Why does a zombie idea keep returning despite being dead?

“A misconceived theory can kill”

Professor. Amartya Kumar Sen

By "zombie ideas," we mean concepts that, despite repeated disbelief, persist. Given that it is challenging to declare any proposal has failed categorically and that there are legitimate concerns over the definition of a plan failure, that is a fairly bold remark. But it is also evident that some ideas keep making their way back onto the active strategy despite the lack of evidence supporting them, and occasionally even after the extremely poor results of the strategies they were intended to support.

USA famous zombie idea: Tax reductions lead to economic growth.

That tax cuts can simply lead to economic growth is perhaps the zombie belief in American politics that has endured the longest. This theory has typically been implemented using a "trickle-down" strategy, according to which tax breaks for the wealthy and companies will encourage their spending, which will eventually lead to economic growth that will benefit the less wealthy members of society. Even the Kennedy tax cuts from the 1960s had a similar effect, albeit being more equal than Reagan's and Trump's.

This generic concept has at least two codicils. The Laffer Curve is the first and most well known. The idea that tax cuts will make up for themselves by generating enough economic growth to allow even lower tax rates to collect as much income for the government as they did before the cuts was made by economist Arthur Laffer. That claim was brought up again during debates of the Trump tax cuts, despite the fact that the increasing federal debt appears to be strong proof that the idea is incorrect now just as it was under Ronald Reagan.

The concept of supply-side economics, or "voodoo economics," in the words of George H. W. Bush, is the second codicil to the general claim that tax cuts result in economic development. Supply side economics, as the name implies, depends on influencing supply, whereas Keynesian economics - (Keynesian economics is a group of theories that John Maynard Keynes put forward in his General Theory of Employment, Interest and Money (1935–36) and other writings with the goal of providing a theoretical foundation for full-employment policies on the part of the government. Up until the 1970s, it was the preeminent macroeconomics school and exemplified the common economic policy framework used by the majority of Western countries) - mostly relies on manipulating demand. That is to say, it depends on the investment brought about by tax cuts, which will then result in the creation of more employment and greater wages for workers. On the supply side, there are what appear to be incorrect behavioral assumptions, as is true for this entire line of reasoning. For instance, it appears that a sizable portion of the Trump tax cut for the wealthy has gone to consumer spending and corporate stock buybacks.

Egypt's Inflation and interest rate

One of the economics zombie ideas in our Egyptian economy that repeated from (2016 to 2018) and in (2022 till now) is believing that raising interest rates will fix inflation but on the other hand inflation raised. this zombie idea is a normative statement particularly in crisis. Egypt is particularly exposed to cost-push inflation because of supply-side shocks and changes in the value of the Egyptian pound.

this resemble another zombie idea that the assumption of macroeconomic analysis should focus on the theoretical outcomes of perfectly rational (or almost perfectly rational) consumer, corporate, and labor behavior instead of observable reality like peaks and downturns.

Paul Krugman, a well-known economist, has claimed that the profession has made mistakes by equating beauty with truth. Even though it is less accurate, macroeconomic analysis needs to be more realistic.

In our culture, zombie ideas proliferate, consuming the victims' brains.

Zombie ideas appear in all fields for example, the assumption that a person's personality type, as determined by the Myers-Briggs Type Indicator (MBTI), predicts job performance is another zombie belief that continues to seduce otherwise competent managers into making choices that are neither advantageous to their organizations' employees nor themselves.

Why Do Zombie Ideas Survive?

1. Elites: Elites are the first group to give zombie ideas some support. These elites are largely political, but they can also be specialists in economics with loyalty to particular ideologies. Because experts frequently have policy ideas, they may in some ways be a more significant source of zombie ideas than politicians. However, that knowledge can also result in arrogance and a failure to consider alternatives to the conventional advice that has been and is still being offered.
2. Organization: The majority of elites belong to organizations, and these organizations will have commitments to particular ideological views. These zombie ideas could be employed to justify organizational self-interest.
3. Society/ Individual: Finally, if there is no widespread acceptance for a zombie idea, it will probably die. This is certainly true in a democratic system, but over time it might also be true in a system without democracy. Numerous of the mentioned earlier zombie ideas are supported mainly by deeply held beliefs. For instance, the renowned Laffer curve has been studied by economists within conservative think tanks, and it seems to work, if at all, only under extremely restricted and unique conditions.

References

Barrett, L.F., 2019. Zombie ideas. APS Observer, 32.

Durlauf, S. and Blume, L.E., 2016. The new Palgrave dictionary of economics. Springer.

Ibrahim Abdu, M., 2022. Analyzing the relationship between Fiscal Deficit and Inflation: The Case of Egypt. ?????? ??????? ???????? ? ???????, 52(4), pp.235-271.

Krugman, P., 2020. Arguing with zombies: Economics, politics, and the fight for a better future. WW Norton & Company.

Peters, B.G. and Nagel, M.L., 2020. Zombie ideas: Why failed policy ideas persist. Cambridge University Press.

Quiggin, J., 2012. Zombie economics. In Zombie Economics. Princeton University Press.