Friday, February 08, 2008

Sense in South Africa

All too often, physicists dabbling in economics just embarrass themselves, and infuriate me.

But here is a fine South African fellow, a PhD physicist, who recognizes that there are laws of economics, different from but no less constraining than, the laws of physics. Further, he draws the right lessons: be humble in what you think economists can accomplish, and keep the communists away from the money supply.

An excerpt:

...there are basic laws of economics, such as the relationship between supply and demand. These laws are extremely important, and it is a mistake to try to fiddle with them too much.

...a shiver went down my spine when I saw newspaper reports stating that South African Communist Party (SACP) deputy general secretary Jeremy Cronin was advocating that the Reserve Bank should consider fiddling with inflation targeting.

I gather that what this actually means is that inflation should be allowed to rise so that goods are artificially cheap. You do this by just paying people more and more devalued money. In other words, kid the poor folks until the spark eventually hits the gunpowder.

Imagining the SACP having a real input into economic policy gives me a bad feeling – like imagining a remake of the movie Basic Instinct, but starring Julie Andrews.

A capital fellow. May his "amber liquid" be tasty and frosty always.