A fortune built on blowing things up is what funds the annual Nobel Prizes.
In 1867, Alfred Nobel patented the mixture of nitroglycerine and diatomaceous earth under the name of dynamite.
When the wealthy industrialist died in 1896, his relatives where the ones who blew up.
This extract from Nobel’s last Will explains why…
‘All of my remaining realisable assets are to be disbursed as follows: the capital, converted to safe securities by my executors, is to constitute a fund, the interest on which is to be distributed annually as prizes to those who, during the preceding year, have conferred the greatest benefit to humankind.’
Ironically, Alfred may have given the world a Peace Prize, but his family went to war over his will.
The original prizes were to be awarded for five categories. Physics. Chemistry. Physiology. Medicine and Literature. Peace.
Have you spotted the missing award?
That’s right. It’s Economic Sciences.
The reason for leaving this one out is simple. In the 19th century, economics was considered philosophy…not a science.
Back then people pondered what might or might not happen if this or that was done.
An economic experiment could never be conducted in the confines of a laboratory. The dynamics of society are constantly changing and evolving. The variables are almost endless.
Whereas with real sciences, like chemistry and physics, outcomes can be accurately measure. For example, water boils at 100°C.
But in 1968, Sweden’s Central Bank introduced ‘The Sveriges Riksbank Prize in Economic Sciences in memory of Albert Nobel’.
The award was an ingenious move.
Economics successfully repositioned itself from the airy-fairy world of the arts to the highly-respected faculties of science.
This shift in stature was crucial to public perception.
If you’re going to sell experimental nonsense like money printing and negative rates to the masses, who has more credibility, a scientist or a philosopher?
The con works better if you hide behind the illusion of science…as evidenced by last year’s winners.
‘[In 2018], William Nordhaus and Paul Romer won the prize for their work on sustainable growth.
‘The US economists’ research focused on how climate change and technology have affected the economy.’
Who would have thought that different weather patterns would produce different economic outcomes?
Even when Albert Nobel was a young man, a changing climate was influencing economic outcomes
Brittanica.com tells us about the role weather played in Ireland’s great famine (emphasis is mine)…
‘In 1845 a strain of Phytophthora arrived accidentally from North America, and that same year Ireland had unusually cool moist weather, in which the blight thrived. Much of that year’s potato crop rotted in the fields. That partial crop failure was followed by more-devastating failures in 1846–49, as each year’s potato crop was almost completely ruined by the blight.’
Philosophically, what could the Irish do?
Blame CO2 emissions for the unseasonal weather OR deal with the problem and survive the best they could?
You could distil the 2018 Nobel Prize winners economic research down to this…
‘Too much rain. Too little rain. Too hot. Too cold. Whenever these factors are present, we have determined there will be positive and negative economic outcomes’.
Sounds like the work of academic dreamers to me. Wait. Isn’t that what a philosopher is?
And this year the Nobel Prize for the most creative daydreamer/s goes to…
‘A huge congratulations to Abhijit Banerjee, Esther Duflo and Michael Kremer who have just won the 2019 Nobel Prize in Economics.’
The Behavioural Insights Team
15 October 2019
Esther and Abhijit are married.
At some point they must have had a blocked drain. Why?
Esther must have started philosophising about the tradie that lies dormant within.
Her essay was published by the Massachusetts Institute of Technology (MIT).
For those who are not aware, MIT is the breeding ground for economic groupthink.
Amongst the PhD alumni (the ones who’ve never set foot in the real world) are…
Mario Draghi. Ben Bernanke. And our very own, Phillip Lowe.
Looking at this list, perhaps the initials MIT should really stand for ‘Money-printers In Training’.
Anyway, back to Esther’s essay.
Her Abstract states (emphasis is mine)…
‘As economists increasingly help governments design new policies and regulations, they take on an added responsibility to engage with the details of policy making and, in doing so, to adopt the mindset of a plumber. Plumbers try to predict as well as possible what may work in the real world, mindful that tinkering and adjusting will be necessary since our models gives us very little theoretical guidance on what (and how) details will matter. This essay argues that economists should seriously engage with plumbing, in the interest of both society and our discipline.’
Firstly, increasing help from economists is not helpful. These professional dreamers are a large part of the problem. They are definitely not the solution.
If ever you wanted proof that Esther and her academic cohort have ABSOLUTELY NO IDEA about the real world, then here it is…plumbers try to predict as well as possible what may work in the real world.
I’ve yet to meet a plumber who tries to ‘predict as best as possible’ whether the toilet should be connected to the sewer pipe or not.
This might be news to Esther, but plumbers actually know what works in the real world.
The hot water gets connected to the hot water tap. The drainage outlets are hooked up to the waste water pipes. And, the number 1’s and 2’s take a ride around the S-bend to the sewerage treatment plant.
It ain’t rocket science Esther.
Esther’s essay prattles on for a mind-numbing 31 pages followed by a further six pages of references.
A guaranteed cure for insomnia…but of little use otherwise. It’s pure nonsense.
There are some plumbing analogies you could use when it comes to these philosophers posing as economists.
They certainly know how to pour money down a drain. Their theories invariably turn an economy to sh*t.
And that’s where the comparisons between the plumbers and the daydreamers start and finish.
If Esther can get the Nobel gong for her plumbing analogy, then there’s a (very slim) chance yours truly could be off to Stockholm this time next year.
In the July 2019 edition of The Gowdie Letter, my essay was on the unregulated ‘electricians’ powering up the global economy.
Here’s a snippet of my potential Nobel Prize winning article…
The Current Situation
And this leads us to the here and now…or in electrical terms…the current situation.
The lesson to be learned from LTCM and 2008 is simple…those charged with the supply (central banks) and distribution (Wall Street) of power to the financial system don’t give a flying fig about safety.
Remember this from June 2017…
‘Fed Chair Janet Yellen said Tuesday that banks are “very much stronger” and another financial crisis is unlikely anytime soon.’
But 18-months later, Janet was not so sure…
‘Former Federal Reserve Chair Janet Yellen told a New York audience she fears there could be another financial crisis because banking regulators have seen reductions in their authority to address panics and because of the current push to deregulate.’
CNBC 11 December 2018
Why the (slight) change of heart?
This is only conjecture on my part, but I think she’s stepped outside the blinkered world of central banking, looked up and has gone ‘oh my God, look at this mess’…
Source: Asian Correspondent
And that photo is only a sample of the cabling — running above, on and underground — that connects markets.
The ‘President’s Working Group’ identified excessive leverage as the major risk in 1998.
With hindsight, LTCM was [nothing more than] a bit of loose wiring.
In 2008, Wall Street rolled out its extensive cabling across the Atlantic…into Portugal, Italy, Ireland, Greece and Spain (PIIGS).
The subprime power outages caused major market blackouts around the world…nearly resulting in Sovereign default.
In 2008, there was US$140 trillion of [debt] voltage running through global network…today its over US$250 trillion volts.
Philosophically, the economics profession and I are diametrically opposed. For starters, I live in the real world.
Therefore, I’m not all that hopeful of receiving a call from the Nobel Foundation anytime soon.
However, on the off chance that Esther bothers to read an alternative point of view, I do have a suggestion for her next essay.
‘The role economists have played in packing the global economy full of Albert Nobel’s patented product’.
Editor, The Rum Rebellion
PS: Why Australia’s ‘miracle’ economy is a farce. Download your free report now.