Classical economics are just wrong. Because they have, and continue to, fail empirical testing. All economic theories do, which implies that we have no actually correct theories of economics, and are just wandering in the wilds of error.
Keynes is.. less wrong.. than the rest, but doesn’t get applied very effectively or often in the real world because his recommendations have a strong tendency to step on the toes of the politically connected. My personal intuition is that Georgist economics are even more correct, but there is a dire shortage of real world testing for that because Georgism is even more offensive unto the people who buy politicians than Keynes. Same goes for some of the more interesting monetary theories. Banning fractional reserve banking and managing the size of the monetary economy directly via the printing press and taxation looks far more sensible and effective than what we are currently doing but would require bankers and the holders of government bonds to find ways to actually earn money rather than just collect interest.
Which leads to the observation that unemployment is useful to some people. The reserve army of labor is a political and social lever that elevates the status, income and power of employers and rentiers over labor. So as a matter of political economy, if unemployment can be maintained without causing disruptive protest… Not that I think anyone actually sits down and works out how to create unemployment, but actually doing anything about it is a much lower policy priority than preventing even very low levels of inflation for.. not very mysterious reasons.
Classical economics are just wrong. Because they have, and continue to, fail empirical testing. All economic theories do, which implies that we have no actually correct theories of economics, and are just wandering in the wilds of error.
Keynes is.. less wrong.. than the rest, but doesn’t get applied very effectively or often in the real world because his recommendations have a strong tendency to step on the toes of the politically connected. My personal intuition is that Georgist economics are even more correct, but there is a dire shortage of real world testing for that because Georgism is even more offensive unto the people who buy politicians than Keynes. Same goes for some of the more interesting monetary theories. Banning fractional reserve banking and managing the size of the monetary economy directly via the printing press and taxation looks far more sensible and effective than what we are currently doing but would require bankers and the holders of government bonds to find ways to actually earn money rather than just collect interest.
Which leads to the observation that unemployment is useful to some people. The reserve army of labor is a political and social lever that elevates the status, income and power of employers and rentiers over labor. So as a matter of political economy, if unemployment can be maintained without causing disruptive protest… Not that I think anyone actually sits down and works out how to create unemployment, but actually doing anything about it is a much lower policy priority than preventing even very low levels of inflation for.. not very mysterious reasons.