Comment on Planet Money on ‘Episode 866: Modern Monetary Theory’
Blog-Reference
Marketing folks are not very innovative. One of the oldest sales gimmicks is baby-kissing and, true enough, it still works.#1 Babies/children are an unfailing Pavlovian trigger for an emotion-addicted audience.
The very characteristic of science is that it never appeals to emotions but to knowledge/ logic/facts. Political agenda pushers, on the other hand, avoid knowledge/logic/facts like the plague and appeal straightforwardly to emotions. So do fraudsters.
MMT is a scientific fraud and meanwhile, it has reached the lowest level: “This is really nice, it’s a podcast where a lovely young English girl asks about MMT and Stephanie Kelton and the Planet Money team answer her question. It’s for beginners, but what lovely way to chill for half an hour. It was delightful! They described Stephanie Kelton as left-wing economist. She’s lovely too!”
So much for the psycho framing. Now comes the fraud: “Some ideas seem too good to be true. Like this one. It comes from a 13-year-old listener named Amy. She says she knows the government has trouble finding enough money to pay for stuff like schools and hospitals. And she wondered if it has considered just printing more money. She asked us: Can the government do that? Just make more money to pay for stuff? Fiscal hawks say, ‘no way!’ We’d have crazy inflation! But there’s a group of economists that says, ‘yes, we can create way more money, without disaster. And pay for lots of stuff we want.’ They are the proponents of what’s called Modern Monetary Theory, or MMT. Their ideas are getting out there, they have the memes to prove it.”
Let’s move on from Barbie land to reality. MMT is proto-scientific garbage. MMT is refuted on all counts. MMTers are stupid/corrupt agenda pushers for the Oligarchy. #2, #3, #4, #5 The emotional vomit-proof for non-economists is in the ridiculous Amy story.
Egmont Kakarot-Handtke
#1 Huffpost 35 Sweet And Hilarious Photos Of Presidents With Babies
#2 Is MMT good for WeThePeople or for the Oligarchy?
#3 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
#4 Down with idiocy!
#5 Stephanie Kelton sells children into slavery
Related 'MMT: Money-making for the one-percenters' and 'The Kelton-Fraud'.
July 17, 2019
The right and the wrong way to bring money into the economy
Comment on Dirk Ehnts/Skender Fani on ‘Modern Monetary Theory’s promise’*
Blog-Reference
“Politicians seem ill-equipped to put scientific findings into practice.” says the MMT propagandist Dirk Ehnts. The problem is that MMT has no sound scientific foundations, to begin with, but is political agenda-pushing in the bluff package of science. Dirk Ehnts, for example, has not realized to this day that Keynesian macroeconomics is proto-scientific garbage.#1
The fact that economists, i.e. Walrasians, Keynesian, Marxians, Austrians, MMTers, lack the true scientific theory has never hindered them to give economic policy advice. Economists have always been a menace for their fellow citizens.#2
Dirk Ehnts repeats the MMT mantra: “The state is the originator of currency as it puts money into circulation through its spending. If we have to pay our taxes in euros, the state has to spend a sufficient amount beforehand. That is the only chance we have of getting the right amount of money.” This assertion is false because MMT’s macroeconomic foundations are false.
There are two ways to bring money into the economy (i) by financing the wage bill, and (ii), by deficit-spending.
To get economics right, it has to be consistently reconstructed from scratch.#3 As the correct analytical starting point, the elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and 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.
Under the conditions of market clearing X=O and budget balancing C=Yw in each period the price is given by P=W/R (1), i.e. the market clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation see Figure 1.#4
What is needed for a start is two things (i) a central bank which creates money on its balance sheet in the form of deposits, and (ii), a legal system which declares the central bank’s deposits as legal tender.
Deposit money, which is a generalized IOU, is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e. if C=Yw.
Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income. This time sequence is no problem for the central bank because the temporary overdrafts vanish with wage payments.
For the case of a balanced budget C=Yw, the idealized transaction sequence of deposits/overdrafts of the household sector at the central bank over the course of one period is shown in Figure 2.#5
The household sector’s deposits/overdrafts are zero at the beginning and end of the period. The business sector’s transaction pattern is the exact mirror image. Money, that is, deposits at the central bank, is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an accommodative role and simply supports the autonomous market transactions between the household and the business sector.
From this follows the average stock of transaction money as M=κYw, with κ determined by the transaction pattern. In other words, the average stock of money M is determined by the autonomous transactions of the household and business sector and created out of nothing by the central bank. The economy NEVER runs out of money. If employment is doubled the average stock of transaction money M doubles. Because the central bank plays an accommodative role there is, as a matter of principle, NO MONETARY obstacle to full employment in the elementary production-consumption economy.
As long as the central bank finances a growing wage bill with money creation out of thin air and with wage rate W and productivity R fixed, the price P does NOT move one iota according to (1). As a matter of principle, the average quantity of money M increases/ decreases according to (2) but there is NO inflation/deflation.
Obviously, this is the correct way of bringing money into the economy. However, this is NOT the MMT way. MMT injects money into the economy by government deficit spending. This has an immediate effect on macroeconomic profit.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw and monetary saving as Sm≡Yw−C. It always holds Qm+Sm=0, or Qm=−Sm, in other words, the business sector’s surplus = profit equals the household sector’s deficit = dissaving. Vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. This is the most elementary form of the macroeconomic Profit Law.
The complete Profit Law reads Qm=Yd+(I−Sm)+(G−T)+(X−M) and reduces to Qm=G−T for Yd, I, Sm, X, M = 0. Legend: Qm monetary profit/loss, G government spending, T taxes. In other words: Public Deficit = Private Profit. This way of money creation is NOT neutral with regard to distribution but is clearly for the benefit of the Oligarchy.
Conclusion: MMT academics in general and Dirk Ehnts, in particular, are not scientists but political agenda pushers, i.e. Wall Street’s useful idiots.#6 Dirk Ehnts’s claim: “As a theoretical basis, Modern Monetary Theory provides a stable scientific foundation to underpin new political instruments and policy measures” is an empty promise. MMT is plain proto-scientific garbage.
Egmont Kakarot-Handtke
* International Politics and Society Modern Monetary Theory’s promise
#1 Keynesians ― terminally stupid or worse?
#2 Econogenics in action
#3 MMT and the canonical macroeconomic model
#4 Wikimedia AXEC31 Elementary production-consumption economy
#5 Wikimedia AXEC98 Idealized transaction pattern, household sector, balanced budget
#6 How counterfeiters save America with an extra profit and make WeThePeople pay for it
Blog-Reference
“Politicians seem ill-equipped to put scientific findings into practice.” says the MMT propagandist Dirk Ehnts. The problem is that MMT has no sound scientific foundations, to begin with, but is political agenda-pushing in the bluff package of science. Dirk Ehnts, for example, has not realized to this day that Keynesian macroeconomics is proto-scientific garbage.#1
The fact that economists, i.e. Walrasians, Keynesian, Marxians, Austrians, MMTers, lack the true scientific theory has never hindered them to give economic policy advice. Economists have always been a menace for their fellow citizens.#2
Dirk Ehnts repeats the MMT mantra: “The state is the originator of currency as it puts money into circulation through its spending. If we have to pay our taxes in euros, the state has to spend a sufficient amount beforehand. That is the only chance we have of getting the right amount of money.” This assertion is false because MMT’s macroeconomic foundations are false.
There are two ways to bring money into the economy (i) by financing the wage bill, and (ii), by deficit-spending.
To get economics right, it has to be consistently reconstructed from scratch.#3 As the correct analytical starting point, the elementary production-consumption economy is defined with this set of macroeconomic axioms: (A0) The objectively given and 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.
Under the conditions of market clearing X=O and budget balancing C=Yw in each period the price is given by P=W/R (1), i.e. the market clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation see Figure 1.#4
What is needed for a start is two things (i) a central bank which creates money on its balance sheet in the form of deposits, and (ii), a legal system which declares the central bank’s deposits as legal tender.
Deposit money, which is a generalized IOU, is needed by the business sector to pay the workers who receive the wage income Yw per period. The need is only temporary because the business sector gets the money back if the workers fully spend their income, i.e. if C=Yw.
Overdrafts are needed by the household sector for consumption expenditures if the households want to spend before they get their income. This time sequence is no problem for the central bank because the temporary overdrafts vanish with wage payments.
For the case of a balanced budget C=Yw, the idealized transaction sequence of deposits/overdrafts of the household sector at the central bank over the course of one period is shown in Figure 2.#5
The household sector’s deposits/overdrafts are zero at the beginning and end of the period. The business sector’s transaction pattern is the exact mirror image. Money, that is, deposits at the central bank, is continually created and destroyed during the period under consideration. There is NO such thing as a fixed quantity of money. The central bank plays an accommodative role and simply supports the autonomous market transactions between the household and the business sector.
From this follows the average stock of transaction money as M=κYw, with κ determined by the transaction pattern. In other words, the average stock of money M is determined by the autonomous transactions of the household and business sector and created out of nothing by the central bank. The economy NEVER runs out of money. If employment is doubled the average stock of transaction money M doubles. Because the central bank plays an accommodative role there is, as a matter of principle, NO MONETARY obstacle to full employment in the elementary production-consumption economy.
As long as the central bank finances a growing wage bill with money creation out of thin air and with wage rate W and productivity R fixed, the price P does NOT move one iota according to (1). As a matter of principle, the average quantity of money M increases/ decreases according to (2) but there is NO inflation/deflation.
Obviously, this is the correct way of bringing money into the economy. However, this is NOT the MMT way. MMT injects money into the economy by government deficit spending. This has an immediate effect on macroeconomic profit.
Monetary profit for the economy as a whole is defined as Qm≡C−Yw and monetary saving as Sm≡Yw−C. It always holds Qm+Sm=0, or Qm=−Sm, in other words, the business sector’s surplus = profit equals the household sector’s deficit = dissaving. Vice versa, the business sector’s deficit = loss equals the household sector’s surplus = saving. This is the most elementary form of the macroeconomic Profit Law.
The complete Profit Law reads Qm=Yd+(I−Sm)+(G−T)+(X−M) and reduces to Qm=G−T for Yd, I, Sm, X, M = 0. Legend: Qm monetary profit/loss, G government spending, T taxes. In other words: Public Deficit = Private Profit. This way of money creation is NOT neutral with regard to distribution but is clearly for the benefit of the Oligarchy.
Conclusion: MMT academics in general and Dirk Ehnts, in particular, are not scientists but political agenda pushers, i.e. Wall Street’s useful idiots.#6 Dirk Ehnts’s claim: “As a theoretical basis, Modern Monetary Theory provides a stable scientific foundation to underpin new political instruments and policy measures” is an empty promise. MMT is plain proto-scientific garbage.
Egmont Kakarot-Handtke
* International Politics and Society Modern Monetary Theory’s promise
#1 Keynesians ― terminally stupid or worse?
#2 Econogenics in action
#3 MMT and the canonical macroeconomic model
#4 Wikimedia AXEC31 Elementary production-consumption economy
#5 Wikimedia AXEC98 Idealized transaction pattern, household sector, balanced budget
#6 How counterfeiters save America with an extra profit and make WeThePeople pay for it
A less than 320 words explanation of why MMT is a fraud
Comment on Warren Mosler/Eric Peters on ‘An MMTer Explains MMT In 320 Words’
Blog-Reference
Eric Peters, CIO of One River Asset Management, retells a conversation: “Imagine Congress appropriates $1BN to refurbish Air Force One,” said Warren Mosler, pioneer of Modern Monetary Theory. We were discussing the financial architecture that allows the Fed to create money. “The Department of Defense hires General Dynamics to upgrade the airplane. The US Treasury instructs the Fed to credit General Dynamic’s account at JP Morgan with +$1bln. The Fed simultaneously debits the US Treasury account with −$1bln and the books are balanced.” Notice, the government did not need to collect taxes or issue bonds.” and “The $1bln the Fed created is trapped in the banking system and finds its way to purchase the $1bln in bonds the Treasury issued to balance its Fed account.” and “People misunderstand debt and money. Government debt is simply money the government has spent that hasn’t yet been used to pay taxes. Holders of that debt prefer saving over consuming or they wouldn’t own bonds. At some point, these people may choose to spend more than they save, and if that sparks excess demand and inflation … then that’s easily dealt with. The government simply raises taxes or cuts spending. Easy eh?”
Where is the fraud in the argument? When the government applies deficit-spending/money-creation macroeconomics kicks in. The macroeconomic Profit Law, i.e. Q=Yd+(I−S)+(G−T)+(X−M), tells everyone that Public Deficit = Private Profit and that MMT is a free lunch program for the Oligarchy and that financial wealth and public debt grow in lockstep and that fabulous financial wealth in the USA is roughly equal to humongous public debt ($22 trillion). The Profit Law explains how billionaires are able to accumulate that much money and why they can buy all the bonds the Treasury issues and cash in the ultra-safe interest that is reliably taxed from WeThePeople as long as the debt is rolled over.
That’s why the two Wall Street guys Warren Mosler/Eric Peters propagate MMT so enthusiastically. Easy eh?
Egmont Kakarot-Handtke
Blog-Reference
Eric Peters, CIO of One River Asset Management, retells a conversation: “Imagine Congress appropriates $1BN to refurbish Air Force One,” said Warren Mosler, pioneer of Modern Monetary Theory. We were discussing the financial architecture that allows the Fed to create money. “The Department of Defense hires General Dynamics to upgrade the airplane. The US Treasury instructs the Fed to credit General Dynamic’s account at JP Morgan with +$1bln. The Fed simultaneously debits the US Treasury account with −$1bln and the books are balanced.” Notice, the government did not need to collect taxes or issue bonds.” and “The $1bln the Fed created is trapped in the banking system and finds its way to purchase the $1bln in bonds the Treasury issued to balance its Fed account.” and “People misunderstand debt and money. Government debt is simply money the government has spent that hasn’t yet been used to pay taxes. Holders of that debt prefer saving over consuming or they wouldn’t own bonds. At some point, these people may choose to spend more than they save, and if that sparks excess demand and inflation … then that’s easily dealt with. The government simply raises taxes or cuts spending. Easy eh?”
Where is the fraud in the argument? When the government applies deficit-spending/money-creation macroeconomics kicks in. The macroeconomic Profit Law, i.e. Q=Yd+(I−S)+(G−T)+(X−M), tells everyone that Public Deficit = Private Profit and that MMT is a free lunch program for the Oligarchy and that financial wealth and public debt grow in lockstep and that fabulous financial wealth in the USA is roughly equal to humongous public debt ($22 trillion). The Profit Law explains how billionaires are able to accumulate that much money and why they can buy all the bonds the Treasury issues and cash in the ultra-safe interest that is reliably taxed from WeThePeople as long as the debt is rolled over.
That’s why the two Wall Street guys Warren Mosler/Eric Peters propagate MMT so enthusiastically. Easy eh?
Egmont Kakarot-Handtke
July 16, 2019
Profit analysis ― another exercise in economic deception
Comment on Michael Roberts on ‘A profits recession?’*
Blog-Reference and Blog-Reference
Michael Roberts reports: “Much is made of the large profits that the top tech companies, the so-called FAANGS, make. But this hides the situation for the majority of US companies. Those with a market value of $300m to $2bn look set to experience a 12% drop in earnings from this time last year after a 17% drop in Q1 2019. So small to medium size American companies are suffering a sharp profits decline.” and “And even with the larger companies, profits are not as good as portrayed. That’s because earnings per share have been boosted by the large companies buying back their own shares (same earnings but with less shares available).” and “Underlying this decline in profits are higher wage costs as fuller employment forces companies to concede wage increases to keep skilled workers – it’s a different story with the less skilled outside the tech sector. Also the cost of other non-labour inputs (energy, raw materials etc) are rising.” and “Most important, even the tech sector will experience an 11.9 per cent fall in earnings and a 1.1 per cent drop in revenues. This is important because it is this sector above all that has driven profits growth in American companies over the period since the Great Recession. If the FAANGS show a decline on profits, then American capital is in trouble.” and “According to Montier, when you dig down into the market you find that a staggering 25-30 per cent of firms are actually making a loss.”
These factoids are seemingly objective information but the only effect of this bombardment with incoherent and mostly irrelevant details is disinformation.
The point at issue is macroeconomic profit, i.e. the sum of profits and losses for the economy as a whole. In principle, this number can be calculated with the precision of two decimal places from the profit-and-loss accounts of all firms taken together under the condition, of course, that the firms’ accounting systems reliably register all transactions. The first thing to note is that the economic measurement and control systems are thoroughly corrupted as the case of Enron and the audit firm Arthur Andersen has shown.
The remarkable difference between the genuine science physics, for example, and the fake science economics is that while physicists continuously improve the precision of their measurement devices, economists have not shown much ambition to develop a consistent and reliable measurement system from the level of the individual firm upwards to National Accounting. Economists prefer to stay in the swamp where “nothing is clear and everything is possible.” (Keynes) Or, as the brain-dead Post-Keynesian motto has it: “It is better to be roughly right than precisely wrong!”
This is NOT how science works. Vague theory and vague data are the means of survival of incompetent scientists because, as Feynman put it: “Another thing I must point out is that you cannot prove a vague theory wrong.”#1 In political economics, it is possible to “prove” any point with a selection of incoherent and unreliable data.
The correct route to the determination of macroeconomic profit is via macroeconomic theory.
The axiomatically correct Profit Law is given by Q=Qm+Qn with Qm=Yd+(I−Sm)+(G−T)+(X−M) Legend: Qm monetary profit/loss of the business sector, Yd distributed profit, I investment expenditure, Sm monetary saving/dissaving of the household sector, G government expenditures, T taxes, X exports, M imports. Total profit Q is the sum of monetary and nonmonetary profit/loss. Roughly speaking, monetary profit is determined by the excess of business sector investment over household sector saving, the government’s deficit and the excess of exports over imports. All variables are measurable with the precision of two decimal places.
Note that the Marxist economist Michael Roberts does not mention the macroeconomic Profit Law once. The reason is simple: Marxian Profit Theory is false since 150+ years.#2, #3 As a result, the whole barrage of Michael Roberts’ factoids (earnings per share, buybacks, partial wage increases, profit margins, productivity, real wages, etc.) is nothing but confused blather.
However, this does not hinder Michael Roberts to push a story: “Underlying this decline in profits are higher wage costs as fuller employment forces companies to concede wage increases to keep skilled workers ― it’s a different story with the less skilled outside the tech sector. … So profit margins (profits per unit of production) are falling.”
And from this crappy argument (a fall in margins does NOT mean a fall in macroeconomic profit which is determined by the Profit Law) he derives a gloomy prophesy: “If the profits crash materialises and is sustained through the year, a sharp fall in investment and eventually employment and spending will follow, despite the stock market boom ― in effect a new recession.”
Michael Roberts delivers a fine example of how political economics works and how stupid/corrupt political economists are.
Egmont Kakarot-Handtke
* Michael Robert’s blog
#1 And the answer is NCND ― economics after 200+ years of Glomarization
#2 Profit for Marxists
#3 Ricardo and the invention of class war
Related 'The Common Error of Common Sense: An Essential Rectification of the Accounting Approach' and 'It is better to be precisely right than roughly wrong'. For details of the big picture see cross-references Profit/Distribution and cross-references Accounting.
You say: “Funny how nobody recognised Ricardo’s ‘garbage’ at the time, not even his opponents!”
Fact is that Profit Theory is provably false from Adam Smith onward to Ricardo to Marx to Keynes to Michael Roberts and jlowie.#1-#4 This is not funny but proves that economists are too stupid for science.
#1 Ricardo, too, got profit theory wrong
#2 The Profit Theory is False Since Adam Smith
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 For more details see cross-references Profit/Distribution
You say: “Mr Karakot i don’t think you have ever cared to understand what marx wrote.”
It is pretty obvious that you don’t even know the difference between thinking and brain-dead blathering.
The point at issue is macroeconomic profit and whether there is a profit recession. In order to answer the question, you must know what profit is. If you “think” the macroeconomic Profit Law is false you are free to logically/empirically refute it.
Marx is a side issue, he is only one of many who did not know what profit is.#1, #2
#1 Karl Marx, fake scientist
#2 Marx’s bicentennial ― nothing to discuss, nothing to celebrate
You say: “Firstly the origin of the system of national accounts from which you draw your categories is based on volume 2 of Das Capital. There Marx compiled the first input output tables when he described simple and expanded reproduction.”
Take notice that input-output tables deal with real magnitudes while national accounting deals with nominal magnitudes. These are quite different things as every economist should know.
Marx proved nothing except that he was an incompetent scientist who NEVER understood what profit is and how the economy works.#1, #2, #3, #4 The same holds for his followers to this day. The proof is in Michael Roberts profit analysis and your confusion about input-output and national accounting.
#1 Dear idiots, Marx got profit and exploitation wrong
#2 If we only had classes
#3 The thing with profit and exploitation
#4 Socialism and scientific incompetence
Blog-Reference and Blog-Reference
Michael Roberts reports: “Much is made of the large profits that the top tech companies, the so-called FAANGS, make. But this hides the situation for the majority of US companies. Those with a market value of $300m to $2bn look set to experience a 12% drop in earnings from this time last year after a 17% drop in Q1 2019. So small to medium size American companies are suffering a sharp profits decline.” and “And even with the larger companies, profits are not as good as portrayed. That’s because earnings per share have been boosted by the large companies buying back their own shares (same earnings but with less shares available).” and “Underlying this decline in profits are higher wage costs as fuller employment forces companies to concede wage increases to keep skilled workers – it’s a different story with the less skilled outside the tech sector. Also the cost of other non-labour inputs (energy, raw materials etc) are rising.” and “Most important, even the tech sector will experience an 11.9 per cent fall in earnings and a 1.1 per cent drop in revenues. This is important because it is this sector above all that has driven profits growth in American companies over the period since the Great Recession. If the FAANGS show a decline on profits, then American capital is in trouble.” and “According to Montier, when you dig down into the market you find that a staggering 25-30 per cent of firms are actually making a loss.”
These factoids are seemingly objective information but the only effect of this bombardment with incoherent and mostly irrelevant details is disinformation.
The point at issue is macroeconomic profit, i.e. the sum of profits and losses for the economy as a whole. In principle, this number can be calculated with the precision of two decimal places from the profit-and-loss accounts of all firms taken together under the condition, of course, that the firms’ accounting systems reliably register all transactions. The first thing to note is that the economic measurement and control systems are thoroughly corrupted as the case of Enron and the audit firm Arthur Andersen has shown.
The remarkable difference between the genuine science physics, for example, and the fake science economics is that while physicists continuously improve the precision of their measurement devices, economists have not shown much ambition to develop a consistent and reliable measurement system from the level of the individual firm upwards to National Accounting. Economists prefer to stay in the swamp where “nothing is clear and everything is possible.” (Keynes) Or, as the brain-dead Post-Keynesian motto has it: “It is better to be roughly right than precisely wrong!”
This is NOT how science works. Vague theory and vague data are the means of survival of incompetent scientists because, as Feynman put it: “Another thing I must point out is that you cannot prove a vague theory wrong.”#1 In political economics, it is possible to “prove” any point with a selection of incoherent and unreliable data.
The correct route to the determination of macroeconomic profit is via macroeconomic theory.
The axiomatically correct Profit Law is given by Q=Qm+Qn with Qm=Yd+(I−Sm)+(G−T)+(X−M) Legend: Qm monetary profit/loss of the business sector, Yd distributed profit, I investment expenditure, Sm monetary saving/dissaving of the household sector, G government expenditures, T taxes, X exports, M imports. Total profit Q is the sum of monetary and nonmonetary profit/loss. Roughly speaking, monetary profit is determined by the excess of business sector investment over household sector saving, the government’s deficit and the excess of exports over imports. All variables are measurable with the precision of two decimal places.
Note that the Marxist economist Michael Roberts does not mention the macroeconomic Profit Law once. The reason is simple: Marxian Profit Theory is false since 150+ years.#2, #3 As a result, the whole barrage of Michael Roberts’ factoids (earnings per share, buybacks, partial wage increases, profit margins, productivity, real wages, etc.) is nothing but confused blather.
However, this does not hinder Michael Roberts to push a story: “Underlying this decline in profits are higher wage costs as fuller employment forces companies to concede wage increases to keep skilled workers ― it’s a different story with the less skilled outside the tech sector. … So profit margins (profits per unit of production) are falling.”
And from this crappy argument (a fall in margins does NOT mean a fall in macroeconomic profit which is determined by the Profit Law) he derives a gloomy prophesy: “If the profits crash materialises and is sustained through the year, a sharp fall in investment and eventually employment and spending will follow, despite the stock market boom ― in effect a new recession.”
Michael Roberts delivers a fine example of how political economics works and how stupid/corrupt political economists are.
Egmont Kakarot-Handtke
* Michael Robert’s blog
#1 And the answer is NCND ― economics after 200+ years of Glomarization
#2 Profit for Marxists
#3 Ricardo and the invention of class war
Related 'The Common Error of Common Sense: An Essential Rectification of the Accounting Approach' and 'It is better to be precisely right than roughly wrong'. For details of the big picture see cross-references Profit/Distribution and cross-references Accounting.
***
REPLY to jlowrie on Jul 17You say: “Funny how nobody recognised Ricardo’s ‘garbage’ at the time, not even his opponents!”
Fact is that Profit Theory is provably false from Adam Smith onward to Ricardo to Marx to Keynes to Michael Roberts and jlowie.#1-#4 This is not funny but proves that economists are too stupid for science.
#1 Ricardo, too, got profit theory wrong
#2 The Profit Theory is False Since Adam Smith
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 For more details see cross-references Profit/Distribution
***
REPLY to vm on Jul 17You say: “Mr Karakot i don’t think you have ever cared to understand what marx wrote.”
It is pretty obvious that you don’t even know the difference between thinking and brain-dead blathering.
The point at issue is macroeconomic profit and whether there is a profit recession. In order to answer the question, you must know what profit is. If you “think” the macroeconomic Profit Law is false you are free to logically/empirically refute it.
Marx is a side issue, he is only one of many who did not know what profit is.#1, #2
#1 Karl Marx, fake scientist
#2 Marx’s bicentennial ― nothing to discuss, nothing to celebrate
***
REPLY to ucanbpolitical on Jul 18You say: “Firstly the origin of the system of national accounts from which you draw your categories is based on volume 2 of Das Capital. There Marx compiled the first input output tables when he described simple and expanded reproduction.”
Take notice that input-output tables deal with real magnitudes while national accounting deals with nominal magnitudes. These are quite different things as every economist should know.
Marx proved nothing except that he was an incompetent scientist who NEVER understood what profit is and how the economy works.#1, #2, #3, #4 The same holds for his followers to this day. The proof is in Michael Roberts profit analysis and your confusion about input-output and national accounting.
#1 Dear idiots, Marx got profit and exploitation wrong
#2 If we only had classes
#3 The thing with profit and exploitation
#4 Socialism and scientific incompetence
July 12, 2019
Lars Syll ― a particularly stupid/corrupt fake scientist
Comment on Lars Syll/Imad Moosa on ‘Econometrics ― a con art with no relevance whatsoever to real world economics’
Blog-Reference
A closer look at the history of economic thought reveals that there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Historical 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: Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, and materially/formally inconsistent. Political economists are NOT scientists but clowns/useful idiots in the political Circus Maximus.#1, #2, #3
Economics claims to be science and, by consequence, the economist has to uphold scientific standards. Scientific standards are well-defined since antiquity: “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)
Scientific knowledge is embodied in the true theory. The true theory is the humanly best mental representation of reality. This defines the economist’s task: “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)
This translates into the methodological basics: logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art econometric testing.
So, there are the hard rocks of true or false and there is the vast swamp between them. The swamp is where stupid/corrupt political economists thrive since Adam Smith/Karl Marx. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman)#4 It is, therefore, quite understandable that the political economist is mainly occupied with producing a methodological smoke screen which consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, the faux humility of ‘I know that I know nothing’, and the post-modern replacement of true theory by storytelling.#5
The stupid/corrupt political agenda pushers try to defend the swamp where “nothing is clear and everything is possible” (Keynes) by arguing that the axiomatic-deductive method and state-of-art testing does not work in economics and by denouncing the adherence to the scientific method as “physics envy” and by intimating that physics is just as crappy as the so-called social sciences, i.e. “physics too is really about arbitrary and fickle social consensus”. (R. S. Mitchell)
The popular swampie arguments are:
• “Economics is a social science where the behaviour of decision makers is not governed purely by economic considerations but also by social and psychological factors, which are not amenable to econometric testing. This is why no economic theory holds everywhere all the time.” (Moosa)
• “And just as Moosa, Keynes certainly did not misunderstand the crucial issues at stake in his critique of econometrics. Quite the contrary. He knew them all too well ― and was not satisfied with the validity and philosophical underpinnings of the assumptions made for applying its methods.” (Syll)
• “Tinbergen’s model assumes that all relevant factors are measurable. Keynes questions if it is possible to adequately quantify and measure things like expectations and political and psychological factors. And more than anything, he questioned ― both on epistemological and ontological grounds ― that it was always and everywhere possible to measure real-world uncertainty with the help of probabilistic risk measures.” (Syll)
• “In his critique of Tinbergen, Keynes points us to the fundamental logical, epistemological and ontological problems of applying statistical methods to a basically unpredictable, uncertain, complex, unstable, interdependent, and ever-changing social reality.” (Syll)
The lethal blunders of Lars Syll/Imad Moosa are: (i) economics is NOT a social science but a system science, and (ii), Keynes was a political agenda pusher and cannot by any stretch of the imagination be taken seriously as scientist.#6
Keynes famously stated in the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63) This two-liner is conceptually and logically defective because Keynes never came to grips with 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.)
Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. Because he was too stupid for the elementary mathematics that underlies macroeconomics the whole of Keynesian theory and methodology is proto-scientific garbage. Instead of I=S, Q=I−S is true with Q as macroeconomic profit.
So, Keynes got it wrong 80+ years ago but Lars Syll/Imad Moosa have not figured it out to this day and instead blather about methodology. That’s how the swampies of political economics have been for 200+ years now: stupid or corrupt or both. Lars Syll is both.#7
All political economists have to be expelled from the sciences. This applies also to Lars Syll’s Sweden where fake scientists/political agenda pushers are to this day rewarded with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. What a farce: economists are the swampies that have in 200+ years not figured out what profit is. Neither Orthodoxy nor traditional Heterodoxy has any scientific content.
Egmont Kakarot-Handtke
#1 Economics: failure, fake, fraud
#2 Economics: A science without scientists
#3 Economics: The greatest scientific hoax in modern times
#4 Getting out of the economics swamp
#5 The economist as storyteller
#6 Marshall and the Cambridge School of plain economic gibberish
#7 For the full-spectrum refutation of Lars Syll see the label zLPS on AXEC
Related 'How to spot economics trolls' and 'How incompetent are economic methodologists? Very!' and 'Economics: Math is NOT the problem, scientific incompetence is'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption and cross-references Methodology and cross-references Math/Mathiness.
Blog-Reference
A closer look at the history of economic thought reveals that there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Historical 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: Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, and materially/formally inconsistent. Political economists are NOT scientists but clowns/useful idiots in the political Circus Maximus.#1, #2, #3
Economics claims to be science and, by consequence, the economist has to uphold scientific standards. Scientific standards are well-defined since antiquity: “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)
Scientific knowledge is embodied in the true theory. The true theory is the humanly best mental representation of reality. This defines the economist’s task: “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)
This translates into the methodological basics: logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-art econometric testing.
So, there are the hard rocks of true or false and there is the vast swamp between them. The swamp is where stupid/corrupt political economists thrive since Adam Smith/Karl Marx. Swampiness is what Popper called an immunizing stratagem because: “Another thing I must point out is that you cannot prove a vague theory wrong.” (Feynman)#4 It is, therefore, quite understandable that the political economist is mainly occupied with producing a methodological smoke screen which consists of vague concepts, anything-goes, pluralism of false theories, alleged complexity, ontological uncertainty, unreliable data, the faux humility of ‘I know that I know nothing’, and the post-modern replacement of true theory by storytelling.#5
The stupid/corrupt political agenda pushers try to defend the swamp where “nothing is clear and everything is possible” (Keynes) by arguing that the axiomatic-deductive method and state-of-art testing does not work in economics and by denouncing the adherence to the scientific method as “physics envy” and by intimating that physics is just as crappy as the so-called social sciences, i.e. “physics too is really about arbitrary and fickle social consensus”. (R. S. Mitchell)
The popular swampie arguments are:
• “Economics is a social science where the behaviour of decision makers is not governed purely by economic considerations but also by social and psychological factors, which are not amenable to econometric testing. This is why no economic theory holds everywhere all the time.” (Moosa)
• “And just as Moosa, Keynes certainly did not misunderstand the crucial issues at stake in his critique of econometrics. Quite the contrary. He knew them all too well ― and was not satisfied with the validity and philosophical underpinnings of the assumptions made for applying its methods.” (Syll)
• “Tinbergen’s model assumes that all relevant factors are measurable. Keynes questions if it is possible to adequately quantify and measure things like expectations and political and psychological factors. And more than anything, he questioned ― both on epistemological and ontological grounds ― that it was always and everywhere possible to measure real-world uncertainty with the help of probabilistic risk measures.” (Syll)
• “In his critique of Tinbergen, Keynes points us to the fundamental logical, epistemological and ontological problems of applying statistical methods to a basically unpredictable, uncertain, complex, unstable, interdependent, and ever-changing social reality.” (Syll)
The lethal blunders of Lars Syll/Imad Moosa are: (i) economics is NOT a social science but a system science, and (ii), Keynes was a political agenda pusher and cannot by any stretch of the imagination be taken seriously as scientist.#6
Keynes famously stated in the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63) This two-liner is conceptually and logically defective because Keynes never came to grips with 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.)
Let this sink in, the economist Keynes NEVER understood profit, i.e. the fundamental concept of economics. Because he was too stupid for the elementary mathematics that underlies macroeconomics the whole of Keynesian theory and methodology is proto-scientific garbage. Instead of I=S, Q=I−S is true with Q as macroeconomic profit.
So, Keynes got it wrong 80+ years ago but Lars Syll/Imad Moosa have not figured it out to this day and instead blather about methodology. That’s how the swampies of political economics have been for 200+ years now: stupid or corrupt or both. Lars Syll is both.#7
All political economists have to be expelled from the sciences. This applies also to Lars Syll’s Sweden where fake scientists/political agenda pushers are to this day rewarded with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. What a farce: economists are the swampies that have in 200+ years not figured out what profit is. Neither Orthodoxy nor traditional Heterodoxy has any scientific content.
Egmont Kakarot-Handtke
#1 Economics: failure, fake, fraud
#2 Economics: A science without scientists
#3 Economics: The greatest scientific hoax in modern times
#4 Getting out of the economics swamp
#5 The economist as storyteller
#6 Marshall and the Cambridge School of plain economic gibberish
#7 For the full-spectrum refutation of Lars Syll see the label zLPS on AXEC
Related 'How to spot economics trolls' and 'How incompetent are economic methodologists? Very!' and 'Economics: Math is NOT the problem, scientific incompetence is'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption and cross-references Methodology and cross-references Math/Mathiness.
***
Wikimedia AXEC139
***
#PointOfProof
Jul 14
July 10, 2019
The surefire way to abolish billionaires
Comment on Ken Zimmerman on ‘Robert Reich suggests 5 ways to abolish billionaires’
Blog-Reference
Ken Zimmerman summarizes: “Robert Reich suggests that one thing we could do to deal with these problems is to abolish billionaires. Robert, lays out the ways billionaires are able to accumulate that much money. First, monopoly. We can address this by vigorously enforcing anti-trust laws already on the books. Second, copyrights and patents. Robert suggests shortening these by half or more. Third, insider information. Here we need to both enforce fines to take away all the money gotten in this way, and in egregious cases send those who seek out and use such information to prison. Fourth, pay off politicians. This screams for Congress to take private money out of elections completely. And long prison sentences for those convicted of giving and receiving private money wouldn’t be a bad idea.”
Robert Reich and Ken Zimmerman obviously lack scientific knowledge about how the economy works. The proof is in the assertion: “Robert, lays out the ways billionaires are able to accumulate that much money.” Fact is that the substandard economists Robert Reich and Ken Zimmerman are stuck on the phenomenal surface and simply parrot worn-out arguments from the long history of soapbox economics.#1
The explanation of how “billionaires are able to accumulate that much money” is in the macroeconomic Profit Law, i.e. Q=Yd+(I−S)+(G−T)+(X−M)#2, #3 which boils down to the pivotal relationship Public Deficit (G−T) = Private Profit Q which states that the Oligarchy’s financial wealth and public debt grow in lockstep.
Conclusion: profit of the business sector as a whole is zero if the government’s deficit is zero (all other factors ignored for the moment). This is the surefire way to prevent billionaires, so the need to abolish them does not arise, to begin with.
Deficit-spending/money-creation is a free-lunch program for the Oligarchy, financial wealth and public debt grow in lockstep, and fabulous financial wealth in the USA is roughly equal to humongous public debt (22 trillion). Macroeconomic profit has NOTHING to do with greed/exploitation/innovation/monopoly power/patents/copyrights/productivity ― these factors play a role for the DISTRIBUTION of macroeconomic profit BETWEEN firms ― but with growing/shrinking debt.#4
The political agenda pushers Robert Reich and Ken Zimmerman simply draw attention away from the ultimate source of profit. The very characteristic of Late Capitalism is that the so-called free market economy is on the full life support of the State. Profit is produced by the government through deficit-spending/money-creation. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, and judiciary institutions. The circular interdependency is self-reinforcing and ruinous.
Needless to emphasize that economists are heavily involved in the deception of WeThePeople and the maintenance of the Oligarchy’s circuit of self-alimentation.#5 After all, that is what the overwhelming majority of economists has been doing since Adam Smith/Karl Marx regardless of their right/center/left self-labeling.#6 Robert Reich and Ken Zimmerman and the Real-World Economics Review Blog are NO exception.
Egmont Kakarot-Handtke
#1 Economics: failure, fake, fraud
#2 Wikimedia AXEC143b Profit Law (with increasing complexity) and Balances Equation
#3 Profit and macrofoundations
#4 MMTers are false Progressives and false Friends-of-the-People
#5 Keynes, Lerner, MMT, Trump and exploding profit
#6 MMTers are false Progressives and false Friends-of-the-People
Related 'How the 99 percent can bring overall profit of the 1 percent legally down to zero in 2017' and 'The Profit Theory is False Since Adam Smith' and 'Profit for Marxists' and 'Essentials of Constructive Heterodoxy: Profit'.
Blog-Reference
Ken Zimmerman summarizes: “Robert Reich suggests that one thing we could do to deal with these problems is to abolish billionaires. Robert, lays out the ways billionaires are able to accumulate that much money. First, monopoly. We can address this by vigorously enforcing anti-trust laws already on the books. Second, copyrights and patents. Robert suggests shortening these by half or more. Third, insider information. Here we need to both enforce fines to take away all the money gotten in this way, and in egregious cases send those who seek out and use such information to prison. Fourth, pay off politicians. This screams for Congress to take private money out of elections completely. And long prison sentences for those convicted of giving and receiving private money wouldn’t be a bad idea.”
Robert Reich and Ken Zimmerman obviously lack scientific knowledge about how the economy works. The proof is in the assertion: “Robert, lays out the ways billionaires are able to accumulate that much money.” Fact is that the substandard economists Robert Reich and Ken Zimmerman are stuck on the phenomenal surface and simply parrot worn-out arguments from the long history of soapbox economics.#1
The explanation of how “billionaires are able to accumulate that much money” is in the macroeconomic Profit Law, i.e. Q=Yd+(I−S)+(G−T)+(X−M)#2, #3 which boils down to the pivotal relationship Public Deficit (G−T) = Private Profit Q which states that the Oligarchy’s financial wealth and public debt grow in lockstep.
Conclusion: profit of the business sector as a whole is zero if the government’s deficit is zero (all other factors ignored for the moment). This is the surefire way to prevent billionaires, so the need to abolish them does not arise, to begin with.
Deficit-spending/money-creation is a free-lunch program for the Oligarchy, financial wealth and public debt grow in lockstep, and fabulous financial wealth in the USA is roughly equal to humongous public debt (22 trillion). Macroeconomic profit has NOTHING to do with greed/exploitation/innovation/monopoly power/patents/copyrights/productivity ― these factors play a role for the DISTRIBUTION of macroeconomic profit BETWEEN firms ― but with growing/shrinking debt.#4
The political agenda pushers Robert Reich and Ken Zimmerman simply draw attention away from the ultimate source of profit. The very characteristic of Late Capitalism is that the so-called free market economy is on the full life support of the State. Profit is produced by the government through deficit-spending/money-creation. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, and judiciary institutions. The circular interdependency is self-reinforcing and ruinous.
Needless to emphasize that economists are heavily involved in the deception of WeThePeople and the maintenance of the Oligarchy’s circuit of self-alimentation.#5 After all, that is what the overwhelming majority of economists has been doing since Adam Smith/Karl Marx regardless of their right/center/left self-labeling.#6 Robert Reich and Ken Zimmerman and the Real-World Economics Review Blog are NO exception.
Egmont Kakarot-Handtke
#1 Economics: failure, fake, fraud
#2 Wikimedia AXEC143b Profit Law (with increasing complexity) and Balances Equation
#3 Profit and macrofoundations
#4 MMTers are false Progressives and false Friends-of-the-People
#5 Keynes, Lerner, MMT, Trump and exploding profit
#6 MMTers are false Progressives and false Friends-of-the-People
Related 'How the 99 percent can bring overall profit of the 1 percent legally down to zero in 2017' and 'The Profit Theory is False Since Adam Smith' and 'Profit for Marxists' and 'Essentials of Constructive Heterodoxy: Profit'.
***
#PointOfProof
Jul 11
July 8, 2019
Asad Zaman marches with the Zeitgeist down a blind alley
Comment on Asad Zaman/Tom Hickey on ‘My Journey from Theory to Reality’
Blog-Reference
The philosopher Tom Hickey sketches the great trends of history: “Many of the traditional worldviews are embedded in a religious contexts that have become cultural. Even in secular China, President Xi is resurrecting Confucius as a cultural icon, and in the supposedly secular US, dominant religious groups are asserting influence more openly, with science itself subject to challenge when it is perceived to conflict with tradition. Asad Zaman’s post is good example of this rising trend, as well as what a highly educated person asking such questions might do about it. This process is an iteration of the historical dialectic as liberal and traditionalism interact to forge a complementary Zeitgeist that moves history forward a step.”
What are the new insights of the new Zeitgeist? “Since most fancy assumptions we make in statistics and econometrics are wrong, we need to learn how to do simple and basic inferences, which actually makes life much easier for students of the subject ― we need to teach them basic and intuitive things, not complex models and math …”
The problem with simple and intuitive things is that they regularly turned out to be false as science progressed. This is why J. S. Mill had no friendly word for the bigots and votaries of common sense: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
Common sense has never been a convincing argument in the scientific sphere but it has always been a very effective rhetorical tool in the political sphere. All religious and political fraud in the last 3000 years has been performed by telling simple stories and by appealing to elementary emotions.
Science is different. Scientific truth is defined by material and formal consistency and not by what makes life easier for students. Lazy students have not developed aircraft and life-saving heart surgery. Neither have retarded political economists produced anything of scientific value. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT is provably false. Economics is not a body of certain knowledge but a heap of inconsistent opinions.
Asad Zaman resumes: “Regarding social, political and economic thought, many if not most of the foremost authorities equate economic liberalism with Western capitalism as the dominant mode of production and also view political liberalism in the form of representative democracy being determined by capitalism as economic liberalism.”
Obviously, liberalism and democracy are political concepts or ideologies. They have nothing to do with science. Economics as a science does NOT deal with ideologies but with how the economic system works. Political agenda pushers like Adam Smith or Karl Marx cannot by any stretch of the imagination be accepted as scientists. They were nothing but brain-dead political storytellers.
Asad Zaman is correct in his criticism of political economics. It is fake science. However, as long as he teaches his students “basic and intuitive things” economics will not rise above the proto-scientific level.#2 To replace one BS with another BS does not count as scientific progress.
The macroeconomic Profit Law reads Q=Yd+(I−S)+(G−T)+(X−M) and it holds for Capitalism and Communism and Socialism independently of whether the dominant belief is Islamic, Christian, Hinduistic, Confucian, Atheistic, or Pagan. Science is universal.
History tells one that human progress comes alone from science and neither from religious beliefs nor from political economics nor from philosophical Zeitgeist blather.
Egmont Kakarot-Handtke
#1 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#2 Zamanomics
Blog-Reference
The philosopher Tom Hickey sketches the great trends of history: “Many of the traditional worldviews are embedded in a religious contexts that have become cultural. Even in secular China, President Xi is resurrecting Confucius as a cultural icon, and in the supposedly secular US, dominant religious groups are asserting influence more openly, with science itself subject to challenge when it is perceived to conflict with tradition. Asad Zaman’s post is good example of this rising trend, as well as what a highly educated person asking such questions might do about it. This process is an iteration of the historical dialectic as liberal and traditionalism interact to forge a complementary Zeitgeist that moves history forward a step.”
What are the new insights of the new Zeitgeist? “Since most fancy assumptions we make in statistics and econometrics are wrong, we need to learn how to do simple and basic inferences, which actually makes life much easier for students of the subject ― we need to teach them basic and intuitive things, not complex models and math …”
The problem with simple and intuitive things is that they regularly turned out to be false as science progressed. This is why J. S. Mill had no friendly word for the bigots and votaries of common sense: “People fancied they saw the sun rise and set, the stars revolve in circles round the pole. We now know that they saw no such thing; what they really saw was a set of appearances, equally reconcileable with the theory they held and with a totally different one. It seems strange that such an instance as this, ... , should not have opened the eyes of the bigots of common sense, and inspired them with a more modest distrust of the competency of mere ignorance to judge the conclusions of cultivated thought.”
Common sense has never been a convincing argument in the scientific sphere but it has always been a very effective rhetorical tool in the political sphere. All religious and political fraud in the last 3000 years has been performed by telling simple stories and by appealing to elementary emotions.
Science is different. Scientific truth is defined by material and formal consistency and not by what makes life easier for students. Lazy students have not developed aircraft and life-saving heart surgery. Neither have retarded political economists produced anything of scientific value. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT is provably false. Economics is not a body of certain knowledge but a heap of inconsistent opinions.
Asad Zaman resumes: “Regarding social, political and economic thought, many if not most of the foremost authorities equate economic liberalism with Western capitalism as the dominant mode of production and also view political liberalism in the form of representative democracy being determined by capitalism as economic liberalism.”
Obviously, liberalism and democracy are political concepts or ideologies. They have nothing to do with science. Economics as a science does NOT deal with ideologies but with how the economic system works. Political agenda pushers like Adam Smith or Karl Marx cannot by any stretch of the imagination be accepted as scientists. They were nothing but brain-dead political storytellers.
Asad Zaman is correct in his criticism of political economics. It is fake science. However, as long as he teaches his students “basic and intuitive things” economics will not rise above the proto-scientific level.#2 To replace one BS with another BS does not count as scientific progress.
The macroeconomic Profit Law reads Q=Yd+(I−S)+(G−T)+(X−M) and it holds for Capitalism and Communism and Socialism independently of whether the dominant belief is Islamic, Christian, Hinduistic, Confucian, Atheistic, or Pagan. Science is universal.
History tells one that human progress comes alone from science and neither from religious beliefs nor from political economics nor from philosophical Zeitgeist blather.
Egmont Kakarot-Handtke
#1 Why J. S. Mill had no friendly word for the bigots and votaries of common sense
#2 Zamanomics
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