A century and a half ago, Hans Christian Anderson wrote the classic tale “The Emperor’s New Clothes.” It is a story about the vanity and intellectual snobbery of the upper crust of society. In it, a vain king cared about nothing but his clothes and how he looked. A couple of weavers promised the king a new suit of clothes that could not be seen by anyone who is stupid and not fit for his political office. They pretended to weave the invisible cloth and told the king how exquisite it was. The emperor, not wanting to appear stupid and unworthy of kingship, agreed with them that the beauty of the cloth was unsurpassed.

The king’s court and all of the people of the kingdom were also told of the cloth and that only smart, wise people could see it. When the king went on parade before all of the subjects in his new suit of clothes, everyone praised its beauty, not wanting to appear stupid and unworthy. In the end, a little boy, who was too young to be politically correct, pointed out the obvious: “But he has nothing on at all!”

There is a lot of intellectual snobbery in our age. Scholars, sages and academics concoct incomprehensible models and theories built on nothing but fantasy, and convince the emperor, the president, congress, all of the officials of the kingdom and the people just how beautiful, elegant and profound their insights are. Anyone too stupid to understand the gibberish is obviously not fit for office. If you can’t see the invisible cloth, it is obvious that you are unfit and not to be taken seriously.

Modern economic and political theory is made from invisible cloth. It is based entirely on fallacy, yet it is woven into elegant designs, complex patterns and high sounding code words. It is used to support the propaganda of politicians as saviors and the common people as ignorant, incompetent dunces who need to be saved from themselves. Billionaire socialists are devoting many millions of dollars to the development of a new “new economics,” with even more beautiful invisible cloth. With it they can justify taking more of your money to give to powerful, wealthy politicians and their cronies.

The fact is that the emperor has no economics. The events of the last few years show that he is naked. It does not matter which political party or which country, the policies that the emperor pursues promote big government as the solution to all problems. The same policies that got us into the mess are merely pushed more aggressively to try to get us out of it. The bubble economy arose from government monetary and fiscal stimulus. The bursting of the bubble was the correction, the cure for the distortion. The stimulus that is being applied now is setting the stage for the next economic disaster down the road.

In the time before activist politicians became economic engineers, depressions lasted a relatively short time, a year or two before things turned. Much of the spending provided for in the current stimulus packages is scheduled to take place in the future. By the time the money is spent, the economy should have been long recovered, meaning that that stimulus is, at best, not needed, and more likely, destructive of recovery.

There really is such a thing as true economic principles. The problem for politicians is that those principles are based on markets, where real people make real decisions. They leave little room for political activism. Economics used to be called the “dismal science,” partly because the principles do not take good intentions into account. They describe reality. Just as gravity does not forgive stupidity or mistakes or good intentions, neither do the laws of supply and demand. If excess money is pumped into the economy, there will be inflationary bubbles. If prices are held artificially low, there will be shortages. If they are held artificially high, there will be gluts. Politics or mathematical models or fluffy, feel good phrases will not change reality. We are dealing with bad results today created by the politicians of yesterday.

As we start the new year, maybe we can all take a lesson from the little boy. It is time to get over the intellectual arrogance and tell the emperor that he is naked. Everything that he has been told and is telling is a fraud. The change we need now is the truth. We haven’t heard that for a long time.