PBS has the article Exposing the Textbook Scam: How to Save Us from Economists. At first, I was afraid of what crap this article might contain, then I realized how topsy-turvy the world has become.

As we see it, the problem begins with a failure to diagnose the problems of unemployment and inequality. Many macroeconomics textbooks today accept as plausible, if not gospel, that there can never be a deficiency of aggregate demand — a deficiency of spending, that is — caused by our present economic system. According to this orthodoxy, economic downturns are caused by factors external to the system itself and can usually be attributed to the government mucking with the market: government overspending, for example, which racks up a ruinous debt load or profligacy by the central bank, creating too much money out of thin air. If this were the case, the best policy for recovery would be to cut back government spending, taxation, regulation and money creation.
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Our opposing point of view has a small but growing minority of economists, among them Paul Krugman, whose textbook ranks third in the macroeconomics market and whose basic economics textbook, written with Robin Wells, has also gained some popularity.

This alternative view of macro is popularly called “Keynesian,” but it includes all kinds of leftist views, from institutionalist to radical. It asserts that downturns and crises are not due to technological change or any other external forces, but primarily to the extreme swings of the economic system itself, which government must moderate. It also argues that inequality has a seriously negative impact on the macro-economy — decreasing aggregate demand — as well as obviously harming so many of the individuals that the economy supposedly serves.

How can anyone alive today that is more than 5 years old still believe “that there can never be a deficiency of aggregate demand”?  How can aggregate demand stay at a high level when people suddenly lose their money or become afraid to spend it?  Didn’t you see this happen with your own eyes in the economic collapse as George W. Bush was at the end of his term as President, and extending well into Barack Obama’s term?  How could you believe anyone who tells you that this did not happen?

Before the 2008-2009 collapse, if you knew anything about the Great Depression of the 1930s, how could you possibly believe that such a thing could not happen?

The “alternative” view is the one that I was taught in the early 1960s when I studied economics from Paul Samuelson’s text book.  This view is the one that I never stopped believing in. This is the same economics that Paul Krugman undoubtedly learned at about the same time that I did.

To show you how old I am, I was going to make a remark about how similar this fashion fad in economics textbooks is to how my wide neckties are coming back in fashion.  Then I realized that I also had narrow ties, and I don’t know which set of ties may be coming back into fashion.

I think that what this article proves is that the likes of the Koch brothers, Pete Peterson and his Peterson Institute, and Ron Paul have been very successful since the 1960s.  They probably were taught the same economics as I was in the 1960s, but they did not like what they were taught.  Since the 1960s, they have been using whatever resources they had to erase what we were taught from our collective memories and replace it with the garbage that suits them better.  In the case of the Kochs and Petersen, their resources were enormous amounts of money.  In Paul’s case it was the national political stage.  I don’t know what Milton Friedman’s motivations might have been.  Was he just seeking glory, or was he the tool of these other folks?

This also explains why President Obama cannot get his economic policies right.  He is of the younger generation that was brainwashed with Friedmanomics.  Some of the people he chose for his cabinet tried to explain the real economics to him, but he never could quite believe it.  All the people who understand real economics have since left his administration, and what was left were the ones who were equally brainwashed, or self-interested enough to believe Friedmanomics.  (Well, who knows if they really believe it, but it sure is profitable for them to say they believe Friedmanomics.)