December 30, 2019

What’s the trouble with some Canadian economists?

Comment on Nick Rowe on ‘Increased Price Flexibility is Destabilising in New Keynesian Models’

Blog-Reference

The general trouble with economists is that they are either stupid or corrupt or both. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Economics is a failed science from Adam Smith/Karl Marx onward to New Keynesianism, DSGE, and MMT but economists cling desperately to their provably false proto-scientific garbage.

This is not only stupid but amounts to a violation of scientific 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) #1-#14

What is needed in economics is NOT repetitive critique and futile cosmetic repair but a Paradigm Shift. This is long known: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al. 1990).

The specific trouble with some Canadian economists is (i) that they cling to false approaches and a failed methodology, (ii) that they have NO idea how to perform a Paradigm Shift, but (iii) that they prevent it by (a) stubbornly recycling provably false approaches, and (b), by actively suppressing critique and refutation in the econoblogosphere.#15-#17

In this, though, the agenda-pushing Canadians are by no means alone but follow a widespread pattern.#18, #19

Egmont Kakarot-Handtke

References


#1 Is Nick Rowe stupid or corrupt or both?
#2 I is never equal S and even Nick Rowe will eventually grasp it
#3 Nick Rowe’s soapbubbling about money
#4 Worthless Canadian model bricolage
#5 It has been said before but economists still don’t get it
#6 Nick Rowe: Bury me at the end of coal-pit
#7 How economists missed out on the essential relationship of economics
#8 Another X-mas fantasy about IS curves
#9 Worthwhile Canadian filibuster?
#10 DSGE and profit―forget it! MMT and profit―forget it!
#11 How Keynes got macro wrong and Allais got it right
#12 Kalecki and Keynes: The double macroeconomic false start
#13 Are economics professors really that incompetent? Yes!
#14 Cryptoeconomics ― the best of Nick Rowe’s spam folder
#15 #EconBlocker Nick Rowe

Source: Twitter

#16 #EconBlocker George Selgin

Source: Twitter

#17 #EconBlocker

Source: Twitter

#18 Economists/MMTers: agenda pushers, distractors, blockers, muters, censors
#19 Economics ― the science that never was

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Wikimedia AXEC123e

December 28, 2019

Economic narratives are for the scientific garbage dump

Comment on Maria Popova on ‘How Kepler Invented Science Fiction and Defended His Mother in a Witchcraft Trial While Revolutionizing Our Understanding of the Universe’*

Own post, Twitter-Reference

To recall, science is about true/false and nothing else. Strictly speaking, it is NOT the task of science to convince the “scientifically illiterate public.” The acceptance of a theory depends alone on the proof of material/formal consistency and NOT on the approval of the general public or the number of followers on Twitter. Storytelling, on the other hand, has been the tool of religious/political fraudsters since they put down their fake accounts of creation and evolution/history in their so-called holy books. To put the scientist Kepler at one level with religious/political impostors is an absolute disgrace.

“In 1609, Johannes Kepler finished the first work of genuine science fiction — that is, imaginative storytelling in which sensical science is a major plot device. Somnium, or The Dream, is the fictional account of a young astronomer who voyages to the Moon. Rich in both scientific ingenuity and symbolic play, it is at once a masterwork of the literary imagination and an invaluable scientific document, all the more impressive for the fact that it was written before Galileo pointed the first spyglass at the sky and before Kepler himself had ever looked through a telescope. Kepler knew what we habitually forget — that the locus of possibility expands when the unimaginable is imagined and then made real through systematic effort.”

To call Somnium a piece of “imaginative storytelling” is tempting but utterly misleading. Somnium is an example of a thought experiment. And Kepler drives home the crucial point of the exercise: “Everyone says it is plain that the stars go around the earth while the Earth remains still. I say that it is plain to the eyes of the lunar people that our Earth, which is their Volva, goes around while their moon is still. If it be said that the lunatic perceptions of my moon-dwellers are deceived, I retort with equal justice that the terrestrial senses of the Earth-dwellers are devoid of reason.”

So, the use of the thought experiment is to clarify a feature of the real world. It is a consistent abstraction that gets closer to reality. A narrative, on the other hand, is an inconsistent fantasy that leads away from reality. This is what science fiction does. It is therefore misleading to call Kepler an inventor of science fiction or a storyteller.

“Like any currency of value, the human imagination is a coin with two inseparable sides. It is our faculty of fancy that fills the disquieting gaps of the unknown with the tranquilizing certitudes of myth and superstition, that points to magic and witchcraft when common sense and reason fail to unveil causality. But that selfsame faculty is also what leads us to rise above accepted facts, above the limits of the possible established by custom and convention, and reach for new summits of previously unimagined truth. Which way the coin flips depends on the degree of courage, determined by some incalculable combination of nature, culture, and character.”

Right, there is progressive use of abstraction and regressive use. The latter is characteristic of economics. Economic storytelling is not applied to enlighten the general public but to deceive it. The deeper reason is that economics is not a science but for 200+ years now political agenda pushing in the mantle of science. Economics suffers since the founding fathers from the Fallacy of Insufficient Abstraction.

“By the time of Astronomia nova, Kepler had ample mathematical evidence affirming Copernicus’s theory. But he realized something crucial and abiding about human psychology: The scientific proof was too complex, too cumbersome, too abstract to persuade even his peers, much less the scientifically illiterate public; it wasn’t data that would dismantle their celestial parochialism, but storytelling.”

It is just the opposite in economics. There is much storytelling but neither mathematical nor empirical evidence for any of the major approaches, i.e. for Walrasianism, Keynesianism, Marxianism, Austrianism, or MMT. Narrative economics is proto-scientific garbage.

For more details see

Egmont Kakarot-Handtke


brainpickings

Related 'How economists became the scientific laughing stock' and 'Econogenics: economists pose a hazard to their fellow citizens' and 'Economics is a science? You must be joking!' and 'The economist as stand-up comedian' and 'Economics: The greatest scientific fraud in modern times' and 'Macroeconomics: Economists are too stupid for science' and 'Links on the Economics Nobel'.


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Twitter Dec 29


Source: Twitter

December 24, 2019

Mankiw vs Mitchell ― another clown show

Comment on Bill Mitchell on ‘A response to Greg Mankiw’*

Blog-Reference and Blog-Reference

To recall, Kennedy claimed that his administration was the “best and the brightest”. This elitist ambition has turned into the opposite: the rule of the worst and dumbest. A similar development can be observed in academic economics. There seems to be a general pattern in the staffing of top positions.

Outwardly, economics is a science. However, there have always been 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.

The goal of theoretical economics (= science) is 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)

Theoretical economics, though, 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 major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Economics is a failed science.

To this day, economists lack the true theory and this is why economic debates inevitably degenerate into a clown show. The current Mankiw-Mitchell stand-off is no exception.#1-#4

Mankiw repeats the already refuted standard arguments against MMT and Mitchell pulls off the standard MMT fraud.#5 How can one tell in two seconds that the whole debate is a freak show? Easy, all one has to do is to put the word profit in the Ctrl+F search field: no hit. Two economics textbook writers debate Money- and Employment Theory without once mentioning the foundational economic concept of profit.

Because of the macroeconomic Profit Law, i.e. Qm=Yd+(I−Sm)+(G−T)+(X−M), the MMT policy of deficit-spending/money-creation has an immediate effect on distribution, i.e. Public Deficit (G−T)>0 = Private Profit Qm which means that the Oligarchy’s financial wealth and public debt grow in lockstep. The Profit Law explains the extremely skewed distribution of income and financial wealth between the one- and the ninety-nine-percenters.#6, #7 Obviously, neither Mankiw nor Mitchell knows how the monetary economy works.

There is much social and save-the-world rhetoric in MMT from the Employment Guarantee to the Green New Deal, however, the fact of the matter is that MMT is a free-lunch program for the Oligarchy. However, Mankiw does not mention once MMT’s massive political fraud.

What can one conclude from all this? Both Mankiw and Mitchell are either stupid or corrupt or both. The whole Mainstream vs MMT brawl shows that the Oligarchy has changed the communication strategy: the mainstream loudspeakers Mankiw/Krugman/etc are retired for good and the fake Progressives Mitchell/Kelton/etc take over. The free market economy can only survive with massive deficit-spending of the State, that’s why the Oligarchy has to replace their useful academic idiots.

Egmont Kakarot-Handtke


* Billy Blog (I) (II)
#1 Blowing smoke about bipartisan failure
#2 Krugman vs MMT ― like the blind talking about colors
#3 Paul’s and Stephanie’s economic delirium talk
#4 Neoclassics and MMT ― much like pest and cholera
#5 For the full-spectrum refutation of MMT see cross-references MMT
#6 Gosh! the One Percent have gotten $21 trillion richer: Links on Distribution
#7 Dear idiots, it is deficit spending that creates the distribution people complain about

Related 'The sectoral balances obfuscation: stupidity or corruption?' and 'The end of Mankiw and his Phillips Curve'.

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REPLY to Matt Franko on Dec 25

You say: “‘So in terms of MMT, the previous equation is just an ex post accounting identity that has to be true by definition and has no real economic importance. But for the mainstream economist like Greg Mankiw, the GBC represents an ex ante (before the fact) financial constraint that the government is bound by.’ Ok that is an acceptable description of the time domain aspects but what are the cognitive aspects?”

NO, that is NOT an acceptable description, that is is the lethal defect of macroeconomics and the smoking-gun proof that both Mankiw and Mitchell are too stupid for elementary algebra.

Every academic economist who uses or swallows the phrase “just an ex post accounting identity that has to be true by definition” loses automatically his tenure.

Here is the full Mitchell quote that explodes the whole debate:
“The GBC says, in English, that a fiscal deficit equals Government spending + Government interest payments – Tax receipts and, must, in turn, be ‘financed’ (equal) by a change in outstanding bonds (issuing debt) and/or a change in high powered money (‘printing money’).
While the mainstream infer that this statement delivers causality from the financing side to the spending side (as if the currency-issuing government is like a household), in fact, it is merely an accounting statement that is of no particular importance in the MMT framework.
In a stock-flow consistent macroeconomics, as an accounting statement the relationship must always hold. That is, it has to be true if all the transactions between the government and non-government sector have been correctly added and subtracted.
So in terms of MMT, the previous equation is just an ex post accounting identity that has to be true by definition and has no real economic importance.”
The axiomatically correct accounting identities read with increasing complexity
(1) Qm≡−Sm in the elementary production-consumption economy,
(2) Qm≡I−Sm in the elementary investment economy,
(3) Qm≡Yd+I−Sm in the investment economy with profit distribution,
(4) Qm≡Yd+I−Sm+(G−T)+(X−M) in the general case with government in an open economy.#1,#2, #3

So, in terms of elementary algebra, the economics textbooks of both Mankiw and Mitchell are proto-scientific garbage and their debate is a lowest-level academic clown show.


#1 MMT and the magical profit disappearance
#2 #DrainTheScientificSwamp
#3 For more details see cross-references Accounting

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REPLY to Kristjan on Dec 27

You say: “He [this AXEC guy] makes statements like ‘this is garbage’ and never attempts to explain anything.”

Take notice that MMT is refuted on all counts. If you had more than two brain cells you would have looked up the explanations.

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REPLY to Andre, Kristjan on Dec 28

Economics is about how the economy works. The foundational question of macroeconomics is about how the balances of the different sectors are related. There are at least two answers to this question (notation standardized)
a) MMT   (I−S)+(G−T)+(X−M)=0
b) AXEC (I−S)+(G−T)+(X−M)−(Q−Yd)=0.

Only one equation can be true. Which one is it? Both Mankiw and Mitchell cannot answer the foundational question of economics because they are too stupid for elementary algebra.

So, the world is waiting for your answer. Is it a) or b) or c) (→ fill in your equation)?

There can be no progress in economic theory and consequently in economic policy before the foundational macroeconomic question is answered.

“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)

The fact is, you have nothing to offer but brain-dead blather.

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REPLY to Kristjan on Dec 28

You say “… business profits don’t necessarily mean cash in vault or deposits in bank account.”

Total macroeconomic profit/loss Q consists of monetary and non-monetary profit Q≡Qm+Qn with Qm≡Yd+(I−Sm)+(G−T)+(X−M) Legend: Qm monetary profit/loss of the business sector, Yd distributed profit, I investment expenditures, Sm monetary saving/dissaving of the household sector, G government expenditures, T taxes, X exports, M imports. Non-monetary profit Qn has been dealt with elsewhere. Monetary profit Qm is as tangible/real/ testable as cash in a vault or deposits in a bank account.

You say “Businesses very often spend their profits before the accounting period is over.”

Under the condition that accounting is complete, this spending is for example recorded as Yd distributed profit or I investment expenditures. Accounting refers to a period of a given length and records ALL transactions during that period.

You say “Egmont doesn’t understand that monetary profit doesn’t fit in the same kind of frame as deficit spending. Monetary profit is calculated. It is not an accounting statement. A company can receive monetary profit but this doesn’t mean household sector dissaving in the same amount like Egmont says.”

Incorrect. The Profit Law boils down to Qm≡−Sm in the most elementary case of a production-consumption economy with the balances Qm≡C−Yw and Sm≡Yw−C. If the household sector’s budget is balanced, i.e. C=Yw, then monetary saving Sm and monetary profit Qm are both zero. If monetary saving is greater than zero, the business sector makes a loss, i.e. profit is less than zero. If monetary saving is less than zero, the business sector’s monetary profit is greater than zero. C and Yw are recorded transactions, the balances Qm and Sm are calculated.

Sectoral balances add always up to zero, i.e. Qm+Sm=0, this is the Fundamental Law of Macroeconomic Accounting.#1

All this is nothing but elementary algebra. The thing is that economists are too stupid for it from freshmen to Nobel laureates, including you, of course.

#1 For more details see cross-references Accounting

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REPLY to Kristjan on Dec 29

You say “Monetary profit is not an accounting statement as you think.”

I do NOT think that monetary profit is an accounting statement, I clearly stated that “C and Yw are recorded transactions [= accounting statements], the balances Qm and Sm are calculated.”#1

You say “So theoretically business sector profit could be 100 and household sector saving could be 0 (not -100 like you think) government budget is assumed to be in balance. This could happen if businesses invested all (100) profits during the accounting period.”

For the elementary production-consumption economy holds Qm≡−Sm. If the household sector gets a wage income of Yw=1000 and spends C=900 then monetary saving is 100 (Sm≡Yw−C) and monetary profit is −100 (Qm≡C−Yw).

For the investment economy, the Profit Law boils down to Qm≡I−Sm (see equation (2) above Dec 25). Clearly, if I=100 and Sm=0 then Qm=100. Your example does NOT refute the macroeconomic Profit Law but CONFIRMS it.

You are the living proof for the stupidity of the representative economist.#2


#1 A tale of three accountants
#2 No future for the representative economist

December 20, 2019

Microfoundations are dead for 150+ years: high time to move on

Comment on Yoshinori Shiozawa on ‘Microfoundations and economic policy choices’

Blog-Reference

Yoshinori Shiozawa summarizes: “What is now necessary is not to criticize the Lucas critique more than 40 years later. It is useless to criticize microfoundations of New Classical or New Keynesian macroeconomic models. They are efforts in vain. As the old dictum put it, it takes a theory to beat a theory. What we really need is to build true microfoundations for our heterodox macroeconomic theories.”

Or, as Blaug put it: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.”

Economists know quite well that microfoundations are dead. Ingrao et al. concluded back in 1990: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.”

What it means is that economics has to move from microfoundations to macrofoundations. This is called a Paradigm Shift. To replace the Walrasian microfoundations with other microfoundations does NOT work. Methodologically, NO way leads from the second-guessing of Human Nature/motives/behavior/action to the understanding of how the economic system works. ALL microfounded/behavioral approaches inevitably fail at the Fallacy-of-Composition hurdle.

What has to be done is to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations.

► Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true
► Where economics went wrong (I)
► Where economics went wrong (II)
► Where modern macroeconomics went wrong
► Modern macro moronism
► Macroeconomics: Drain the scientific swamp
► Macro of and for the scientifically blind and deaf
► Funny folks in the big omnibus
► Macroeconomics and the fake History of Economic Thought
► Rethinking macro
► The new macroeconomic paradigm
► From false microfoundations to true macrofoundations (II)
► True macrofoundations: the reset of economics
► Show first your economic axioms or get out of the discussion
► The canonical macroeconomic model
► For more details of the big picture see cross-references Axiomatization and cross-references Paradigm Shift

Egmont Kakarot-Handtke


Related  'The future of economics: why you will probably not be admitted to it, and why this is a good thing' and 'How to restart economics'.

For more about microfoundations see AXECquery.
For more about macrofoundations see AXECquery.

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Wikipedia AXEC121f

December 19, 2019

Blowing smoke about bipartisan failure

Comment on Brian Romanchuk on ‘A Skeptics Guide To Mankiw’s Skeptic’s Guide To MMT’*

Blog-Reference

Brian Romanchuk summarizes: “I would paraphrase Mankiw’s criticism of MMT as follows: if we assume that neoclassical theory is correct, MMT is either incorrect (where it contradicts neoclassical theory) or trivial. This is an obviously true statement, but it begs the question: is neoclassical theory correct? As my earlier discussion noted, one of core topics of discussion of the MMT literature are critiques of neoclassical theory. We need to investigate whether those MMT critiques are out to lunch.”

NO, there is absolutely NO need for further investigations of neoclassical economics: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug)

Neoclassical economics is dead for 150+ years. Is MMT the valid new theory? Again NO, MMT, too, is refuted on all counts.#1 Therefore, the comparison of standard textbooks of both approaches, i.e. Neoclassics vs MMT, is an exercise in smoke blowing.#2-#4 More specifically, both approaches get the foundational macroeconomic balances equation wrong which proves that they are too stupid for elementary algebra.

Because the conceptual foundations are false the whole analytical superstructure is false and, as a result, the respective textbooks are scientifically worthless.#5-#11 Neither Neoclassical nor MMT policy guidance has sound scientific foundations. Neither mainstreamers nor MMTers have something worthwhile to say about how the monetary economy works.

Egmont Kakarot-Handtke


* Bond Economics
* Gregory Mankiw A Skeptic’s Guide to Modern Monetary Theory
#1 For the full-spectrum refutation of MMT see cross-references MMT
#2 Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true
#3 Neoclassics and MMT ― much like pest and cholera
#4 Heterodoxy ― an axiomatic failure just like Orthodoxy
#5 To this day, economists have produced NOT ONE textbook that satisfies scientific standards
#6 Refuting MMT’s Macroeconomics Textbook
#7 The father of modern economics and his imbecile kids
#8 False on principle
#9 Economics textbooks ― tombstones at the Flat-Earth-Cemetery
#10 CORE: more lipstick on the dead economics pig
#11 Macroeconomics and the fake History of Economic Thought

December 16, 2019

MMT: Corbynism is dead, British Labour is next

Comment on Bill Mitchell on ‘An evolving 6-point plan for British Labour’*

Blog-Reference and Blog-Reference

MMT policy boils down to deficit-spending/money-creation. According to the macroeconomic Profit Law, it holds Public Deficit = Private Profit.#1 So, MMT policy is for the benefit of the Oligarchy. The natural enemy of the Oligarchy is WeThePeople and all institutions that promote their interests. The logical thing to do for MMTers is to weaken or destroy these institutions. In the case of British Labour this means to drive a wedge between members/voters and the party’s leadership. This is what Bill Mitchell as academic loudspeaker of MMT has done with considerable intensity for a long time.#2, #3

Bill Mitchell’s method has not been very subtle but consisted in the main of presenting himself as true Progressive and smearing the Labour leadership as closet neoliberals who torture the working class with Austerity. #4, #5

Whether Bill Mitchell’s interference in UK affairs made any effect in the anti-Corbyn coup is open to anybody’s guess, what is remarkable is that the agent of the Oligarchy is not yet finished with undermining British Labour.

The Corbynism corpse not yet being cold, Bill Mitchell comes forward with the 6-point plan for a Labour Party that suits the Oligarchy:

“3. Sack/ignore all the advisors who advocated neoliberal fiscal rules as being clever. They were stupid and unworkable and the fact that the Labour Party changed the Rule in the weeks before the election when the IFS pointed out that they were incompatible with the Manifesto, a view I had presented when the Rule first came out, is testament to that.

4. Maintain the progressive Manifesto without the neoliberal frames and structures.#6

5. Begin this 5-year period of isolation by mounting a massive education campaign to allow British voters to truly understand the capacities of the currency-issuing government which will make it much easier to disabuse arguments that start with ‘How will we pay for it?’. In that sense, I advise the British Labour Party to commission a series of workshops on Modern Monetary Theory (MMT), starting February when I will next be in the UK.

Note that MMT is (i) refuted on all counts, (ii) scientifically worthless, (iii) against the interest of WeThePeople, (iv) for the benefit of the Oligarchy, and (v), that Bill Mitchell as an Australian academic has neither any scientific nor any political legitimacy to interfere with what is exclusively the business of the Legitimate Sovereign of the UK.#7

Note further that economics is NOT a science and economists are NOT scientists but for 200+ years now the useful idiots of the Oligarchy.

Egmont Kakarot-Handtke


* Billy Blog
#1 Q≡Yd+(I−S)+(G−T)+(X−M)QG−T Legend: Q overall monetary profit, G−T>0 public deficit.
#2 Mission accomplished: Economists as useful idiots of the Oligarchy
#3 How Bill Mitchell stalks Jeremy Corbyn
#4 MMT Progressives: The knife in the back of WeThePeople
#5 MMTers are false Progressives and false Friends-of-the-People
#6 MMT: The communicative war on budget-balancers
#7 MMTers are false Progressives and false Friends-of-the-People

Related 'Bill Mitchell’s pure MMT teachings for British Labour' and 'Totally schizo ― MMT and policy' and 'Economic backstabbing: Bill Mitchell hits again' and 'Very busy these days: Wall Street’s agents' and 'MMT: A Trojan Horse for Labour courtesy of the Oligarchy' and 'MMT’s true program' and 'Thinking about economic policy for future PM Corbyn'. For details of the big picture see cross-references MMT and cross-references Political Economics/Stupidity/Corruption.


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Billy Blog Dec 19



Billy Blog Nov 26, 2020, British Labour remains unelectable


Source: Twitter

Twitter May 7, 2021



Twitter May 12, 2021



Twitter Aug 18, 2021 Finished off by business consulting

December 14, 2019

Mission accomplished: Economists as useful idiots of the Oligarchy

Links on Bill Mitchell on ‘My brief comment on the British election’

Blog-Reference and Blog-Reference on Dec 15 and Blog-Reference and Blog-Reference on Dec 19

Bill Mitchell summarizes the UK election outcome: “The information we have at present is that that position on Brexit is probably going to cost them [Labour] office. Which means the Tories survive when they should not but finish the Brexit process which they should. Then Labour will have to reinvent itself to take advantage of the renewed sovereignty that Brexit will bring. To do that it has to expunge its ranks of the neoliberals.”

Until proven otherwise, one should take it for granted that an economist is on the payroll of the Oligarchy. This applies obviously to think-tank economists but in many/most cases also to self-styled Progressives who claim to fight for WeThePeople.

Economics is NOT science. Economics is failed/fake science. Most economists are NOT scientists but useful political idiots. The pertinent example is MMT but all goes back to the founding fathers who described their job as Political Economy.

The MMT policy of deficit-spending/money-creation clearly benefits the one-percenters but is sold as a benefit for the ninety-nine-percenters. The scientific proof is in the macroeconomic Profit Law which says Public Deficit = Private Profit.

Accordingly, MMT’s mission in the UK was to undermine the Labour Party by attacking its economic program and by smearing its leadership as closet neoliberals.

If any proof were needed that academic economics is fake science and covered political agenda pushing, MMT has delivered it in the run-up to the historical election of Dec 12. For details see

► How Bill Mitchell stalks Jeremy Corbyn
► Thinking about economic policy for future PM Corbyn
► MMT Progressives: The knife in the back of WeThePeople
► MMTers are NOT Friends-of-the-People
► MMT: Academic snake oil for the people
► Economic backstabbing: Bill Mitchell hits again
► Bill Mitchell’s pure MMT teachings for British Labour
► Is MMT good for WeThePeople or for the Oligarchy?
► MMT is ALWAYS a bad deal for the 99-percenters
► Are MMTers stupid or corrupt or both?
► MMT: The fusion of Wall Street and Academia
► MMT’s true program
► How to spot economics trolls
► Links on Neoliberalism
► Just one more day: How deficit-spending delays the breakdown of Capitalism
► Trust in science? Yes, but economics is NOT a science
► There is NO such thing as “smart, honest, honorable economists”

Egmont Kakarot-Handtke


Related 'MMT: A Trojan Horse for Labour courtesy of the Oligarchy' and 'MMT and the overall political corruption of economics' and 'MMT and grassroots movements' and 'MMT: Corbynism is dead, British Labour is next' and 'MMT undermines democracy'. For more details see cross-references Political Economics/Stupidity/Corruption.

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Wikimedia AXEC158

December 12, 2019

Trust in science? Yes, but economics is NOT a science

Links on Lars Syll on ‘Public trust in economists’*

Blog-Reference and Blog-Reference and Blog-Reference on Dec 13

When things get serious, there is NO In-God-We-Trust. Everybody trusts in science even religious people who reject science as too rational, incomprehensible, abstract, limited, or emotionally unsatisfactory. Every time priests of whatever denomination#1 board an aircraft or undergo surgery they practically admit that they trust more in science than in their particular faith.

It is quite natural#2 and unavoidable that sooner or later science look-alikes appear that exploit the prestige/authority of science. This is pretty much like counterfeiters who exploit the difference between the purchasing value of money and the material value of the money token. Fake is profitable.

Look-alike scientists produce cargo cult science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.” The general public cannot recognize the difference between science and cargo-cult science.

Economics is a cargo cult science. More precisely, 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.

The fact is that (i) theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers), and (ii), political economics has produced NOTHING of scientific value in the last 200+ years. Economics started as Political Economy and never got above the proto-scientific level.

As a result, economics does NOT deserve the trust that science has rightfully earned over 2300+ years. On the contrary. Economists are NOT scientists but agenda pushers and they deserve all the contempt for cheaters, clowns, confused confusers, and useful idiots in the political Circus Maximus.#3-#16

Egmont Kakarot-Handtke


* Lars P. Syll Blog
#1 Wikipedia Priest
#2 Wikipedia Mimicry
#3 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#4 Economics and scientific foolishness
#5 Economics: The greatest scientific fraud in modern times
#6 Macroeconomics: Economists are too stupid for science
#7 There is NO such thing as “smart, honest, honorable economists”
#8 Economics: ‘a tale told by an idiot ... signifying nothing’
#9 There is NO such thing as an economic expert
#10 Economists cannot do the simple math of profit — better keep them out of politics
#11 Economics as storytelling and entertainment for the masses
#12 Trust in economics as a science?
#13 Lars Syll ― a particularly stupid/corrupt fake scientist
#14 Cryptoeconomics ― the best of Lars Syll’s spam folder
#15 Feynman Integrity, fake science, and the econoblogosphere
#16 The economist as storyteller

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Source: Lars P. Syll Blog

December 7, 2019

Understanding socialism presupposes understanding profit

Comment on Michael Roberts/Tom Hickey on ‘Understanding socialism’*

Blog-Reference and Blog-Reference

“The New York Times magazine has described Richard Wolff as ‘probably America’s most prominent Marxist economist’.”

From the word ‘prominent’ alone you know that you are out of science and in the midst of the usual journalistic propaganda hype. The applause troll Michael Roberts tries to arouse even more enthusiasm by quoting Wolff: “If you want to understand an economy, not only from the point of view of people who love it, but also from the point of view of people who are critical and think we can do better, then you need to study Marxian economics as part of any serious attempt to understand what’s going on.”

No, you don’t because Marx’s economics is refuted on all counts and Wolff only recycles long-dead stuff: “Wolff concentrates on Marx’s key discovery about capitalism, namely the surplus value, which is what employers appropriate above what they pay for wages.”

The fact of the matter is that Marx NEVER understood what profit ― the foundational magnitude of economics ― is.#1 Neither did his followers to this day.#2 The rectification of Marxianism consists of the replacement of the key-concept of exploitation by cross-over exploitation.#3

Wolff sticks to surplus value and this tells one that he is a rather feeble thinker. Marx got economics wrong, so he can safely be forgotten. Same for Wolff’s policy proposals which have no sound scientific foundations.

Oh no, says the philosopher Tom Hickey: “He [Marx] was a philosopher, social and political activist, political theorist, historian, and one of the founders the disciplines that later became sociology and economics.”

True, but irrelevant.#4 Marx’s economics is provably false = scientifically worthless and this makes it very probable that the rest of his intellectual output was also proto-scientific garbage.

Egmont Kakarot-Handtke


* Michael Roberts Blog
#1 Links on Karl Marx
#2 Dear idiots, Marx got profit and exploitation wrong
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 Perhaps the debunker Miles Mathis is closer to the historical facts than the philosopher Tom Hickey: “In that sense, Marxism is probably the greatest propaganda success of all time. The smashing success of this early major psy-op has led to everything we have seen since, including the sharp rise of all forms of misdirection. The upper class discovered that most people could be fooled most of the time, and that this fooling allowed for complete control of society.”

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REPLY to Bob on Dec 8

The crucial point with Marx/Socialism/Communism/Capitalism is whether Marx understood how the monetary economy works. This presupposes an understanding of the foundational economic magnitude profit. The point is that Marx and Marxians have NO idea what profit is. For the proof see Profit for Marxists.

So, Marxianism is scientifically worthless for 150+ years. Maybe Marx is philosophically relevant, in any case, he is irrelevant for economics understood as science.

Note in passing that philosophy has degenerated much from the ancient Greeks to the present and has become irrelevant itself. The practical proof is that philosophers readily board an aircraft that has been constructed by scientists/engineers but would refuse to board an aircraft that has been constructed by philosophers.

Now, the philosopher Tom Hickey claims: “I would add, at the very least. Marx and Engels, and subsequent Marxists and those influenced by Marx are still highly relevant and they are becoming more so as capitalism is more and more in crisis owing to neoliberalism, neoliberal globalization and the challenge of climate change.” Given their track record, the idea that philosophers or Marxists or economists can solve any of humanity’s problems is downright idiotic.

To repeat, Marx is scientifically irrelevant. And whether he gets many likes from folks like Richard Wolff, Michael Roberts, Tom Hickey and the brain-dead journalists of the New York Times is a scientific non-event.

The fact is that Marx got profit wrong and this he has in common with MMTers. The fact is that Marxians, MMTers, and philosophers like Tom Hickey are too stupid for the elementary algebra that underlies macroeconomics. The proof has been given elsewhere.

To expect from folks who cannot put 2 and 2 together a contribution to the advancement of science, culture, and civilization is the very definition of madness.

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REPLY to Bob on Dec 8

You say: “Marx was concerned with the operation of individual businesses, hence the profit of the firm. He was looking at microeconomics.” and “Can science come to a conclusion that a relationship (employer/employee) is exploitative?”

Yes, Marx generalized what can be observed in a single firm, that is, methodologically Marxianism is one big Fallacy of Composition from Marx onward to retarded Marxians like Richard Wolff and the applause trolls of the NYT/econoblogosphere.

If one does not understand macroeconomic profit one cannot understand exploitation and cross-over exploitation.

Here is the abbreviated argument.#1

The business sector is split into two identical firms and firm 1 is supposed to cut the wage rate W1 arbitrarily by half. From this follows that the market-clearing price P declines if all independent variables remain unchanged. Firm 2 is affected because total income Yw falls and with it consumption expenditures C and the market-clearing price P.

The reduction of the wage rate W1 increases the profit of firm 1 and produces a loss in firm 2. When we look alone at firm 1 we see what Smith, Mill, Ricardo, and Marx have seen before, to wit, wages down ― profit up. This fits the time-honored stereotype of wages and profits as antagonists.#2

The error/mistake/blunder of economists since the Classics has been to generalize what is true for a single firm and this is known as Fallacy of Composition.

If profits have been zero in the initial period because of budget-balancing C=Yw then firm 2 makes a loss which is exactly equal to firm 1’s profit. Therefore, the arbitrary wage rate cut of firm 1 does NOT increase the profit of the business sector as a whole but only REDISTRIBUTES profit/loss between the firms that constitute the business sector.

Seen from the perspective of a single firm, the antagonism of wages and profits is absolutely real. This, though, is parochial realism. The complete picture reveals that firm 1 is better off to the disadvantage of firm 2 and the workers of firm 2 are better off to the disadvantage of the workers of firm 1 because at a lower market-clearing price they absorb a bigger share of output O with their unaltered income.

The situation of the business sector AS A WHOLE is unchanged and the same is true for the household sector AS A WHOLE. If there is exploitation it happens WITHIN the sectors. A partial wage rate change leads only to a redistribution of profits between the firms and of output between the workers. So, in real terms, the exploitation of the workers of firm 1 benefits the workers of firm 2. The capitalist class as a whole does NOT benefit from the exploitation by the owners of firm 1 because the profit of firm 1 is exactly equal to the loss of firm 2.

So, Marx got the relationship between profit, exploitation, and class badly wrong. Marxians are for 150+ years now struck with the Fallacy of Composition. Not very smart these ‘philosophers, social/political activists, political theorists, and historians’. Time to bury them at the Flat-Earth-Cemetery in the dark corner that is reserved for the worst of all useful political idiots.


#1 Capitalism, poverty, exploitation, and cross-over exploitation
#2 Ricardo, too, got profit theory wrong

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REPLY to Bob on Dec 9

You say: “Parochial realism is the perspective they are interested in. Marxists and business owners are not interested in macroeconomic explanations.”

It is a matter of indifference what Marxists and business owners are interested in. The economist as scientist figures out how the economy works just like astrophysicists figure out how the universe works and it is a safe bet that they are not at all interested in what retarded flat-earthers think or want.

The first thing an economist is supposed to know is what macroeconomic profit is. Marx did NOT know it and this is why Marxianism is proto-scientific garbage to this day. Why folks like Richard Wolff, Michael Roberts, the journalists of the New York Times, or Tom Hickey are recycling Marxian proto-scientific garbage is at anybody’s guess. OK, the journalists are on the payroll of the Oligarchy. The others are perhaps only stupid. Anyway, for all of them holds Voltaire’s écrasez l'infâme!

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REPLY to Bob on Dec 10

You say: “… but you have to answer their questions. ... How do we eliminate unemployment?”

The matter has already been settled. For the axiomatically correct Employment Law see Full employment through the price mechanism and for more details see cross-references Employment/Phillips Curve.

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REPLY to Calgacus on Dec 11

Marx always claimed that he was doing science. Of course, he was NOT. He was a political agenda pusher.
► Karl Marx, fake scientist

The same holds for Marxians to this day. And also for Walrasians, Keynesians, Austrians, and MMTers.

This brings us back full circle to
► Economics, philosophy, and the crapification of science
and to
► Economics ― the science that never was

To this day, Marxians are NOT doing science. Neither do the others. Economists are clowns and useful idiots in the political Circus Maximus.

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REPLY to Bob on Dec 12

You say: “If the matter were settled, I wouldn’t have had to provide five places for five different answers. Could this be settled if there were a technical debate free of politics?”

The matter IS settled. The problem is that the scientific mechanism does not work in economics.

Science is NOT an endless conversation and never-ending recycling of old arguments but eventually ends with the refutation of materially/logically inconsistent theories: “That the settlement of opinion is the sole end of inquiry is a very important proposition.” (Peirce)

Being incompetent scientists, i.e. being stupid or corrupt or both, economists simply ignore refutation. This defect is well known: “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)

This is the simple reason why you have to provide “five places for five different answers”. And this tells you that economics is NOT a science.

“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)

Walrasians, Keynesians, Marxians, Austrians, MMTers violate scientific standards. The “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a fraud.

Stop blathering, apply the principles of science and your five places reduce to one. Simple.

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REPLY to Dr. Wintermute on Dec 13 and Blog-Reference

Broadly speaking, economics is about how the economy works and NOT about how society or the human brain works. The economy is a sub-set of the universe and the subject matter is defined with phenomena like profit, income, price, output, saving, etcetera that do not appear in other sub-sets of reality like physics or biology.

Science takes the concrete form of a theory. The true theory/model is the humanly best mental representation of reality. Scientific truth is well-defined by material and formal consistency. “The chief demerit is inconsistency …” (Popper)

In this thread, we are concerned specifically with Marx’s economics. The proof has been given that Marx’s profit theory is false. Because Marx got the foundational concept of economics wrong the analytical superstructure of Marxianism is scientifically worthless.

This is the 150+ years overdue end of Marxian economics. Tom Hickey admits this but argues: “Secondly, Marx was a philosopher in his own right and a public intellectual in this time as a journalist and writer of political tracts in the context of the contemporary debates.” Yes, but this does NOT change the fact that Marx was a fake scientist and Marxianism is proto-scientific garbage.

What the philosopher Tom Hickey does is meta-communication. We are no longer talking about how the economy works but about the philosopher and agenda pusher Marx. Calgacus goes further in the wrong direction: “That’s some sort of positivism, analytic philosophy stuff. Stuff that was popular in the 20th century. Especially virulent in the postwar era. 1945-1970 or so. There was a bit of that in Marx, but not much. He was German, not English!” Perhaps this is good to know in a TV quiz.

You drive meta-communication even further away from the point at issue: “Your beef with Hegelian Dialectics is that on one hand, you don’t understand that the set of things which can be thought of without contradiction is only a subset of all possible things, and on the other hand, that the Kantian assumption that knowledge as such is limited is itself inconsistent. So you cannot blame the assumption of existing «real contradictions» solely on bad theorizing.”

I do not blame Marx or any other economist for bad theorizing, I blame them for being too stupid for the elementary algebra that underlies macroeconomics.#1 In fact, I prove it and the proof is as good as the proof of the Pythagorean Theorem and in any case vastly superior to your brain-dead off-topic meta-communication.

To make it concrete and politically relevant: Dear philosophers tell the econoblogosphere which of the two sectoral balances equations is true?
a) (I−S)+(G−T)=0 (MMT, Keynesianism)
b) (I−S)+(G−T)=Q (AXEC)

Equation b) boils down to Public Deficit = Private Profit and this gives one the life formula of present-day Capitalism. You certainly agree that one cannot find this enlightening formula that gives you the conditions of the breakdown of Capitalism in the works of the philosopher and political agenda pusher Marx nor in Hegel’s Dialectic nor in Dr. Wintermute’s Analytische Sozialkritik.


#1 The ancient philosophers were supposed to be proficient at math as the motto of Plato’s Academy testifies.

December 6, 2019

Economics ― the science that never was

Comment on Michael Roberts on ‘Economics as a social science’*

Blog-Reference and Blog-Reference and Blog-Reference on Dec 9

“Recently, Benoît Cœuré, a leading French member of the Executive Board of the European Central Bank, delivered an address to economics students at the job forum of Paris School of Economics. He wanted to explain to the gathered students that becoming an economist was a great thing to do and paid well. ... But the money was less important because ‘your PhD should be fuelled by your passion and your love for research rather than by hopes of earning more money’.”

Economics officially declares each year to be a science with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. The problem is that economics does to this day not satisfy the well-defined criteria of science. And this means that economics is a fraud. Economists have never been scientists. Since Adam Smith/Karl Marx, they are clowns and useful idiots in the political Circus Maximus. Economics is NOT part of science but of the entertainment industry. The EconNobel is the Oscar for the best science look-alike.#1

The challenge for economists 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)

Economists do NOT have the true theory but many opinions. The major approaches — Walrasianism, Keynesianism, Marxianism, Austrianism, MMT — are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept profit wrong. Economics is a heap of proto-scientific garbage.

The outstanding characteristic of the economist is utter scientific incompetence. Economists are simply too stupid for the elementary algebra that underlies macroeconomics. This seems surprising because economists are often accused of applying too much math. However, the fact of the matter is that they do not understand how to apply it properly. As Feynman put it: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”#2 The stupidity of economists is the ultimate reason why all economic models are provably false.

Worse, economists are not only stupid but politically corrupt. Let us take macroeconomics as example.#3 In his General Theory, Keynes asserted: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

This syllogism is conceptually and logically defective because Keynes never came to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end, he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)

Let this sink in, the economist Keynes never understood profit, i.e. the foundational concept of economics. So, Keynes’ I=S is false and consequently the multiplier and all IS-LM models. Instead, Q≡I−S is true with Q as macroeconomic profit. Neither pro-Keynesians nor anti-Keynesians spotted Keynes’ elementary blunder in 80+ years — except Allais.#4 Needless to emphasize that lack of the true theory never hindered an economist from giving economic policy advice and pushing a political agenda.

Because Keynes got macroeconomic profit wrong for the most elementary case, economists messed up the more complex sectoral balances equation which reads (I−S)+(G−T)+(X−M)=0.#5

This provably false equation, though, is applied by MMTers.#6 It provides the theoretical foundation for the MMT policy of deficit-spending/money-creation. And this is the point where scientific incompetence becomes hazardous to the general public.#7 Economists bear the intellectual responsibility for the social devastation of all economic crises since the Great Depression.

As Monsieur Cœuré summarized it: “… economics is a social science. Models will not take away the burden and responsibility of making judgements. Economics involves much trial and error — you have to take decisions in the fog when you can barely see your hand in front of your face. This makes our profession exciting!”

The general public does not need this kind of excitement. The sooner it can leave 200+ years of scientific incompetence and generously rewarded agenda-pushing for the Oligarchy behind the better.

Egmont Kakarot-Handtke


* Michael Roberts Blog
#1 Scrap the EconNobel
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true
#4 How Keynes got macro wrong and Allais got it right
#5 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
#6 Down with idiocy!
#7 Econogenics: economists pose a hazard to their fellow citizens

Related 'The economics Cargo Cult Prize' and 'When substandard thinkers dabble in science it is called economics' and 'Economics is NOT a social science' and 'Economics is NOT a science of behavior (IV)' and 'The only thing we can learn from economic models is what proto-scientific garbage looks like' and 'False models and true incompetence' and 'Wikipedia, economics, scientific knowledge, or political agenda pushing?'. For details of the big picture see cross-references Not a Science of Behavior.

December 4, 2019

Get it econ suckers: behavioral microfoundations ⇒ false, systemic macrofoundations ⇒ true

Comment on Lars Syll on ‘What is (wrong with) mainstream economics?’

Blog-Reference and Blog-Reference adapted to context

Lars Syll maintains: “The basic problem with [the] definition of neoclassical (mainstream) economics ― arguing that its differentia specifica is its use of demand and supply, utility maximization and rational choice ― is that it doesn’t get things quite right. As we all know, there is an endless list of mainstream models that more or less distance themselves from one or the other of these characteristics. So the heart of mainstream economic theory lies elsewhere. The essence of mainstream economic theory is its almost exclusive use of a deductivist methodology. A methodology that is more or less used without a smack of argument to justify its relevance.”

Arrow formulated the essence of the neoclassical approach in more general terms: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.”

This translates into this set of neoclassical hardcore propositions, a.k.a. verbalized axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

There is a simple test of scientific competence: if you do not feel ― after thinking about HC1/HC5 for a second ― the urge to vomit you lack elementary scientific reflexes. And if you think the axiom set is acceptable as the starting point of economic analysis you are forever beyond help.

The point is: economics is NOT about the behavior of agents but about the behavior of the economic system. Economics is NOT a social science but a systems science. From this follows methodologically that economics has NOT to be based on microfoundations but on macrofoundations. Microfoundations are the lethal methodological blunder of economics and the reason why both orthodox and heterodox economics are scientifically worthless. So, microfoundations have to be abandoned. The move from false microfoundations to true macrofoundations is called Paradigm Shift. It was Keynes who messed it up 80+ years ago but economists have not realized it to this day.

So, every economist faces the option to do the Paradigm Shift or to be buried at the Flat-Earth-Cemetery together with the preceding Walrasian, Keynesian, Marxian, Austrian losers and their heap of proto-scientific garbage.

► Where economics went wrong (I)
► Where economics went wrong (II)
► Where modern macroeconomics went wrong
► Modern macro moronism
► Macroeconomics: Drain the scientific swamp
► Macro of and for the scientifically blind and deaf
► Funny folks in the big omnibus
► Macroeconomics and the fake History of Economic Thought
► Rethinking macro
► The new macroeconomic Paradigm
► From false microfoundations to true macrofoundations (II)
► True macrofoundations: the reset of economics
► The canonical macroeconomic model
► For details of the big picture see cross-references Axiomatization

Egmont Kakarot-Handtke


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Wikimedia AXEC106m


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Wikimedia AXEC121i