Comment on ProGrowthLiberal
Blog-Reference
ProGrowthLiberal learns from the dictionary that chump means “a stupid or foolish person”. He thinks that this a perfect description for Trump supporters.
He overlooks that this description applies to economists in general and to the agenda pushers of EconoSpeak in particular. To paraphrase the Urban Dictionary: An economist, colloq. chump is ‘someone who does not understand the basics of economics.’ Accordingly, the main output of both orthodox and heterodox chumps is pointless squabbling as exemplified by ProGrowthLiberal. For more details see
► Econ 101: supply-demand-equilibrium is dead for 150+ years
► Economics: failure, fake, fraud
► Macroeconomics: Economists are too stupid for science
► Yes, economists are really that stupid
► Economists: Trolls with a mortarboard
► Economics as a cover for agenda pushing
► Still beyond the reach of economists: The Holy Grail of Science
► Economists: “a bevy of camp-following whores”
► The economist as stand-up comedian
► For the big picture see cross-references Political Economics/Stupidity/Corruption and cross-references Failed/Fake Scientists.
Egmont Kakarot-Handtke
Related 'Links on capital-T Truth, stupidity, corruption'
April 30, 2019
April 29, 2019
Econ 101: Supply-Demand-Equilibrium is dead for 150+ years
Comment on Dirk Ehnts on ‘The problem with the supply curve’
Blog-Reference and Blog-Reference
Dirk Ehnts reports: “Steve Keen uses a 1952 paper to make a very important point about neoclassical economics: There is a problem with the supply curve.” and concludes: “Microeconomics, the behavior of firms and households, is very important. Starting the subject by repeating theories that should have long been discarded blocks more relevant approaches from being taught. These new approaches could provide proper foundations of the behavior of firms and households if they are not based on ‘economic laws’ that are refuted by reality.”
All this is true, of course, but ultimately not very helpful: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
Because traditional Heterodoxy consistently failed at this methodological barrier economics students are still taught the ‘Totem of the Micro’, i.e. supply-demand-equilibrium.#1
The lethal blunder of microeconomics, though, does not start with the supply curve but with the neo-Walrasian axiom set: “HC1 There exist economic agents. HC2 Agents have preferences over outcomes. HC3 Agents independently optimize subject to constraints. HC4 Choices are made in interrelated markets. HC5 Agents have full relevant knowledge. HC6 Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states.” (Weintraub, 1985)
The pivotal propositions are HC3 and HC6. Methodologically, they are NONENTITIES like the Easter Bunny and Spiderman. The behavioral axiom HC3 makes economics marginalistic.#2, #3 In order to make constrained optimization work, a well-behaved production function is required. The production function is NOT the result of real-world observations but implicated by HC3.#4, #5, #6 The supply curve, in turn, follows from the assumed production function. So HC3 is the ultimate reason why there “is a problem with the supply curve”.
From this follows that the microfoundations HC1/HC6 have to be discarded. And this is the end of Econ 101 as we know it. Economics textbooks are worthless since Samuelson’s firstling of 1948.#7
The end of proto-scientific economics, though, is the beginning of scientific economics which is no longer based on false microfoundations but on true macrofoundations.#8, #9, #10
From the devastating critique of supply-demand-equilibrium follows the necessity of a Paradigm Shift. Traditional Heterodoxy never performed the Paradigm Shift but was content with the endless repetition of how “unrealistic” Orthodoxy is.
Because of this, both Orthodoxy and traditional Heterodoxy go down the scientific drain.
Egmont Kakarot-Handtke
#1 Where advanced Heterodoxy — represented by Steve Keen — took the wrong turn
#2 The solemn burial of marginalism
#3 Marginalism is the landmark of scientific incompetence
#4 Putting the production function back on its feet
#5 Infantile model bricolage, or, How many economists can dance on a non-existing pinpoint?
#6 Mathiness and the Ur-Blunder
#7 The father of modern economics and his imbecile kids
#8 Essentials of Constructive Heterodoxy: The Market
#9 How to Get Rid of Supply-Demand-Equilibrium
#10 The Law of Supply and Demand: Here It Is Finally
Related 'There is NO such thing as supply-demand-equilibrium' and 'How the Intelligent Non-Economist Can Refute Every Economist Hands Down' and 'Why you should NEVER use supply-demand-equilibrium' and 'The monstrous utility-supply-demand-equilibrium failure'. For details of the big picture see cross-references Econ 101/Old Curriculum/New Curriculum and cross-references Paradigm Shift and the textbook Sovereign Economics. The macroeconomic Law of Supply and Demand is shown on Wikimedia AXEC64
Blog-Reference and Blog-Reference
Dirk Ehnts reports: “Steve Keen uses a 1952 paper to make a very important point about neoclassical economics: There is a problem with the supply curve.” and concludes: “Microeconomics, the behavior of firms and households, is very important. Starting the subject by repeating theories that should have long been discarded blocks more relevant approaches from being taught. These new approaches could provide proper foundations of the behavior of firms and households if they are not based on ‘economic laws’ that are refuted by reality.”
All this is true, of course, but ultimately not very helpful: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
Because traditional Heterodoxy consistently failed at this methodological barrier economics students are still taught the ‘Totem of the Micro’, i.e. supply-demand-equilibrium.#1
The lethal blunder of microeconomics, though, does not start with the supply curve but with the neo-Walrasian axiom set: “HC1 There exist economic agents. HC2 Agents have preferences over outcomes. HC3 Agents independently optimize subject to constraints. HC4 Choices are made in interrelated markets. HC5 Agents have full relevant knowledge. HC6 Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states.” (Weintraub, 1985)
The pivotal propositions are HC3 and HC6. Methodologically, they are NONENTITIES like the Easter Bunny and Spiderman. The behavioral axiom HC3 makes economics marginalistic.#2, #3 In order to make constrained optimization work, a well-behaved production function is required. The production function is NOT the result of real-world observations but implicated by HC3.#4, #5, #6 The supply curve, in turn, follows from the assumed production function. So HC3 is the ultimate reason why there “is a problem with the supply curve”.
From this follows that the microfoundations HC1/HC6 have to be discarded. And this is the end of Econ 101 as we know it. Economics textbooks are worthless since Samuelson’s firstling of 1948.#7
The end of proto-scientific economics, though, is the beginning of scientific economics which is no longer based on false microfoundations but on true macrofoundations.#8, #9, #10
From the devastating critique of supply-demand-equilibrium follows the necessity of a Paradigm Shift. Traditional Heterodoxy never performed the Paradigm Shift but was content with the endless repetition of how “unrealistic” Orthodoxy is.
Because of this, both Orthodoxy and traditional Heterodoxy go down the scientific drain.
Egmont Kakarot-Handtke
#1 Where advanced Heterodoxy — represented by Steve Keen — took the wrong turn
#2 The solemn burial of marginalism
#3 Marginalism is the landmark of scientific incompetence
#4 Putting the production function back on its feet
#5 Infantile model bricolage, or, How many economists can dance on a non-existing pinpoint?
#6 Mathiness and the Ur-Blunder
#7 The father of modern economics and his imbecile kids
#8 Essentials of Constructive Heterodoxy: The Market
#9 How to Get Rid of Supply-Demand-Equilibrium
#10 The Law of Supply and Demand: Here It Is Finally
Related 'There is NO such thing as supply-demand-equilibrium' and 'How the Intelligent Non-Economist Can Refute Every Economist Hands Down' and 'Why you should NEVER use supply-demand-equilibrium' and 'The monstrous utility-supply-demand-equilibrium failure'. For details of the big picture see cross-references Econ 101/Old Curriculum/New Curriculum and cross-references Paradigm Shift and the textbook Sovereign Economics. The macroeconomic Law of Supply and Demand is shown on Wikimedia AXEC64
For more about supply-demand-equilibrium see AXECquery.
***
Wikimedia AXEC121i
April 28, 2019
Economics: failure, fake, fraud
Comment on Michael Roberts on ‘Progressive capitalism ― an oxymoron’*
Blog-Reference and Blog-Reference
On the back cover of People, Power, and Profits, the applause troll Paul Krugman is cited under the heading Praise for Joseph E. Stiglitz: “[Joseph Stiglitz] is an insanely great economist.”
The first thing to notice is that Paul Krugman is an insanely little economist because he proudly presents himself as ‘sorta-kinda maximization-and-equilibrium guy’, that is, he has not realized to this day that maximization-and-equilibrium is dead for 150+ years.#1, #2
From Adam Smith/Karl Marx onward to the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel economics claims to be science but has never been anything else than brain-dead political agenda-pushing. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.#3, #4
There are 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.#5 Because all variants of theoretical economics are provably false, economic policy guidance NEVER has had sound scientific foundations.
Because both microeconomics and macroeconomics are based on inconsistent concepts the respective models are scientifically worthless and economic policy guidance is not different from tea leaves reading.
What, then, are Joseph E. Stiglitz’s policy proposals? “The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society. We need regulations that ensure strong competition without abusive exploitation, realigning the relationship between corporations and the workers they employ and the customers they are supposed to serve. We must be as resolute in combating market power as the corporate sector is in increasing it.”
Those prescriptions are (i) the stock of the left in the US and elsewhere, (ii) miss the point because the underlying profit/distribution theory is false.
Roughly speaking, Joseph E. Stiglitz believes that profit comes from market power. This is proto-scientific common sense. In other words, the economist Joseph E. Stiglitz does not know what profit is. This he has in common with his academic colleagues.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q≡−S, i.e. the mirror image of household sector saving S is business sector loss (−Q). The mirror image of household sector dissaving (−S) is business sector profit Q. The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the state, the Profit Law boils down to Q≡(G−T), i.e. Public Deficit = Private Profit. Obviously, macroeconomic profit has NOTHING to do with exploitation.#6
The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S, and (ii), if the state runs a deficit, i.e. (G−T)>0.
Case (i) is characteristic of early Capitalism and case (ii) is characteristic of late Capitalism. Currently, the so-called free-market economy is on the full life support of the state. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt grow in lockstep.
This distribution problem can not be solved by increasing wages or by reducing market power because these factors affect only the distribution of profit between firms while the profit for the business sector as a whole is determined by deficit spending.
Joseph E. Stiglitz titles his new book People, Power, and Profits and does not know what profit is and how it is determined. Because of scientific failure, his policy proposals are at best useless. This he has in common with the rest of academic economists.#7
The fact of the matter is: so-called free-market economies like the USA have long been on full life-support of the state. The continuous creation of financial wealth has become the first and foremost economic task of the state. The Oligarchy is continuously fed by deficit-spending/money-creation. Roughly speaking, the Oligarchy’s financial wealth is equal to accumulated Public Debt (with WeThePeople as ultimate bagholders).
Capitalism and Socialism are both monetary economies. The macroeconomic Profit Law is the same for both.#8 Economists like Paul Krugman and Joseph E. Stiglitz have not realized it to this day and this tells one that they are insanely stupid.
Egmont Kakarot-Handtke
* Michael Roberts Blog
#1 Paul Krugman and economic poultry entrails reading
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 The Profit Theory is False Since Adam Smith
#4 Dear idiots, Marx got profit and exploitation wrong
#5 Macroeconomics: Economists are too stupid for science
#6 Capitalism, poverty, exploitation, and cross-over exploitation
#7 Econogenics in action
#8 No future for Socialism and Capitalism
Related 'There is no like/dislike button in science' and 'Here is the long-overdue scientific death certificate for Marx and Marxists' and 'Profit for Marxists' and 'Economists cannot do the simple math of profit — better keep them out of politics' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?'. For details of the big picture see cross-references Methodology.
Twitter Apr 28
Blog-Reference and Blog-Reference
On the back cover of People, Power, and Profits, the applause troll Paul Krugman is cited under the heading Praise for Joseph E. Stiglitz: “[Joseph Stiglitz] is an insanely great economist.”
The first thing to notice is that Paul Krugman is an insanely little economist because he proudly presents himself as ‘sorta-kinda maximization-and-equilibrium guy’, that is, he has not realized to this day that maximization-and-equilibrium is dead for 150+ years.#1, #2
From Adam Smith/Karl Marx onward to the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel economics claims to be science but has never been anything else than brain-dead political agenda-pushing. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.#3, #4
There are 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.#5 Because all variants of theoretical economics are provably false, economic policy guidance NEVER has had sound scientific foundations.
Because both microeconomics and macroeconomics are based on inconsistent concepts the respective models are scientifically worthless and economic policy guidance is not different from tea leaves reading.
What, then, are Joseph E. Stiglitz’s policy proposals? “The prescription follows from the diagnosis: It begins by recognizing the vital role that the state plays in making markets serve society. We need regulations that ensure strong competition without abusive exploitation, realigning the relationship between corporations and the workers they employ and the customers they are supposed to serve. We must be as resolute in combating market power as the corporate sector is in increasing it.”
Those prescriptions are (i) the stock of the left in the US and elsewhere, (ii) miss the point because the underlying profit/distribution theory is false.
Roughly speaking, Joseph E. Stiglitz believes that profit comes from market power. This is proto-scientific common sense. In other words, the economist Joseph E. Stiglitz does not know what profit is. This he has in common with his academic colleagues.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q≡−S, i.e. the mirror image of household sector saving S is business sector loss (−Q). The mirror image of household sector dissaving (−S) is business sector profit Q. The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the state, the Profit Law boils down to Q≡(G−T), i.e. Public Deficit = Private Profit. Obviously, macroeconomic profit has NOTHING to do with exploitation.#6
The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S, and (ii), if the state runs a deficit, i.e. (G−T)>0.
Case (i) is characteristic of early Capitalism and case (ii) is characteristic of late Capitalism. Currently, the so-called free-market economy is on the full life support of the state. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt grow in lockstep.
This distribution problem can not be solved by increasing wages or by reducing market power because these factors affect only the distribution of profit between firms while the profit for the business sector as a whole is determined by deficit spending.
Joseph E. Stiglitz titles his new book People, Power, and Profits and does not know what profit is and how it is determined. Because of scientific failure, his policy proposals are at best useless. This he has in common with the rest of academic economists.#7
The fact of the matter is: so-called free-market economies like the USA have long been on full life-support of the state. The continuous creation of financial wealth has become the first and foremost economic task of the state. The Oligarchy is continuously fed by deficit-spending/money-creation. Roughly speaking, the Oligarchy’s financial wealth is equal to accumulated Public Debt (with WeThePeople as ultimate bagholders).
Capitalism and Socialism are both monetary economies. The macroeconomic Profit Law is the same for both.#8 Economists like Paul Krugman and Joseph E. Stiglitz have not realized it to this day and this tells one that they are insanely stupid.
Egmont Kakarot-Handtke
* Michael Roberts Blog
#1 Paul Krugman and economic poultry entrails reading
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#3 The Profit Theory is False Since Adam Smith
#4 Dear idiots, Marx got profit and exploitation wrong
#5 Macroeconomics: Economists are too stupid for science
#6 Capitalism, poverty, exploitation, and cross-over exploitation
#7 Econogenics in action
#8 No future for Socialism and Capitalism
Related 'There is no like/dislike button in science' and 'Here is the long-overdue scientific death certificate for Marx and Marxists' and 'Profit for Marxists' and 'Economists cannot do the simple math of profit — better keep them out of politics' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?'. For details of the big picture see cross-references Methodology.
***
Twitter Apr 28
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| Source: Twitter |
REPLY to Kaivey on Apr 29
You ask: “… how do you fit countering global warming into your equations, or reducing poverty?”
You obviously do not understand the essential difference between science and politics. Scientists/engineers, for example, figure out the laws of motion and of aerodynamics and of thermodynamics and all the rest and eventually get an aircraft off the ground. The characteristic of scientific knowledge is that it is public and freely accessible to every smart and interested person.
The practical use of scientific knowledge is an entirely different matter. In principle, it is the decision of the Legitimate Sovereign. The Legitimate Sovereign decides whether an aircraft is used to deliver food and medicine to the victims of a natural disaster or to throw bombs on a wedding party in a faraway country.
Analogously, the task of the economist as a scientist is to figure out the laws that govern the monetary economy. It is NOT his task to dabble in politics. Most economists do not understand this albeit it is known since J. S. Mill: “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.”
Economists, though, have NEVER been cultivators of science but only stupid/corrupt agenda pushers. This is the indelible scientific disgrace of economists. The designation economist includes Walrasians, Keynesians, Marxians, Austrians, MMTers, and, of course, you.
The reduced macroeconomic Profit Law Q≡(G−T) tells one that profit in the monetary economy is positive if the state runs a deficit, i.e. (G−T)>0. Economically, i.e. with regard to overall profit, it is a matter of indifference whether the deficit results from military or from environmental spending. It is the deficit as such that feeds the Oligarchy and NOT the political purpose of the deficit. Because of this, a Green New Deal is just as good for Wall Street as a war in the Middle East provided it is financed by the Central Bank.
The indelible moral disgrace of MMT consists of telling people that deficit-spending/money-creation is for their or their children’s benefit while it is uniquely and exclusively for the benefit of the Oligarchy.
The indelible moral disgrace of economists in general consists of the claim that they are contributing to the growth of scientific knowledge while in fact, they are producing nothing but political BS.
You ask “… if it turns out that the Scandinavian system is the most efficient, could that be proven with your equations?”
Before you can prove anything you need an accurate formal representation of the system in question. The usual economic squabbling is pointless, it proves nothing.
The macroeconomic Profit Law is ONE element of the scientifically valid description of the monetary economy. There are more elements, to be sure.#1 Because the Scandinavian economies are monetary economies the Profit Law holds also for them.
Needless to emphasize that the general equation has to be specified for the national economy under consideration. This is the step from theory to model. For example, if government expenditures G are differentiated into military spending Gm and social spending Gs, i.e. G=Gm+Gs, then one gets wildly different numbers for the USA and for Norway but, of course, this does NOT affect the general Profit Law in any way. It’s just like putting different masses into the Law of Gravity.
Again, the macroeconomic laws are the same for Capitalism and Socialism, and anything in between. Only the values of the variables differ.
#1 Go! ― test the Profit and Employment Law
***
REPLY to Kaivey on Apr 30You ask “… if it turns out that the Scandinavian system is the most efficient, could that be proven with your equations?”
Before you can prove anything you need an accurate formal representation of the system in question. The usual economic squabbling is pointless, it proves nothing.
The macroeconomic Profit Law is ONE element of the scientifically valid description of the monetary economy. There are more elements, to be sure.#1 Because the Scandinavian economies are monetary economies the Profit Law holds also for them.
Needless to emphasize that the general equation has to be specified for the national economy under consideration. This is the step from theory to model. For example, if government expenditures G are differentiated into military spending Gm and social spending Gs, i.e. G=Gm+Gs, then one gets wildly different numbers for the USA and for Norway but, of course, this does NOT affect the general Profit Law in any way. It’s just like putting different masses into the Law of Gravity.
Again, the macroeconomic laws are the same for Capitalism and Socialism, and anything in between. Only the values of the variables differ.
#1 Go! ― test the Profit and Employment Law
April 25, 2019
Macroeconomics: Economists are too stupid for science
Comment on Noah Smith on ‘Beware of Economic Theories Claiming to Explain Everything’*
Blog-Reference and Blog-Reference (Link) and Blog-Reference (Link)
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
The goal of science is the true theory. The true theory is the humanly best mental representation of reality. Science is for 2300+ years defined by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art testing.
According to the criteria of material/formal consistency, economics is a failed science. Economists do not possess a true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.
Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). This corresponds approximately to Noah Smith’s mistaken idea of science: “What it [orthodox macroeconomics] is, is science. Not the clean, idealized lab science of physics or chemistry, or the simple, convincing studies of microeconomics. But as messy and limited as it is, empirical macro represents a real, honest, ongoing attempt by dedicated researchers to explore the ins and outs of a hideously complex and hard-to-measure system. Someday, thanks to their modest, diligent efforts, we will probably understand the phenomena of booms and busts much better than we do now.”
Noah Smith thinks that Orthodoxy has a communication problem: “But elected politicians looking for a bold policy program and asset managers looking for a bold investment thesis are frequently tempted by heterodox economic theories claiming to have simple, sweeping solutions. Two examples are Austrian economics and modern monetary theory.” And: “The boldness and confidence of these predictions — and the comparative lack of math — makes these theories much more attractive to politicians and investors compared to the turgid scribblings of professors.”
No, communication is neither the problem of Orthodoxy nor of Heterodoxy. Scientific content is the problem. Both Orthodoxy and Heterodoxy is proto-scientific garbage. Both, orthodox and heterodox economists are scientifically incompetent. As a consequence, Noah Smith’s conclusion misses the point: “In other words, both policy makers and politicians should be reluctant to embrace the sweeping claims of unconventional theorists. Instead, a cautious approach, relying on judgment, data, and an eclectic mix of theories, seems best.”
There is no way around it: economics does NOT need an “eclectic mix” of provably false theories but the true theory. After 200+ years, economics has to get out of the swamp of what Feynman called cargo cult science. In methodological parlance, economics has to abandon false Walrasian microfoundations#1 and false Keynesian macrofoundations#2 and move to true macrofoundations.#3 Economics needs a Paradigm Shift. The materially/ formally inconsistent orthodox and heterodox models have to be buried at the Flat-Earth Cemetery. All orthodox and heterodox economists have to be expelled from the scientific community.
To this day, the axiomatic foundations of economics are provably false. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and also for MMT.#4 MMT has the methodological advantage that it is based on a clearly defined sectoral balances equation. This enables the straightforward application of the scientific method. Accordingly, the question is which of the two foundational macroeconomic equations is true, i.e. materially and formally consistent:
• the MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 or
• the axiom-based equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
Both equations consist of measurable variables and are testable with the precision of two decimal places. This is a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.
The MMT equation is logically/mathematically false. Economists are too stupid for the elementary mathematics that underlies macroeconomics.#5 Because of this, the whole analytical superstructure of MMT is false. Because the theory is false MMT policy guidance has NO sound scientific foundations ― just like Walrasianism, Keynesianism, Marxianism, and Austrianism.
Right policy depends on true theory. To this day, economists do NOT have the true theory. There is no escape: false theory becomes political fraud#6 and incompetent scientists become useful political idiots. This is the state of present-day economics.
Egmont Kakarot-Handtke
* BloombergOpinion
#1 Microfoundations are given with this axiom set: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) Accepting these axioms has always been a reliable indicator of idiocy.
#2 How Keynes got macro wrong and Allais got it right
#3 True macrofoundations are given with this axiom set: (A0) The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
#4 Hooray! The formalization issue is finally settled
#5 Wikipedia and the promotion of economists’ idiotism (II)
#6 MMT: How mathematical incompetence helps the Kelton-Fraud
Related 'Economists: too stupid for counting' and 'Knowledge is attainable ― even in economics' and 'How economists murdered the economy and got away with it' and 'Economics is locked in idiocy: How could this happen?' and 'Dani Rodrik, fake scientist' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Are economists natural born scientific failures?' and 'Confused Orthodoxy vs. confused Heterodoxy' and 'Eclecticism, anything goes, and the pluralism of false theories' and 'The creative destruction of Wren-Lewis' and 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists' and 'Why is economics a total scientific failure?' and 'Economists: Either stupid or corrupt or both' and 'From Keynes’ fatal blunder to the true economic model' and 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Smart young empirically-minded economists: another vain hope' and 'Media-fake-farce-fraud-storytelling-macro' and 'Economists: Either stupid or corrupt or both' and 'Proving Bill Mitchell wrong ― burying MMT for good' and 'The canonical macroeconomic model' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Profit' and 'Your economics is refuted on all counts: here is the real thing'.
Blog-Reference and Blog-Reference (Link) and Blog-Reference (Link)
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
The goal of science is the true theory. The true theory is the humanly best mental representation of reality. Science is for 2300+ years defined by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art testing.
According to the criteria of material/formal consistency, economics is a failed science. Economists do not possess a true theory. The fact of the matter is that the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the pivotal concept of the subject matter ― profit ― wrong.
Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). This corresponds approximately to Noah Smith’s mistaken idea of science: “What it [orthodox macroeconomics] is, is science. Not the clean, idealized lab science of physics or chemistry, or the simple, convincing studies of microeconomics. But as messy and limited as it is, empirical macro represents a real, honest, ongoing attempt by dedicated researchers to explore the ins and outs of a hideously complex and hard-to-measure system. Someday, thanks to their modest, diligent efforts, we will probably understand the phenomena of booms and busts much better than we do now.”
Noah Smith thinks that Orthodoxy has a communication problem: “But elected politicians looking for a bold policy program and asset managers looking for a bold investment thesis are frequently tempted by heterodox economic theories claiming to have simple, sweeping solutions. Two examples are Austrian economics and modern monetary theory.” And: “The boldness and confidence of these predictions — and the comparative lack of math — makes these theories much more attractive to politicians and investors compared to the turgid scribblings of professors.”
No, communication is neither the problem of Orthodoxy nor of Heterodoxy. Scientific content is the problem. Both Orthodoxy and Heterodoxy is proto-scientific garbage. Both, orthodox and heterodox economists are scientifically incompetent. As a consequence, Noah Smith’s conclusion misses the point: “In other words, both policy makers and politicians should be reluctant to embrace the sweeping claims of unconventional theorists. Instead, a cautious approach, relying on judgment, data, and an eclectic mix of theories, seems best.”
There is no way around it: economics does NOT need an “eclectic mix” of provably false theories but the true theory. After 200+ years, economics has to get out of the swamp of what Feynman called cargo cult science. In methodological parlance, economics has to abandon false Walrasian microfoundations#1 and false Keynesian macrofoundations#2 and move to true macrofoundations.#3 Economics needs a Paradigm Shift. The materially/ formally inconsistent orthodox and heterodox models have to be buried at the Flat-Earth Cemetery. All orthodox and heterodox economists have to be expelled from the scientific community.
To this day, the axiomatic foundations of economics are provably false. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and also for MMT.#4 MMT has the methodological advantage that it is based on a clearly defined sectoral balances equation. This enables the straightforward application of the scientific method. Accordingly, the question is which of the two foundational macroeconomic equations is true, i.e. materially and formally consistent:
• the MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 or
• the axiom-based equation (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
Both equations consist of measurable variables and are testable with the precision of two decimal places. This is a clear-cut true/false question that can be unambiguously decided according to well-established scientific criteria.
The MMT equation is logically/mathematically false. Economists are too stupid for the elementary mathematics that underlies macroeconomics.#5 Because of this, the whole analytical superstructure of MMT is false. Because the theory is false MMT policy guidance has NO sound scientific foundations ― just like Walrasianism, Keynesianism, Marxianism, and Austrianism.
Right policy depends on true theory. To this day, economists do NOT have the true theory. There is no escape: false theory becomes political fraud#6 and incompetent scientists become useful political idiots. This is the state of present-day economics.
Egmont Kakarot-Handtke
* BloombergOpinion
#1 Microfoundations are given with this axiom set: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) Accepting these axioms has always been a reliable indicator of idiocy.
#2 How Keynes got macro wrong and Allais got it right
#3 True macrofoundations are given with this axiom set: (A0) The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
#4 Hooray! The formalization issue is finally settled
#5 Wikipedia and the promotion of economists’ idiotism (II)
#6 MMT: How mathematical incompetence helps the Kelton-Fraud
Related 'Economists: too stupid for counting' and 'Knowledge is attainable ― even in economics' and 'How economists murdered the economy and got away with it' and 'Economics is locked in idiocy: How could this happen?' and 'Dani Rodrik, fake scientist' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Are economists natural born scientific failures?' and 'Confused Orthodoxy vs. confused Heterodoxy' and 'Eclecticism, anything goes, and the pluralism of false theories' and 'The creative destruction of Wren-Lewis' and 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists' and 'Why is economics a total scientific failure?' and 'Economists: Either stupid or corrupt or both' and 'From Keynes’ fatal blunder to the true economic model' and 'Mad but true: 200+ years after Adam Smith economists still have no idea what profit is' and 'Smart young empirically-minded economists: another vain hope' and 'Media-fake-farce-fraud-storytelling-macro' and 'Economists: Either stupid or corrupt or both' and 'Proving Bill Mitchell wrong ― burying MMT for good' and 'The canonical macroeconomic model' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Profit' and 'Your economics is refuted on all counts: here is the real thing'.
***
Wikimedia AXEC118d
April 24, 2019
Safe assets ― how the state pampers the Oligarchy
Comment on Dmitrieva/Liz McCormick on ‘America’s Big Deficits Are Solving a Big Problem for Markets’* and on Paul Jay (host) on ‘Modern Monetary Theory ― A Debate Between Randall Wray and Gerald Epstein’**
Blog-Reference
Dmitrieva and Liz McCormick explain: “At home, the economy’s expansion is about to set records for longevity ― a reminder that it won’t last forever. When that kind of foreboding takes hold, it translates into demand for safe assets. And Trump is supplying them ― at a pace of about $1 trillion a year, matching the projected shortfalls in the U.S. budget.”
How can it be that the free-market economy has problems and needs the state to solve them? Isn’t the free-market economy the best problem solver humanity has ever invented?
To begin with, what is the “big problem for markets” that President Trump’s deficits are supposed to solve? For an answer, one needs some elementary macroeconomics. The process of deficit-spending and safe-asset issuance goes schematically as follows:
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by budget-balancing of the household sector C=Yw, i.e. consumption expenditures C are equal to wage income Yw, and zero profit of the business sector Q≡C−Yw→0.
(ii) The government deficit-spends. Deficit D is defined as public spending G minus taxes T in a given period, i.e. D≡(G−T). Deficit-spending on current production causes a one-off price hike (NO inflation) and the business sector ends up with macroeconomic profit Q≡(G−T). With deficit-spending, the government creates a free lunch for the Oligarchy.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny. Deposits at the CB are money.
(iv) The interest rates on both sides of the CB’s balance sheet are for a starter set to zero.
(v) If government deficit-spending continues period after period deposits grow continuously. Since deposits bear no interest the Oligarchy’s desire for a safe investment opportunity becomes more urgent over time.
(vi) Now, the government consolidates its overdrafts at the CB by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks again. The Oligarchy’s portfolio consists of bonds and money. After issuance, the bonds are traded on the secondary market which grows continuously.
(vii) In order to pay the interest on bonds, the government taxes the household sector and hands the money over to the bondholders, i.e. the Oligarchy. The disposable income of the taxpayers decreases and that of the bondholders increases. The IRS makes sure that the Oligarchy gets its interest on time and in full. This is the beauty of a safe asset.
(viii) The income redistribution from WeThePeople to the Oligarchy goes on as long as the public debt is rolled over.
So, the policy of permanent deficit-spending/money-creation entails some real benefits for the Oligarchy, i.e. (i) a free lunch because of Public Deficit = Private Profit,#1 (ii) a permanent safe interest income on a growing public debt which takes the form of safe assets = government bonds, (iii) a liquid secondary bond market.
All this works fine: “As and when the U.S. Treasury market explodes due to more issuance, you’ll be seeing a lot of investors simply dashing for safety and buying that debt,’’ said Milligan at Aberdeen Standard. “Supply often creates its own demand in the bond market,’’ he said. “It’s a peculiar phenomenon.”
Very peculiar, indeed. The state sees to it that the Oligarchy gets a free lunch by deficit-spending and then offers government bonds as a safe asset which produces a safe interest income courtesy of the IRS. In the limiting case, it holds Financial Wealth of the Oligarchy = Public Debt of WeThePeople.
Roughly speaking: The continuous creation of financial wealth and the supply of safe interest-bearing assets has become, in the free-market economy, the first and foremost economic task of the state. In other words, the Oligarchy is on the full life support of the state.
From this follows politically that MMTers are NOT the benefactors of WeThePeople but the useful idiots of the Oligarchy.
Egmont Kakarot-Handtke
* Bloomberg
** The real news network
#1 The complete macroeconomic Profit Law is given by Q≡Yd+(I−S)+(G−T)+(X−M).
Related 'Gosh! the One Percent have gotten $21 trillion richer: Links on Distribution'. For the full-spectrum refutation of MMT see cross-references MMT.
You say: “I worked that one out, Egmont, Karl Marx was right, free-market capitalism forces wages down too much which drives down demand.”
Marx was a sociologist and political agenda pusher. He had no idea how the economy works and what profit is. It seems that you have not realized this.#1, #2, #3
#1 Dear idiots, Marx got profit and exploitation wrong
#2 Here is the long-overdue scientific death certificate for Marx and Marxists
#3 Profit for Marxists
Blog-Reference
Dmitrieva and Liz McCormick explain: “At home, the economy’s expansion is about to set records for longevity ― a reminder that it won’t last forever. When that kind of foreboding takes hold, it translates into demand for safe assets. And Trump is supplying them ― at a pace of about $1 trillion a year, matching the projected shortfalls in the U.S. budget.”
How can it be that the free-market economy has problems and needs the state to solve them? Isn’t the free-market economy the best problem solver humanity has ever invented?
To begin with, what is the “big problem for markets” that President Trump’s deficits are supposed to solve? For an answer, one needs some elementary macroeconomics. The process of deficit-spending and safe-asset issuance goes schematically as follows:
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by budget-balancing of the household sector C=Yw, i.e. consumption expenditures C are equal to wage income Yw, and zero profit of the business sector Q≡C−Yw→0.
(ii) The government deficit-spends. Deficit D is defined as public spending G minus taxes T in a given period, i.e. D≡(G−T). Deficit-spending on current production causes a one-off price hike (NO inflation) and the business sector ends up with macroeconomic profit Q≡(G−T). With deficit-spending, the government creates a free lunch for the Oligarchy.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny. Deposits at the CB are money.
(iv) The interest rates on both sides of the CB’s balance sheet are for a starter set to zero.
(v) If government deficit-spending continues period after period deposits grow continuously. Since deposits bear no interest the Oligarchy’s desire for a safe investment opportunity becomes more urgent over time.
(vi) Now, the government consolidates its overdrafts at the CB by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks again. The Oligarchy’s portfolio consists of bonds and money. After issuance, the bonds are traded on the secondary market which grows continuously.
(vii) In order to pay the interest on bonds, the government taxes the household sector and hands the money over to the bondholders, i.e. the Oligarchy. The disposable income of the taxpayers decreases and that of the bondholders increases. The IRS makes sure that the Oligarchy gets its interest on time and in full. This is the beauty of a safe asset.
(viii) The income redistribution from WeThePeople to the Oligarchy goes on as long as the public debt is rolled over.
So, the policy of permanent deficit-spending/money-creation entails some real benefits for the Oligarchy, i.e. (i) a free lunch because of Public Deficit = Private Profit,#1 (ii) a permanent safe interest income on a growing public debt which takes the form of safe assets = government bonds, (iii) a liquid secondary bond market.
All this works fine: “As and when the U.S. Treasury market explodes due to more issuance, you’ll be seeing a lot of investors simply dashing for safety and buying that debt,’’ said Milligan at Aberdeen Standard. “Supply often creates its own demand in the bond market,’’ he said. “It’s a peculiar phenomenon.”
Very peculiar, indeed. The state sees to it that the Oligarchy gets a free lunch by deficit-spending and then offers government bonds as a safe asset which produces a safe interest income courtesy of the IRS. In the limiting case, it holds Financial Wealth of the Oligarchy = Public Debt of WeThePeople.
Roughly speaking: The continuous creation of financial wealth and the supply of safe interest-bearing assets has become, in the free-market economy, the first and foremost economic task of the state. In other words, the Oligarchy is on the full life support of the state.
From this follows politically that MMTers are NOT the benefactors of WeThePeople but the useful idiots of the Oligarchy.
Egmont Kakarot-Handtke
* Bloomberg
** The real news network
#1 The complete macroeconomic Profit Law is given by Q≡Yd+(I−S)+(G−T)+(X−M).
Related 'Gosh! the One Percent have gotten $21 trillion richer: Links on Distribution'. For the full-spectrum refutation of MMT see cross-references MMT.
***
REPLY to Kaivey on Apr 25You say: “I worked that one out, Egmont, Karl Marx was right, free-market capitalism forces wages down too much which drives down demand.”
Marx was a sociologist and political agenda pusher. He had no idea how the economy works and what profit is. It seems that you have not realized this.#1, #2, #3
#1 Dear idiots, Marx got profit and exploitation wrong
#2 Here is the long-overdue scientific death certificate for Marx and Marxists
#3 Profit for Marxists
April 23, 2019
Heterodox economics ― stupidity, masochism, or disinformation?
Comment on Merijn Knibbe on ‘Putting the baby in the tub: unemployment in a neoclassical (?) macro model’
Blog-Reference
Merijn Knibbe asks: “Is it possible to model unemployment in neoclassical ‘DSGE’ macro-economic models? I’m occupied with a project which compares neoclassical macro concepts with statistical macro concepts.”
The question is rhetorical because it is widely known by now that neoclassical economics in general and DSGE, in particular, is one of the greatest scientific blunders of all time.
Merijn Knibbe is well aware of this: “There is a momentous literature about this, even when people like Thomas Sargent and Robert Lucas and Edward Prescott and Christopher Pissarides, al winners of the Sveriges Riksbank Prize in Economic Sciences in Honor of Alfred Nobel, all use the word ‘leisure’ when they mean ‘unemployment’.”
Yes, neoclassical economics is proto-scientific garbage and the economics Nobel is plain fraud. Mainstream economists are stupid or corrupt or both, and more is NOT to say about it. The critique of mainstream economics has run its course: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
Merijn Knibbe could know this. #1, #2, #3, #4, #5, #6
The only reason why DSGE is still around despite the fact that even its dullest proponents have realized by now that it is indefensible proto-scientific garbage is that Heterodoxy has failed to develop a suitable alternative: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend)
Both Orthodoxy and Heterodoxy is proto-scientific garbage. Why economists are engaged in this senseless and endless quarrel about “neoclassical platitudes” and plain NONENTITIES like utility and equilibrium is a problem for the couch doctor, it is not a problem for the scientific community. Economists have been thrown out of the sciences long ago and are only admitted as useful idiots and clowns to the political Circus Maximus.#7
Egmont Kakarot-Handtke
#1 From Keynes’ fatal blunder to the true economic model
#2 From subjective weighing of motives to objective systemic properties
#3 When numbers don’t add up
#4 Economists: Jacks-of-all-trades ― except economics
#5 Sumner’s proto-scientific garbage
#6 The future of economics: why you will probably not be admitted to it, and why this is a good thing
#7 For details of the big picture see cross-references Employment
LINKS on Rob Reno’s ‘Mathematics is to science what a hammer is to a carpenter’ on Apr 26
Rob Reno maintains: “The entire science of mathematics, the whole domain of philosophy, the highest physics or chemistry, could not predict or know that the union of two gaseous hydrogen atoms with one gaseous oxygen atom would result in a new and qualitatively superadditive substance ― liquid water.”
The first popular misconception about science relates to prediction. See
► The brouhaha about prediction: which Feynman is right?
Bottom line: scientists do NOT predict, only political/religious manipulators and sociopaths predict.
Second popular misconception: economics suffers from mathiness. The fact is that economists are too stupid for the elementary mathematics that underlies macroeconomics. See
► Macroeconomics: Economists are too stupid for science
► Still beyond the reach of economists: The Holy Grail of Science
► Heterodoxy’s popular but silly math denial
► For details of the big picture see cross-references Math/Mathiness and cross-references Accounting
Bottom line: If mathematics is a tool then economists are the dumb folks that stubbornly hammer their thumbs and as bad workmen blame the tool.
Blog-Reference
Merijn Knibbe asks: “Is it possible to model unemployment in neoclassical ‘DSGE’ macro-economic models? I’m occupied with a project which compares neoclassical macro concepts with statistical macro concepts.”
The question is rhetorical because it is widely known by now that neoclassical economics in general and DSGE, in particular, is one of the greatest scientific blunders of all time.
Merijn Knibbe is well aware of this: “There is a momentous literature about this, even when people like Thomas Sargent and Robert Lucas and Edward Prescott and Christopher Pissarides, al winners of the Sveriges Riksbank Prize in Economic Sciences in Honor of Alfred Nobel, all use the word ‘leisure’ when they mean ‘unemployment’.”
Yes, neoclassical economics is proto-scientific garbage and the economics Nobel is plain fraud. Mainstream economists are stupid or corrupt or both, and more is NOT to say about it. The critique of mainstream economics has run its course: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)
Merijn Knibbe could know this. #1, #2, #3, #4, #5, #6
The only reason why DSGE is still around despite the fact that even its dullest proponents have realized by now that it is indefensible proto-scientific garbage is that Heterodoxy has failed to develop a suitable alternative: “... we may say that ... the omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend)
Both Orthodoxy and Heterodoxy is proto-scientific garbage. Why economists are engaged in this senseless and endless quarrel about “neoclassical platitudes” and plain NONENTITIES like utility and equilibrium is a problem for the couch doctor, it is not a problem for the scientific community. Economists have been thrown out of the sciences long ago and are only admitted as useful idiots and clowns to the political Circus Maximus.#7
Egmont Kakarot-Handtke
#1 From Keynes’ fatal blunder to the true economic model
#2 From subjective weighing of motives to objective systemic properties
#3 When numbers don’t add up
#4 Economists: Jacks-of-all-trades ― except economics
#5 Sumner’s proto-scientific garbage
#6 The future of economics: why you will probably not be admitted to it, and why this is a good thing
#7 For details of the big picture see cross-references Employment
***
#PointOfProof
Apr 26
***
Rob Reno maintains: “The entire science of mathematics, the whole domain of philosophy, the highest physics or chemistry, could not predict or know that the union of two gaseous hydrogen atoms with one gaseous oxygen atom would result in a new and qualitatively superadditive substance ― liquid water.”
The first popular misconception about science relates to prediction. See
► The brouhaha about prediction: which Feynman is right?
Bottom line: scientists do NOT predict, only political/religious manipulators and sociopaths predict.
Second popular misconception: economics suffers from mathiness. The fact is that economists are too stupid for the elementary mathematics that underlies macroeconomics. See
► Macroeconomics: Economists are too stupid for science
► Still beyond the reach of economists: The Holy Grail of Science
► Heterodoxy’s popular but silly math denial
► For details of the big picture see cross-references Math/Mathiness and cross-references Accounting
Bottom line: If mathematics is a tool then economists are the dumb folks that stubbornly hammer their thumbs and as bad workmen blame the tool.
April 20, 2019
The CCC ― a monument of economists’ utter scientific incompetence
Comment on Robert Vienneau on ‘Some Experts On The Cambridge Capital Controversy’*
Blog-Reference and Blog-Reference
David Ricardo defined economics back in 1821: “To determine the laws which regulate this distribution [between rent, profit, wages], is the principal problem in Political Economy.” (Principles, p. 5)
This problem has NOT been solved to this day. Economics is proto-scientific garbage since the founding fathers. Or, as Steve Keen summarized with regard to the Cambridge Capital Controversy: “Today economic theory continues to use exactly the same concepts which Sraffa’s critique showed to be completely invalid … There is no better sign of the intellectual bankruptcy of economics than this.”
Intellectual bankruptcy is all-embracing. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
Because profit theory has always been false, distribution theory has always been false. There is NO need to elaborate again and again on the defects of the diverse approaches. This is a senseless exercise. As Joan Robinson put it “Scrap the lot and start again.” In other words, what is needed is a Paradigm Shift. More specifically, economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#1, #2, #3, #4, #5
This is the correct core of macroeconomic premises: (A0) The most elementary systemic configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. it holds X=O. The monetary saving/dissaving of the household sector is defined as S≡Yw−C. The monetary profit/loss of the business sector is defined as Q≡C−Yw. Ergo Q≡−S.
The balances add up to zero. The mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. Q≡−S is the elementary version of the macroeconomic Profit Law.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on the quantity of capital employed,#6 (3) in order that profit comes into existence for the first time in the elementary production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income. #7, #8, #9, #10
Bottom line: Profit Theory and by consequence Distribution Theory is false from Adam Smith onward to the Cambridge Capital Controversy and beyond. Robert Vienneau has not realized anything and prolongs the worst performance in the history of modern science by recycling BS as expert knowledge.#11, #12
Egmont Kakarot-Handtke
* Thoughts on Economics
#1 Microfoundations are given with this axiom set: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) To accept these axioms has always been a sure indicator of idiocy.
#2 Where economics went wrong (II)
#3 Macroeconomics ― dead since Keynes
#4 From Keynes’ fatal blunder to the true economic model
#5 True macrofoundations: the reset of economics
#6 Squaring the Investment Cycle
#7 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#8 Ricardo, too, got profit theory wrong
#9 The futile attempt to recycle Sraffa
#10 Dear idiots, it is deficit spending that creates the distribution people complain about
#11 Economics: A science without scientists
#12 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
Related 'Ricardian vice and Keynesian confusedness' and 'Ricardo and the invention of class war' and 'Profit for Marxists' and 'Socialism and scientific incompetence' and 'Profit: after 200+ years still elusive' and 'The solemn burial of marginalism' and 'Capitalism, poverty, exploitation, and cross-over exploitation'. For details of the big picture see cross-references Profit/Distribution.
Blog-Reference and Blog-Reference
David Ricardo defined economics back in 1821: “To determine the laws which regulate this distribution [between rent, profit, wages], is the principal problem in Political Economy.” (Principles, p. 5)
This problem has NOT been solved to this day. Economics is proto-scientific garbage since the founding fathers. Or, as Steve Keen summarized with regard to the Cambridge Capital Controversy: “Today economic theory continues to use exactly the same concepts which Sraffa’s critique showed to be completely invalid … There is no better sign of the intellectual bankruptcy of economics than this.”
Intellectual bankruptcy is all-embracing. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
Because profit theory has always been false, distribution theory has always been false. There is NO need to elaborate again and again on the defects of the diverse approaches. This is a senseless exercise. As Joan Robinson put it “Scrap the lot and start again.” In other words, what is needed is a Paradigm Shift. More specifically, economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#1, #2, #3, #4, #5
This is the correct core of macroeconomic premises: (A0) The most elementary systemic configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. it holds X=O. The monetary saving/dissaving of the household sector is defined as S≡Yw−C. The monetary profit/loss of the business sector is defined as Q≡C−Yw. Ergo Q≡−S.
The balances add up to zero. The mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. Q≡−S is the elementary version of the macroeconomic Profit Law.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on the quantity of capital employed,#6 (3) in order that profit comes into existence for the first time in the elementary production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income. #7, #8, #9, #10
Bottom line: Profit Theory and by consequence Distribution Theory is false from Adam Smith onward to the Cambridge Capital Controversy and beyond. Robert Vienneau has not realized anything and prolongs the worst performance in the history of modern science by recycling BS as expert knowledge.#11, #12
Egmont Kakarot-Handtke
* Thoughts on Economics
#1 Microfoundations are given with this axiom set: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub) To accept these axioms has always been a sure indicator of idiocy.
#2 Where economics went wrong (II)
#3 Macroeconomics ― dead since Keynes
#4 From Keynes’ fatal blunder to the true economic model
#5 True macrofoundations: the reset of economics
#6 Squaring the Investment Cycle
#7 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
#8 Ricardo, too, got profit theory wrong
#9 The futile attempt to recycle Sraffa
#10 Dear idiots, it is deficit spending that creates the distribution people complain about
#11 Economics: A science without scientists
#12 How the Intelligent Non-Economist Can Refute Every Economist Hands Down
Related 'Ricardian vice and Keynesian confusedness' and 'Ricardo and the invention of class war' and 'Profit for Marxists' and 'Socialism and scientific incompetence' and 'Profit: after 200+ years still elusive' and 'The solemn burial of marginalism' and 'Capitalism, poverty, exploitation, and cross-over exploitation'. For details of the big picture see cross-references Profit/Distribution.
April 19, 2019
MMT: economics for suckers
Comment on Dylan Matthews on ‘Modern Monetary Theory, explained’*
Blog-Reference
Dylan Matthews frames his contribution as follows: “I’ll explain MMT theories about deficits, inflation, and employment, and what it all means for Democratic Party politics in 2020 and beyond.”
Clearly, Dylan Matthews delivers another example of political blather. He still has not realized that economics in general and MMT, in particular, cannot be taken seriously.#1 And he is obviously not aware that economics is a failed/fake science from Adam Smith onward to MMT.
The general public does not know that there is 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.
Economics consists of the major approaches Walrasianism, Keynesianism, Marxianism, Austrianism that are mutually contradictory, axiomatically false, and materially/ formally inconsistent. What can be observed is the pluralism of provably false theories.
Because MMT, too, is provably false, i.e. materially/formally inconsistent, MMT policy guidance has no sound scientific foundations. MMT does not provide a scientifically valid theory but is political agenda pushing for the Oligarchy in a scientific/social bluff package.#2, #3
Dylan Matthews gives a fair account of the current state of the discussion except for the fact that he does not mention that MMT is refuted on all counts.
The failure of MMT is due to the fact that its underlying macroeconomic foundations are false.#4 The lethal blunder of MMT is that it is built upon a provably false sectoral balances equation, i.e. upon (I−S)+(G−T)+(X−M)=0.#5 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. Because all variables are measurable with the precision of two decimal places, the issue can be decided by mathematical proof and empirical test. However, NO MMTer has ever answered to the proof of material/formal inconsistency. MMTers are simply too busy with pushing their political agenda. After all, in the political Circus Maximus, nobody cares about true/false.
Accordingly, this is Dylan Matthews’ political bottom line: “The rise of MMT could allow Democrats to embrace the de facto fiscal policy of Republican presidents, who tend to explode the deficit to finance pet initiatives like tax cuts and defense spending, leaving Democrats to clean up afterward. MMT could be Democrats’ way of saying, ‘We don’t want to be suckers anymore’.”#6
True, if Republicans can deceive voters so can Democrats. And MMT is as good as any other economic approach for an academic con job.#7
Egmont Kakarot-Handtke
* Vox
#1 MMT sucks
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 Economics, MMT, and the capture of science by the political mob
#4 Macroeconomics ― dead since Keynes
#5 From Keynes’ fatal blunder to the true economic model
#6 Dear idiots, it is deficit spending that creates the distribution people complain about
#7 Economists: “a bevy of camp-following whores”
LINKS on Sam Fleming/Chris Giles’ Why America is learning to love budget deficits on Apr 26
Sam Fleming and Chris Giles quote: “The winning formula for the Democrats is they are going to have to endorse some of these relatively fiscally extreme positions to get nominated,” says one Democratic strategist, speaking of the 2020 presidential contenders. “The threats of debt and deficits have not panned out. We have been running deficits and debt for 30 years and where is the crowding out, the inflation and the soaring interest rates?”
Of course, there was neither inflation nor soaring interest rates. This has never been more than hallucinations of scientifically incompetent economists. Instead, what the policy of deficit-spending/money-creation has produced is the insane distribution of income and financial wealth. For details see:
► Dear idiots, it is deficit spending that creates the distribution people complain about
► MMT: Distribution is the drawback NOT Inflation
► Keynes, Lerner, MMT, Trump, Biden, and exploding profit
► MMT: economics for suckers
► Dear idiots, MMTers are Wall Street’s agenda pushers
► Safe assets ― how the State pampers the Oligarchy
► MMT: fundamentally false
► Economics, MMT, and the capture of science by the political mob
► MMT is an economic policy fraud
► Macroeconomics: Economists are too stupid for science
► The canonical macroeconomic model
Blog-Reference
Dylan Matthews frames his contribution as follows: “I’ll explain MMT theories about deficits, inflation, and employment, and what it all means for Democratic Party politics in 2020 and beyond.”
Clearly, Dylan Matthews delivers another example of political blather. He still has not realized that economics in general and MMT, in particular, cannot be taken seriously.#1 And he is obviously not aware that economics is a failed/fake science from Adam Smith onward to MMT.
The general public does not know that there is 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.
Economics consists of the major approaches Walrasianism, Keynesianism, Marxianism, Austrianism that are mutually contradictory, axiomatically false, and materially/ formally inconsistent. What can be observed is the pluralism of provably false theories.
Because MMT, too, is provably false, i.e. materially/formally inconsistent, MMT policy guidance has no sound scientific foundations. MMT does not provide a scientifically valid theory but is political agenda pushing for the Oligarchy in a scientific/social bluff package.#2, #3
Dylan Matthews gives a fair account of the current state of the discussion except for the fact that he does not mention that MMT is refuted on all counts.
The failure of MMT is due to the fact that its underlying macroeconomic foundations are false.#4 The lethal blunder of MMT is that it is built upon a provably false sectoral balances equation, i.e. upon (I−S)+(G−T)+(X−M)=0.#5 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. Because all variables are measurable with the precision of two decimal places, the issue can be decided by mathematical proof and empirical test. However, NO MMTer has ever answered to the proof of material/formal inconsistency. MMTers are simply too busy with pushing their political agenda. After all, in the political Circus Maximus, nobody cares about true/false.
Accordingly, this is Dylan Matthews’ political bottom line: “The rise of MMT could allow Democrats to embrace the de facto fiscal policy of Republican presidents, who tend to explode the deficit to finance pet initiatives like tax cuts and defense spending, leaving Democrats to clean up afterward. MMT could be Democrats’ way of saying, ‘We don’t want to be suckers anymore’.”#6
True, if Republicans can deceive voters so can Democrats. And MMT is as good as any other economic approach for an academic con job.#7
Egmont Kakarot-Handtke
* Vox
#1 MMT sucks
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 Economics, MMT, and the capture of science by the political mob
#4 Macroeconomics ― dead since Keynes
#5 From Keynes’ fatal blunder to the true economic model
#6 Dear idiots, it is deficit spending that creates the distribution people complain about
#7 Economists: “a bevy of camp-following whores”
***
Wikimedia AXEC118d
***
Sam Fleming and Chris Giles quote: “The winning formula for the Democrats is they are going to have to endorse some of these relatively fiscally extreme positions to get nominated,” says one Democratic strategist, speaking of the 2020 presidential contenders. “The threats of debt and deficits have not panned out. We have been running deficits and debt for 30 years and where is the crowding out, the inflation and the soaring interest rates?”
Of course, there was neither inflation nor soaring interest rates. This has never been more than hallucinations of scientifically incompetent economists. Instead, what the policy of deficit-spending/money-creation has produced is the insane distribution of income and financial wealth. For details see:
► Dear idiots, it is deficit spending that creates the distribution people complain about
► MMT: Distribution is the drawback NOT Inflation
► Keynes, Lerner, MMT, Trump, Biden, and exploding profit
► MMT: economics for suckers
► Dear idiots, MMTers are Wall Street’s agenda pushers
► Safe assets ― how the State pampers the Oligarchy
► MMT: fundamentally false
► Economics, MMT, and the capture of science by the political mob
► MMT is an economic policy fraud
► Macroeconomics: Economists are too stupid for science
► The canonical macroeconomic model
***
#PointOfProof
Apr 26
April 17, 2019
Economics, MMT, and the capture of science by the political mob
Comment on Bill Mitchell on ‘When the MMT critics jump the shark’*
Blog-Reference and Blog-Reference
Bill Mitchell is well aware of how communication works: “Terminology, semantics matter a lot in framing arguments and educational dissemination.” and “So framing and language matter and one of the things that the core MMT group has been mindful of and intent on ensuring is that these conceptual points are clear in peoples’ minds.”
And then he starts framing and mobbing Thomas Palley (who has indeed delivered a brain-dead critique of MMT.#1):
“I have known him for decades. He continually disappoints. He has become one of those self-styled Post Keynesians who are trying to destroy the credibility of Modern Monetary Theory (MMT) for reasons that are not entirely clear although I know things I won’t write here.”
“But, the reality is that his work (what limited academic work that he has published) sits squarely in the Neoclassical IS-LM synthesis tradition, which is not Post Keynesian nor heterodox at all. It is the antithesis of Post Keynesian.”
“So I have never understood how he wants to appear Post Keynesian. Anyway whatever the answer to that little puzzle is, he definitely has a set on MMT and regularly recycles the same sorts of attacks, which, continue to have the same problems. In other words, he does not seem to (or does not want to) learn.”
“He also accuses those who respond of dishonesty ― playing the pure is me card ― although his own work on MMT fails, …”
“At the time, it was a ridiculous claim that suggested he had read very little of our work or was just being a vindictive or both.”
“Has Palley not read my work? The answer is he has, and indeed, in February 2014, he did cite my work and lied about it.”
“He either hasn’t read much and therefore should not be holding himself out as any sort of expert on the matter or he has deliberately avoided referring to those sections of our work that are inconvenient for his vindictiveness, which disqualifies him through a lack of credibility.”
“The selective quoting of literature is, in fact, the exemplar of the way academics construct dishonest scholarship. Not that Palley is working in an academic post (despite trying).”
“Palley either hasn’t read my work or deliberately avoids citing it. That is not the behaviour of a person acting in good faith.”
“That is a dishonest representation. I would forgive a non-economist, not trained in concepts such as opportunity cost, etc if they had made that statement.”
“That might make him feel important. But it certainly doesn’t help him establish the credibility he has so sorely desired over the years but never seems to find.”
“So, Tom, you can do better than the pathetic stuff you are pumping out at present. It doesn’t help your standing at all.”
That sort of argumentation is known as Ad-hominem Fallacy. Genuine scientists avoid motive speculation and folk psychology because they know that it leads away from the point at issue and directly into the bottomless swamp of inconclusive blather. As Schumpeter put it: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”
The proto-scientific swamp, though, is the natural habitat of political agenda pushers who have no truck whatsoever with true or false. The methodological point to grasp is that there is theoretical economics and political 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. Fact is that 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 NOT a science. Economists are NOT scientists but useful political idiots. MMTers are NO exception. Bill Mitchell, in particular, has disqualified himself in multiple dimensions
• heavy use of ad hominem,
• suppression of serious critique,#2
• redundant refutation of blatant straw-man critique,#3
• continuous deflection from the point at issue, i.e. the inconsistency of MMT theory and the fraudulence of MMT policy.
The real point at issue is that MMT is built upon a provably false sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0.#4 The true balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. Because all variables are measurable with the precision of two decimal places, the real point at issue can be decided once and for all by mathematical proof and empirical test. However, NO MMTer has ever answered to the proof of material/formal inconsistency of MMT.
Economics is a failed/fake science. Economic debates do not advance science but are nothing more than political brawls.#5 The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud. MMT academics are an integral part of the fraud. Debates between competing schools have no scientific content but are propaganda exercises. The MMTer Bill Mitchell is NOT a scientist but a political agenda pusher. The same holds for the Post Keynesian Thomas Palley. Both have to be expelled from the scientific community.
Egmont Kakarot-Handtke
* Bill Mitchell When the MMT critics jump the shark
#1 Post-Keynesianism vs MMT: a Zombie debate
#2 Cryptoeconomics ― the best of Bill Mitchell’s spam folder
#3 Debunking idiots does not prove that MMT is valid
#4 Yes, economists are really that stupid
#5 Economics: The proto-scientific mob embroiled in just another gang war
Related 'Economics: A science without scientists' and 'Economists: Time to say goodbye' and 'Dear idiots, MMTers are Wall Street’s agenda pushers' and 'How a Swedish professor cares about the Oligarchy’s financial well-being'. For details of the big picture see cross-references Failed/Fake Scientists.
Blog-Reference and Blog-Reference
Bill Mitchell is well aware of how communication works: “Terminology, semantics matter a lot in framing arguments and educational dissemination.” and “So framing and language matter and one of the things that the core MMT group has been mindful of and intent on ensuring is that these conceptual points are clear in peoples’ minds.”
And then he starts framing and mobbing Thomas Palley (who has indeed delivered a brain-dead critique of MMT.#1):
“I have known him for decades. He continually disappoints. He has become one of those self-styled Post Keynesians who are trying to destroy the credibility of Modern Monetary Theory (MMT) for reasons that are not entirely clear although I know things I won’t write here.”
“But, the reality is that his work (what limited academic work that he has published) sits squarely in the Neoclassical IS-LM synthesis tradition, which is not Post Keynesian nor heterodox at all. It is the antithesis of Post Keynesian.”
“So I have never understood how he wants to appear Post Keynesian. Anyway whatever the answer to that little puzzle is, he definitely has a set on MMT and regularly recycles the same sorts of attacks, which, continue to have the same problems. In other words, he does not seem to (or does not want to) learn.”
“He also accuses those who respond of dishonesty ― playing the pure is me card ― although his own work on MMT fails, …”
“At the time, it was a ridiculous claim that suggested he had read very little of our work or was just being a vindictive or both.”
“Has Palley not read my work? The answer is he has, and indeed, in February 2014, he did cite my work and lied about it.”
“He either hasn’t read much and therefore should not be holding himself out as any sort of expert on the matter or he has deliberately avoided referring to those sections of our work that are inconvenient for his vindictiveness, which disqualifies him through a lack of credibility.”
“The selective quoting of literature is, in fact, the exemplar of the way academics construct dishonest scholarship. Not that Palley is working in an academic post (despite trying).”
“Palley either hasn’t read my work or deliberately avoids citing it. That is not the behaviour of a person acting in good faith.”
“That is a dishonest representation. I would forgive a non-economist, not trained in concepts such as opportunity cost, etc if they had made that statement.”
“That might make him feel important. But it certainly doesn’t help him establish the credibility he has so sorely desired over the years but never seems to find.”
“So, Tom, you can do better than the pathetic stuff you are pumping out at present. It doesn’t help your standing at all.”
That sort of argumentation is known as Ad-hominem Fallacy. Genuine scientists avoid motive speculation and folk psychology because they know that it leads away from the point at issue and directly into the bottomless swamp of inconclusive blather. As Schumpeter put it: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”
The proto-scientific swamp, though, is the natural habitat of political agenda pushers who have no truck whatsoever with true or false. The methodological point to grasp is that there is theoretical economics and political 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. Fact is that 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 NOT a science. Economists are NOT scientists but useful political idiots. MMTers are NO exception. Bill Mitchell, in particular, has disqualified himself in multiple dimensions
• heavy use of ad hominem,
• suppression of serious critique,#2
• redundant refutation of blatant straw-man critique,#3
• continuous deflection from the point at issue, i.e. the inconsistency of MMT theory and the fraudulence of MMT policy.
The real point at issue is that MMT is built upon a provably false sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0.#4 The true balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. Because all variables are measurable with the precision of two decimal places, the real point at issue can be decided once and for all by mathematical proof and empirical test. However, NO MMTer has ever answered to the proof of material/formal inconsistency of MMT.
Economics is a failed/fake science. Economic debates do not advance science but are nothing more than political brawls.#5 The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud. MMT academics are an integral part of the fraud. Debates between competing schools have no scientific content but are propaganda exercises. The MMTer Bill Mitchell is NOT a scientist but a political agenda pusher. The same holds for the Post Keynesian Thomas Palley. Both have to be expelled from the scientific community.
Egmont Kakarot-Handtke
* Bill Mitchell When the MMT critics jump the shark
#1 Post-Keynesianism vs MMT: a Zombie debate
#2 Cryptoeconomics ― the best of Bill Mitchell’s spam folder
#3 Debunking idiots does not prove that MMT is valid
#4 Yes, economists are really that stupid
#5 Economics: The proto-scientific mob embroiled in just another gang war
Related 'Economics: A science without scientists' and 'Economists: Time to say goodbye' and 'Dear idiots, MMTers are Wall Street’s agenda pushers' and 'How a Swedish professor cares about the Oligarchy’s financial well-being'. For details of the big picture see cross-references Failed/Fake Scientists.
***
Wikimedia AXEC144c
April 15, 2019
Yes, economists are really that stupid
Comment on Alan Longbon on ‘U.S. Private Domestic Sector Balance Books A $147 Billion Surplus Through March 2019’
Blog-Reference
Alan Longbon reports: “The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income. Dollars added to the economy by the federal government allow the private sector to post a $147 billion surplus and add to its stock of net financial assets.”
This statement proves that, to this day, economists have no idea what profit is and what the decisive difference between income and profit is.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q=−S, i.e. the mirror image of household sector saving S is business sector loss (-Q). The mirror image of household sector dissaving (-S) is business sector profit Q.#1, #2 The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the State, the Profit Law boils down to Q=(G−T), i.e. Public Deficit = Private Profit.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on markup-setting, nor on risk-taking, (3) in order that profit comes into existence for the first time in the production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income, (10) total income is NEVER equal to total spending/value of output,#3 (11) saving and investment are causally independent and NEVER equal, (12) Keynesianism, Post-Keynesianism, I=S/IS-LM, New Keynesianism and all variants are scientifically worthless, (13) the foundational MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is false because it lacks the balance of the business sector Q.
“The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income.” is false and has to be replaced by “The US budget deficit is $147 billion in March 2019; this is a net add to the Oligarchy’s financial wealth.” Income is a flow and financial wealth is a stock. And the link between stocks and flows are the differences of flows called profit/loss of the business sector Q or saving/dissaving of the household sector S. There is NO such thing as a “private sector” or a “private domestic sector income”.#4 Economists in general and MMTers, in particular, simply don’t get it.#5
Egmont Kakarot-Handtke
#1 The elementary production-consumption economy is for a start defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw) and two definitions (Q≡C−Yw, S≡Yw−C).
#2 For details of the big picture see cross-references Profit/Distribution
#3 Keynes got it wrong: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
#4 Dear idiots, government deficits do NOT fund private savings
#5 Why is MMT so false?
Related 'How the intelligent non-economist can refute every economist hands down' and 'Debunking Squared' and 'From Keynes’ fatal blunder to the true economic model' and 'MMT and the canonical macroeconomic model' and 'The clock runs down on economics' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Econogenics in action'. For details of the big picture see cross-references Failed/Fake Scientists.
Wikimedia AXEC109i
Blog-Reference
Alan Longbon reports: “The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income. Dollars added to the economy by the federal government allow the private sector to post a $147 billion surplus and add to its stock of net financial assets.”
This statement proves that, to this day, economists have no idea what profit is and what the decisive difference between income and profit is.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q=−S, i.e. the mirror image of household sector saving S is business sector loss (-Q). The mirror image of household sector dissaving (-S) is business sector profit Q.#1, #2 The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the State, the Profit Law boils down to Q=(G−T), i.e. Public Deficit = Private Profit.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on markup-setting, nor on risk-taking, (3) in order that profit comes into existence for the first time in the production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income, (10) total income is NEVER equal to total spending/value of output,#3 (11) saving and investment are causally independent and NEVER equal, (12) Keynesianism, Post-Keynesianism, I=S/IS-LM, New Keynesianism and all variants are scientifically worthless, (13) the foundational MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is false because it lacks the balance of the business sector Q.
“The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income.” is false and has to be replaced by “The US budget deficit is $147 billion in March 2019; this is a net add to the Oligarchy’s financial wealth.” Income is a flow and financial wealth is a stock. And the link between stocks and flows are the differences of flows called profit/loss of the business sector Q or saving/dissaving of the household sector S. There is NO such thing as a “private sector” or a “private domestic sector income”.#4 Economists in general and MMTers, in particular, simply don’t get it.#5
Egmont Kakarot-Handtke
#1 The elementary production-consumption economy is for a start defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw) and two definitions (Q≡C−Yw, S≡Yw−C).
#2 For details of the big picture see cross-references Profit/Distribution
#3 Keynes got it wrong: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
#4 Dear idiots, government deficits do NOT fund private savings
#5 Why is MMT so false?
Related 'How the intelligent non-economist can refute every economist hands down' and 'Debunking Squared' and 'From Keynes’ fatal blunder to the true economic model' and 'MMT and the canonical macroeconomic model' and 'The clock runs down on economics' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Econogenics in action'. For details of the big picture see cross-references Failed/Fake Scientists.
***
Wikimedia AXEC109i
No future for Socialism and Capitalism
Comment on Robert Wolff/Tom Hickey on ‘The Future of Socialism’
Blog-Reference
The philosopher Tom Hickey cites the Professor Emeritus of Afro-American Studies: “In what follows, I propose to take as my text a famous statement from Marx’s A Contribution to the Critique of Political Economy ― a sort of preliminary sketch of Das Kapital ― and see what it can tell us about the capitalism of our day. I shall try to show you that Marx was fundamentally right about the direction in which capitalism would develop, but that because of his failure to anticipate three important features of the mature capitalist world, his optimism concerning the outcome of that development was misplaced. Along the way, I shall take a fruitful detour through the arid desert of financial accounting theory. Here is the famous passage, from the preface of the Contribution, published in 1859: ‘No social order ever disappears before all the productive forces for which there is room in it have been developed, and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.’”
It is pretty obvious that Marx’s description of Capitalism is sociological/historical/ philosophical. Marx claimed to do science but he was never more than a storyteller/ agenda-pusher and never understood how the economy works. More specifically, Marx never understood what profit is.#1, #2, #3 This he has in common with the rest of the economists.#4 Economics is a failed/fake science and Marx is an integral part of the mess: the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, etc. ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all have the foundational concept of the subject matter ― profit ― wrong.
From the most embarrassing failure in the history of modern science, it follows that all these incompetent sociological/historical/philosophical blatherers have to be buried for good at the Flat-Earth Cemetery.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a production-consumption economy, this reduces to Q≡−S, i.e. the mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. The point to grasp is that profit for the business sector as a whole has NOTHING to do with exploitation or class struggle but with deficit spending. Because Marx did not understand how the economy works his sociological/historical/philosophical storytelling about Capitalism was and is proto-scientific BS. His prophecies about the future of Capitalism are on the same level as tea leaves reading.
Capitalism and Socialism are monetary economies and subject to the same fundamental laws. The macroeconomic Profit Law holds for the USA, the USEu, Russia, and China and it is absolutely independent of the ownership of the firms, or of the self-identification as capitalistic or socialistic, or of other subjective factors. The macroeconomic Profit Law consists of precisely measurable variables and is testable.
The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S and (ii) if the State runs a deficit, i.e. (G−T)>0.
Case (i) is characteristic of early Capitalism and case (ii) is characteristic of late Capitalism. Currently, the so-called free-market economy is on the full life support of the State. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep. Capitalism will break down as soon as the sum of (i) and (ii) turns negative and NOT because the “material conditions of their existence have matured in the womb of the old society” or because of a social/political revolution.#5
Neither orthodox nor heterodox economists understand to this day how the economy works and what profit is. Robert Wolff maintains “… I remain persuaded that Karl Marx has something important to teach us about the world in which we live today.” Nothing could be further from the truth but this is forever beyond the horizon of stupid/corrupt storytellers like Robert Wolff, Tom Hickey, and the rest of failed/fake economists. These folks have NO future as scientists.
Egmont Kakarot-Handtke
#1 Dear idiots, Marx got profit and exploitation wrong
#2 Karl Marx, fake scientist
#3 Profit for Marxists
#4 The Profit Theory is False Since Adam Smith
#5 Mathematical Proof of the Breakdown of Capitalism
Related 'Who is really a scientist?' and 'Socialism and scientific incompetence' and 'Capitalism, poverty, exploitation, and cross-over exploitation' and 'No exploitation, no classes'. For details of the big picture see cross-references Profit and cross-references Accounting and cross-references Political Economics/Stupidity/Corruption and cross-references Paradigm Shift.
Blog-Reference
The philosopher Tom Hickey cites the Professor Emeritus of Afro-American Studies: “In what follows, I propose to take as my text a famous statement from Marx’s A Contribution to the Critique of Political Economy ― a sort of preliminary sketch of Das Kapital ― and see what it can tell us about the capitalism of our day. I shall try to show you that Marx was fundamentally right about the direction in which capitalism would develop, but that because of his failure to anticipate three important features of the mature capitalist world, his optimism concerning the outcome of that development was misplaced. Along the way, I shall take a fruitful detour through the arid desert of financial accounting theory. Here is the famous passage, from the preface of the Contribution, published in 1859: ‘No social order ever disappears before all the productive forces for which there is room in it have been developed, and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.’”
It is pretty obvious that Marx’s description of Capitalism is sociological/historical/ philosophical. Marx claimed to do science but he was never more than a storyteller/ agenda-pusher and never understood how the economy works. More specifically, Marx never understood what profit is.#1, #2, #3 This he has in common with the rest of the economists.#4 Economics is a failed/fake science and Marx is an integral part of the mess: the major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, etc. ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all have the foundational concept of the subject matter ― profit ― wrong.
From the most embarrassing failure in the history of modern science, it follows that all these incompetent sociological/historical/philosophical blatherers have to be buried for good at the Flat-Earth Cemetery.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a production-consumption economy, this reduces to Q≡−S, i.e. the mirror image of household sector saving S is business sector loss −Q. The mirror image of household sector dissaving (-S) is business sector profit Q. The point to grasp is that profit for the business sector as a whole has NOTHING to do with exploitation or class struggle but with deficit spending. Because Marx did not understand how the economy works his sociological/historical/philosophical storytelling about Capitalism was and is proto-scientific BS. His prophecies about the future of Capitalism are on the same level as tea leaves reading.
Capitalism and Socialism are monetary economies and subject to the same fundamental laws. The macroeconomic Profit Law holds for the USA, the USEu, Russia, and China and it is absolutely independent of the ownership of the firms, or of the self-identification as capitalistic or socialistic, or of other subjective factors. The macroeconomic Profit Law consists of precisely measurable variables and is testable.
The reduced macroeconomic Profit Law Q≡(I−S)+(G−T) tells one that profit in the monetary economy is positive (i) if business sector investment I is greater than household sector saving S and (ii) if the State runs a deficit, i.e. (G−T)>0.
Case (i) is characteristic of early Capitalism and case (ii) is characteristic of late Capitalism. Currently, the so-called free-market economy is on the full life support of the State. The macroeconomic Profit Law boils down to Public Deficit = Private Profit and thus the Oligarchy’s financial wealth and public debt (currently $22 trillion) grow in lockstep. Capitalism will break down as soon as the sum of (i) and (ii) turns negative and NOT because the “material conditions of their existence have matured in the womb of the old society” or because of a social/political revolution.#5
Neither orthodox nor heterodox economists understand to this day how the economy works and what profit is. Robert Wolff maintains “… I remain persuaded that Karl Marx has something important to teach us about the world in which we live today.” Nothing could be further from the truth but this is forever beyond the horizon of stupid/corrupt storytellers like Robert Wolff, Tom Hickey, and the rest of failed/fake economists. These folks have NO future as scientists.
Egmont Kakarot-Handtke
#1 Dear idiots, Marx got profit and exploitation wrong
#2 Karl Marx, fake scientist
#3 Profit for Marxists
#4 The Profit Theory is False Since Adam Smith
#5 Mathematical Proof of the Breakdown of Capitalism
Related 'Who is really a scientist?' and 'Socialism and scientific incompetence' and 'Capitalism, poverty, exploitation, and cross-over exploitation' and 'No exploitation, no classes'. For details of the big picture see cross-references Profit and cross-references Accounting and cross-references Political Economics/Stupidity/Corruption and cross-references Paradigm Shift.
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Wikimedia AXEC109i The Profit Theory is false since Adam Smith
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Twitter/X Dec 30, 2023
April 13, 2019
Post Keynesianism vs MMT: a Zombie debate
Comment on Lars Syll on ‘Thomas Palley claims MMT fails to provide plausible macroeconomics’*
Blog-Reference and Blog-Reference and Blog-Reference
Thomas Palley is asked: “What are the major flaws you see within Modern Monetary Theory?”
Clearly, the question is about the scientific truth/falsehood of the theory called MMT. Scientific truth is, in turn, defined by material and formal consistency: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)
The problem is that economics is NOT a science but political agenda pushing. Economists are NOT scientists but useful political idiots. Because of this, economic debaters do not spend much time, if any, on clarifying and finally deciding questions of material/formal consistency but turn at the first opportunity to political blather.
Accordingly, Thomas Palley gets straightforwardly lost in the woods of meta-communication and political practicability:
“MMT is the counterpart to the [budget] hawks. And here’s the rub. MMT is needed as an anti-dote to austerity hawks, but neither make for good economic theory.”
“… MMT economists used to say it is easy to have full employment without inflation. I don’t think that is true.”
“… MMT economists tend to say the central bank should park the interest rate at zero and forget about it. I think that is crazy. It is throwing away an important economic policy tool,”
“Once MMT starts addressing these critiques, it collapses into fairly standard Keynesian economics. But MMT does not want to acknowledge that because it undercuts its policy polemic and claim to fame.”
“As a political polemic, it [MMT] has done a lot of good by riposting the budget hawks and by persuading people that government has much more financial space than the hawks say.”
“…we need to persuade the general public about the role of government. Persuade people we need government to stabilize the economy.”
Note well that it is NOT the task of economists to persuade the public of anything. This is the business of politicians. The task of economists is to figure out how the economy works.
And here is the problem: economists are NOT scientists and have NOT produced scientific knowledge in the last 200+ years but proto-scientific garbage. The fact of the matter is that both Post Keynesianism and MMT are provably false.#1, #2 So, any debate between the two camps is not a scientific debate but at best an entertaining talk show.
Thomas Palley fails to identify the lethal defect of MMT. MMT is based on the sectoral balances equation (I−S)+(G−T)+(X−M)=0. This equation is provably false.#3, #4 Because the foundations are false the whole analytical superstructure is false. This, in turn, means that MMT policy guidance has NO solid scientific foundations. MMT is scientifically worthless and political fraud. The fatal effect of MMT policy is on distribution and NOT on inflation.
Fact is that Post Keynesianism is not one iota better.#5, #6
In the final analysis, there is nothing to choose between Post Keynesianism and MMT. Both approaches go down the scientific drain. The actual problem of economics is how to get all these scientifically incompetent/politically corrupt folks#7 out of the way and to make economics a science.
Egmont Kakarot-Handtke
* Thomas Palley, Modern Money Theory (MMT) vs. Structural Keynesianism
#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 For the full-spectrum refutation of Keynesianism/Post-Keynesianism see cross-references Keynesianism
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Rectification of MMT macro accounting
#5 Why Post Keynesianism Is Not Yet a Science
#6 Keynes, Lerner, MMT, Trump, Biden, and exploding profit
#7 How a Swedish professor cares about the Oligarchy’s financial well-being
Related 'From Keynes’ fatal blunder to the true economic model' and 'The canonical macroeconomic model' and 'MMT vs Mainstream: examining proto-scientific garbage in detail' and 'MMT vs WSJ: Another futile exercise in moron bashing' and 'Hype does not help: MMT is toast'.
Blog-Reference and Blog-Reference and Blog-Reference
Thomas Palley is asked: “What are the major flaws you see within Modern Monetary Theory?”
Clearly, the question is about the scientific truth/falsehood of the theory called MMT. Scientific truth is, in turn, defined by material and formal consistency: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)
The problem is that economics is NOT a science but political agenda pushing. Economists are NOT scientists but useful political idiots. Because of this, economic debaters do not spend much time, if any, on clarifying and finally deciding questions of material/formal consistency but turn at the first opportunity to political blather.
Accordingly, Thomas Palley gets straightforwardly lost in the woods of meta-communication and political practicability:
“MMT is the counterpart to the [budget] hawks. And here’s the rub. MMT is needed as an anti-dote to austerity hawks, but neither make for good economic theory.”
“… MMT economists used to say it is easy to have full employment without inflation. I don’t think that is true.”
“… MMT economists tend to say the central bank should park the interest rate at zero and forget about it. I think that is crazy. It is throwing away an important economic policy tool,”
“Once MMT starts addressing these critiques, it collapses into fairly standard Keynesian economics. But MMT does not want to acknowledge that because it undercuts its policy polemic and claim to fame.”
“As a political polemic, it [MMT] has done a lot of good by riposting the budget hawks and by persuading people that government has much more financial space than the hawks say.”
“…we need to persuade the general public about the role of government. Persuade people we need government to stabilize the economy.”
Note well that it is NOT the task of economists to persuade the public of anything. This is the business of politicians. The task of economists is to figure out how the economy works.
And here is the problem: economists are NOT scientists and have NOT produced scientific knowledge in the last 200+ years but proto-scientific garbage. The fact of the matter is that both Post Keynesianism and MMT are provably false.#1, #2 So, any debate between the two camps is not a scientific debate but at best an entertaining talk show.
Thomas Palley fails to identify the lethal defect of MMT. MMT is based on the sectoral balances equation (I−S)+(G−T)+(X−M)=0. This equation is provably false.#3, #4 Because the foundations are false the whole analytical superstructure is false. This, in turn, means that MMT policy guidance has NO solid scientific foundations. MMT is scientifically worthless and political fraud. The fatal effect of MMT policy is on distribution and NOT on inflation.
Fact is that Post Keynesianism is not one iota better.#5, #6
In the final analysis, there is nothing to choose between Post Keynesianism and MMT. Both approaches go down the scientific drain. The actual problem of economics is how to get all these scientifically incompetent/politically corrupt folks#7 out of the way and to make economics a science.
Egmont Kakarot-Handtke
* Thomas Palley, Modern Money Theory (MMT) vs. Structural Keynesianism
#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 For the full-spectrum refutation of Keynesianism/Post-Keynesianism see cross-references Keynesianism
#3 Wikipedia and the promotion of economists’ idiotism (II)
#4 Rectification of MMT macro accounting
#5 Why Post Keynesianism Is Not Yet a Science
#6 Keynes, Lerner, MMT, Trump, Biden, and exploding profit
#7 How a Swedish professor cares about the Oligarchy’s financial well-being
Related 'From Keynes’ fatal blunder to the true economic model' and 'The canonical macroeconomic model' and 'MMT vs Mainstream: examining proto-scientific garbage in detail' and 'MMT vs WSJ: Another futile exercise in moron bashing' and 'Hype does not help: MMT is toast'.
***
#PointOfProof
Apr 13