We Have Such Poor Economists

This political season has brought out why we had the crash. Bad bankers, well a bit. But really horrible economists. There are some left wing economists who teach, and who in my opinion know nothing about the economy.

They bemoan private equity. Almost every start up has received money from some form of private equity. And leveraged buy outs, if the company had been well managed then there never would have been a leveraged buy out. LBOs clear the market, they take bad companies and try to make them good. Yes good, namely profitable for the investors.

Let me reiterate something I introduced to the telephone company just after it became unregulated:

Profit Equals Revenue Less Expenses

This is a truism, a tautology, it is a definition. Why do people invest? Duh. To make money. Value is all too often based upon profit. Profit is the above. So increasing revenue and/or reducing costs is an imperative.

But somehow these economists are clueless. Perhaps their students should institute a class action suit.  Economics should reflect reality, at least a little, right guys, try at least to pretend it does! That is why I like the Canadians, like Nick Rowe. He not only pretends, he often admits that he just does not know. Why I have done that a few times as well, it is good for the soul. But not these characters on the left.

We have about 4 months left. It will be interesting to see how far from reality these characters go.