Is, of course, a cartoon by The Oatmeal.

Lots of sites are dark today, but none are quite so entertaining.

So Mark Crovelli at Mises.org, whoever he is, has a post that I am still having trouble believing.

Essentially, he argues that economists don’t need the scientific method–that pesky process of checking your conclusions against the real world—as long as they’re smart enough to understand how things really work.

Now: Mises.org is an organ of Austrian economics, Austrians believe in free markets no matter what, and the only way to believe that is to ignore what actually happens in the real world and focus instead on how you think the economy should work. So Mr. Crovelli is not alone among Austrians in rejecting the scientific method, and Austrians are not alone among economists–far too much of economics starts with assumptions, builds logically on them, and then comes to conclusions that may or may not apply in the real world.

And yes, it can be hard to check things in the infinite complexity of the real world. But economists who don’t understand the need to check wind up pushing the same old policies no matter how much they keep failing. Policies like financial deregulation, low taxes on the rich, and so on. (Or for that matter, Marxism, which always claimed to be “scientific” when it actually did the same things Austrians do: it took a few principles, extrapolated from them, and ignored when its prescriptions turned out to be wrong.)

It’s not news that Austrian economists reject empiricism (again, they have to, or they wouldn’t believe in Austrian economics). Still, it’s startling to see someone a) clearly understand what science is, b) reject it, and then c) brag about rejecting it.

So apparently one of my least favorite humans, Donald Trump, is taking credit for launching the career of another of my least favorite humans, Lady Gaga, in his new book.

Well, here’s a sentence I never thought I’d write: it’s worth looking at Trump’s thought process.

From the article:

Trump explained that he owns the Miss Universe pageant where Lady Gaga got her start. “About four years ago, during what you call half-time, we always have an entertainer,” he wrote. “We’ve had a lot of great people, and you don’t pay them anything because it’s one of the biggest audiences and my people told me, ‘Nobody knows who she is, but there’s this woman with good talent named Lady Gaga.”

Trump agreed to add her to the bill. Lady Gaga performed “Just dance” and set the crowd ablaze. “Nobody was talking about Miss Universe, everybody was talking, ‘Who was the woman, who was the entertainer? She was unbelievable,’” he shared.

I have no interest in Gaga’s career, but the Wikipedia article on her goes into mind-numbing detail about her rise to stardom and doesn’t even mention the Miss Universe thing. So, probably not that important.

And the thing is, even in Trump’s own narrative, his people found Gaga, and all he did was agree to what they recommended.

So, assuming that Trump is sincere, how did “My people recommended her for a show, when she was already well on her way, and I agreed” become, in his mind, “I launched her career?”

I say, you have to be in the habit of thinking that way–of taking credit for every damn thing your subordinates do, and then magnifying it beyond recognition. Which is why I risked breaking out in hives by talking about Trump and Gaga in the first place. This squalid little episode shows, in microcosm, the reigning ideology of our times: the idea that the person on top of the pyramid deserves the credit, and the reward, for anything anyone in the pyramid does. Trump is one of the people who ram that ideology down our throats every chance he gets.  Apparently he’s come to believe his own propaganda. In fact, he’s probably believed it for a while; how else could someone who was given the family real-estate business by his millionaire father write a book telling the rest of us how to get rich?

As of this writing, gold is up above $1800 an ounce; it’s been driven so high at least partly by the idea that gold is a safe haven in these chaotic times.

But how, exactly?

I understand why gold was so popular during its last big run-up in the 1970s—then, the problem was inflation. Your money was likely to be worth less next year than this year, so keeping it in your mattress (or, as it happened, in bonds, stocks or real estate) meant losing purchasing power every year. One thing money lost purchasing power against was gold; the flip side was that if you bought gold it was worth more money every year.

Of course, things went crazy (gold hit $800 an ounce back then), but the idea that gold was a hedge against inflation was fundamentally sensible.

But today, the problem isn’t too much money, it’s the opposite. Since the 1980s, the prices of assets (stocks, bonds, real estate, financial instruments) have been run up far beyond what there’s actual money to justify. These bubble prices hold only until too many people try to cash in at once, at which point it turns out that there’s not that much real money around and asset prices collapse.

Or at least prices would collapse, except that the governments of the world have gotten the habit of bailing out the financial system (which has happened over and over since the 1980s).

The problem since 2008, in a nutshell, is that assets are so overvalued that even government bailouts don’t do it anymore; the most imminent economic danger is that of a financial collapse, leading to another dip in this depression.

How, exactly, does owning gold protect against that? Gold is just another asset whose price has been bid up. In another financial collapse, the owners of gold will be desperate for cash (to pay back the money they borrowed to buy other assets that are now worthless). They’ll sell gold as quickly as they’ll sell anything else.

Which is what happened in the 2008 crash; gold lost value. You would have been better off simply holding on to your cash, and I think that applies today too. Cash is the safe haven.

And now, the two objections:

1: It’s true that an ounce of gold is always going to be worth something no matter how hard the crash. But that’s also true of other investments, like a New York apartment or a share of GE. Unless society completely collapses.

2: If society falls apart completely, a gold coin will get you farther than a dollar bill or a stock certificate. BUT, most people who invest in gold as a safe haven are not buying the metal itself; they’re buying pieces of paper that give them ownership of gold. If we’re knifing rats for dinner, a piece of paper saying that you once owned gold won’t be worth any more than a dollar bill.

So what, exactly, is everyone thinking?

With all the commentary on the debt limit negotiations, nobody seems to be mentioning that it’s just a continuation of normal Republican tactics: when they’re in the minority, they do everything they can to prevent government from functioning unless they get their way. What we’re seeing now is just a continuation of what we saw after the 2008 election, where Republicans used the filibuster as a sort of universal veto. With the filibuster, and with their willingness to risk consequences that no sane, patriotic person would, the Republicans (the party that controls only one half of one branch of government) and the Tea Party (only a fraction of the Republicans) have created a situation where pretty much nothing can happen unless they allow it.

So either they shut down the government (which would be quick national suicide) or they get everything they want (which would be slower, but no less certain).

The frustrating part is that this has all happened before. Consider Poland, which had an elected monarchy and an elected legislature long before they were popular. The Polish constitution had one quirk: the “liberum veto,” which was sort of Poland’s version of the filibuster but even worse—it meant that every legislator had to sign off on each year’s legislation. As long as that was a mere formality, Poland was a powerful, enlightened country, but once Polish legislators—often paid by Poland’s enemies—started refusing to sign off, thus paralyzing the government, it wasn’t too long before Poland was partitioned and disappeared. (Poland was replaced as the chief power in Eastern Europe by the notably less enlightened Russia.).

The Founding Fathers, with their deep knowledge of history, were well acquainted with the Polish experience and others like it. Thus, the Constitution departs from the principle of majority rule only in very limited cases (overrunning vetoes and signing treaties are all I can think of).

This was a very careful choice; Alexander Hamilton could have been describing today’s Republicans and their filibustering ways when he said:

To give the minority a negative upon the majority (which is always the case where more than a majority is requisite to a decision) is in its tendency to subject the sense of the greater number to that of the lesser number. . . .This is one of those refinements which in practice has an effect, the reverse of what is expected from it in theory.

The necessity of unanimity in public bodies, or of something approaching towards it, has been founded upon a supposition that it would contribute to security. But its real operation is to embarrass the administration, to destroy the energy of government, and to substitute the pleasure, caprice, or artifices of an insignificant, turbulent, or corrupt junto, to the regular deliberations of a respectable majority.

In those emergencies of a nation, in which the goodness or badness, the weakness or strength of its government, is of the greatest importance, there is commonly a necessity for action. The public business must in some way or other go forward. If a pertinacious minority can controul the opinion of a majority respecting the best mode of conducting it; the majority in order that something may be done, must conform to the views of the minority; and thus the sense of the smaller number will over-rule that of the greater, and give a tone to the national proceedings. Hence tedious delays—continual negotiations and intrigue—contemptible compromises of the public good.

And yet in such a system, it is even happy when such compromises can take place: For upon some occasions, things will not admit of accommodation: and then the measures of government must be injuriously suspended or fatally defeated. It is often, by the impracticability of obtaining the concurrence of the necessary number of votes, kept in a state of inaction. Its situation must always savour of weakness—sometimes border upon anarchy.

(Federalist Papers, Federalist 17, Paragraph breaks added)

Today we’ve forgotten those lessons. How long until we re-learn them, painfully, by watching our nation collapse around us?