The War on Economics – The New Yorker

by | May 16, 2022 | Financial

ContentThis content can also be viewed on the site it originates from.There has always been something irresistible about advice in mathematical form. When, in the Book of Genesis, Joseph was plucked from prison to interpret the dreams of the Pharaoh, he offered some Biblical budgeting: To survive the seven years of famine that will come after seven years of abundance, the Egyptians must save exactly a fifth of their harvest. Sun Tzu’s military counsel in “The Art of War” depends on ratios: “It is the rule in war, if our forces are ten to the enemy’s one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two.” Alexander Hamilton, arguing for a national bank in 1790, presented the appeal of fractional-reserve banking in quantifiable terms. “It is a well-established fact, that Banks in good credit can circulate a far greater sum than the actual quantum of their capital in Gold & Silver,” he wrote in a letter to the Speaker of the House of Representatives. “The extent of the possible excess seems indeterminate; though it has been conjecturally stated at the proportions of two and three to one.”Where leaders once turned to sages and pols for such wisdom, they now turn to the guild of economists. The most powerful states in the world are accustomed to outsourcing the management of their crucial macroeconomic decisions to committees of central bankers. Nowadays, no arena of public policy is untouched by economic guidance, solicited or unsolicited. Economists influence the way that children are cared for and schooled; the way that citize …

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