do not presuppose transactions in all circumstances but only where the economy is not performing. Thus, it is better to do something inefficient and wasteful than to let assets be “idle”, by way of assuming one could, from afar, judge what is and is not inoperative.

In short, economists are asserting their views of value upon the markets without accounting for their decided (and self-imposed) handicap in terms of information. What one person is to know the price and quantity of pencils, particularly if that person is a central banker?

That is why asset bubbles are so injurious in the long run. In the scheme of double counting GDP, activity generated by a bubble is taken as spending and income; inseparable from activity generated by profitable endeavor free of any redistribution (as much as that is possible). So any GDP that is derived from the bubbles is not “of the economy” but rather this parallel “economy” that will of its own inefficiency come to wind down to nothing at some point. Economists do agree on that, only that they disagree in what will come of it – as they believe the parallel, redistribution winds down the real economy will have been much better for it and so will make up easily any difference.

If at the end of your string of transactions and endeavors there is nothing created of value, the economy falls not propels. The true economy is not transactions but wealth and such value, something that today’s central planners refuse to accommodate because it cannot be accommodated under any such centralized construction. Even divine monarchs could not declare something valuable which was not so accepted by the “market” of even his own subjects. Orthodox economics has simply circumvented the fatal flaw, so it believes, by removing the question altogether (another offshoot of “rational” expectations theory).

War and other forms of redistribution thus fit the profile of substitutable transactions; the depressive economy that results also fits the profile since a great deal of value is destroyed for the effort.