Today, those same loser economists who got it wrong did not lose their jobs. Not at all. Many are among Obama's closest economic advisers. The politicians most instrumental in the collapse were not fired or put in jail as they should have been; they were re-elected and promoted and given applause and honors by their peers, just like the Yankee generals who performed the more horrific and criminal atrocities upon civilians in the South were greeted with promotions and parades upon their return north! Things ain't changed a whole lot in these United States since 1865.
But what of Austrian, hard money oriented economists like Schiff, Jim Rogers, Ron Paul and the scholars at the Mises Institute who courageously and correctly predicted this mess, enduring derision and ridicule in the process? Many common folk began to pay attention to them like never before, but to the political class the Austrian economists are personae non grata. Today, the White House keeps them as far from Pennsylvania Avenue as possible.
This seems to be a pattern in today's America: be right and you're excoriated and treated as a pariah; be wrong and you're praised and promoted. Why is this the case? Because, political correctness has become much more important than truth to our twittering political classes inside the Beltway. And great masses follow them because they prefer hearing what pleases them instead of risking facing unpleasant truths.
While all this is interesting, it is not the focus of our discussion here. The real issue at hand is not that the Austrians were right, but why they were right. Why did they see it all coming down and others, highly educated and rife with accolades, awards and praise, miss it by a mile? Were the Austrians just smarter to a man? No. They were not right because they were smarter. They were right because they were wiser: they had embraced the correct principles by which an economy gets healthy, remains healthy and thrives. (Keynsians had embraced a complex labyrinth of novel ideas dreamed up by an early 20th century British academic.)
It is upon correct principles that Austrian reasoning rested. The Keynsians may have reasoned more perfectly but they ended up wrong, wrong wrong. Why? Their reasoning was rooted in the wrong premises and principles to begin with. These flawed ideas caused them to misunderstand and misinterpret all the data. They were, therefore, victims of the GIGO effect: Garbage in, garbage out: you can't get a true answer from a wrong premise--no matter how flawlessly you reason or how complete and correct your data and facts.
The great English writer, G.K. Chesterton was right on issue after issue in his day and was uncanny in predicting the future difficulties and dilemmas we in the West face today. In fact, many would argue that Chesterton is more relevant today than he was even in his time.
Why was Chesterton right when so many of his peers, many more famous than he, were so horribly and tragically wrong? (Some were so wrong they gave tyrants like Mussolini and Hitler the highest praise and looked optimistically upon their rise to power.)
Was Chesterton that much smarter? Was he a more systematic thinker? Did he have information his opponents did not have? Not at all. All the "information" Chesterton had was readily available to his peers, and had been for centuries. It's simply that Chesterton embraced it and they rejected it.
The contest between Chesterton and the intellectual opponents of his time is a text book case of the pridefulness of modern, iconoclastic, rooted as it is in relativism, against that of the humility of common sense.
Chesterton's perspective was the perspective of every common man who has not been intellectually disfigured by university elitists who have educated them into imbecility. (As a case in point I recall making a remark to an Ivy League educated lawyer about certain sexual practices being deviate and perverse. He responded with a superior tone, "I can't judge." I replied, "Then you should ask your schools for your tuition money back, for they've done you a great disservice." (As I saw it, if you pay a bunch of money and they turn you into an amoral, know-nothing idiot you have a moral right, a moral duty to ask for your money back. But I guess his (mis)education blinded him from seeing that as well. I guess an institution can successfully substitute propaganda for education and not be sued. They just have to be careful to withhold the tools of critical thought from students and hope they don't learn them later.)
We would see a particularly stark and horrific example of the fruit of elitist education only a few years after Chesterton's death. It was reported that the more education a guard in Nazi prison camps had the more willing he was to commit atrocities upon the prisoners when ordered to.
St. Thomas Aquinas says "Truth is the conformity of the mind to reality." If we are wrong at the very ground of our reasoning we will be wrong in our conclusion as well, no matter how perfectly we reason. Events and experiences are not perspicuous, and facts don't immediately translate into truth.
In order to reach a right conclusion one must begin with fundamentally correct presuppositions and principles, taken from reality itself (reality being "what is"). It is then that the tools of reason can effectively examine events, details and data and dependably lead you to the truth about the matter.
The primary problem that plagues us in America today, despite all the mental energy, discussion and punditry we hear from all sides on all sorts of subjects, is that we have embraced myths and rejected reality; we prefer fantasy to fact. How fitting this land is the one giving birth to Disneyland.
Our reasoning, like that of the Keynsian, fails us because our foundational principles are not rooted in reality. The Empire is making up our history to please us and glorify and justify itself. The Lincoln myth stands at the heart of everything. That is an important fact to consider, because it is hardly possible for a government to stoop any lower than fabricating history for the sole purpose of justifying the wholesale slaughter of civilians and the destruction of the land of their countrymen to the point of desolation in a brutal, unconstitutional invasion of their sovereign states--and call it patriotism.
The suppression of truth and the embrace of myth and fantasy is true for American life on every level, not just economics. The history most of us believe is jingoistic cant and pious mythology designed to justify the actions of the Consolidated State and make it into a quasi-religious institution. The culture is consumed with the metaphysical cancer of Relativism, a relativism that tells us wealth can be pulled out of thin air by the simple operation of efficient printing presses, and that morality is whatever the Consolidated State says it is––for the Consolidated State is the only absolute.
Correct premises and principles are not invented any more than truth is; they are discovered. What is needed to make such discovery? The honest searching for the truth guided by the humility of a good will. Such humility cannot be tolerated by the modern arrogance. It will continue to hold the truth at arms length for as long as possible, just as the Austrian economists have been held at arms length by the government leaders. They will continue to treat the Austrians as they treat the truth: as if it doesn't exist. And they will do this until the truth crashes in on them. Today we suffer under their iron hand imposed upon us in a velvet glove. At any moment the glove might come off. But when the consequences of living on myths and lies reach critical mass the oligarchy will also learn what suffering and pain is.