A Zombie Idea that Refuses to Die

This week, Nobel Prize winning economist Paul Krugman’s op-ed piece in the New York Times is a must read.

In the article, Krugman expresses his dismay concerning how the public debate surrounding the public option for health insurance in the US is being vilified for purely ideological reasons. In short, according to the cant: government intervention is always bad, and leaving the private sector to its own devices is always good.

Given the performance of the US economy during the application of Reaganomics (1980 – 2007) -- a seven fold increase in revenues for the top 1% of earners while the median income level increased by a modest 22%, the worst recession since the Great Depression, and the astronomical debt load the US has taken on to first fuel its economic growth and to then prevent the economy from collapsing -- you would think that laissez-faire would be dead.

Krugman reasons that the Zombie like existence of the mindset is linked to the inability of the American financial elite to let go of its cash cow. There is some truth in his assertion, but I believe that the root of the problem lies much deeper.

Unlike the evolution of evidence-based decision making in the public health sector, economic policy making in North America is still in the thrall of faith-based belief. From the evidence-based perspective, the collapse of the American economy is a serious anomaly that demands that the theoretical foundations of the world-view be re-evaluated, but from the faith-based perspective it is wholly sufficient to simply believe in the fundamentals.

In many ways, this is also very characteristic of the public debate regarding climate change and peak oil. On the one hand, there is a large body of scientific evidence pointing out to the dangers of climate change and to the continued depletion of fossil fuel reserves. On the other hand, there are the doubters who simply refuse to believe that we need to change our ways.

Essentially, these are two vastly different epistemological approaches that have been with us for the last 2500 years, one that deals with the life hereafter, the other with life in the here and now.

The inability to reconcile these two approaches was largely responsible for the bloodbath of the twentieth century and is placing us in dire straits as we approach the end of the first decade of the twenty-first.

In my next post, I’ll begin to examine the tension between the two camps.