Correction, Please!; M. Skousen

Correction, Please! Is This the Age of Ignorance-Or Enlightenment? "I am more and more impressed by my ignorance. ' , -Herbert Stein, "The Age of Ignorance," The Wall Street Journal (June 11, 1993) H erbert Stein ought to know better. He was the chairman of President Nixon's Council of Economic Advisers and an eco nomics professor at the University of Vir ginia. Today he's a member of The Wall Street Journal's board of contributors and an American Enterprise Institute fellow. Yet here he is filling up a valuable page in The Wall Street Journal proclaiming to the entire world that he knows very little, if anything. After reading three daily newspa pers and numerous magazines, watching all the talk shows, and talking to dozens of "well-informed" people, he confesses com plete ignorance about the budget deficit, taxes, the money supply, the stock market, and the war in Bosnia. "I don't know whether increasing the budget deficit stimulates or depresses the national income. I don't know whether it is M2 or M1 that controls the level of spending.

I don't know how much a 10 percent inMark Skousen is editor of Forecasts & Strate gies, one of the nation's largest financial news letters, and an economist at Rollins College in Winter Park, Florida. He is the author of The Structure of Production and Economics on Trial. For information on his newsletter and books contact Phillips Publishing Inc. at (800) 777: 5005, or (301) 340-2100. by Mark Skousen crease in the top rate of individual income tax will raise the revenue .... I do not know how to pick winning stocks." The New Nihilism: The Bankruptcy of the Economics Profession It wouldn't bother me if one lonely Ph.D. economist claimed ignorance of basic eco nomics, but the amazing thing is that Her bert Stein is not alone. He reflects a strange new malaise in the economics profession, an eerie complacency about the burning eco nomic issues of the day. Economists all along the political spectrum are eschewing responsibility for policy decisions or fore casting the future. Will interest rates rise or fall? Are we headed for another recession more inflation, or both? Will the stock market go up or down? The answer is always the same: Who knows?

Robert J. Barro, Harvard economist and exponent of the New Classical School seemed to take pride in his laid-back attitud~ about the economy during the 1991-1992 recession: "The questions I am asked most often these days are: Why is the economic recovery weaker than expected? How will the economy do over the next year? What should the government do to help? As a first approximation, the right answers to ques tions like these are: 'I don't know,' 'I don't know,' and 'nothing.'" (The Wall Street Journal, November 21, 1991) 320 Not to be outdone is Paul Krugman, self-proclaimed Keynesian professor at MIT. He asserts that economists, including himself, don't understand why there are business cycles. Furthermore, economists "don't know how to make a poor country rich, or bring back the magic of economic growth when it seems to have gone away. . . . Nobody really knows why the U.S. economy could generate 3 percent annual productivity growth before 1973 and only 1 percent afterward; nobody really knows why Japan surged from defeat to global economic power after World War II, while Britain slid slowly into third-rate status." 1 Really? Mind you, this is the professor who won the John Bates Clark Medal, a prize given every two years to the most promising American economist under the age of forty.