August 31, 2020

The new economic Paradigm requires a new textbook

Comment on Bill Mitchell on ‘US Federal Reserve statement signals a new phase in the paradigm shift in macroeconomics’


Bill Mitchell summarizes current events “Regular readers will know that for the last few years I have been documenting the way that the dominant paradigm in macroeconomics (New Keynesianism) is slowly disintegrating as the dissonance between its empirical predictions and reality becomes too great to ignore and justify. … Last week, the US Federal Reserve Bank Chairman, Jerome Powell made a path breaking speech ― New Economic Challenges and the Fed’s Monetary Policy Review ― at the annual economic policy symposium sponsored by the Federal Reserve Bank of Kansas City at Jackson Hole. On the same day, the Federal Reserve Bank released a statement ― Federal Open Market Committee announces approval of updates to its Statement on Longer-Run Goals and Monetary Policy Strategy. We have now entered a new phase of the paradigm shift in macroeconomics.”

Bill Mitchell feels validated “This has progressively opened the door for Modern Monetary Theory (MMT), the emerging rival paradigm.” Mainstream economics has failed “But we are making progress.”

“And, if you scanned the textbook market in macroeconomics looking for guidance to all of this, then you would find only ONE offering that allows you to understand all of this ― yes ― Macroeconomics (William Mitchell, L. Randall Wray, and Martin Watts). Small sales pitch ― but that is the fact.”

Yes, a Paradigm Shift is going on, but it is not headed toward MMT. Yes, mainstream textbooks are obsolete #1, #2, #3 but this does not mean that the new MMT textbook is scientifically acceptable. The fact of the matter is that the foundational MMT sectoral balances equation is provably false.#4 Because of this, the analytical superstructure of MMT is false and as a consequence, the new MMT macroeconomics textbook is scientifically worthless.

The Paradigm Shift moves from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.#5

The good news for teachers and students is that the axiomatically correct textbook Sovereign Economics is now available.#6

Egmont Kakarot-Handtke


#6 Sovereign Economics Amazon.de, BoD, etc.

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REPLY to Tom Hickey on Sep 2

Bill Mitchell commented on the FED’s announcement of a new monetary strategy: “We have now entered a new phase of the paradigm shift in macroeconomics.” And “Jerome Powell’s speech at Jackson Hole was described by a Reuters report (August 28, 2020) ― With new monetary policy approach, Fed lays Phillips curve to rest ― in this way: ‘One of the fundamental theories of modern economics may have finally been put to rest.’

This may be politically true but is scientifically false because the Phillips curve had been put to rest already in 2012.#1

The folks at the FED are a bit slow, worse, they still do not get the point.

The axiomatically correct macroeconomic Employment Law states that in order to increase employment, wages must go UP, and/or prices must go DOWN. To push inflation is pure idiocy. 

Yes, for the micro-brains of economists this appears counter-intuitive. But then, microeconomics is long dead. The Paradigm Shift from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations is an accomplished fact.#2


#1 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster, see Links on the Phillips Curve
#2 Cross-references Paradigm Shift
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August 30, 2020

MMT: fraudsters united

Comment on Richard Murphy on ‘Steve Keen’s lightbulb moment on modern monetary theory’*


Richard Murphy, Steve Keen, and Stephanie Kelton have been individually refuted some time ago.#1, #2, #3

According to Richard Murphy, the big MMT lightbulb consists of “the deficit creates money”. This is not quite correct because the public deficit creates counterfeit currency.#4 And because of the Profit Law ⇒ Public Deficit = Private Profit this mode of money creation is NOT neutral with regard to distribution but a massive free lunch for the Oligarchy.

Needless to emphasize that distribution is not an issue for the MMT sales team that poses as progressive friends of WeThePeople.

These are the facts
• MMT policy is NOT in the interest of the WeThePeople.
• MMT policy amounts to an abuse of the fiat money system.
• The profit effect of MMT money-creation/deficit-spending strengthens the Oligarchy.
• Politically, MMT is a fraud and scientifically it is garbage.#5

Axiomatic macroeconomics tells one that late capitalism can only survive with ever-increasing public deficit-spending. COVID has made this clear to even the dullest person as deficit-spending explodes around the world. This is why Steve Keen jumped on the MMT bandwagon. His Minsky model now confirms Stephanie Kelton’s new sales brochure. What a happy coincidence!

Egmont Kakarot-Handtke


#5 For the full-spectrum refutation of MMT see cross-references MMT
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August 27, 2020

The trouble with truth

Comment on Philip Giraldi on ‘Rashomon American Style–Truth is somewhere in between’ 

Blog-Reference

Philip Giraldi’s summary misses the point by suggesting that truth is an entirely subjective affair: “The story reveals how all of the contradictory testimony was fundamentally dishonest, in that each participant was interpreting events to support his or her self-interest in the outcome of the tragedy.”

This conclusion is true for the political sphere. In the Rashomon story, though, the 5th person is missing: the detective/scientist. It seems that the paradox of multiple truths has been solved already by the ancient Greeks: “There are always many different opinions and conventions concerning any one problem or subject-matter … This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides ... was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other ...” (Popper)

The idea of truth has no meaning in the political context. It has no meaning in economics either, because economics is not a science. Science is digital=binary=true/false and NOTHING in between. There is NO such thing in science as roughly right or roughly wrong, it is only materially/formally true/false. The swamp between true/false where “nothing is clear and everything is possible” (Keynes) is the natural habitat of morons, agenda pushers, confused confusers, blatherers, fraudsters, trolls, incompetent scientists, in one word, of political economists.#1, #2

Egmont Kakarot-Handtke


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Price theory — more than beating the dead horse again and again

Comment on Blair Fix on ‘Supply and demand deconstructed’

Blog-Reference and Blog-Reference

Blair Fix summarizes “… Jonathan Nitzan demolishes the neoclassical theory of prices. It’s a master lesson in how to deconstruct a theory.”

Mainstream economics, though, does not need another deconstruction. Mainstreamers have admitted failure long ago “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al., 1990)

Clearly, everybody knows by now for sure that supply-demand-equilibrium is proto-scientific garbage. Back in 1954, Schumpeter found it still necessary to diffuse doubts about the scientific status of the supply-demand-equilibrium approach “The primitive apparatus of the theory of supply and demand is scientific. But the scientific achievement is so modest, and common sense and scientific knowledge are logically such close neighbors in this case, that any assertion about the precise point at which the one turned into the other must of necessity remain arbitrary.”

So, the right thing to do is to bury and forget the “Totem of the Micro”: “If neoclassical theory is bunk, then what explains prices? Jonathan Nitzan, together with Shimshon Bichler, argues that prices are inseparable from power.”#4

With this, though, everything remains in the old economics-is-a-social-science paradigm. The behavioral assumption of price-taking is replaced by the assumption of price-setting. To remain in the psycho-sociological sphere is the lethal blunder of the power approach because economics is a systems science.#5

Here are the basics of the macrofoundations approach. The elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) 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.

Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price as the dependent variable is given by P=W/R (1a). The price is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. This is the most elementary case, i.e. when the economy gets more complex the price equation becomes longer.*

The macroeconomic Law of Supply and Demand (1a) implies W/P=R (1b), i.e. the real wage is always equal to the productivity no matter how the wage rate W is set or how long the individual or aggregate working time L is. Full employment is possible, the workers always get the whole product O. The workers' living standard depends ultimately on productivity.

The logical next steps are (i) to skip the conditions of market-clearing and budget-balancing and to allow for price-setting, (ii) to differentiate the business sector into multiple firms and markets and to determine the price structure.#6

Egmont Kakarot-Handtke


#1 There is NO such thing as supply-demand-equilibrium
#2 How to Get Rid of Supply-Demand-Equilibrium
#3 The Law of Supply and Demand: Here It Is Finally
#4 This echoes Macht und ökonomisches Gesetz (Power and Economic Law), Schriften des Vereins für Socialpolitik, 1972.
#5 Your economics is refuted on all counts: here is the real thing
#6 See Ch. 3 Market interdependence in Sovereign Economics

Related 'Economists never understood how the price mechanism works' and '10 steps to leave cargo cult economics behind for good' and 'Primary and Secondary Markets' and 'Hayek and other informationally retarded proto-economists' and 'How to overcome the manifest silliness of Econ 101 and save the economy' and 'Why you should NEVER use supply-demand-equilibrium' and 'Traditional Heterodoxy’s paradigmatic impotence' and 'Essentials of Constructive Heterodoxy: The Market' and 'Understanding Profit and the Markets: The Canonical Model' and 'Major Defects of the Market Economy' and 'How to finally hammer down the nails in the coffin of Monty Python economics' and 'Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true' and 'Econ 101: Economists flunk the intelligence test at the first hurdle' and 'The monstrous utility-supply-demand-equilibrium failure' and 'To this day, economists have produced NOT ONE textbook that satisfies scientific standards' and 'Ch. 9, Price mechanism vs quantity mechanism in Sovereign Economics, BoD'.

“Totem of the Micro” has been coined by Axel Leijonhufvud.

* E.g. Wikimedia AXEC64


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#PointOfProof
Aug 29
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August 26, 2020

Occasional Tweets: Where does profit come from?

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All behavior-based economic textbooks are false

Comment on John Komlos on ‘A new real-world economics textbook’

Blog-Reference

Mainstream economics is known for a long time to be dead and in need of a Paradigm Shift “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al., 1990)

John Komlos echoes this insight “… how misleading it can be to apply oversimplified models of perfect competition to the real world. The math works well on college blackboards but not so well on the Main Streets of America.”

However, “The problem is not just to say that something might be wrong, but to replace it by something — and that is not so easy.” (Feynman)

John Komlos takes up the challenge. His textbook “… demonstrates how we should take into account the inefficiencies that arise due to asymmetric information, mental biases, unequal distribution of wealth and power, and the manipulation of demand.”

This is laudable, except for one point: John Komlos’ approach is behavior-centered like the mainstream approach, only the behavioral premises have been changed and are certainly more ‘realistic’. However, John Komlos remains in the old economics-is-a-social-science paradigm. This is a lethal blunder because economics is a systems science. Economics is NOT about how people behave but how the economic system behaves. Human behavior is the subject matter of psychology and sociology and history and political science but NOT of economics.

Why do economists cling so tenaciously to the behavioral approach? Because they are political agenda pushers and NOT scientists. And politics is about the control of behavior. Economic incentives are but one form of behavioral control.

It is a scientific fact that economics as social science has to this day not figured out what macroeconomic profit — the foundational concept of economics — is. The behavioral approach is a methodological failure. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, and materially/formally inconsistent.#1, #2

What economics needs is a Paradigm Shift from behavioral microfoundations to structural macrofoundations.#3

This Paradigm Shift and its far-reaching consequences can be studied with Sovereign Economics. This textbook contains the axiomatically true theory as an indispensable prerequisite of economic policy guidance.

“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)

John Komlos’ textbook is an outstanding example of educated common sense. The fact of the matter is, though, that neither orthodox nor heterodox economists have realized to this day what science is all about.

Egmont Kakarot-Handtke


#1 Economics is a disgrace ― now more than ever
#2 Wikipedia, economics, scientific knowledge, or political agenda pushing?
#3 Your economics is refuted on all counts: here is the real thing
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August 18, 2020

Occasional Tweets: Economists are too stupid for science

Twitter Aug 18








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August 17, 2020

Fake America great again

Comment on Barkley Rosser on ‘The End Of Special Fiscal Stimulus’

Blog-Reference

Barkley Rosser reports on the actual state of the economy: “Dems indicated that they were willing to compromise on many issues. To pick a big symbolic one has to do with the total spending level. Going into this the Dems were pushing $3+ trillion and the GOP was pushing $1 trillion. Gosh, looks like $ 2 trillion would be an obvious compromise, and the Dems have publicly indicated they would be willing to go to that, but, no, … As it is, Meadows left town and the Senate has gone on leave until after Labor Day. No deal.”

This is Barkley Rosser’s usual newspaper digest. Not one small crumb of real economic analysis. That is regrettable because what unfolds before our eyes is the spectacular finale of the so-called free-market economy.

In the elementary production-consumption economy with a state sector, macroeconomic profit comes ultimately from the household and state sector’s deficit-spending/money-creation, i.e. Qm≡(G−T)−Sm.#1

For Sm=0 this boils down to (G−T)=Qm, i.e. public deficit equals private profit. The profit of the monetary economy is in this analytical limiting case produced entirely by the state. This case is at odds with the popular ideas of a free-market economy and Laissez-faire but it is practically the new normal.

The greater part of the profit in the United States is actually produced by the state. The US economy hangs for a long time already on the state ventilator for its survival. With the current boost of deficit-spending, the situation becomes even more extreme.

The policy of deficit-spending/money-creation is ultimately a means of postponing the breakdown of the US economy. Deficit-spending/money-creation is a free lunch for the Oligarchy. Financial wealth grows in lockstep with public debt. While employment and wage income go down, Mr. Trump’s current policy will blow up macroeconomic profit to hitherto unimaginable proportions. This profit will nearly 100 percent be state-produced.

Say, economists, what exactly has always been the strong point of Laissez-faire capitalism?

Egmont Kakarot-Handtke


#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?


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REPLY to Barkley Rosser Aug 18

You say: “Second you have the oddity that while you claim profits are tied to budget deficits, why is it that it is pro-business Republicans who are now opposing larger deficits thereby endangering business profits?”

Economics is about how the economy works and NOT about how the brains of GOP Senators work.

Btw. this question has already been dealt with. See
Stephanie Kelton and the self-destructive stupidity of the super-rich

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REPLY to Barkley Rosser

You say: “Yo are one of those caricatures of an economist who when confronted with facts that do not coincide with his theory declare that the facts are either wrong or irrelevant because the theory is true.”

The voting behavior of GOP Senators is NOT part of any economic theory but your re-telling of what you have read in the newspapers, which is obviously your main intellectual occupation.

What I told you is that profit in the US economy is nowadays entirely produced by the state and that the exploding deficit-spending will explode profit within a short time span.

This perverse correlation of high unemployment and high state-produced profit is a bit at odds with the popular idea of a free-market economy and should, therefore, provoke the interest of the professional economist.

I realize that it is impossible to get you above the newspaper level.

Anyway, I take the opportunity and, in order to honor myself as the author of the Axiomatic Profit Law, I call the correlation of exploding unemployment, exploding public debt, and exploding profit Handtke’s Law of Exitus Capitalism. It replaces the Law of the Tendency of the Rate of Profit to Fall.

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REPLY to Barkley Rosser Aug 19

You say: “Sorry, Egmont, but your claim tha profit is produced by the state is simply wrong, so wrong that it is not even wrong, as they say.”

What “they” say is absolutely irrelevant, because it is known by now that “they” are scientifically incompetent. Economics is a failed science. That is a fact.

The macroeconomic Profit Law for a closed economy is given by Qm≡Yd+(I−Sm)+(G−T) and this implies Qm=(G−T), i.e. macroeconomic profit is equal to the state’s budget deficit.#1 In order that there is a surplus in the business sector, there must be a deficit in the state sector. Balances always add up to zero.

So, I am right and you and “they”, i.e. the rest of American academics, are wrong. This is elementary algebra, the proof is in the public domain, and you can do NOTHING against it.


#1 Wikipedia, economics, scientific knowledge, or political agenda pushing?
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August 9, 2020

Disgrace again ― is economics really that bad?

Comment on David Glasner on ‘Why The Wall Street Journal Editorial Page is a Disgrace’

Blog-Reference

There is a lot of talk about the disgrace of economics these days.#1, #2, #3, #4 Now, David Glasner is pouring petrol on the fire by characterizing The Wall Street Journal’s editorial page as “a self-parody of obnoxious, philistine anti-intellectualism.”

What is the rage all about? It is about Mr. Moore’s claim “Because too often economic theories defy common sense.” This, indeed, is a recurring issue since J. S. Mill debunked the “bigots of common sense” a long time ago.#5 Obviously, there has not been much progress in the meantime.

The fact of the matter is that economists lack the true theory for 200+ years now and therefore regress periodically to common sense: “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)

David Glasner argues: “But Keynesian ideas are also rooted in certain common-sense notions, for example, the idea that income and expenditure are mutually interdependent, the income of one person being derived from the expenditure of another.”

Yes, Keynes famously stated in the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This elementary syllogism is false because the premise is false. It is quite commonsensical but nonetheless false that “Income = value of output”. The value of output is normally greater than income and the difference is macroeconomic profit. Profit, though, is a balance of flows and not a flow like wage income. Against common sense: profit is NOT income. A balance and a flow are different things.

Keynes NEVER understood profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

What did Keynes do? “In the early thirties he confessed to Roy Harrod that he was ‘returning to an age-long tradition of common sense’.”#6

A fatal move, but After-Keynesians did not spot the blunder to this day.

Economists got macroeconomic profit wrong. Because of this foundational blunder, the whole of economics is proto-scientific garbage. See Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.#7

Common sense naively assumes that so many economists can not be wrong for such a long time. As always, common sense is mistaken.

Egmont Kakarot-Handtke


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August 8, 2020

Economists can hardly wait for their burial at the Flat-Earth Cemetery

Comment on Barkley Rosser on ‘Is The Latest Apparent Economist Suicide A Sign "Economics Is A Disaster"?’


“Economics is the study of the economy, not the study of economists.” (Ricardo Reis)

Economists, though, are not very talented scientists (they fail already at elementary macroeconomic algebra#1) and therefore every professional debate turns sooner or later into gossiping about idiosyncratic aches, pains, and neuroses.#2 Thus, academic economics has completely lost its scientific status and has become just another shitshow in the political Circus Maximus.

What economics needs after the obvious failure of Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism is a Paradigm Shift. What it gets is another report about economics as a human cesspool.

Claudia Sahm, who mentions as their credentials bipolar disorder and an econ Ph.D. has recently given a report of the psychological toxicity of economics and its on-duty tormenters.#3

No word about economics as a failed/fake science, though. And that means that she is part of it. #4,#5

Not even at gossiping economists are overwhelmingly smart. Claudia Sahm “names names of quite a few prominent economists she charges with bad behavior of one sort or another.” “At least one of those she criticizes has engaged in public behavior that is well known and notorious, namely Larry Summers, who is also notoriously arrogant, and some of these the charge of arrogance is a large part of her argument, indeed mostly towards those beneath them, as well as simply to rivals, with it being especially nasty when directed at women or minorities.” (Barkley Rosser)

However, what is also well-known is that Summers and Epstein were best buddies.#6

I wonder why neither Claudia Sahm nor Barkley Rosser ― the Sherlock Holmes of EconoSpeak ― nor anybody else connects the dots that seem to neatly explain the human and institutional rottenness of academic economics.

Egmont Kakarot-Handtke


#1 Cross-reference: Scientific Incompetence
#6 Twitter, Michael Krieger, here and here

Source: Twitter

Source: Twitter

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Twitter Aug 8

Source: Twitter

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REPLY to Barkley Rosser Aug 10

Where is Barkley Rosser (“He is guilty guilty guuilty”) when you need him?

These are the dots to connect:

• Barkley Rosser mentions Larry Summers “At least one of those she [Claudia Sahm] criticizes has engaged in public behavior that is well known and notorious, namely Larry Summers, who is also notoriously arrogant, and some of these the charge of arrogance is a large part of her argument, indeed mostly towards those beneath them, as well as simply to rivals, with it being especially nasty when directed at women or minorities.”

• Larry Summers, though, is not only known for nasty behavior but for heavy-duty political agenda-pushing “Epstein was convicted in 08. So, how could LHSummers possibly have known something was amiss? Clearly, he was in the dark; like when he scrapped Glass-Steagall, blocked the regulation of derivatives, & lost $1bn for Harvard. Poor Larry, how could he have known?” #1

• The Epstein/Maxwell duo was not only in the sex business but also in the science business.

• There are four suicides in academic economics in the wake of Epstein’s suicide.#2

• Claudia Sahm attributes these strange events to the psychological toxicity of economics “Many graduate students and economists have mental health issues. Research at Harvard found notably higher rates of depression and anxiety among economics PhD students than other PhD students and the general population. Departments often do send students to campus health resources. The faculty place unrealistic expectations on the students. … Faculty suffer too. [Krueger, Weitzman, Sandholm, Farhi, rest in peace. I am so sorry.]”.

• Barkley Rosser knew Krueger, Weitzman, and Sandholm personally. Not to forget Mark Thoma who retired unexpectedly and abandoned the leading blog Economist’s View.

Strange things happen in economics. Being a lifelong insider, Barkley Rosser maintains that “economics and economists have some very serious problems to deal with.”

Yes, the first and foremost problem is, how could it happen that economics has become scientific fake and fraud from the peer review selection process onwards to the EconNobel?

Barkley Rosser concludes cryptically “I could say more, actually a lot more, but I think this will do for now.”

What shitshow economics is!



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August 6, 2020

Economics is a disgrace ― now more than ever

Comment on Claudia Sahm on ‘Economics is a disgrace’ * ‡


The true disgrace of economics is that it has been a failed/fake/cargo cult science for 200+ years. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, and Pluralism are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong.#1 As a consequence, economic policy guidance has never had sound foundations. This applies to left/center/right policy. Economists are a hazard to their fellow citizens.#2

This is why economics has to be burnt down to the ground. However, Claudia Sahm demands “Burn it down: economics failed us.” This is upside-down thinking. In the scientific realm, the question is, what have you done for science and not what has science done for you. However, economists are not scientists, and science is the last thing Claudia Sahm cares about.

Claudia Sahm is “privileged enough to hold a PhD” but has not realized to this day that economics is failed/fake science.#3 That means that she is part of it.

What she cares about primarily is to make the story of her martyrdom in a toxic institutional culture (painful appears 7 times in her post) and her psychic condition (bipolar disorder) as widely known as possible. She does this for herself and on behalf of other victims, in particular vulnerable students and women of color, but does not forget to mention the recent deaths of Krueger, Weitzman, Sandholm, and Farhi as proof of the psychological toxicity of economics.

Everybody knows that something is rotten in economics as a scientific discipline. However, Claudia Sahm does not deliver a material/formal refutation of mainstream economics but sends a letter to Janet Yellen, Ben Bernanke, and Peter Rosseau complaining about the toxic culture of the profession.

This, of course, is a farce. You cannot be an economist without realizing at some point that academic economics is not committed to the advancement of objective scientific truth but that it is a crucial propaganda outlet of the Oligarchy.

This is no secret. Arrow defined the rules of the game in his famous AEA address: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.”

So, either you subscribe to the ideology of methodological individualism and the peer-review gatekeepers let you in and thus help you to get on a financially attractive trajectory with the Bank of Sweden Nobel at the end of the rainbow or you get problems ― psychological or otherwise.

All this is really old stuff. Economics started as Political Economy and J. S. Mill was on the payroll of the East India Company. Economics has from the beginning been the Oligarchy’s heavily promoted queen of the so-called social sciences.

The disgrace of economics is that economists have not produced much of genuine scientific value for 200+ years: “Thousands upon thousands of scholars, as well as thousands of statesmen and men of affairs, have contributed their efforts to the attempt to understand the course of events of the economic world. And today this field of investigation is being cultivated more extensively, than ever before. How is it, then, that in all these years, and with all the undoubted talent that has been lavished upon it, the subject of economics has advanced so little? (Schoeffler)

Worse, economists still do not understand profit ― the foundational concept of their subject matter.#4 Worse, MMTers with academic credentials apply a provably false macroeconomic balances equation to camouflage that public deficit-spending/money-creation is to the disadvantage of WeThePeople and a free lunch for the Oligarchy.

Claudia Sahm does not address any scientific issues or the role of economists as useful idiots, she instead accuses academic economics of psychological cruelty, well knowing that this emotional issue will bring her immediate attention and the approval of the general public.

No doubt, the economics profession in the incarnation of the AEA will pledge guilt and promise betterment and reform and rework their code of conduct.

This, of course, is the usual farce. Claudia Sahm wittingly or unwittingly helps to cover the real disgrace of economics. Economics ― orthodox and heterodox alike ― needs to be condemned for the corruption of science. The condemnation of toxic culture is justified but entirely beside the point. It is like a sociopathic mobster getting off cheaply by pleading guilty to having stolen a candy bar.

Egmont Kakarot-Handtke


‡ Twitter


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Wikimedia AXEC106l


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Wikimedia AXEC121i

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August 2, 2020

Occasional Tweets: MMT is refuted on all counts (I)

Twitter Aug 2









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