December 29, 2016

Americans believe crazy things, yet they are outdone by economists

Comment on Catherine Rampell on ‘Americans — especially but not exclusively Trump voters — believe crazy, wrong things’#1


Americans are NOT special. For more than 5000 years people believe things JUST BECAUSE they are absurd — in accordance with Tertullian’s famous dictum “credo quia absurdum est”.#2

As a matter of principle, almost everybody has the right to his own opinion no matter how stupid, crazy, wrong, or absurd; the only exception is scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof, belief, or opinion count for nothing.

Opinion is the currency in the political sphere, knowledge is the currency in the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science but they have never risen above the level of opinion, belief, wish-wash, storytelling, soapbox propaganda, and sitcom gossip.

The orthodox majority still believes in these Walrasian hardcore absurdities: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to  equilibrium states.” (Weintraub)

To be clear: HC2, HC4, HC5 are NONENTITIES like angels, Spiderman, or the Easter Bunny.

The heterodox camp still believes in these ill-defined Keynesian relationships: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.”

Until this day, Walrasians, Keynesians, Marxians, Austrians hold to their provably false beliefs and claim to do science. This is absurdity on stilts but it is swallowed hook, line, and sinker by every new generation of economics students. Compared to the representative economist the average political sucker is a genius.

Egmont Kakarot-Handtke

#1 The Washington Post
#2 Wikipedia