August 31, 2018

Economists simply don’t get it

Comment on Chris Dillow on ‘What’s behind the rising US profit share?’

Blog-Reference and Blog-Reference and Blog-Reference on Sep 3

Chris Dillow argues: “Diane Coyle says the fact that different countries have seen different changes in labour’s share of income in recent years ― with it falling in the US but not UK ― shows that ‘institutions are playing a big part’ in driving factor shares. This is true. But it’s only part of the story. I say so for a simple reason. Imagine aggregate wages were to fall for some reason ― technical change, globalization, whatever. Would this raise the profit share? Not necessarily. If every £1 fall in wages causes workers to cut their spending by £1, profits would also fall.”

False, profit would stay the same. The obvious fact of the matter is that economists do not understand to this day what profit is: “A satisfactory theory of profits is still elusive.” (Palgrave Dictionary, Desai, 2008) This is obviously disqualifying for economists in general and Chris Dillow, in particular.#1

Chris Dillow cites Kalecki and derives from “basic national accounts identities … an identity for profits: P=(C−W)+(I−D)+(G−T)+NX (i).”

This, of course, is proto-scientific rubbish because economists are too stupid for the elementary mathematics that underlies National Accounting.#2, #3, #4 Distribution theory has always been false because profit theory has always been false.

To make matters short, here is the axiomatically correct macroeconomic Profit Law: Q= Yd + (I−Sm) + (G−T) + NX (ii). Legend: Qm monetary profit/loss, Yd distributed profit, I investment expenditures, Sm monetary saving/dissaving, G government spending, T taxes, NX export minus import. Total profit Q is the sum of monetary profit Qm and nonmonetary profit Qn, i.e. Q=Qm+Qn (iii).#5

Eq. (iii) determines the nominator of the so-called profit share and explains why it is rising. Roughly speaking, neither Diane Coyle’s institutions nor market power nor automation account for a rising profit share. The main drivers of increasing overall profit have been in the past decades the increasing deficit-spending of the government- and household sector which translates into ever-increasing public/private debt.#6

As Mirowski put it: “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” No surprise then, that neither Diane Coyle nor Chris Dillow ever understood how the economy works, what profit is, and why the profit share rises. This is the essential prerequisite of trash-blogging.

Egmont Kakarot-Handtke


#1 The Profit Theory is False Since Adam Smith
#2 Profit: after 200+ years, economists are still in the woods
#3 Truth by definition? The Profit Theory is axiomatically false for 200+ years
#4 Wikipedia and the promotion of economists’ idiotism (II)
#5 For details of the big picture see cross-references Profit
#6 Profit and the decline of labor’s nominal share (I)

Related 'Macroeconomics ― dead since Keynes' and 'Feeble thinkers, feeble rethinkers: the perennial misery of economics' and 'Go! ― test the Profit and Employment Law' and 'MMT and the single most stupid physicist'.

***
Wikimedia, AXEC109i

August 30, 2018

Secret Champagne for the MMT gods

Comment on Michael Norman on ‘Deficit is the highest in 6 years. Where are all the MMT gods??’

Blog-Reference

Michael Norman wonders: “The deficit is now $766 bln, the highest in 6 years and the highest in 5 years as a % of GDP. Where are all the MMT gods touting this as bullish? Mosler’s still bearish. He’s been bearish for 4 years. Missed the entire rally. Kelton? Still criticizing Trump.”

The embarrassment is this. MMT is about deficit-spending/money-creation. Deficit-spending/money-creation is money-making for the oligarchy. The macroeconomic Profit Law clearly states that Public Deficit = Private Profit.

This, however, is an economic policy that cannot be sold to the people. So, the MMT gods developed a smart communication strategy:
  • They made the profit effect disappear in their monetary theory with the help of a false balances equation.#1
  • They put potential positive employment effects of deficit spending in the foreground.
  • They tell people that public debt is not really debt but private savings.#2
  • They tell people that debt does not really matter but is only some digits on an account.
  • They tell people that budget-balancers are either retarded Swabian housewives or Neoliberal austerity sadists.

In brief, MMTers sell deficit-spending/money-creation as a social benefit, with Stephanie Kelton as the pepped-up Mother Theresa of Late Capitalism.#3

Now, as it happens, Mr. Trump has realized the highest public deficit in 6 years. Michael Norman of Wall Street is very excited about this, and rightly so. Mr. Trump is the straightforward implementer of MMT.#4 The embarrassment of the MMT gods consists of the obvious PR disaster that Mr. Trump did not care to put on the social fig leaf which is of overriding importance for the political credibility of MMTers.#5

But, in the end, only success counts. While Wall Street’s MMTer Michael Norman can openly rejoice,#6 the academic MMT gods click glasses with Mr. Trump behind closed doors, with Stephanie Kelton chiding Mr. Trump for unthinkingly busting the social cover of the MMT deficit-spenders/money-creators.

Egmont Kakarot-Handtke


#1 MMT and the magical profit disappearance
#2 For details of the big picture see cross-references MMT
#3 The Kelton-Fraud
#4 Keynes, Lerner, MMT, Trump and exploding profit
#5 MMT and grassroots movements
#6 “… at Mike Norman Economics we look at FLOWS. It gave us the bullish signal a long time ago.”

Related 'Why the British Labor Party should NOT adopt MMT' and 'MMT-Progressives: stupid or corrupt or both?'.

***
REPLY to Matt Franko on Aug 31

You say: “Ah yes now we have the ‘neo-neoliberal conspiracy!!!’”

No conspiracy, merely the peaceful pluralism of scientific incompetence and political corruption:

August 29, 2018

China does NOT need Keynesianism

Comment on Frank Li on ‘John Maynard Keynes: The Best Economist Since 1899?

Blog-Reference

Frank Li argues: “Keynesian economics makes a world of sense today. Two main reasons: It is a valid theory, developed on top of the past economic theories, including both Adam Smith’s and Karl Marx’s. It was developed mostly in Britain, a great country with a long history, without an excessive delusion of exceptionalism.”

Let us put some points straight:

• The formal basis of the General Theory is given with “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)#1

• This proposition is conceptually/logically false because Keynes NEVER came to grips with profit.#2 This is self-defeating for an economist.

• Because the foundational economic concepts profit/income/saving are miss-specified, the whole theoretical superstructure of Keynesianism in ALL its variants is false.#3

• Keynes messed up the inexorable paradigm shift from microfoundations to macrofoundations.#4

• Keynes was an agenda pusher, NOT a scientist. Keynesian policy guidance has NO valid scientific foundations and in effect enables the self-alimentation of the oligarchy.#5

• Keynes’ policy proposals are nothing more than educated common sense and have NO valid scientific foundations. They are superior to Walrasian/Marshallian economics, though, but only because it is impossible to be worse.

• The extremely unequal distribution of income and financial wealth is the direct result of public deficit spending over the last decennia. The macroeconomic Profit Law says Public Deficit = Private Profit.#6

• After-Keynesians have not detected/rectified Keynes’ blunders to this day. Macroeconomics ― profit and employment theory, in particular ― is materially/formally inconsistent.#7

• Keynesianism is scientifically worthless.

Frank Li summarizes: “(1) the free market cannot possibly be all self-functioning and self-stabilizing, and (2) a critical and indispensable ‘balancing’ force is the government, especially in time of crisis.” This is only a great insight to economists who, to recall, are known to be scientifically incompetent since the founding fathers. Keynes stood firmly in this tradition of cargo cult science.#8

China can do better without Smith, Marx, and Keynes.#9

Egmont Kakarot-Handtke


#1 Keynes and the logical brilliance of Bedlam
#2 How Keynes got macro wrong and Allais got it right
#3 Forget Keynes
#4 Finalizing the Keynesian Revolution
#5 Who or what exactly did Keynes save?
#6 Keynes, Lerner, MMT, Trump and exploding profit
#7 Post Keynesianism, science, and universal idiocy
#8 Marshall and the Cambridge School of plain economic gibberish
#9 For details of the big picture see cross-references Keynesianism

Why the British Labour Party should NOT adopt MMT

Comment on Bill Mitchell on ‘The conservative polity is fracturing ― an opportunity for the Left’

Blog-Reference and Blog-Reference and Blog-Reference

Bill Mitchell shows the way: “The progressive social policies that are core to social democratic parties has to be married with an economics that allows those policies to be advanced.” And this economics is MMT, according to Bill Mitchell, Stephanie Kelton and many academic economists around the world.

There is NOTHING to say against the social policies MMT propagates except that they are a bluff package. The Job Guarantee, in particular, has to be seen as political door-opener and friend-of-the-people signaling.

MMT policy guidance ultimately boils down to deficit-spending/money-creation. It is a macroeconomic fact, though, that Public Deficit = Private Profit, so in simple terms, MMT is effectively money-making for the one-percenters. The social rhetoric of MMT is NOT in accordance with what economically happens in the real world.

There is NO way that any genuine/intelligent social democratic party ever adopts MMT:

• MMT is scientifically worthless because it is based on inconsistent macroeconomic accounting identities.#1

• MMT policy guidance ultimately benefits only the one-percenters.

• Deficit-spending/money-creation means stealth taxation for the ninety-nine percenters.

• Interest on public debt amounts to an income redistribution from the ninety-nine-percenters to the one-percenters.

• Public debt is NOT savings of the private sector as MMTers claim but deferred taxation which is simply shifted beyond the time horizon but eventually hits the ninety-nine-percenters.

• MMT policy is in any dimension a bad deal for the ninety-nine-percenters.

• The MMT policy of ever-increasing public debt amounts to the permanent self-financing of the oligarchy.

• MMTers are NOT the friends-of-the-people but the useful idiots of Wall Street/City of London.

Egmont Kakarot-Handtke


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

***
REPLY to Barkley Rosser on Aug 30

You say: “Anyway, please keep your comments at least somewhere in the vicinity of the topic of the original post or subsequent discussion, not remotely the casee here.”

The title of this blog is EconoSpeak.
The title of my post is: Why the British Labour Party should NOT adopt MMT.
The title of your post is: Are We Alone In The Galaxy?

YOU are the wrong guy at the wrong place with the wrong topic.

By the way, I nowhere said that public debt equals private profit. I always say that Public Deficit = Private Profit according to the macroeconomic Profit Law. Profit is the difference of flows, debt is a stock. Mathematically, a real or nominal economic stock is the discrete numerical integral of flow differences.#1

You cannot even read. And you actually know nothing about the relationship between profit and debt. Obviously, you have never encountered intelligent life in your social galaxy.


#1 Primary and Secondary Markets

August 27, 2018

MMT-Progressives: stupid or corrupt or both?

Comment on Bill Mitchell on ‘The conservative polity is fracturing ― an opportunity for the Left’

Blog-Reference

Bill Mitchell explains his long-lasting critique of “the Left”: “Regular readers will know that I have spent a lot of time writing about the demise of the Left political parties as they became subsumed with neoliberal economic ideology, which blurred the political landscape as the ‘centre’ moved to the Right.”

The Progressives argue that what people think of “the Left” is false because “the Left” is (i) stupid and has bought into the neoliberal ideology of budget-balancing/austerity, and (ii), has been hijacked by Oxbridge careerists. In other words, the traditional Left is fake and the Progressives are the true fighters for the cause of WeThePeople.

According to Bill Mitchell: “The neoliberal wedge that has compromised the Left side of politics is now clearly splintering the conservative polity …” and, in order to take advantage of the situation “… the social democratic movements has to abandon every vestige of neoliberal economics ― the concepts, policies and language and framing.” which means “The progressive social policies that are core to social democratic parties has to be married with an economics that allows those policies to be advanced.”

This economics is MMT. In brief, WeThePeople is advised to swap “the Left” for “the Progressives” who apply a superior economic policy which is scientifically based on MMT.

What exactly has been the fatal blunder of “the Left”? “Think about British Labour, who told the people who have endured years of disastrous austerity that ‘Sound finances are the foundations on which everything else is possible’.”

The key word is austerity and austerity is ― everybody knows this ― a pivotal Neoliberal concept. Neoliberal policy, in turn, is the economic sadism that WeTheOligarchy applies to WeThePeople. The Progressives will change that by swapping austerity for deficit-spending/money-creation.

While it is true that Neoliberals have always talked much about budget-balancing they in effect have practiced the exact opposite. Historically, the greater part of the now existing public debt has been produced by Neoliberals. Contrary to the rhetoric, deficit-spending/ money-creation is good old Neoliberal policy.#1, #2, #3 Deficit-spending/money-creation always and everywhere benefits the one-percenters.

This leads to the inescapable conclusion that Progressives are actually Neoliberals in a social guise.#4 Progressives are either stupid or corrupt or both.

Fact is:
• The macroeconomic foundations of MMT are provably false. More specifically, the MMT sectoral balances equation is proto-scientific garbage. Because of this, MMT is scientifically worthless.#5
• According to the axiomatically correct macroeconomic Profit Law, it holds Public Deficit = Private Profit. The MMT sales force, though, falsely claims that Public Deficit = Private Saving.#6
• Because all MMT policy guidance boils down to deficit-spending/money-creation, MMT policy directly and immediately increases macroeconomic profit. Effects on employment/ prices are uncertain and secondary.
• Contrary to the social rhetoric, MMT policy is for the benefit of the one-percenters. MMT is the easily recognizable tip of the iceberg of the political corruption of economics.#7

Egmont Kakarot-Handtke


#1 Austerity and the idiocy of political economists
#2 Austerity and the utter scientific ignorance of economists
#3 Austerity and the total disconnect between economic policy and science
#4 MMT and the promotion of Wall Street socialism
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 For example Tweet of Aug 17, 2018

#7 Lock them up

Related 'How Bill Mitchell stalks Jeremy Corbyn' and 'MMT, Bill Mitchell, and the lack of basic scientific integrity' and 'MMT is gangsta economics' and 'Austerity and the political games Progressives play' and 'MMT is dead: An unfriendly critique of Bill Mitchell' and 'Everything you know about MMT is wrong' and 'MMT: scientific incompetence or political fraud?' and 'Why the British Labor Party should NOT adopt MMT'.

August 25, 2018

Lock them up

Comment on Barkley Rosser on ‘Hannity as Goebbels’

Blog-Reference

Economics claims to be a science. Fact is that economists never did proper science because they were too much occupied with agenda pushing. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and Pluralism. None of these approaches has sound scientific foundations. This does not matter for economic policy, though, because it is known from history that politics runs on silly stories/literary fictions and not on materially/formally consistent theories.

This is why the political sphere and the scientific sphere have to be strictly kept apart. In economics, though, the exact opposite can be observed since 200+ years. Economics is NOT an integral part of science but of the political Circus Maximus.

Barkley Rosser is a fine specimen of the representative economist. His main occupation is propaganda/entertainment/attention-management and not science. With the title of his post ‘Hannity as Goebbels’ Barkley Rosser identifies himself as a member of the propaganda/counter-propaganda community.

The business of the economist as a scientist is to figure out how the economy works and NOT how Washington DC works. The business of the economist as a scientist is NOT to see to it that stupid/corrupt politicians/journalists are expelled/locked up but to produce scientific truth and to see to it that stupid/corrupt agenda pusher do not hijack academia.

The question is why Barkley Rosser does not get tired of addressing political failure/fraud but closes his eyes to the failure/fraud of his own profession.

MMT, for example, propagates a bunch of social measures with the MMT-specific extra benefit of promptly to realize deficit-spending/money-creation. MMTers underpin their policy guidance on any occasion with the macroeconomic balances equation (X−M)+(G−T)+(I−S)=0.#1

This equation is proto-scientific garbage. The axiomatically correct balances equation reads (X−M)+(G−T)+(I−S)−(Qm−Yd)=0.#2, #3 And from this equation follows the reduced form Qm=G−T, that is, Public Deficit = Private Profit. Macroeconomics tells everyone that, in effect, MMT policy benefits alone the one-percenters.#4, #5

So, MMTers talk a lot of social benefits for the ninety-nine-percenters and present provably false macroeconomic equations to mislead the general public.#6 Worse, MMTers pose as Progressives and undermine the genuine social movements.#7

All this happens in plain sight and every theoretical economist (= scientist) can easily see through the fraud of political economists (= agenda pushers).

Barkley Rosser is NOT a scientist. Either he does not understand macroeconomics because he is too stupid or he covers the political machinations of his corrupt colleagues by pointing his finger to some brain-dead media figure and shouting Goebbels!!!

If there ever was one atom of science in economics, it is definitively gone. From Walrasianism to Keynesianism to Marxianism to Austrianism, economics is a political fraud. This, clearly, has to end.#8

Egmont Kakarot-Handtke


#1 Down with idiocy!
#2 Profit and the Private-Property-Irrelevance Theorem
#3 Economists cannot do the simple math of profit — better keep them out of politics
#4 Keynes, Lerner, MMT, Trump and exploding profit
#5 MMT is ALWAYS a bad deal for the 99-percenters
#6 The Kelton-Fraud
#7 How Bill Mitchell stalks Jeremy Corbyn
#8 The end of political economics

Related 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists'.

***
REPLY to Barkley Rosser on Aug 26

You say: “I have over 200 academic publications. Many have nothing to do with politics at all, dealing with abstract mathematical theory, not really appropriate to blog about as not very accessiblee to most readers. I realize you will dismiss them as unscientific because they do not use or ever even mention your worthless and unpublishabe piece of crap theory about profit.”

This is a spot-on self-representation of the representative economist.

Now, we are going to prove that the representative economist is too stupid for the elementary mathematics that underlies the monetary economy.#1, #2 The analytical starting point is given as follows:
(A0) The objectively given systemic configuration consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. The elementary production-consumption economy is given with 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 expenditure C is equal to price P times quantity bought/sold X.

From the macroeconomic axioms follow models by specification. The Ur-Model is given by two conditions (X=O, C=Yw) and two definitions (monetary profit/loss Qm≡C−Yw, monetary saving/dissaving Sm≡Yw−C).

It always holds Qm+Sm=0 or Qm=−Sm (i). The business sector’s monetary profit Qm is equal to the household sector’s dissaving −Sm. The business sector’s loss is equal to the household sector’s saving.

Eq. (i) is the most elementary accounting identity.#1 It obviously refutes Keynes’ I=S.#2 The idiocy of the representative economist consists of calling I=S an accounting identity “that by definition (or construction) must be true.” (Wikipedia) Fact is that I=S is FALSE by construction.

Fact is that the axiomatically correct expanded accounting identity reads Qm=I−Sm#3, which says that saving is NEVER equal to investment. So, Keynesianism and the whole analytical apparatus of the multiplier and IS-LM is false. The same holds for the Wicksell-mechanism which is predicated on the equilibrium of I and S. The same holds for the MMT balances equation. The same holds for Marx’s profit theory. And so on for the rest of economics.

The representative economist in his utter scientific incompetence has NOT realized anything to this day. He was too busy with producing peer-reviewed proto-scientific garbage and with political agenda pushing by shouting Goebbels!!! at mentally retarded TV anchors. All this, clearly, is NOT science and it has to end NOW.


#1 Wikipedia and the promotion of economists’ idiotism (II)
#2 “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
#3 Wikimedia, Profit Law

August 21, 2018

The biggest scientific mistake of the last centuries, and it has much to do with academic economists

Comment on Simon Wren-Lewis on ‘The biggest economic policy mistake of the last decade, and it had nothing to do with academic economists’

Blog-Reference and Blog-Reference and Blog-Reference on Aug 22

Simon Wren-Lewis argues: “I think this lack of influence that academic economics can have is not understood by many. It often suits some heterodox economists to pretend otherwise. Economists can be influential, but only when politicians want to listen, or the media is prepared to confront them with academic knowledge.”

Economists have it always BOTH ways. Keynes famously argued: “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

In economics, everything and the exact opposite has already been said sometime, somewhere, by somebody. Self-contradiction is NOT a disadvantage. Just the opposite. If some major economic event happens, there is always somebody who ‘saw it coming’ or ‘who got it right but, unfortunately, was ignored’. The discussion about austerity is NOT different.

Simon Wren-Lewis tells the story how he, Paul Krugman, Brad DeLong and others have successfully taken down the arguments for austerity: “As far as us Keynesians were concerned, the intellectual battles were won by the end of 2012 if not before.”

This gives us the Iron Rule of Political Economics: If economic shit happens then it was NEVER the fault of economists but of politicians who do not understand economics and always listen to the incompetent economists and ignore the competent economists.” The truth is just the opposite: “Late in life, moreover, he [Napoleon] claimed that he had always believed that if an empire were made of granite the ideas of economists, if listened to, would suffice to reduce it to dust.” (Viner)

This is why intelligent heads of state do not listen to economists but only employ them as useful idiots.

The point is this: “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)

Now, this is the current state of economics: the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With the pluralism of provably false theories, economists have not achieved anything of scientific value. They nonetheless hold up the claim to be scientists and experts.

The key to understanding economics is that there are TWO economixes: political and theoretical economics. Theoretical economics (= science) had been hijacked from the very beginning by the agenda pushers of political economics. Economics claims to be a science but is NOT. Economists claim to know how the economy works but do NOT. From this follows that economic policy guidance from Smith/Marx onward NEVER had sound scientific foundations. This applies also to the issue of austerity.#1, #2, #3

Neither Simon Wren-Lewis nor Paul Krugman nor Brad DeLong nor the rest knows how the economy works yet all have very strong opinions what the politicians should do. Economists have entirely forgotten that agenda pushing is NOT AT ALL their business: “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.” (J. S. Mill)

All the more so, because economists messed up science.#4 After 200+ years of political agenda pushing, economics is one of the most embarrassing failures in the history of modern science.

Egmont Kakarot-Handtke


#1 Austerity and the idiocy of political economists
#2 Austerity and the utter scientific ignorance of economists
#3 Austerity and the total disconnect between economic policy and science
#4 See cross-references Failed/Fake Scientists

***
REPLY to Tom Hickey on Aug 23

You say: “All of us have a world view. World views differ, perhaps slightly but perhaps a great deal. We affiliate based on shared world views. If one beings to groups that don’t share a common world view. this creates some double binds and cognitive dissonance, or role-playing, These world views are ‘programed’ into the brain functioning. At the social level this results in group think and conflict within and among groups.”

Wow. And you found this out by stressing your two brain cells? Take notice that the difference between doxa = opinion and episteme = knowledge has been settled by the Greek philosophers more than 2000 years ago.

The guiding principle for establishing knowledge is the distinction between true and false: “There are always many different opinions and conventions concerning any one problem or subject-matter (such as the gods). This shows that they are not all true. For if they conflict, then at best only one of them can be true. Thus it appears that Parmenides … was the first to distinguish clearly between truth or reality on the one hand, and convention or conventional opinion (hearsay, plausible myth) on the other …” (Popper)

To deny the true/false demarcation means to kick oneself out of science. And this is exactly what you are doing.

It is rather trivial to state that there are a lot of different opinions around. Genuine philosophers went well beyond this triviality: “That the settlement of opinion is the sole end of inquiry is a very important proposition.” (Peirce)

In brief, Walrasianism, Keynesianism, MMT, Marxianism, Austrianism, Pluralism, Eclecticism is mere opinion and will find its final resting place at the Flat-Earth-Cemetery together with your silly anything-goes philosophy.

You say: “All of us have a world view”. What you call a “world view” is qualitatively not different from a bacillus fart. The representative orthodox and heterodox economist does NOT have a valid world view but is scientifically incompetent/corrupt. The proof is all over the econoblogosphere including the Mike Norman Economics blog.#1, #2, #3


#1 The scientific self-elimination of Heterodoxy
#2 MMT, Bill Mitchell, and the lack of basic scientific integrity
#3 You don’t see what you don’t see: censorship in the econoblogosphere

***
REPLY to Tom Hickey on Aug 23

You say: “Right, and most people today are completely unaware of this. They have been captured by ‘science’ that is really pseudoscience.”

Worse, they have been captured by ‘philosophy’ that is really pseudophilosophy. After the sciences and mathematics have left philosophy behind it is only a shadow of its former self and practically indistinguishable from journalism/propaganda/agenda-pushing.

The anything-goes philosopher Tom Hickey is a sad example of the political sellout of philosophy.

***
Wikimedia, AXEC141b

August 18, 2018

“I never learned maths, so I had to think” ― another False-Hero-Memorial

Comment on Lars Syll on “I never learned maths, so I had to think”*

Blog-Reference

The Economist summarizes a tribute to Nick Rowe: “Professors may find themselves ill-prepared for the macro classroom. To become academics they had to answer erudite questions posed by more senior members of the discipline. To become good teachers of introductory macro, they have to give clear answers to muddled students. That requires an intuitive feel for the subject. It is not enough to crank through the equations.

Indeed, Mr Rowe attributes part of his success as a teacher to his shortcomings as a mathematician. He quotes Joan Robinson, another clear expositor of macroeconomics: “I never learned maths, so I had to think.” Because the answers did not leap out at him from the equations, he had to dwell on the economic behaviour underneath the algebra.

Macroeconomics is difficult to teach partly because its theorists (classical, Keynesian, monetarist, New Classical and New Keynesian, among others) disagree about so much. It is difficult also because the textbooks disagree about so little. To reach the widest possible audience, most cover similar material: a miscellany of models that are not always consistent with each other or even with themselves. The result is that many professors must teach things they do not believe.

Professors can also sometimes forget that macroeconomics is full of faux amis: words that mean something different in everyday speech. ‘Saving’ is an example. In ordinary life, it means the opposite of spending. In macroeconomics it means the opposite of consumption (or, more precisely, not buying new consumer goods with income earned from production). In macro, someone who spends a fortune on a house is saving even if they have emptied their bank account to do so. The term can be so confusing that Mr Rowe thinks it should be banished from the discipline.

More difficulties, Mr Rowe suggests, follow from the fact that macroeconomics is a bit ‘weird’.”

Macroeconomics is NOT weird but provably false. The foundational concepts profit/ income/saving are inconsistently defined and because of this, the whole analytical superstructure is false:
Macroeconomics ― dead since Keynes

Nick Rowe, though, did NOT get it and this has NOTHING to do with math:
Is Nick Rowe stupid or corrupt or both?
I is never equal S and even Nick Rowe will eventually grasp it
Cryptoeconomics ― the best of Nick Rowe’s spam folder

It is a remarkable fact that economics teachers never understood how the economy works and that generation after generation of Econ 101 students have swallowed their micro- and macro-garbage without turning an eyelid.#1 The whole idea of a ‘thinking economist’ is laughable, to begin with. The history of orthodox and heterodox economic thought is a gallery of False-Hero-Memorials.#2

Egmont Kakarot-Handtke


* The Economist, Why is macroeconomics so hard to teach? Lessons from a master of the craft

#1 The father of modern economics and his imbecile kids
#2 For details of the big picture see cross-references Failed/Fake Scientists

***

Wikimedia, AXEC144

August 17, 2018

You don’t see what you don’t see: censorship in the econoblogosphere

Comment on Barkley Rosser on ‘Kevin Hassett In Lie Lie Land’

Blog-Reference and Blog-Reference on Aug 23 adapted to context

Barkley Rosser rates the personnel of the current administration: “Pretty much everybody else appointed was some combination of corrupt …, incompetent …, or just plain insane ….

As an economist, though, Barkley Rosser is in NO position to rate any personnel/institution because it is pretty obvious that the representative economist himself is incompetent/ corrupt/insane. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With the pluralism of provably false theories, economists have not achieved anything of scientific value. They nonetheless hold up the insane claim to be scientists.

One tends to think that economics started as Political Economy and that the economists of old were according to their self-definition more agenda pushers than scientists but that this has changed in the meantime. Yet, this is definitively NOT the case, economists ignore/ violate scientific standards to this day. As incorrigible political agenda pushers, economists apply all tools and tricks of political warfare. And they do keep up with the times.

In the great wave of privatization, censorship, too, has been privatized. This is provably true for economic discussion/debate/dispute. As a starting point for a thorough analysis, in the following, a provisional list of blogs is provided that tend to violate the first rule of “the friendly-hostile cooperation of scientists” that is “… a critical discussion is well-conducted if it is entirely devoted to one aim: to find a flaw in the claim that a certain theory presents a solution to a certain problem.” (Popper)#1

In the econoblogosphere, it is not unusual to make critique/refutation disappear or to bury it under a heap of irrelevant/off-topic filibuster and then to go on to recycle one’s junk. This is not a new phenomenon of the social media age but standard operating procedure since the founding fathers. Morgenstern reminded his colleagues back in 1941: “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.”

It is important to remind oneself that Walrasianism, Keynesianism, Marxianism, Austrianism is refuted according to the scientific criteria of material and formal consistency. However, this junk is undeviatingly recycled. In the social media age, refutation is simply blocked or deleted and then all goes on “as if nothing had happened”. Most of the private censors have an academic degree, are honorable members of honorable economic societies, have published in peer-reviewed journals, and their blogs reappear regularly in the Top-10, -20, -100 charts.#2, #3, #4, #5, #6

No doubt, everything looks good with economic communication except for the fact that the general public does not see what has been made to vanish into thin air.

Currently, every blog owner is entitled to reject submissions for whatever reason. There is nothing illegal in selecting the content of one’s own blog and in tuning up consent and in tuning down dissent. This is standard operating procedure in the political realm, however, this is an absolute no-go in the scientific realm.

Social communication is composed of information, misinformation, disinformation, story-telling, and deceit. Propaganda, fake news, lies, and censorship are bad in politics but worse in science because, of all human endeavors, science is explicitly committed to truth. Political corruption is bad but scientific corruption is the worst thing of all. An economist who hyperventilates about the incompetence/corruption/insanity of figures like Kevin Hassett has lost his priorities, his compass, the reality of his discipline, and makes a fool of himself.

Egmont Kakarot-Handtke


#1 Multiple or one-time blocking/deleting/manipulation/threat of blocking: Economist’s View, Billy blog, Real-World Economics Review blog, Lars P. Syll blog, Uneasy Money, Worthwhile Canadian Initiative, EconoSpeak, The Baseline Scenario, Social Democracy For The 21st Century, bradford-delong, Stumbling and Mumbling, Roger Farmer’s Economic Window, evonomics, Critical Macro Finance, INET, Naked Keynesianism, The Conversation, Information Transfer Economics, Bloomberg View, Dietrich Vollrath, EconBlog101, heteconomist, Fresh Economic Thinking, Noahpinion, Robert Skidelsky, Angry Bear, Renegade Inc, Social Europe, The Everyday Economist, Dani Rodrik’s Weblog, On the Economy Jared Berstein Blog, New Economic Perspectives, Michael Roberts Blog, The Harvard Crimson, Asymptosis, longandvariable, taxresearchuk.
#2 Cryptoeconomics ― the best of Lars Syll’s spam folder
#3 Cryptoeconomics ― the best of Bill Mitchell’s spam folder
#4 Cryptoeconomics ― the best of Real-World Economics Review’s spam folder
#5 Cryptoeconomics ― the best of Mark Thoma’s spam folder
#6 Cryptoeconomics ― the best of Nick Rowe’s spam folder

***
REPLY to Barkley Rosser on Aug 18

What I wrote is this: “As an economist, though, Barkley Rosser is in NO position to rate any personnel/institution because it is pretty obvious that the representative economist himself is incompetent/corrupt/insane. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong. With the pluralism of provably false theories, economists have not achieved anything of scientific value. They nonetheless hold up the insane claim to be scientists.” and “An economist who hyperventilates about the incompetence/corruption/ insanity of figures like Kevin Hassett has lost his priorities, his compass, the reality of his discipline, and makes a fool of himself.”

To say an economist is making a fool of himself is NOT an offense but an accurate and well-established characterization: “If a professional group regards itself a having a message to deliver to others than its own members and makes any public claims in that respect, it thereby gives others the right to scrutinize the methods whereby that message was discovered, including the principles, or possibly prejudices, followed in choosing premises. They continue to do so. Cunningham in 1891 remarked that in the choice of premises ‘it is not always easy to tell when a professor of the dismal science is making a joke’ and I suspect that Cunningham meant that if the professor was not joking, then he was making a fool of himself.” (Viner, 1963)

Because the premises of economics ― the concept of profit in particular#1 ― are false at least since 1891, holding up the claim that economists are doing science is foolish or worse.


#1 Wikimedia, Profit Law
***

REPLY to Barkley Rosser on Aug 19

The key to understanding economics is that there are TWO economixes: political and theoretical economics. The main differences are: (i) The objective of political economics is to successfully push an agenda, the objective 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 the agenda pushers of political economics. Political economics has produced NOTHING of scientific value in the last 200+ years because the representative economist was fully occupied with agenda pushing.

So, the representative economist can be characterized (using your words referring to the current WH-staff): “Pretty much everybody … was some combination of corrupt …, incompetent …, or just plain insane.”

As it happens, this is an unintended self-characterization of economics which boils down to this neat formula: economics ⇒ political economics ⇒ zero scientific content ⇒ representative economist ⇒ useful political idiot ⇒ incompetent/corrupt/insane.

Needless to emphasize that the representative economist does NOT care about the scientific standards of material and formal consistency but relentlessly spreads his political BS across the econoblogosphere.

The corruption of the representative economist consists of claiming to do science while pushing an agenda. Fact is, the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent and all got the pivotal economic concept profit wrong.

The axiomatically correct macroeconomic Profit Law reads Qm=Yd+(I−Sm)+(G−T)+(X−M).#1

As a representative economist, you (i) NEVER refuted the Profit Law, and (ii), you NEVER showed that one of the four main approaches applies it. You just keep parroting the brain-dead ‘accounting-identity’ idiocy#2, #3 and playing your silly political kindergarten games by exposing some random figure as corrupt/incompetent/insane. This is political agenda pushing and has NOTHING at all to do with science.

Science tells us how the economy works and it is common knowledge that the representative economist has not figured it out to this day. It is therefore NOT an incivility to call him corrupt/incompetent/insane but an unassailable statement of fact.


#1 Profit Theory in less than 5 minutes
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 Wikipedia and the promotion of economists’ idiotism (I)

***
REPLY to Barkley Rosser on Aug 20

The axiomatically correct macroeconomic Profit Law reads Qm=Yd+(I−Sm)+(G−T)+(X−M).#1

It has profound consequences, e.g.
• Keynes’ I=S is false,#2
• All I=S/IS-LM models are false,#3
• The MMT balances equation (I−S)+(G−T)+(X−M)=0 is false,#4
• National Accounting is false.#5

The representative economist, who is too stupid for the elementary mathematics of accounting, reiterates the BS-consensus about "accounting identities" on Wikipedia.#6

Your characterization of the WH-staff: “Pretty much everybody … was some combination of corrupt …, incompetent …, or just plain insane.” is a self-description of the economics profession in general and yourself in particular.


#1 Profit Theory in less than 5 minutes
#2 How Keynes got macro wrong and Allais got it right
#3 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#4 MMT, Bill Mitchell, and the lack of basic scientific integrity
#5 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#6 Wikipedia and the promotion of economists’ idiotism (II)

***
Wikimedia, AXEC136e

August 16, 2018

The economist as useful political idiot

Comment on Simon Wren-Lewis on ‘Interest rate vs fiscal policy stabilisation’

Blog-Reference and Blog-Reference

The key point for understanding economics is that there are TWO economixes: political and theoretical economics. The main differences are: (i) The objective of political economics is to successfully push an agenda, the objective 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 the agenda pushers of political economics. Note that neither Simon Wren-Lewis nor Bill Mitchell knows how the economy works but both have very strong opinions what the Labour Party’s economic policy should look like.

There is no need to bother much with the scientific underpinnings of Simon Wren-Lewis’ or Bill Mitchell’s policy guidance because there are none. Both DSGE and MMT are scientifically worthless. Economics is not a branch of science and economists are not scientists.#1

For political purposes, though, this does not matter much because in the political sphere the number of useful idiots is decisive for success and not any genuine scientific merits.

So, how are the useful idiots positioned these days in the UK?
(i) The hardcore neoliberal position is that the state has to be kept out of the economy, so fiscal policy is a priori ruled out. What is admissible is interest policy of a (nominally) independent central bank. This policy is already in place and is continually adapted/ improved.
(ii) The soft neoliberal approach of Simon Wren-Lewis gives fiscal policy a greater role in the case of economic emergency/stress but delegates policy to a (nominally) independent body of experts that is tasked with budget balancing (ex investment spending) over a rolling five-year horizon.
(iii) The hardcore MMT position is that monetary policy has always been ineffective and that only permanent deficit-spending/money-creation keeps the economy going at full employment. Bill Mitchell’s main point of critique of (ii) is that Labour clings to the obsolete idea of budget balancing and is not progressive enough.#2

After blowing the whole pseudo-scientific argumentative fog away what remains with regard to the positioning vis-a-vis the current Labour leadership is:
(i) means attacking Labour/Corbyn from the right,
(iii) means attacking Labour/Corbyn by the fake left a.k.a. Progressives,#3
(ii) means neutralizing Labour/Corbyn through a committee of (nominally) independent economic experts.#4

Among economists, the current Labour leadership has NO real supporters. A paranoiac view of the political world would come to the conclusion that the oligarchy has Jeremy Corbyn successfully encircled with their useful academic idiots.

Egmont Kakarot-Handtke


#1 See cross-references Failed/Fake Scientists
#2 How Bill Mitchell stalks Jeremy Corbyn
#3 The Kelton-Fraud
#4 The demise of phony experts: macroeconomics is provably false

***
Wikimedia, AXEC144

How to get rid of inflation and deflation

Comment on Brian Romanchuk on ‘Why Is A Positive Inflation Rate A Good Thing?’

Blog-Reference and Blog-Reference

Brian Romanchuk takes the question “Why is inflation above 0% considered a good thing?” as a starting point for a psychological/sociological study of what different people/groups think how inflation/deflation affects them.

His answer is the usual vacuous ‘It depends’: “I could try to discuss the economic theory questions associated with price stability. My view is ambivalent.… As a result, I would argue that the economic theory is a red herring: what matters is political economy.”

Needless to stress that this is not the answer of a scientist: “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)

Brian Romanchuk, though, is not a scientist but a blathering agenda-pusher. He has NO idea how the monetary economy works. Time to remind him of some economic basics and of some basics of scientific methodology as well.

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). This is the most elementary form of the macroeconomic Law of Supply and Demand.

In the most elementary case, the price P is determined by the wage rate W, which takes the role of the nominal numéraire, and the productivity R. The quantity of money is NOT among the price determinants. This puts the commonplace Quantity Theory forever to rest.

In the elementary production-consumption economy, the price P performs a random walk which in turn depends on the random changes of productivity R and wage rate W. Note that the price movements do not depend on the random changes of employment or on whether the economy is at full employment or not. Equation (1) implies W/P=R (2), i.e. the real wage W/P is always equal to the productivity R.

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.#1 As long as C=Yw, macroeconomic profit is zero.

As a matter of principle, the elementary production-consumption economy is reproducible for an indefinite time. It is important to note that there is no such thing as an equilibrium or price stability or full employment.

Now it is easy to see that price stability, that is a rate of inflation/deflation of zero, can be established with a simple institutional rule: change of wage rate = change of productivity. In equation (1) this stabilizes the price P forever at the given level. No inflation, no deflation, no random price movements.

So, if the Legitimate Sovereign decides to implement absolute price stability and asks the economist how to achieve this goal, the economist has a clear-cut answer. It reads W'=R' with ' indicating the rate of change. No wish-wash here, no ambiguity, no senseless blather.

Of course, things become more complex in the investment economy and when the price becomes the independent variable and employment becomes the dependent variable. These issues have been dealt with elsewhere.#2 The bottom line is that to set the inflation target at 2 percent is plain economic idiocy.

Egmont Kakarot-Handtke


#1 Truth by definition? The Profit Theory is axiomatically false for 200+ years
#2 See cross-references Employment

***
REPLY to Brian Romanchuk on Aug 19 and Blog-Reference on Aug 21

You say: “There is an extremely long line of academic arguments that suggest the determination of what is ‘good’ is a question of philosophy/ethics/religious belief.”

True, and this is why economists should stop blathering about philosophical, ethical, and religious issues. Science is about true/false and NOT about good/bad.#1 Economics has to define itself as a system science.

The elementary version of the correct (objective, systemic, behavior-free, macrofounded#2) Employment Law is shown on Wikimedia.#3

From this equation follows inter alia:
(i) An increase in the expenditure ratio rhoE leads to higher employment L (the Greek letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates a budget deficit = credit expansion, a ratio rhoE less than 1 indicates credit contraction.
(ii) Increasing investment expenditures I exert a positive influence on employment.
(iii) An increase of the factor cost ratio rhoF=W/PR leads to higher employment.

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

Items (i) and (ii) cover Keynes’ familiar arguments about aggregate demand. The factor cost ratio rhoF 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.

Roughly speaking, the Legitimate Sovereign has two policy parameters: rhoE and rhoF. Now, rhoF, in turn, is composed of W/PR. It is pure dilettantism to set the rate of price increase at 2% without taking the other variables into consideration. What has to be set is NOT one isolated variable but the policy parameter rhoF as a whole. A smart policy to reduce unemployment and to eventually arrive at full employment would be to set P'=0 and W' >R' with ' indicating the rate of change. If, for example, P' is set at 2% and W'=R' unemployment INCREASES.

This brings us back to the initial question: “Why is inflation above 0% considered a good thing?”

The answer is because economics is a failed science and economists do not know how the monetary economy works. False theory leads to false policy guidance. With their defective employment theory, economists bear the intellectual responsibility for the social devastation of mass unemployment.#4 Therefore, it is NOT good for society to take these incompetent blatherers seriously.#5


#1 Beware of the moralizing economist
#2 The macrofoundations approach starts with three 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. For a start it holds X=O.
#3 Wikimedia, Employment Law
#4 For details of the big picture see cross-references Employment
#5 As Napoleon said: don’t listen to economists

August 15, 2018

MMT, Bill Mitchell, and the lack of basic scientific integrity

Comment on Bill Mitchell on ‘MMT is just plain old bad economics ― Part 3 = MMT is just plain good economics ― Part 3’

Blog-Reference

The key point for understanding economics is that there are TWO economixes: political and theoretical economics. The main differences are: (i) The objective of political economics is to successfully push an agenda, the objective 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 the agenda pushers of political economics. Economic debate is, since the founding fathers, characterized by rhetorically switching between political and scientific arguments. In this shuffle, science got entirely lost. After 200+ years, economics is still at the proto-scientific level. To this day, economists are NOT scientists but only useful political idiots.

Bill Mitchell is a case in point. He is one of the academic representatives of MMT. He claims
  • that neoclassical = mainstream economics is scientific junk (true),
  • that MMT monetary theory is superior to neoclassical theory (true),
  • that MMT is a scientifically true theory, i.e. materially and formally consistent (false),
  • that MMT policy guidance is progressive, i.e. promotes the cause of the ninety-nine-percenters (false),
  • that most of the critique of MMT, especially mainstream critique, is way beside the point (true),
  • that MMT is not political agenda-pushing but a scientific tool, i.e. a lens for analyzing how the monetary economy works (false),
  • that his blog is only “an extension of [his] role as an educator” (false),
  • that on his blog, Bill Mitchell has extensively refuted all scientific and political arguments against MMT (half true). The proof that MMT is a distributional catastrophe#1 has NEVER been refuted.

The fact of the matter is that MMT is scientifically untenable and politically biased against the ninety-nine-percenters. The social appearances of MMT are a deception of the general public.

Against critique, Bill Mitchell answers with rhetoric (neoliberal framing, attention-seeking smart-guys, misrepresentation, a twitter storm of lies) and holds up his academic credentials: “One of the things that an academic is trained to do and required to do before entering public debate is to make sure they have read the relevant literature. We are not paid to be attention-seeking, social media heroes who tweet our heads off by making stuff up. We have a responsibility to the public to speak with authority and knowledge.”

Here is the benchmark for academics: “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)

MMT falls short of the scientific mark. MMTers do NOT have the true theory and they violate scientific standards on a daily basis. Bill Mitchell is an agenda pusher, he promotes the cause of the one-percenters, and he falsely claims to speak with scientific “authority and knowledge”.#2 Bill Mitchell does NOT even know what profit is and this is disqualifying for all academic MMTers.#3

MMT’s economic policy guidance has NO sound scientific foundations. MMT is in NO position to criticize the Labour leadership on scientific grounds. MMT is plain academic fraud.

Egmont Kakarot-Handtke


#1 Keynes, Lerner, MMT, Trump and exploding profit
#2 Cryptoeconomics ― the best of Bill Mitchell’s spam folder
#3 For the full-spectrum refutation of MMT see cross-references MMT

Related 'How Bill Mitchell stalks Jeremy Corbyn'.

August 14, 2018

How Bill Mitchell stalks Jeremy Corbyn

Comment on Bill Mitchell on ‘MMT is just plain old bad economics ― Part 2’

Blog-Reference

The general public has no proper understanding of what economics is all about. Therefore, the first thing to do is to distinguish between political and theoretical economics. The main differences are: (i) The objective of political economics is to successfully push an agenda, the objective 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 had been hijacked from the very beginning by the agenda pushers of political economics. Political economics has produced NOTHING of scientific value in the last 200+ years. The four major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism — are mutually contradictory and materially/formally inconsistent. Economics is a failed science. Most people have the impression that economics is, roughly speaking, a fight between the pro-capitalist/anti-communist side against the pro-communist/anti-capitalist side.

This impression is confirmed on all channels of public communication and this shows that the agenda pushers have taken over economics and have weaponized economic theory. Since Adam Smith/Karl Marx, economic policy guidance NEVER had sound scientific foundations. To this day, economists are not competent scientists who are committed to scientific truth but stupid and corrupt story-tellers/agenda-pushers.

How does MMT fit into this scheme?

• MMT claims that neoclassical = mainstream economics is garbage. That is provably true.

• MMTers claim, in particular, that their monetary theory is superior. That is correct especially in comparison to mainstream economics.

• MMT claims to be politically progressive, that is, to promote the cause of the ninety-nine-percenters.

• This seems to imply that MMTers and the Labour Party harmonize with regard to economic policy. This, though, is NOT the case.

• In a speech, John McDonnell, the Shadow Chancellor, said that: “Austerity is not an economic necessity, it’s a political choice … We will tackle the deficit fairly and we can do it … Labour’s plan to balance the books will be aggressive … Where money needs to be raised it will be raised from fairer, more progressive taxation.”

• To call austerity a political choice is characteristic MMT terminology, however, this does NOT satisfy Bill Mitchell: “So in this framing, the Labour Party was signalling that it would continue to construct the macroeconomic debate within the standard neoliberal (mainstream economics) framework. The language and concepts of that flawed approach would be retained.”

• According to Bill Mitchell, the Labour Party’s economic program hides “the fact that the proponents do not want governments to do what we elect them to do ― that is, advance general welfare.”

• This smacks of treason but is merely incompetence of the current leadership: “In my view, it would be a better strategy, … to spend time reframing the debate away from the neoliberal obsession with deficits and public debt, and, instead, elevating progressive goals of full employment, environmental sustainability, equity etc to the centre stage.”

• “But then the Shadow Chancellor would need to get some better advice.”

• And here Bill Mitchell jumps in: “As I explained … the only appropriate deficit target is whatever is required to ensure the overall savings desires of the non-government sector are achieved at a full employment level of output.”

• Expressed in a formula, Public Deficit should be equal to Private Saving. What Bill Mitchell in his scientific incompetence/corruption does NOT know/does NOT WANT to know is that the macroeconomic Profit Law clearly states: Public Deficit = Private Profit.#1

• Since “Private Saving” is supposed to be positive most of the time, Bill Mitchell is arguing for permanent deficit-spending/money-creation and a steadily growing public debt.

• What is absolutely unacceptable for Bill Mitchell is that the Labour Party intends to “balance the books” with “more progressive taxation.”

• MMT is for social policy but only for a social policy that is NOT funded by taxes, and NOT by a reduction of military spending, but predominantly by deficit-spending/money-creation which amounts to stealth taxation of the ninety-nine percenters.

So, what MMT is all about is to steal the social image from the Labour Party, to undermine the current leadership, and to substitute Labour’s economic policy by a program that exactly fits the requirements of Wall Street/City of London.#2, #3

Egmont Kakarot-Handtke


#1 MMT and the magical profit disappearance
#2 Political economics: Who hijacks British Labour?
#3 MMTers are NOT Friends-of-the-People

Related 'The Kelton-Fraud' and 'Richard Murphy: the MMT fraudster dressed up as realist' and 'The Magic Money Tree is real ― too bad that the magic is fraud' and 'MMT, Bill Mitchell, and the lack of basic scientific integrity' and 'The economist as useful political idiot'. For the full-spectrum refutation of MMT see cross-references MMT.

***

REPLY to Calgacus on Aug 15

You say: “The idea that spending not funded by taxes necessarily amounts to stealth taxation is very neoclassical, commodity theory thinking.”

Axiomatically correct macroeconomics leads to the provable conclusion that deficit-spending/money creation has two certain effects (i) the ninety-nine-percenters are taxed in real terms,#1 (ii) the business sector’s profit increases because the Profit Law states Public Deficit = Private Profit.#2

MMT policy has massive negative effects on distribution.#3 The claim that MMT is progressive is laughable.#4

Scientifically, MMT is garbage and politically it is Wall Street’s attempt to hijack and neutralize genuine social movements.

MMTers are scientifically incompetent and politically corrupt. MMT is refuted on all counts.#5


#1 MMT, money printing, stealth taxation, and redistribution
#2 The Magic Money Tree is real ― too bad that the magic is fraud
#3 Keynes, Lerner, MMT, Trump and exploding profit
#4 Hope you get it: MMTers = Friends-of-the-People
#5 See cross-references MMT


***
Wikimedia, AXEC142

August 10, 2018

MMTers are NOT Friends-of-the-People

Comment on Bill Mitchell on ‘MMT is just plain old bad economics’

Blog-Reference and Blog-Reference and Blog-Reference on Aug 11 adapted to context

Bill Mitchell recounts: “The exchange took place on the social media page of a Labour Party insider who has long advocated a Land Tax, which McDonnell is on the public record as saying will ‘raise the funds we need’ to help local government. He called it a ‘radical solution’ (Source). An aside, but not an irrelevant one. It reflects the mindset of the inner economics camp in the British Labour Party, a mindset that is essentially in lockstep with the neoliberal narrative about fiscal policy.”

Bill Mitchell has serious doubts about whether the current Labour leadership really has the people’s best interest in mind:
• “The British Labour Party has not crowned itself in glory in the last few weeks by proposing to consider adding a UBI to its policy platform.”
• “As many commentators have pointed out the problem with this proposal can be summarized by just considering the party’s own title – Labour Party. A party that is concerned for the welfare and aspirations of workers who work and their dependents.”
• “Why would a progressive ‘Labour’ party want to introduce a UBI to solve unemployment when in government it could always ensure that all idle labour is productively employed?”
• “Why would a progressive Labour Party want to surrender to the neoliberal idea that there will never be enough jobs to go round when there is patently millions of jobs that can be created to serve community and environment if the government funds them?”

There is social policy and there is the funding of social policy. And these are TWO ENTIRELY DIFFERENT things. The economic stunt is that one can pull social policy out of the monetary cylinder that does NOT benefit WeThePeople but WeTheOligarchy. And one can call oneself a real Progressive and present oneself as true Friend-of-the-People and stab the elected party leadership in the back.

Classical social policy is rather straightforward: increase social spending and balance the budget by increasing the taxes of the rich or, alternatively, increase social spending and balance the budget by lowering military spending while keeping taxes unchanged.

Progressive social policy does not bother with either. As Bill Mitchell said elsewhere: “Do we need the rich’s money?” “No”.#1 Progressive social policy does not need taxes because, in a fiat money system, the sovereign government solves all problems by deficit-spending/ money-creation. MMTers correctly point out that, historically, ever-growing public debt has posed no serious problems and has never caused inflation. And this should tell everybody that all arguments against MMT are scientific and political BS.

In sum, Bill Mitchell argues that all available evidence confirms that Progressive social policy is superior to the obsolete social policy of the current Labour leadership which seems, moreover, to be mentally in bed with Neoliberals, Austerity sadists, and balanced-budget imbeciles.

Fact is that Progressives/MMTers are NOT the true Friends-of-the-People. MMT is scientifically refuted on all counts.#2, #3, #4, #5, #6, #7 Because of the Profit Law, i.e. Public Deficit = Private Profit, MMT policy ultimately benefits alone the Oligarchy.

Politically speaking, Bill Mitchell is Wall Street’s knife in the back of the current Labour leadership.

Economics is scientifically worthless and politically corrupted since the founding fathers. This holds for Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT.

Egmont Kakarot-Handtke


#1 MMT: academic snake oil for the people
#2 MMT, money printing, stealth taxation, and redistribution
#3 MMT is ALWAYS a bad deal for the 99-percenters
#4 Down with idiocy!
#5 MMT and the magical profit disappearance
#6 Keynes, Lerner, MMT, Trump and exploding profit
#7 MMT: So-called Progressives as trailblazers for Trumponomics

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Wikimedia, AXEC142

August 9, 2018

#DeleteKeynes #ExpellAllKeynesians

Comment on Asad Zaman on ‘Methodology of Modern Economics’

Blog-Reference

• The formal basis of the General Theory is given with “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

• This proposition is conceptually/logically false because Keynes NEVER came to grips with profit.

• Because the foundational economic concepts profit/income/saving are miss-specified, the whole theoretical superstructure of Keynesianism in all its variants is false.

• Keynes messed up the inexorable paradigm shift from microfoundations to macrofoundations.

• Keynes was an agenda pusher, NOT a scientist. Keynesian policy guidance has NO sound scientific foundations and in effect enables the self-alimentation of the oligarchy.

• The extremely unequal distribution of income and financial wealth is the direct result of public deficit spending. It holds Public Deficit = Private Profit.

• After-Keynesians have not detected/rectified Keynes’ blunders to this day. Macroeconomics ― profit and employment theory, in particular ― is materially/formally inconsistent.

• Keynesianism is scientifically worthless. All Keynesians have to be expelled from the sciences.

• The same holds for Walrasians, Marxians, Austrians, and Pluralists.

For details of the big picture see cross-references Keynesianism

Egmont Kakarot-Handtke

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