September 25, 2020

The unconditional surrender/sellout of science

Comment on Sabine Hossenfelder on ‘Follow the Science? Nonsense, I say.’

Sabine Hossenfelder gets directly to the heart of the matter: “Today I want to tell you why I had to stop reading news about climate science. Because it pisses me off. Every. Single. Time. There’s all these left-wing do-gooders who think their readers are too fucking dumb to draw their own conclusions so it’s not enough to tell me what’s the correlation between hurricane intensity and air moisture, no, they also have to tell me that, therefore, I should donate to save the polar bears.”

Obviously, science has been captured by political agenda pushers. Scientists have quietly left the realm of science and moved over to the political Circus Maximus with all its funny clowns and useful idiots and breathtaking stunts. The self-conception of science has fundamentally changed in the process.

“When I was your age, we learned science does not say anything about what we should do. What we should do is a matter of opinion, science is matter of fact. Science tells us what situation we are in and what consequences our actions are likely to have, but it does not tell us what to do.”

Indeed, that was exactly what J. S. Mill told his fellow economists: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

The decision has to be made by the Legitimate Sovereign. It is an entirely different matter to clarify who the Legitimate Sovereign in a given situation is but that much is certain: genuine scientists will refuse to get involved in the issue. The genuine scientist sticks to the principle of the separation of science and politics.

In economics, the principle of the separation of science and politics has been violated from the first day onward. The founding fathers called their subject matter Political Economy. What comes under the label of economics these days is in fact two economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economics is a failed science.

Most people have not noticed it, but the official capitulation/sellout of science happened on Sep 3, 2020.#1

So, “Follow the Science is a complete rubbish idea, …” for various reasons. The worst of all is, that the prestige of science has been abused and ruined by the most unscientific assholes.

“You’d think it’s bad enough that politicians conflate scientific fact with opinion, but the media actually make it worse. They make it worse by giving their audience the impression that it matters what someone whose job it is to execute the will of the electorate believes about scientific facts. But I couldn’t care less if Donald Trump ‘believes’ in climate change. Look, this is a man who can’t tell herd immunity from herd mentality, he probably thinks winter’s the same as an ice age. It’s not his job to offer opinions about science he clearly doesn’t understand, so why do you keep asking him. His job is to say if the situation is this, we will do that. At least in principle, that’s what he should be doing. Then you look up what science says which situation we are in and act accordingly.”

There is no better exemplification of the indispensable separation of science and politics. In economics, in particular, there is no point at all to appeal to science because there has never been an economic science. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, and materially/ formally inconsistent.#2-#4

Egmont Kakarot-Handtke

Wikimedia AXEC136g

September 17, 2020

Governance, then and now

Comment on Frank Li on ‘Confucius on Governance’

In ancient Greece, the idea that the position in the social hierarchy should correspond to virtue/arete was not much different from Confucianism. “According to Plato, a philosopher king is a ruler who possesses both a love of wisdom, as well as intelligence, reliability, and a willingness to live a simple life.” (Wikipedia)

Things have changed a bit in the meantime. The Great Chain of Being model has been replaced by the Godfather model where sociopathology is the organizing principle with the worst person on top. Love of wisdom, intelligence, reliability, and a willingness to live a simple life have been turned on their heads.

Hollywood has produced a lot of educational material on mob rule. Compared to the three parts of The Godfather, Confucius' teachings look a bit naive. With Mr. Trump, the Chinese now learn it the hard way.

Egmont Kakarot-Handtke

September 16, 2020

Psychologism: how morons explain the world

Comment on Brian Romanchuk/Tom Hickey on ‘Canadian Establishment: "Deficit Myths? Yes, Please!"’

Brian Romanchuk explains: “The Canadian economic establishment is very much wedded to sound finance beliefs, courtesy of the Great Canadian Fiscal Crisis of the early 1990s.”

This sounds like an explanation but is pure blather. First, who is the “Canadian economic establishment” and, second, how can we know to which beliefs this fictitious subject is wedded and, third, is there any way to prove that Brian Romanchuk's statement is true?

This psychological motive-imputation is as far away from science as can be. It is, however, the stuff political propaganda is made of. Read three Trump tweets and you get the pattern.

Things are bad enough with fresh political events but they get exponentially worse with historical events.

As usual, Tom Hickey cannot resist jumping headfirst into the poop: “As an aside, Germany still can't get over the Weimar hyperinflation and ignores the turnaround engineered by Reichsbank president Hjalmar Schacht that contributed to the economic success of the Hitler regime through ‘creative finance’.”

Folk-psychologist Tom Hickey has “Germany” on his couch and diagnoses a trauma: hyperinflation.  And now it comes “since the end of WWII, Germany has been firmly committed to ‘sound finance’.” That is the hysteresis of the worst sort.

OK Doctor, got it. Everybody who talks of sound finance is psychologically deranged. In particular, those people who accuse MMT of unsound economic policy. Your psycho-babble proves nothing but it is good enough for social media trolling.

The first point to realize is: the attempt to explain things historically is bound to fail because in most cases we have no such thing as a historical fact. Everybody could know this since 1440 when Lorenzo Valla “proved that the Donation of Constantine was a forgery.”#1 This can be extrapolated backward to the folks who wrote the bible and forward to those who wrote the Warren Report which “concluded that President Kennedy was assassinated by Lee Harvey Oswald and that Oswald acted entirely alone.” (Wikipedia)

Most people are aware that most of what is called history is silly propaganda. For this reason, it is a bad idea to use historical events or mere opinions about those events in an economic argument. They prove NOTHING.

Psychoanalyzing about the collective psyche of “Germany” and inflation is a futile exercise. What we know is (i) that hyperinflation does not happen by accident but has to be engineered, (ii) that it ruined the German economy with the middle class as the primary victim. Given the historical context, the combination of Weimar/Inflation is a signifier for an unprecedented political and economic catastrophe and not for some irrational phobia.

Having enjoyed a thorough economic education “Germany” is well-prepared to smell an economic rat. MMTers understandably do not like this and call “Germany” a paranoid Swabian housewife.

All this has nothing to do with economics understood as science. It is just a political shit-show. Scientifically, MMT is worthless and politically it is a fraud. Brian Romanchuk is part of it.#2

Egmont Kakarot-Handtke

#1 Wikipedia, Lorenzo Valla
#2 For details see blog query


REPLY to Global Markets Training on Sep 17

You say: “When a bank makes a loan they DEBIT the asset named LOANS and they CREDIT the liability named DEPOSITS. Look up any definition of money as M1 or M2 and you will see that loans create deposits hence create M1 or M2 hence create money.”

For all practical purposes and in normal times, central bank deposits and bank deposits are functionally identical. However, in the strict sense, bank deposits are near-money, only central bank deposits/notes are money.#1 This explains the phenomenon of bank runs, i.e. when many people suddenly try to get central bank money/notes for their bank deposits.

You say: “And I audited banks for Ernst & Young. So I think I know something about the debits and credits of which I speak.”

Agreed. But despite the fact that the underlying math is the same, business accounting and macroeconomic accounting are different things. Obviously, you have not yet realized that MMT gets the macroeconomic sectoral balances equation wrong.#2 This foundational blunder makes that MMT as a whole is scientifically worthless.#3

#2 “And, although a classically trained economist I now fully accept the complete MMT lens.”

REPLY to Tom Hickey on Sep 20

I argued above “For this reason, it is a bad idea to use historical events or mere opinions about those events in an economic argument. They prove NOTHING.”

For those economists who do not understand how the economy works and habitually try to explain actual problems with a reference to alledged historical precedents some devastating news about history in general just comes in: Almost all you know about history is wrong.#1


September 15, 2020

Occasional Tweets No 200915


September 13, 2020

Let's bury economics now

Comment on Lars Syll on ‘Michael Woodford on models’

Lars Syll argues against Michael Woodford: “This is — sad to say — a rather typical view among mainstream economists today. Defending the use of unrealistic and unsubstantiated models with the argument that models make it ‘easy for others to see what assumptions have been relied upon, and hence to challenge them’ is rather far-fetched.”

Yes, “unrealistic and unsubstantiated models” are indefensible. Yes, mainstream economics is proto-scientific garbage. Yes, mainstreamer are in the “story-telling business”.#1

Yes, yes, yes. All this is known for 150+ years. Yes, economics is failed/fake science. Yes, economists are stupid or corrupt or both. Yes, this applies in equal measure to Orthodoxy and Heterodoxy. It applies to economics in general and to Lars Syll, in particular.#2

The most important thing to realize is that there is theoretical economics and political economics. Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Economic policy NEVER had sound scientific foundations.

Both orthodox and heterodox economists are NOT scientists but clowns and useful idiots in the political Circus Maximus.#3, #4

The representative economist does not understand to this day what science is all about. So, here are eleven plain facts about ‘economic sciences’:

1. Science manifests itself in the form of the true theory. 2. Truth is well-defined by material and formal consistency. 3. Logical consistency is secured by applying the axiomatic-deductive method and material consistency is secured by applying state-of-the-art testing. 4. The true theory/model is the humanly best mental representation of reality. 5. “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle, 300 BC)  6. The main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong. 7. Because the foundations are false the analytical superstructure is false. 8. Economists are too stupid for elementary algebra. 9. Both orthodox and heterodox economics is failed/fake science. 10. Economic policy has no sound scientific foundations. 11. The BoS-Nobel for ‘economic sciences’ is a fraud.

And this is the cause of the mess: economists have since the founding fathers consistently violated the separation of science and politics. In hashtags

All this is known and needs no repetition. So, economics and economists go directly to the Flat-Earth-Cemetery.

What next? Craig thinks he has a brilliant idea: “Paradigms, especially extremely relevant and urgently needed new paradigms are everything.” Yes, this is also known for a long time: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al. 1990)

Except that the Paradigm Shift from provably false Walrasian microfoundations and provably false Keynesian macrofoundations to true macrofoundations is an accomplished fact.#5

And now, Lars Syll and the heterodox trolls, lead your own funeral cortege!

Egmont Kakarot-Handtke

#2 Lars Syll is refuted on all counts. See blog query for details
#5 Sovereign Economics BoD

Putin or Trump — who is owned by the Oligarchy?

Comment on TASS/Tom Hickey on ‘Russia will keep low level of public debt to ensure macroeconomic stability — experts’

Tom Hickey comments: “I guess they haven't yet discovered MMT.”

First, for governments, there is not much to discover with MMT. Governments do deficit-spending/money-creation since time immemorial. And the Russian government is NO exception.

Does anybody believe that Mr. Putin does not know recent history? “Adam Smith, when he wrote his Wealth of Nations, and Burke, when he produced his famous speech on economic reform, understood by ‘political economy’ a ‘branch of the science of the statesman or legislator’, a theory of practice, the science of the prudent management of the public finances. The growth of the huge debts which weighed on the great military nations would end in proving their ruin. This was especially true of England, which had become immensely in debt through the conquest of her colonial Empire.” (Halévy)

Second, does anybody believe that Mr. Putin does not know that MMT policy is NOT for the benefit of the People but for the benefit of the Oligarchy?#1 To recall, the macroeconomic Profit Law implies Public Deficit = Private Profit. Does it make sense for Mr. Putin to feed the Russian Oligarchs with newly printed money?

Because we cannot read Mr. Putin's mind we really don't know.

It is different from Mr. Trump. The first thing he did after his inauguration was to surround himself with Wall Street folks. So, it is not really a surprise that Mr. Trump blew deficit-spending/money-creation up to hitherto unknown proportions.#2

After four years, it is pretty obvious that for Mr. Trump and his oligarchic backers it holds: mission accomplished.#3

No surprise then, that MMT has become so popular in the U.S. recently#4 but not so much in Russia.

Egmont Kakarot-Handtke

Occasional Tweets No 200913