The Silence of the Hams

Why the deafening silence of the University of Chicago's Economics Dept.?

This article explains how "gougeonomics" not "economics" offers a better explanation of economic turmoil than neoclassical economics.  Gougeonomic theory explains why bankers are getting huge bonus payouts for destroying the economy, driving us out of work, doubling our credit card rates, repossessing our homes, and refusing to do what they are supposed to be in business to do ... i.e. make loans.

Gougeonomic Theory is also used extensively by UCAN's Big Oil Hog to explain irrational price movements in gasoline and oil markets.  

Five years

For five long years the Big Oil Hog has made its annual economic predictions with a dazzling record of 100% accuracy. It even predicted the massive slide in gas prices prior to the 2006 elections, and it did it using a novel new theory of economics called "gougeonomics."

Every February 2, (Ground Hog Day), the infamous Big Oil Hog has appeared  to seek out his shadow at Hogger's Knob, San Diego.  Once the "Oracle of Pork's" prediction is translated from its native Pig Latin, it means either six months of higher oil and gas prices, or a welcome respite from the tyranny of the oil companies. 

Listen up, CNBC, because the Big Oil Hog's predictions are news. Big news. Yet given the Big Oil Hog's astonishing track record, one can't help but wonder about the silence of the University of Chicago.  Obviously as a tool of the mainstream media, Good Morning America's annual boycotting of event is utterly predictable.  But with a record of accuracy that defies all odds, you would think the Pink Porker of Petroleum's price predictions would garner the attention of the Chicago School.

So again: Why the silence?

Could it be that a wisp of the smoke of academic jealousy has entered the hallowed halls at U of C ?

It's possible. After all, when UCAN makes a prediction on future prices, we do not use classical economics. This is because the "rules of economics" have failed. This is especially true of the neoclassical economics taught at the Chicago School. 

After years of study, UCAN has created a new school of economic thinking called "gougeonomics."  It is this fundamental understanding of the principles of gougeonomics that allows the Oil Hog to enjoy its record of 100% accuracy in its predictions regarding commodity prices for oil and gasoline. Gougeonomic Theory explains irrational price movements in markets where the prices are rigged or manipulated, such as the New York Mercantile Exchange.

Gougeonomics explained

The biggest difference between a market economy and a gougeonomy are that in a market economy, you have competitors and competition that eventually has an effect on retail prices.

In a gougeonomy, however, the market consists of a naturally evolved oligarchical pricing structure where the price of a commodity or service is determined not by supply and demand, but rather, by "demand and supply" where the oligarchy (or oiligarchy if you prefer),  supplies less product and demands more money for it.

The theory of gougeonomics first came into being as a hypothesis during the California Electricity Crisis of 1999-2000 when former monopoly energy suppliers were required to compete under electric deregulation.   The fatal flaw of electric deregulation was the idea among regulators that energy companies "Like to compete."  This faulty assumption created a marketplace where the suppliers of natural gas and electricity routinely restricted supplies in order to drive up the price. 

These energy suppliers learned that by limiting the supply of energy, they could quickly make from ten to twenty times as much profit per unit of energy sold. California was plunged into rolling blackouts because the energy companies were intentionally shutting off power in order to drive up the price. Essentially, the rolling blackouts were in reality "rolling blackmail," caused by an overly consolidated energy industry.

The fatal flaw of free market economists

In retrospect, the theory of gougeonomics, not the neoclassical economics of the Chicago School prevailed.  The free marketeers could not accept the idea that energy companies would cooperate instead of compete. Despite mountains of evidence of price-fixing, price manipulation, gouging, and collusion, many still believe, wrongly, that the reason behind the electric crisis was a fundamental shortage of electricity. They believe, wrongly, that the wisdom of the "hidden hand of the marketplace" as espoused by Adam Smith would stabilize dysfunctional markets.  It didn't. The shortages and rolling blackouts were created by a dysfunctional market that had a perverse incentive to not compete.

The genesis of the  Gougeonomic Theory

Gougeonomic Theory was first developed by UCAN's Oil and Gasoline Analyst, Charles Langley, after watching the manipulation of gasoline prices in Southern California. The theory asserts that in a gougeonomy (i.e. a dysfunctional market)  the corporation that supplies the least amount of product at the highest price with the worst customer service will be victorious.

It isn't fair, it isn't pretty, and it isn't just. Nor is it eloquent, but in a gougeonomy, as UCAN's Executive Director Michael Shames explains, "The hidden hand is in the cookie jar." And ultimately, instead of embracing reality, the mainstream economists cling to their dogmatic beliefs that "supply and demand" actually sets oil and gas prices, and that our financial markets will self-regulate through competition. They do not.  But saying this out loud is to scream that God is Dead in the Church of Economics, or to declare that the earth is not the center of the universe in the time of Copernicus.

Gougeonomic Theory offers the best explanation for  the complete collapse of our banking system

With the recent collapse of the nation's banks and investment houses, and the unprecedented public subsidies of the nation's largest banks, the Theory of Gougeonomics is more relevant than ever.

You may have asked your self these questions:

"Why are banking executives who are proven failures getting paid so well?"

Or, "Why are bankrupt firms, the same companies that deprived me of my life savings, my job, and my home, being rewarded with multi-billion dollar welfare payments from the government?"

Viewed through the myopic lens of the Chicago School, these ugly realities don't make sense. That's because the Chicago School embraces a theory of finance and banking called the "Efficient Market Hypothesis," which, in a nutshell, asserts that financial markets can not be gamed because the market is inherently wise.

Yet if anything proves the failure of the Chicago School, it is the complete meltdown of the global economy.

 If the Chicago School's idea of  "supply and demand" really did work, then AIG, Goldman Sachs, Morgan Stanley, and JP Morgan would all be out of business.  These firms are morally, ethically, and financially bankrupt.  What's more, these four institutiions are complete financial and business failures. This is an undisputed fact. Yet in the first quarter of 2010, the top executives at these instutions got record salaries and huge bonus payouts. According to Bloomberg News, the money these executives have made has increased by 60%.

Ordinary economics doesn't explain why these failed losers are being  rewarded ... but gougeonomics does.

Gougeonomics explains this phenomona of rewarding failure elegantly. Remember, in a previous paragraph we explain that in a gougeonomy, the market rewards the vendors who supply the least amount of product at the highest price with the worst possible service.

Now look again at who is prospering in this economy. Is it efficient corporations?

No. It is the same bankers who ruined it. 

Why? because these bankers are supplying less product at higher prices with horrible service. And because we have a gougeonomy instead of a free market, these failed bankers are prospering.

No wonder the University of Chicago is silent. It could be a victim of gougeonomics, too, where the worst students, with the lowest performance are commanding the highest pay as faculty members.

Enough said.