Criticize Lucas (2)

 

이형춘(Hyeong Chun Lee): 루카스를 비판 (hyeong-chun.blogspot.com)

Lucas, an economist, argues that the government's economic policy is useless, citing the rational expectation theory. Lucas says that it is reasonable because people make rational and intelligent judgments. For example, when the public learns that the government increases the amount of money, people act in anticipation of inflation. The logic is that government policies become useless. In an interview in the late 1990s, Lucas says that Keynes led economics in the wrong direction.

 

Lucas is highly regarded by the Friedman School, a small government-minded monetaryist, and Professor Mankiw of Harvard University. Lucas, according to Professor Mankiw, was the most influential macroeconomist during the last 25 years of the 20th century.

 

Based on Lucas's or Friedman's theories, the Reagan administration implemented Reaganomics, a neoliberal economic policy, in the 1980s. A neoliberal craze arose at the time along with the Thatcherism of the British government. However, the Reagan administration eventually turned to a large government for an arms race with the Soviet Union. After all, the problem was ideology.

 

The Reagan administration implemented a tax cut policy for the rich based on the economic theory of supply-oriented economics, but ended up suffering from a lack of tax revenue. And over the years, the Korean government, with very peripheral thinking that did not know people's livelihoods and economics, copied supply-oriented economics, and the Korean government suffered from a lack of tax revenue and foreign currency.

 

What went wrong? It has been difficult for me to see a rational citizen with economically reasonable thinking, wandering the base of society as a bus driver and technician. It is true that after going through several waves, more and more politically sophisticated citizens have come to understand the economic cycle system. Economically, however, the majority of working citizens do not understand the economic cycle at all. And Korea's economy is completely separated from its real economy and financial sector. So the foundation is weak. So, unlike the United States, Korea's financial and economic sectors take on a speculative form. On the one hand, the Korean government, where legal professionals(a line of prosecutor) took power, has driven its economic policies more speculatively, focusing only on the financial and economic sectors.

 

If we have a slightly broader perspective, we find that workers focus on their work, not on the economic system. And the basis of the economy is the workers who make up the real economy. If they falter, the economic structure will be transformed into a Ponzi scheme, destroying the future of Korea.

 

What I feel every time I look at Lucas's economic theory and its influence is that in order to understand economy or politics, we must first see the foundation of society. And economic policy must be approached pragmatically, not ideologically. Because everyone is connecte