By Tim Hosking
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Tim Hosking has studied around 40 schools of economics put forward by economists over the past centuries. He says, they all miss the key points. It is time for some new thinking. Here are his comments
“The following are key economics models taught at universities. They all have some well-considered logic. But when you take into account Behavioural Economics they all contain fatal flaws:”
1. Keynesian Economics – an excellent understanding of managing economic cycles. My concern was that the human behaviour has a narrow pattern of normal - going between exuberance and panic and requiring a control tighter than what governments were capable of and politicians are willing to react to. An easier, quicker adjusting model, along clearer defined parameters, would be the Ingram Model.
2. Laissez Faire Capitalism – uncontrolled competition consumes wealth with most of the competitors drained and few very well off. Wealth stripping means that the consumer base is impoverished and fewer of the competitors survive. A restricted field would mean more can healthily compete and grow themselves and the economy. The Ingram Model is not a complete solution but aids the prevention of wealth stripping.
3. Monetarism – The Ingram Model would replace this in a more controlled and less volatile fashion.
4. Marxism – The goal of social sharing of resources was raised during the period of vast wealth differences. Unfortunately, this was only partly resolved by revolution. Behavioural Economics was replaced by desire and ignored the fact that people want more. Marxism replaced the obstructions of the Nobility with that of their system. By curbing wealth stripping the Ingram Model moves in the right direction.
5. Game Theory, Zero Sum Games – John Nash (Beautiful Mind), John Neuman amongst others. These brilliant models are corrupted in a Macro environment by political interference, slow reaction times and Dualism. In a sense they work when their scope expands to include these interferences, but they become less relevant to the problem. The Ingram Model will curb the interferences allowing the Macro Economic scope to be reduced to the immediate problem.
6. Positive Money – This influential UK group is looking at what some people call ‘QE for the people’ whereby money is created and given to the government or the people to spend rather than using the Keynesian ‘borrow and spend’ approach or reducing interest rates. The Ingram Model is significantly better thought out. It acts faster, protects small businesses better, has a better balance, better control, is less complicated, and has a damper which automatically protects the economy and savings if too much money is created