January 31, 2018

Cryptoeconomics ― the best of Lars Syll’s spam folder

Comment on Lars Syll on ‘Truth and knowledge’

Blog-Reference

Science is about truth and knowledge. Science is binary true/false and NOTHING in between. Non-science is the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes). The distinction between science and non-science corresponds to the ancient Greek’s distinction between episteme (= knowledge) and doxa (= opinion).

Science is since 2000+ years defined by material and formal consistency. Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-the-art testing.#1

Fact is that about ninety-nine percent of people are satisfied with opinion and only one percent is devoted to episteme. Economists do NOT belong to the latter group. Economics is a cargo cult science and both orthodox and heterodox economists are fake scientists.

Until this day, in their research and communication, economists in general and heterodox economists, in particular, are not guided by the principles of Science but by the principles of Circus Maximus. As a consequence, in the econoblogosphere, the best stuff is hidden in the spam folders, and what is openly recycled ad nauseam is soft soap, blather, gossip, propaganda, disinformation, and proto-scientific garbage.

It is long known that economists routinely violate scientific standards and simply suppress/ ignore refutation “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)

It is at anybody’s guess to which extent the econoblogosphere is corrupted. The problem, of course, is that spam folders are invisible to the general public. Private censorship is built into the blogging software and works without any traces.

Occasionally, there are exceptions. For those who appreciate the privilege of casting a glance into Lars Syll’s spam folder, here is a sample of posts he suppressed over the last three month.


It is a defining characteristic of the topsy-turvy world of economics ― which has, to bear in mind, produced NOTHING of scientific value in the last 200+ years ― that incompetent/ corrupt scientists and methodologists cannot stop blathering about truth and knowledge ― issues that they have not for one moment understood properly.*

Egmont Kakarot-Handtke


#1 Success is the best method

Related 'Feynman Integrity, fake science, and the econoblogosphere' and 'Needed: The Worst of the Worst of economics blogs' and 'On econoblogosphere bias' and 'Economics between cargo cult, farce, and fraud' and 'What is so great about cargo cult science? or, How economists learned to stop worrying about failure' and 'Economics: 200+ years of scientific incompetence and fraud' and 'Economists: Incompetent? Stupid? Corrupt?' and 'Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother' and 'Economics, methodology, morals ― a creepy freak-show' and 'Fact of life: your econ prof is scientifically incompetent' and 'Heterodoxy ― an axiomatic failure just like Orthodoxy'.

*  2018 membership badge


Source: Lars P. Syll blog

For details of the big picture see 'Econoblogosphere: The flawed Top 101'

January 30, 2018

Cryptoeconomics ― the best of Bill Mitchell’s spam folder

Comment on Bill Mitchell’s ‘Planning public works ― history has a lot to say if we listen properly’

Blog-Reference

MMT is a failed approach. Therefore, there is absolutely no use to follow the discussion between what Bill Mitchell calls mainstream and progressives. Both sides lack sound scientific foundations, that is, the true theory. MMTers have to this day not realized that their foundational premises/balances equations are provably false.#1

To this day, in their research and communication, economists in general and MMTers, in particular, are not guided by the principles of Science but by the principles of Circus Maximus. As a consequence, in the econoblogosphere, the best stuff is hidden in the spam folders, and what is openly recycled ad nauseam is soft soap, blather, gossip, propaganda, disinformation, and proto-scientific garbage.

It is long known that economists routinely violate scientific standards and simply suppress/ ignore refutation “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern)

It is at anybody’s guess to what extent the econoblogosphere is corrupted. The problem, of course, is that spam folders are invisible to the general public. Private censorship is built into the blogging software and works without any traces.

Occasionally, there are exceptions. For those who appreciate the privilege of casting a glance into  Bill Mitchell’s spam folder, here is a sample of posts he suppressed over the last twelve month.


Needless to emphasize that Bill Mitchell’s billy blog represents not more than the tiny tip of the iceberg. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and materially/formally inconsistent. As a result, almost all of the econoblogosphere consists of fake news, attention management, brown-nosing, wrestling exercises, buddy back-scratching, PR, slander, and cheer-leading. MMT is NO exception, it is political agenda pushing with a scientific content of zero.

Egmont Kakarot-Handtke


#1 For the full-spectrum refutation see cross-references MMT

***

NOTE on Bill Mitchell’s ‘Oh poor Britain ― overrun by chlorinated chickens, hapless without the EU’ on Feb 1

Bill Mitchell argues “A rising fiscal deficit is neither good nor bad. It all depends on the saving and spending desires of the non-government sector and the state of capacity utilisation. A rising deficit associated with a growing economy and full employment with stable prices is to be desired.”

The MMT swindle lies in the word “non-government sector”. There is NO such thing as the “non-government sector”, there are TWO sectors, the business- and the household sector. And the business sector does NOT save. Saving/dissaving is the balance of the household sector, profit/loss is the balance of the business sector. The word profit, though, does not appear once in Bill Mitchell’s analysis. Why? Because it holds Public Deficit = Private Profit which means that Bill Mitchell does not really care about poor Britain but about the wellness of the one-percenters.

For more on the essential flaws of MMT’s profit and employment theory see

January 29, 2018

Cryptoeconomics ― the best of Real-World Economics Review’s spam folder

Comment on Michel Zouboulaki on ‘The crisis in economics education’. Sequel to ‘Cryptoeconomics ― the best of Mark Thoma’s spam folder’ and ‘Cryptoeconomics ― the best of Nick Rowe’s spam folder’

Blog-Reference

Economics is a failed science. On this, heterodox economists of all colors agree, entirely forgetting that Heterodoxy itself has never risen above the proto-scientific level.

Beginning with Adam Smith/Karl Marx, theoretical economics (= science) had been hijacked by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years. Heterodoxy is a staunch defender of pluralism, which means practically the pluralism of false theories.

Until this day, in their research and communication, economists are not guided by the principles of Science but by the principles of Circus Maximus. As a consequence, in the econoblogosphere the best stuff is in the spam folders, and what is tirelessly recycled is soft soap, blather, gossip, propaganda, disinformation, and proto-scientific crap.

It is at anybody’s guess to what extent the econoblogosphere is corrupted. The problem, of course, is that spam folders are invisible to the general public. Private censorship is built into the blogging software and works without any traces.

Occasionally, there are exceptions. For those who appreciate the privilege of casting a glance into the Real-World Economics Review’s spam folder, here is a sample of posts the editors suppressed over the last four month.


Needless to emphasize that the Real-World Economics Review represents not more than the tiny tip of the iceberg. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and materially/ formally inconsistent. As a result, almost all of the econoblogosphere consists of fake news, attention management, brown-nosing, wrestling exercises, buddy back-scratching, artificial applause, PR, slander, and cheer-leading.#1

The common denominator of Orthodoxy and Heterodoxy is scientific incompetence. The inconsequential political skirmishes have no deeper meaning and are only meant as a rebuttal of the presumption that economists are not even useful as useful idiots.

Egmont Kakarot-Handtke


#1 How Heterodoxy became the venue for science’s scum

Related 'Lars Syll, fake scientist'. For details of the big picture see cross-references Failed/Fake scientists.

Cryptoeconomics ― the best of Mark Thoma’s spam folder

Note on Barkley Rosser’s ‘Parsing the Poland Problem Paradox: Local Versus National Outcomes’ and sequel to 'Cryptoeconomics ― the best of Nick Rowe’s spam folder'

Blog-Reference and Blog-Reference

Economics claims to be a science but is not. There is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

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.

Accordingly, in their research and communication, economists are not guided by the principles of Science but by the principles of Circus Maximus. As a consequence, in the econoblogosphere, the best stuff is hidden in the spam folders, and what is openly recycled ad nauseam is soft soap, blather, gossip, propaganda, disinformation, and proto-scientific crap.

It is at anybody’s guess to what extent the econoblogosphere is corrupted. The problem, of course, is that spam folders are invisible to the general public. Private censorship is built into the blogging software and works without any traces.

Occasionally, there are exceptions. For those who appreciate the privilege of casting a glance into Mark Thoma’s spam folder, here is a sample of comments he suppressed over the last six month.


Needless to emphasize that Mark Thoma represents not more than the tiny tip of the iceberg. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, and materially/formally inconsistent. As a result, almost all of the econoblogosphere consists of fake news, attention management, brown-nosing, wrestling exercises, buddy back-scratching, PR, slander, and cheer-leading.#1

Egmont Kakarot-Handtke


#1 Economics: a science without scientists

Immediately following 'Cryptoeconomics ― the best of Real-World Economics Review’s spam folder'. For details of the big picture see cross-references Failed/Fake scientists.

January 28, 2018

Cryptoeconomics ― the best of Nick Rowe’s spam folder

Comment on Nick Rowe on ‘”Profits = Investment − Saving”’

Blog-Reference and Blog-Reference on Jan 29

Nick Rowe concluded his post with this cryptic remark “[An economist will probably make a comment on this post, and that comment will go automatically into the spam folder. Because Typepad, and history, across this and other macro blogs. But if it’s a reasonable comment I will fish it out, after a short delay.]”

Nick Rowe, though, gladly publishes comments like this: “I agree with the point of this post, Nick, and I think that it helps reconcile two methodological truths: good account matters in economics AND no economic knowledge is ultimately purely an accounting truth. It might be helpful to try to put your point in terms of the distinction in logic and the foundations of mathematics between (a) a calculus and (b) the interpretation of that calculus. By the way, I recently graduated with my Ph.D. Thanks for all of your blogposts that opened up much of macro to me!”

In the topsy-turvy econoblogosphere the best stuff is in the spam folders, and what is tirelessly recycled is soft soap, blather, gossip, propaganda, disinformation, and proto-scientific crap.

It is at anybody’s guess to what extent the econoblogosphere is corrupted. The problem, of course, is that spam folders are invisible to the general public. Private censorship is built into the blogging software and works without any traces.

Occasionally, there are exceptions. For those who appreciate the privilege of casting a glance into Nick Rowe’s spam folder, here is a sample of comments he suppressed over the last two years.
Since the agenda pushers Adam Smith/Karl Marx, fake news is standard communication procedure in political economics. Thus, any idea of what scientific ethics means got entirely lost. Economics has to be rebuilt up from scratch, or, as Joan Robinson had it: Scrap the lot and start again.#1

Egmont Kakarot-Handtke


#1 How to restart economics

Immediately preceding 'Is Nick Rowe stupid or corrupt or both?'
Immediately following 'Cryptoeconomics ― the best of Mark Thoma’s spam folder'

Related 'Are MMTers stupid or corrupt or both?' and 'It has been said before but economists still don’t get it'.

January 25, 2018

Is Nick Rowe stupid or corrupt or both?

Comment on Nick Rowe on ‘”Profits = Investment − Saving”’

Blog-Reference and Blog-Reference on Jan 26 and Blog-Reference

“Since every act of spending results in income for somebody else, total spending for the economy as a whole equals total income. This is true by definition and is a basic building block in macroeconomics.” (Cooper) Both, orthodox and heterodox economists subscribe to this statement as the self-evident rock-bottom truth of all of economics.

The foundational methodological error/mistake/blunder of economics is that the pivotal concepts — profit and income — are ill-defined and not at all understood. This explains why economics is a failed science or what Feynman called a cargo cult science. Actually, economics is at the stage of medieval physics before the pivotal concept of energy was properly defined and understood.

The proof of the utter scientific incompetence of economists is given with the fact that the profit theory is false since Adam Smith.#1, #2, #3

Keynes started macroeconomics with false premises and ended with false conclusions “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)#4

That Keynes was too stupid for the elementary mathematics of macro accounting was proven by Allais.#5

According to well-established scientific standards, profit theory, Keynesian economics, and all I=S/IS-LM models are definitively refuted. However, economists NEVER lived up to any standards “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941)

Nick Rowe stands firmly in this corrupt methodological tradition “If households own the firms, we can say that firms’ assets are owned by households, and firms’ profits are included in households’ income. And if we do that, then we are back at the standard definitions where Expenditure = Income, and Investment = Saving, must always be true. … There’s a number of different ways we could add things up. Which is the best way? It depends.”#6

This is the classical argument since Alice’s and Humpty Dumpty’s memorable methodological dialogue “’When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all’.”

Science, of course, is different “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen) Science is defined by material and formal consistency and this is known since 2000+ years ― except among economists “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle)

Keynes’ premise Income = Value of Output is axiomatically false and because of this, the whole analytical superstructure of Keynesianism up to MMT is scientifically worthless. Worse, with MMT the toxic combination of stupidity and corruption has reached a new quality and has unnoticed mutated into ordinary political fraud.#7

Since Keynes, macro is proto-scientific garbage but Nick Rowe and his Trump University colleagues have not realized it.#8

Egmont Kakarot-Handtke


#1 The profit theory is false since Adam Smith
#2 “A satisfactory theory of profits is still elusive.” (Palgrave Dictionary, Desai, 2008)
#3 “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” (Mirowski, 1986)
#4 I is never equal S and even Nick Rowe will eventually grasp it
#5 How Keynes got macro wrong and Allais got it right
#6 No accountant worth his salt adds wage income (= flow) and profit (= balance of the flows consumption expenditures and wage income) together. Only brain-dead economists do this. For more details about flow―balance consistency see cross-references Accounting.
#7 Down with idiocy!
#8 Rethinking macro

Immediately preceding 'I is never equal S and even Nick Rowe will eventually grasp it'. For details of the big picture see also cross-references MMT.

***

REPLY to Nick Rowe on Jan 26 and Blog-Reference MNE

You say it depends, and this a not so smart answer from the handbook of lame excuses.#1 Science is about proof, so here is the unassailable proof of Nick Rowe’s incompetence.

1. Premises

The elementary production-consumption economy is given by three macroeconomic axioms: (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 expenditures C is equal to price P times quantity bought/sold X.#2

2. Logical implications

In the elementary production-consumption economy, three configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) C is less than Yw, (iii) C is greater than Yw.
• In case (i) the monetary saving of the household sector Sm≡Yw−C is zero and the monetary profit of the business sector Qm≡C−Yw, too, is zero. The product market is cleared, i.e. X=O in all three cases. For a start, the market clearing price as the dependent variable is given by P=C/X=W/R.
• In case (ii) monetary saving Sm is positive and the business sector makes a loss, i.e. Qm is negative. The market clearing price P is less than W/R.

It always holds Qm+Sm=0 or Qm=−Sm, in other words, the business sector’s loss is equal to the household sector’s saving. In still other words, saving is NOT equal to investment (because there is NO investment in the elementary production-consumption economy) but saving is equal to loss. There is NO such thing as an IS-curve but there is an SL-line = Saving/Loss-line which runs with minus 45 degrees through the origin.#3

3. Conclusion

Simple algebra tells everybody that saving is NEVER equal to investment and that, by consequence, there is NO such thing as an IS-curve. All IS-LM models are a priori false. Nick Rowe’s model is wackadoodle.

4. Generalization

The axiomatically correct Profit Law says for the general case Qm=Yd+I−Sm+(G−T)+(X−M). Legend: Qm monetary profit, Yd distributed profit, I investment expenditures, Sm monetary saving, G government expenditures, T taxes, X exports, M imports. Again, there is NO such thing as an equality/identity/equilibrium of investment and saving. Both variables are entirely independent.#4


#1 Failed economics: The losers’ long list of lame excuses
#2 For more details see Economics for Economists
#3 See on Wikimedia
#4 For details of the big picture see cross-references Refutation of I=S

***

REPLY to Benoit Essiambre on Jan 26 and Blog-Reference MNE

You say “MMTers *insist* in the I=S identity.”

The MMT balances equation reads (I−S)+(G−T)+(X−M)=0. This boils down to I=S if the government balance and the foreign trade balance is set to zero. The MMT balances equation is provably false.#1

The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Qm−Yd)=0. The correct equation contains profit Qm and distributed profit Yd while these pivotal economic magnitudes are MISSING in the MMT equation.

Conclusion: Keynes’ I=S was false because Keynes NEVER understood what profit is which is the defining mental defect of the representative economist. The Post Keynesians realized nothing.#2 The MMTers, too, realized nothing and built their whole approach on the false macroeconomic balances equation. Because of this, the whole analytical superstructure of MMT is proto-scientific garbage. MMT policy lacks sound scientific foundations and is nothing more than ordinary political fraud.

Reply to Economuse

You say “Qre=I−S arises because of EKH’s narrow definition of income. Change the definition to the usually accepted definition and the usual Keynesian identity reappears. This is easily demonstrated.”

Yes, indeed. The point is, though, that what you call “narrow definition of income” is the correct definition and what you call the “usually accepted definition” is provably false. Here is the proof.

It holds
(i) Qm=−Sm in the elementary production-consumption economy,
(ii) Qm=I−Sm in the elementary investment economy,
(iii) Qm=Yd+I−Sm in the investment economy with profit distribution.

Let us now take equation (ii) and play the Humpty Dumpty shell game.

We introduce a new definition by saying that profit may be called “saving of the business sector” and that this “saving” can be added up with saving of the household sector to “total saving” Σ thus
(a) Σ≡Qm+Sm and now (ii) is rewritten
(b) Qm+Sm=I and then, hey presto,
(c) Σ≡I that is, “total saving” is “by definition” identical to investment or in the usual sloppy parlance saving equals investment.

Let us call this the Humpty Dumpty Fallacy. It is at the bottom of all IS-LM models. Note that “total saving” Σ is different from household sector saving Sm and that this crucial difference simply gets lost in the brain-dead slogan “saving equals investment”.

The methodological blunder consists in the introduction of the redundant definition (a).

The parallel blunder consists in the introduction of the redundant definition of “total income” as the sum of wage income and profits, i.e. Ψ≡Yw+Qm. Note in particular that here a flow Yw and a difference of flows Qm is added together which is a plain flow-balance inconsistency.#3 The 1st macroeconomic axiom says household sector income Y is the sum of wage income (= flow) and distributed profit income (= flow), i.e. Y=Yw+Yd.

Needless to emphasize that economists never feel any irritations about logical inconsistencies, just the opposite, this is the air that they breathe from their student days to the grave. And this is why economics is a failed science.

Conclusion: All of economics is proto-scientific garbage because the foundational concepts profit and income are ill-defined since Adam Smith.


#1 For the full-spectrum refutation of MMT see cross-references MMT.
#2 Why Post Keynesianism Is Not Yet a Science
#3 A tale of three accountants

***

REPLY to Henry Rech on Jan 27 and Blog-Reference MNE

You say “EKH defines household income: Household Income = Wage Income + Distributed Firm Profits => Y=Yw+Yd. However, conventional Keynesian macro defines total economy income: Total Eco. Income = Wages Income + Dist Firm Profs + Retained Firm Profs.” Then you rearrange the equations and conclude: “That is, removing the definitional impediments EKH imposes, EKH’s equations reduce to the Keynesian relationship of equality between investment and savings.”

In fact, I have proven this:
(i) Loss/profit is equal to saving/dissaving in the elementary case of a production-consumption economy, i.e. Qm=−Sm (1), and equal to the difference between investment and saving, i.e. Qm=I−Sm (2), in the case of an investment economy without profit distribution. Conclusion: household sector saving is NEVER equal to business sector investment.

(ii) Keynes’ slogan saving-equals-investment is axiomatically false and is definitively refuted. By implication, the whole General Theory is refuted.

(iii) It is, however, quite easy to regress to Keynes’ false formula by introducing redundant definitions. So, by introducing the definition of “total saving” Σ, thus that Σ≡Qm+Sm, equation (2) turns to Σ≡I that is, “total saving” is “by definition” identical to investment. This, of course, is a methodologically inadmissible semantic shell game.

(iv) The same shell game is performed with the introduction of the redundant definition of “total income” as the sum of wage income and profits, i.e. Ψ≡Yw+Qm. This definition is methodologically inadmissible because a flow Yw and a difference of flows Qm are added together which is a  flow-balance inconsistency (which is just as bad as a stock-flow inconsistency).

So, yes, Keynes’ slogan saving-equals-investment can at any time be reestablished by applying the Humpty Dumpty Fallacy. The students of economics simply swallow and parrot every crap as the history of economic thought shows.#1 History shows also that heterodox profit theory has not been one iota better and falls flat as an alternative.#2

In order to end the 200+ years old predominance of utter incompetence in economics, it is necessary to get rid of the whole bunch of blatherers, shell game artists, morons, and agenda pushers. Those who still parrot saving-equals-investment and those who present I=S/IS-LM models on their blogs or in the New York Times and those who peer-review and publish this proto-scientific garbage have to go first.


#1 For details of the big picture see cross-references Refutation of I=S
#2 Heterodoxy, too, is scientific junk

***

REPLY to Henry Rech on Jan 28 and Blog-Reference MNE

I said “Conclusion: household sector saving is NEVER equal to business sector investment.”

You say: “OK, however, the Keynesian formulation specifies total investment, not just household investment.”

Keynes said “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.”

There is NO such thing as household investment. The household sector either saves (consumption is less than income) or dissaves (consumption is greater than income) in the elementary cases under discussion and NOTHING else.

"Keynes always believed that ‘a little clear thinking’ or ’more lucidity’ could solve almost any problem." (Moggridge, 1976, p. 39)


Immediately following 'Cryptoeconomics ― the best of Nick Rowe’s spam folder'.
Immediately preceding 'I is never equal S and even Nick Rowe will eventually grasp it'.

January 24, 2018

I is never equal S and even Nick Rowe will eventually grasp it

Comment on Nick Rowe on ‘”Monetary Policy Accommodation” and Upward-sloping IS curves’

Blog-Reference and Blog-Reference

The economist’s idea of the price mechanism is encapsulated in the Totem of the Micro/Macro, i.e. supply-curve-demand-curve-equilibrium. Because each of the three elements is a NONENTITY, price theory in general and IS-LM, in particular, will forever stand out as laughable proto-scientific constructs.

In order to see this, one has to go back to the most elementary economic configuration, that is, the pure production-consumption economy which consists of the household and the business sector.#1

In this elementary economy, three configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) C is less than Yw, (iii) C is greater than Yw.

• In case (i) the monetary saving of the household sector Sm≡Yw−C is zero and the monetary profit of the business sector Qm≡C−Yw, too, is zero. The product market is cleared, i.e. X=O in all three cases.
• In case (ii) monetary saving Sm is positive and the business sector makes a loss, i.e. Qm is negative.
• In case (iii) monetary saving Sm is negative, i.e. the household sector dissaves, and the business sector makes a profit, i.e. Qm is positive.

It always holds Qm+Sm=0 or Qm=−Sm, in other words, at the heart of the monetary economy is an identity: the business sector’s deficit (surplus) equals the household sector’s surplus (deficit). Put bluntly, loss is the counterpart of saving and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. Obviously, there is NO such thing as the equality/identity/equilibrium of saving and investment and by consequence, there is NO such thing as an IS-curve.

The profit theory is false since Adam Smith and all IS-LM models are false since Keynes/Hicks.#2

The axiomatically correct profit equation for the investment economy with profit distribution reads Qm=Yd+I−Sm. Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditures. This boils down to Allais’ Qre=I−Sm.

The difference between investment and saving I−Sm plus distributed profits Yd determine monetary profit Qm in each period. All variables are measurable with the precision of two decimal places with an appropriate macroeconomic accounting system.

IS-LM models are worthless since 70+ years. Is Nick Rowe really the last to get it?

Egmont Kakarot-Handtke


#1 The elementary production-consumption economy is given by three macro axioms: (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.
#2 How Keynes got macro wrong and Allais got it right

Related 'I=S: Mark of the Incompetent' and 'Nick Rowe: Bury me at the end of coal-pit' and 'Getting out of IS-LM = Getting out of despair' and 'Macro poultry entrails reading' and 'Worthless Canadian model bricolage' and 'Keynesians ― terminally stupid or worse?' and 'Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It'. For details of the big picture see cross-references The representative economist and cross-references Refutation of I=S.

Immediately following 'Is Nick Rowe stupid or corrupt or both?'.

January 21, 2018

Rethinking macro

Comment on Michael Roberts on ‘The macro: what’s the big idea?’

Blog-Reference and Blog-Reference and Blog-Reference on Jan 25

Eighty years ago, Keynes got macro wrong and neither pro-Keynesians nor anti-Keynesians noticed it until this very day.

Keynes has to be credited for realizing that the economics of Jevons/Walras/Menger/ Marshall was false at its core and that nothing less than a paradigm shift was needed: “The [neo-]classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight ― as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics.”

After Keynes, an economist who does not see the necessity of a paradigm shift is a scientifically incompetent moron.#1

Keynes, though, messed up the shift from microfoundations to macrofoundations. His methodological blunder can be exactly located in the GT “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This two-liner is conceptually and logically defective because Keynes did not come 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.)

Because profit and income are ill-defined the whole theoretical superstructure of Keynesianism is false. It was Allais who identified Keynes’ lethal blunder.#2 Obviously, neither orthodox nor heterodox economists got the message.#3

Until this very day economists did not get the foundational concepts of their subject matter ― profit and income ― right. The four main approaches ― Walrasianism, Keynesianism, Marxianism,#4 Austrianism#5 ― are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economic policy guidance NEVER had sound scientific foundations from Adam Smith/Karl Marx onward.

So what is the big idea?

It is pretty obvious that one has to go back before Keynes’ failed General Theory and perform the paradigm shift from false microfoundations to true macrofoundations.#6 This cannot be done by the present generation of orthodox and heterodox economists who have thoroughly proven their utter scientific incompetence.#7 No idea ― neither big nor small ― will ever come from them.

Egmont Kakarot-Handtke


#1 Microfoundations R.I.P.
#2 How Keynes got macro wrong and Allais got it right
#3 Economists never understood how the price mechanism works
#4 Profit for Marxists
#5 Austrian idiocy ― the case of Hayek
#6 If it isn’t macro-axiomatized, it isn’t economics


#7 Time to retire political economists

Related 'Macro for retarded economists' and 'Keynesianism is broke: Get over it!' and 'Post Keynesianism, too, is indefensible'.

January 20, 2018

Time to retire political economists

Comment on Simon Wren-Lewis on ‘Microfoundations and the values of policymakers’

Blog-Reference

Economics started as Political Economy. Adam Smith and Karl Marx where agenda pushers who used theoretical economics (= science) not so much for enlightenment about how the actual economy works but as the appropriate format of political communication. After the breathtaking successes of science and the debunking of all variants of religious/moral/ mythical world interpretation, there was simply no other format left.

The dilemma of the soapbox economist is this: the overwhelming majority of any population likes storytelling, gossip, and moralizing and dislikes the insistence on objectivity, consistency, and proof which defines science. In other words, science does not yield emotional approval, likes on Facebook, votes, and all the other social goodies that have top priority for the agenda pusher. Yet, on the other hand, religions have convincingly demonstrated that it is very effective to speak in the name of some higher authority and/or eternal truth.

From Adam Smith/Karl Marx to the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” economists claim to do science and exploit the prestige of science but economics never rose above the level of a proto-scientific sitcom. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.

When economists are taken to task for the indefensible pluralism of false theories or ask themselves occasionally ‘Why economists disagree’ they argue that most of the disagreement is only apparent. Friedman and Machlup argued that economists generally agree on theoretical fundamentals ― the basic models ― and disagree only with regard to values and politics. (Prychitko, 1998, p.1) Nothing could be further from the truth.

The mission of economics is to figure out how the economic system works and NOTHING else. Economists need the true theory “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)

Economists do NOT have the true theory but a heap of inconsistent models. Alone for this reason, their answer to the IS-OUGHT question is beside the point. Simon Wren-Lewis argues “It was … an exciting breakthrough. We could now tell policymakers that, if this is the utility function of the representative consumer, and the model was a good representation of reality (yes, I know), this is how you should be trading off output and inflation losses.”

The fact of this paradigmatic case is, unfortunately, that there never was any trade-off between output and inflation but both evils always come in tandem, i.e. higher inflation=lower output/employment. Economists got the Phillips curve dead wrong.#1 Because of scientific incompetence, the scientific basis for any political valuation is lacking.#2

Politics and science do not mix, never have, never will. Political economics has produced NOTHING of scientific value in the last 200+ years. In order that economics moves from agenda pushing, infotainment, and inconclusive sectarian squabbles to science, economists have to be discouraged from assuming the roles of fake scientists, opinion managers, and useful idiots in the political Circus Maximus.#3

Egmont Kakarot-Handtke


#1 Economists never understood how the price mechanism works
#2 Microfoundations R.I.P.
#3 Krugman and the scientific implosion of economics

Related 'The end of political economics'. For details of the big picture see cross-references Political Economics.

January 18, 2018

Economists never understood how the price mechanism works

Comment on David Glasner on ‘Milton Friedman and the Phillips Curve’

Blog-Reference and Blog-Reference on Jan 19

The economists’ idea of the price mechanism is encapsulated in the Totem of the Micro, i.e. supply-curve-demand-curve-equilibrium. Because each of the three elements is a NONENTITY and the generalization for the whole economy is a Fallacy of Composition, price theory will forever remain one of the most laughable constructs in the history of wannabe science. It is not really funny, though, because the paradigmatic case of the Phillips curve proves how the scientific incompetence of economists ruins the economy.

The basic idea of the working of the price mechanism goes a follows “In other words, you can’t make the economy as a whole better off just by printing money. Or can you? Actually you can, and Friedman himself understood that you can, but he argued that the possibility of making the economy as a whole better of (in the sense of increasing total output and employment) depends crucially on whether inflation is expected or unexpected. Only if inflation is not expected does it serve to increase output and employment.” (Glasner)

Exactly the opposite is, in fact, the case, a one-off or permanent or accelerating macroeconomic price increase does NOT increase employment but unemployment. In other words, economists got the Phillips curve catastrophically wrong.#1, #2

In order to see this one has to go back to the axiomatic foundations and to replace microfoundations by true macrofoundations.#3 The elementary version of the correct (objective, systemic, behavior-free, macrofounded) Employment Law is shown on Wikimedia.#4


From this equation follows:
(i) An increase of the expenditure ratio ρE leads to higher employment L (the Greek letter ρ stands for ratio).
(ii) Increasing investment expenditures I exert a positive influence on employment.
(iii) An increase in the factor cost ratio ρF=W/PR leads to higher employment.

The complete employment equation contains in addition profit distribution, the public sector, and foreign trade.

Item (i) and (ii) cover the familiar arguments about aggregate demand. The factor cost ratio ρF as defined in (iii) embodies the macroeconomic price mechanism. The fact of the matter is that overall employment INCREASES if the average wage rate W INCREASES relative to average price P and productivity R. Or, the other way round, overall employment DECREASES if the average price P INCREASES relative to average wage rate W.#5 Roughly speaking, inflation is BAD for employment and this is the OPPOSITE of what microfounded economics teaches and what supply-demand-equilibrium economists still believe since Friedman’s proto-scientific rubbish was applauded by the dull members of the American Economic Association.

Egmont Kakarot-Handtke


#1 NAIRU, wage-led growth, and Samuelson’s Dyscalculia
#2 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#3 The macrofoundations approach starts with SYSTEMIC 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.
#4 Wikimedia, Employment Law
#5 Attention: there are THREE types of inflation

Related 'Macro for retarded economists' and 'Microfoundations R.I.P.' and 'Economists, stupid or corrupt or both?' and 'The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment' and 'Essentials of Constructive Heterodoxy: The Market' and 'Rethinking macro'. For details of the big picture see cross-references Employmen/Phillips Curve and cross-references Paradigm Shift.

January 14, 2018

Macroeconomics for retarded economists

Comment on Brian Romanchuk on ‘The Death of Mainstream Macro’

Blog-Reference and Blog-Reference and Blog-Reference and Blog-Reference on Jan 17 adapted to context

“Since every act of spending results in income for somebody else, total spending for the economy as a whole equals total income. This is true by definition and is a basic building block in macroeconomics.” (Cooper)

Both, orthodox and heterodox economists subscribe to this statement as the self-evident rock-bottom truth of all of economics. Too bad that this statement is materially/logically false.

The foundational error/mistake/blunder consists in the methodological fact that the two most important magnitudes of economics — profit and income — are ill-defined.#1 In order to see this one has to go back to the most elementary configuration, that is, the pure production-consumption economy which consists of the household and the business sector.#2

In this elementary economy, three configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) C is less than Yw, (iii) C is greater than Yw.
  • In case (i) the monetary saving of the household sector Sm≡Yw−C is zero and the monetary profit of the business sector Qm≡C−Yw, too, is zero. The product market is cleared, i.e. X=O in all three cases.
  • In case (ii) monetary saving Sm is positive and the business sector makes a loss, i.e. Qm is negative.
  • In case (iii) monetary saving Sm is negative, i.e. the household sector dissaves, and the business sector makes a profit, i.e. Qm is positive.
It always holds Qm+Sm=0 or Qm=−Sm, in other words, at the heart of the monetary circuit is an identity: the business sector’s deficit (surplus) equals the household sector’s surplus (deficit). Put bluntly, loss is the counterpart of saving and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. It follows directly from the profit definition and the definition of household sector saving.

Loss or profit are NOT income. Only distributed profit is income. The profit theory is false since Adam Smith.#3 As a collateral damage, all I=S or IS-LM models are false.

Economists are too stupid for the elementary mathematics of accounting.#4 The statement total income equals total spending is simply false because of the all-important phenomenon of credit. Equipped with credit the household sector can spend MORE than its period income (= dissaving) or in the opposite case LESS (= saving). Total spending and total income are NEVER equal, the foundational intuition of macroeconomics is false ― and so is all the rest. Macroeconomics is dead since Keynes.#5

Egmont Kakarot-Handtke


#1 For details see ‘How the Intelligent Non-Economist Can Refute Every Economist Hands Down’ and ‘Keynes’ Missing Axioms’ Sec. 14-18
#2 The elementary production-consumption economy is given by three macro axioms: (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.
#3 See ‘Essentials of Constructive Heterodoxy: Profit’ and cross-references Profit
#4 See ‘The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#5 How Keynes got macro wrong and Allais got it right


Related 'Economists never understood how the price mechanism works' and 'Profit: after 200+ years, economists are still in the woods' and 'How economists missed out on the essential relationship of economics'. For details of the big picture see cross-references Keynesianism and cross-references Scientific Incompetence and cross-references Paradigm Shift.

***

REPLY to Brian Romanchuk on Jan 14

You say “So you have proven that cash expenditures on investment by the business sector are truly an expense!”

I have proven nothing of the sort but I have indeed proven that macro is dead since Keynes and that you have not realized it until this very day.#1


#1 Note that nominal magnitudes Yw, C, Qm, Sm are normally NOT identical with cash payments. For the relationship between the nominal flow magnitudes and the stock of cash see The creation and value of money and near-monies.

***

COMMENT on Brian Romanchuk on Jan 15

Your discussion of macro is the usual echo chamber economics. You do not ask what the correct approach is but are content with stating that current macro is crap and watching what your clueless peers are doing and opportunistically waiting who fetches the most likes on Twitter or Facebook. You argue:

• “I had contact with hundreds of economists over the course of my career.” There is no use of talking with people who have not even realized that supply-demand-equilibrium is proto-scientific rubbish.

• “One of the requirements of being minimally competent was being able to read another researcher’s paper, and compare what they demonstrated within the body of the paper versus what the abstract says the paper accomplished.” This does not even prove minimal competency but only how low the scientific standards in economics are.

• “In summary, he [Krugman] argues that we could just use IS/LM … to analyse the policy response to the Financial Crisis.” If you have not realized until now that Krugman is not a scientist but a soapbox economist nothing can help you.#1, #2

• “The other line of defense of mainstream macro is that young researchers are doing all this amazing new work.” Macro is axiomatically false and the new generation is busily but senselessly digging at the same wrong place as the old generation.

• “One argument is that mainstream macro is more empirical.” Yes, but this does not help if the theory is axiomatically false, to begin with.

• “As should be clear, I pay almost no attention to the latest developments in mainstream macro. … Unless you are being paid to keep up with the latest research fads, it is probably safe to wait until some form of new consensus appears among researchers before actually reading the papers.” Very smart, indeed. What about getting off your ass and figuring things out for yourself?

“The highest ambition an economist can entertain who believes in the scientific character of economics would be fulfilled as soon as he succeeded in constructing a simple model displaying all the essential features of the economic process by means of a reasonably small number of equations connecting a reasonably small number of variables. (Schumpeter)

What is your simple macro model? If you cannot answer this question you are out of economics and out of the discussion.


#1 Krugman is not an economist
#2 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It

***

REPLY to Brian Romanchuk on Jan 15

Thank you for the reference to your Bitcoin articles.

I have only one thing to criticize: the issue is macro and with Bitcoin, you switch to partial analysis in good old Marshallian tradition. What your analysis, first of all, shows is that microeconomic price theory does not work and, worse, that the one-size-fits-all explanation with supply-demand-equilibrium explains, in fact, nothing and never has.#1 Neither has general equilibrium theory, the very core of economics. In other words, 200+ years after Adam Smith, economists still do NOT know how the price mechanism works.

You say “Note how I explain how ‘simple’ models fail when applied to the straightforward question of valuing Bitcoin. How well is a simple model going to do when applied to all prices?”

Indeed, the explanation of the price mechanism has to start from macrofoundations and NOT from microfoundations or partial analysis. So we are back at macro.#2

The elementary macroeconomic Law of Supply and Demand is shown on Wikimedia.#3


This price formula gets, of course, longer with the increasing complexity of the economy. All these details are not needed at the moment.

The elementary macroeconomic Law of Supply and Demand says:#1
(i) An increase of the expenditure ratio ρE=C/Y leads to a higher market clearing price (the Greek letter ρ stands for ratio). An expenditure ratio ρE greater than 1 indicates credit expansion, a ratio ρE less than 1 indicates credit contraction. Credit expansion/ contraction, in turn, affects the quantity of money.
(ii) An increase in the ratio of wage rate to productivity W/R leads to a higher market clearing price.

Roughly speaking, the macroeconomic Law of Supply and Demand explains the price level and its development over time. The equation contains only measurable variables and is therefore testable in principle. Starting with one product market, the way forward is differentiation.

The crucial differentiation is between primary markets (= perishable consumption goods from current production) and secondary markets (= durable goods). Both markets run on entirely different principles.#4 The formula above holds for the primary market.

In brief, the nominal anchor of the whole price system is unequivocally given with the macroeconomic Law of Supply and Demand. But from primary markets to secondary markets and then to Bitcoin is a longer analytical way.#5 In any case holds, if it isn’t macro-axiomatized it isn’t economics, and ― definitely ― microfounded price theory is dead.


#1 The monstrous utility-supply-demand-equilibrium failure
#2 This is the correct core of macroeconomic premises: (A0) The objectively given and most elementary systemic configuration of the (world-) 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.
#3 Wikimedia, Law of Supply and Demand, pure production-consumption economy
#4 Primary and Secondary Markets
#5 The creation and value of money and near-monies

Lars Syll, fake scientist

Comment on Lars Syll’s ‘Is economics ― really ― a science?’

Blog-Reference and Blog-Reference

The state of economics is this: 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.

The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong. As a result of the utter scientific incompetence of the representative economist, what has been achieved is the pluralism of provably false theories.#1

It is rather comical when folks that have produced nothing but proto-scientific rubbish talk about scientific methodology. Economic methodology is even more absurd than economics itself. Economic methodologists have not even spotted blatant methodological blunders like petitio principii or inconsistent definitions which are entirely sufficient to refute every approach on purely methodological grounds.#2, #3

The self-appointed methodologists Lars Syll is a case in point. He has one valid point, that is, Walrasian economics in the current incarnation of DSGE is false on all counts. That’s all. He never advanced to the insight that Keynesianism ― the approach he propagates ― is not significantly better. It cannot be said that he understands what science is all about and how this applies to economics.#4

To recall, the objective of economics is the true theory which, in turn, is the humanly best mental representation of reality: “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)

Walrasian economics is materially and formally inconsistent, true but this holds also for Keynesianism, Marxianism, Austrianism ― and this is why economics is a failed science.#5

Lars Syll’s arguments against Walrasian Orthodoxy are rather silly:

• “… manifest inability to foresee the latest financial and economic crises.” To predict the future is, as a matter of principle, not the business of science but of charlatans.#6

• “Neither the economist, nor the deciding individual, can fully pre-specify how people will decide when facing uncertainties and ambiguities that are ontological facts of the way the world works.” Economics, properly understood, does NOT deal with the behavior of people but with the behavior of the economic system. Human Nature/motives/behavior/action is the business of Psychology/Sociology and other so-called social sciences. Economics is a system science.#7

• “There are no universal laws in economics.” There are no universal behavioral laws in economics. This is true but irrelevant because economics is NOT a science of behavior but a system science. To be sure, there are systemic laws but economists have not figured them out because they wasted 200+ years with folk psychology, i.e. with waffling about rationality, selfishness, utility maximization, rational expectations or uncertainty.

• “We have to build our models on assumptions that are not so blatantly in contradiction to reality.” Trivially true, but if Lars Syll knows how to do it why don’t he apply his superior methodology and shows the results? As J. S. Mill told the slyboots who never rose above the level of vacuous methodological blather “Doubtless, the most effectual mode of showing how the sciences of Ethics and Politics may be constructed, would be to construct them …”

At some point, though, orthodox and heterodox incompetence turns into self-deception and deception of the general public. This point is reached with the false claim that economics is a science as expressed in the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

At present, economics is not a science but what Feynman called a cargo cult science. Make no mistake, BOTH orthodox AND heterodox economics is integral part of the fake. One of the best examples is the scientific failure and methodological loudspeaker Lars Syll.#8

Egmont Kakarot-Handtke


#1 Economics: a science without scientists
#2 Economics, methodology, morals ― a creepy freak-show
#3 Axiomatized nonentities and the failure of methodologists
#4 The irrelevance of economics
#5 Economists, stupid or corrupt or both?
#6 Science does NOT predict the future
#7 If it isn’t macro-axiomatized, it isn’t economics
#8 Nothing to choose between Orthodoxy and traditional Heterodoxy

Related 'Shocking: methodology is a tricky business' and 'Addendum to ‘Musings on Whether We Consciously Know More or Less than What Is in Our Models’ and 'Economics is NOT a misunderstanding but cargo cultic crap' and 'No trade-off, Kant said' and 'Methodological wrong-way drivers' and 'Refutation of Asad Zaman’s heterodox methodology: all arguments you ever need' and 'Why does Heterodoxy not abolish the fake Nobel?'. For details of the big picture see cross-references Failed/Fake scientists and cross-references Scientific Incompetence.

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NOTE on Lars Syll’s ‘Neoclassical economics is great — if it wasn’t for all the caveats!’ on Jan 15 and Blog-Reference LPS

Lars Syll is a one-trick pony. The sum of his insight is that Neoclassical economics is a failure and Keynesianism is superior because its core assumption is ontological uncertainty which reduces economic knowledge ultimately to I know that I know nothing and anything goes, or, as Keynes put it, to “nothing is clear and everything is possible.”

Lars Syll never understood that science is not about unknown and unknowable unknowns but about certain knowledge. His hero is not Archimedes who figured out the Law of the Lever or Euclid who figured out that a2+b2= c2 but the waffling philosopher Socrates with his shallow wisdom and false humbleness of I know that I know nothing ― which, of course, is true of philosophers and heterodox economists.

For details see:
Lars Syll, fake scientist
Fact of life: your econ prof is scientifically incompetent
Say hello to Lars Syll, Keynes’ last parrot
Don Lars and the axiomatic windmill
Economics — the fly that cannot see the glass
Heterodoxy, too, is scientific junk
Throw them out! Orthodox and heterodox economists are unfit for science

***
REPLY to Kaivey on Jan 16

You say “Hi Egmont, what do you think of Single Payer and Britain’s National Health Service? … Do you think the government should renationalise the railways, and highly regulate or renationalise the energy industries?”

I think this is for the Legitimate Sovereign to decide. There is the political realm and the scientific realm and the economist qua scientist must uphold the strict separation of politics and science. This point has been made abundantly clear by J. S. Mill: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”#1

For non-economists, the most important thing to realize 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. This applies also to MMT. MMT policy proposals have no sound scientific foundation.#2

I have no truck with the political program of MMT. National Health, clearly, is a matter for the UK population to discuss and to decide and no economist has any mandate to interfere in the political process. Political economists like Krugman, Varoufakis, or Kelton have not to be praised for taking political sides but condemned for corrupting science.

The issue with MMT is not about good/bad politics but about true/false economic theory. MMTers do either not understand how the monetary economy works or they deceive their fellow citizens about the fact that Public Deficit = Private Profit and that, therefore, MMT policy ultimately benefits the one-percenters, contrary to the political claim that MMT is the champion of the ninety-nine-percenters.#4

The political economist = fake scientist is one of the most disgusting creeps in the Circus Maximus.


#1 The end of political economics
#2 MMT: The one deadly error/fraud of Warren Mosler
#3 MMT = proto-scientific junk + deception of the 99-percenters
#4 MMT and grassroots movements