August 31, 2019

No False-Hero-Memorials (II)

Comment on Barkley Rosser on ‘Martin Weitzman RIP’

Blog-Reference and Blog-Reference

The failed scientist and applause troll, attention/reputation manager, political agenda pusher, crime hunter, academic busybody, storyteller, and falsifier of the history of economic thought Barkley Rosser takes the opportunity to erect the next False-Hero-Memorial.

These are Barkley Rosser’s quality criteria: “But he was always further out on the edge of respectability, even though his career always looked respectable on the surface: a PhD from MIT under Robert Solow and holding positions at Yale, MIT, and Harvard since 1989, as well as regularly publishing in top journals from 1965 on.”

This translates into: During his academic career, he was most of the time either indirectly or directly on the payroll of billionaire-sponsors.#1

What about the contributions of real scientific worth?

“This famous paper reasonably argued that in a world of non-certainty regarding costs and benefits of environmental policies, the use of a tax versus a quantity control such as cap and trade depended on the relative slopes of the marginal cost and marginal damage functions. If the former is steeper then a price-oriented policy such as a tax is preferred whereas if the marginal damage function is steeper than a quantity-oriented policy such as cap and trade would be preferred.”

This translates into Martin Weitzman never realized that Marginalism and the Totem-of-the-Micro are proto-scientific garbage since Jevons/Walras/Menger.#2

With all these credentials, Martin Weitzman was, of course, a worthy candidate for the faux Nobel: “Several of us here had long advocated that he share the first Nobel Prize to be given for environmental economics.”#3

Yes, obituaries have always been the best place to plant myths. And nobody does this better than Barkley Rosser, the promoter of fake science and suppressor of genuine science.

For the scientific community it holds vis-a-vis all cargo cult scientists: RIP at the Flat-Earth-Cemetery.

Egmont Kakarot-Handtke


#1 “MIT is giving Jeffrey Epstein’s tainted donation to a charity, but Harvard says it won’t do the same”. Twitter
#2 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#3 Links on the Economics Nobel

Related 'The Palgrave Dictionary ― a comprehensive collection of False-Hero-Memorials' and 'Economics textbooks ― tombstones at the Flat-Earth-Cemetery' and '“I never learned maths, so I had to think” ― another False-Hero-Memorial' and 'What comes first: eco-self-destruction or oeco-self-destruction?'.

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REPLY to Barkley Rosser on Sep 1

You say: “Egmont, your vacuous profit law is completely irrelevant to whether or not marginal social cost curves or marginal social damage curves regarding environmental problems are usuful or meaningful concepts.”

The Profit Law is not at issue in the given context. What is at issue is the irrelevance of Marginalism which is already dead for 150+ years because it consists of plain NONENTITIES. So, the question “whether global warming is better addressed by using taxes or some kind of quantity control” is at the same level as How many angels can dance on a pinpoint?

Standard economics is based on these hardcore propositions: “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)

This set is shock-full of NONENTITIES. The whole of Marginalism derives from the core behavioral assumption HC2 which is a NONENTITY like the Tooth Fairy or the Easter Bunny. From the Walrasian axioms, the triad SS-function―DD-function―equilibrium is derived. Leijonhufvud called this defective analytical tool Totem of the Micro/Totem of the Macro. Because there is NO such thing as supply-demand-equilibrium the whole of economics is vacuous.

It is plain to every person with more than two brain cells that any analysis that crosses an upward-sloping and a downward-sloping curve is proto-scientific idiocy. So, every economist who blathers about “relative slopes of the marginal cost and marginal damage functions” is either stupid or corrupt or both.

Global warming is an issue for scientists. It is generally known by now that economists are fake scientists, so they have NOTHING to contribute to the discussion. Actually, global warming is used by academic economists under the label of Green New Deal to deceive WeThePeople.#1, #2 Instead of defunct microfoundations, MMTers apply macrofoundations that are dead since Keynes. Both microfoundations and macrofoundations are provably false, so economists have NOTHING to add to a scientific discussion.

If you were a scientist you would not push for the erection of False-Hero-Memorials but instead, push for the end of the 200+ years mob rule of incompetent scientists and political fraudsters.


#1 MMT and the Green New Deal: Where is the snag? (I)+(II)
#2 Bill Mitchell’s dishonorable discharge from the sciences

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REPLY to Barkley Rosser on Sep 2

“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 that both microfounded and macrofounded economics is provably false. Economists do not know how the monetary economy works. There is no valid Employment-, Profit-, Distribution-, or Money Theory. So, economic policy guidance NEVER had sound scientific foundations since the days of Adam Smith.

The fact is that the so-called free market economy is on the life support of the State and Wall Street is on the life support of the Central Bank. Macroeconomic profit is in the main produced by public deficits. Financial wealth grows in lockstep with public debt. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, and judiciary institutions.

The proof has been given that economists are too stupid for the elementary math that underlies macroeconomics.#1 Because macroeconomics and microeconomics are materially/formally inconsistent economists have NOTHING to contribute to the solution of any problems between unemployment and global warming.

So, what is lacking in economics is the true theory. Economics is a scientific failure. This is bad enough. But then comes the absurdity on top of all the proto-scientific garbage which consists of rewarding fake scientists with the faux Nobel.#2


#1 Deficit cheerleaders ― the Oligarchy’s useful idiots, Aug 27
#2 Links on the Economics Nobel

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REPLY to Barkley Rosser on Sep 5

You say: “Let us get real. There is a very serious problem known as global warming. Do you deny that it exists?”

I say: Let us get real. There is a very serious problem in economics of scientific failure/fake/fraud. Do you deny that it exists?

You abuse an obituary to distract from the fact that economists have to this day no valid theory about how the economy works and that they are too stupid for the elementary math that underlies macroeconomics and that their policy guidance has no sound scientific foundations since Adam Smith. Instead, you portray economists as saviors of the planet and humanity.

Economics is not a science. Economists are incompetent scientists. Martin Weitzman was part of an institutional system that is rigged from textbooks to peer review to the faux Nobel. Do you deny that it exists and that you, too, are part of it?

August 30, 2019

Links on the Economics Nobel

Comment on Philip Mirowski on ‘Why Is There a Nobel Memorial Prize in Economics?’*

Own post, no external Blog-Reference and Blog-Link, and Blog-Reference

Economics claims to be science from Adam Smith/Karl Marx onward to the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. Yet, everyone who looks closely into the matter eventually arrives at the conclusion that economics is a failure/ fake/fraud or what Feynman called a 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 major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational economic concept of profit wrong.

All appearances to the contrary, economics is NOT a science but political agenda-pushing. Since the founding fathers, economists violate the principle of the separation of science and politics. Political economics has produced NOTHING of scientific value in the last 200+ years. As a result, neither right-wing nor left-wing economic policy guidance ever had sound scientific foundations. Economic controversies have not to be seen as a struggle for scientific progress but as turf wars of the billionaires-sponsored academic mob.

Economics is failure/fake/fraud from the curriculum to the peer review of journals to the Nobel Prize, and orthodox/heterodox/pluralist economists are part of it ― not to forget methodologists and the historians of economic thought. For details of the big picture see


The EconNobel is NOT a recognition of genuine scientific merits ― there are none in economics ― but a reward for successful agenda-pushing handed out by the Bank of Sweden on behalf of the Oligarchy. The Bank of Sweden is in NO position to pass judgment in matters of science.

Egmont Kakarot-Handtke


* The Mint Magazine
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Real-World Economics Review Ken Patterson Sep 22



Twitter Sep 2, 2020


Clearly, these 81 Nobelists are NOT aware of what science is all about and what scientific ethics implies.  They are but clowns and useful idiots in the political Circus Maximus. Science, too, has become part of a shitshow.
 

Philip Mirowski, The Neoliberal Ersatz Nobel Prize, in Nine Lives of Neoliberalism



Twitter Mar 12, 2021, Another False-Hero-Memorial



Twitter Mar 19, 2021 Fake Nobel Prize?



Twitter Oct 11, 2021 For the "greatest benefit to humankind" is not quite correct because economics is proto-scientific garbage to this day → econogenics


Bill Mitchell’s dishonorable discharge from the sciences

Comment on Bill Mitchell on ‘Spending equals income whether it comes from government or non-government’

Blog-Reference and Blog-Reference

The well-known problem of economics is that it is a failed/fake science. The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent, and all have gotten the foundational economic concept of profit wrong.

Bill Mitchell is right in summarizing that not only the credibility of the mainstream is “in tatters” but also that of the “self-proclaimed Left”. How does MMT fit into this picture of overall academic failure/fake/fraud?

MMT, too, has no sound scientific foundations and therefore MMT’s economic policy guidance, too, is nothing but brain-dead agenda-pushing. From the scientific standpoint, MMT is not qualitatively different from mainstream garbage. MMT shares the lethal methodological blunder with the rest of economics.

Bill Mitchell enumerates the basics of MMT as follows:
“1. Aggregate demand is total spending in the economy.
2. Given the way we measure economic activity (as an aggregate of output and income produced per period), nominal (money) values of spending must equal income as an accounting statement.
3. If inflation is stable, then increased spending equals increased real income.
4. …”

The blunder is in “nominal (money) values of spending must equal income as an accounting statement.” NO! Economists are too stupid for the elementary math that underlies macroeconomic accounting. Keynes is the most prominent example. He wrote in the GT: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)

Income is NEVER equal to the “nominal (money) values of spending”. Here is the proof.
1. Premises: The elementary production-consumption economy is given by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditures C is equal to price P times quantity bought/sold X.
2. Logical implications: In the elementary production-consumption economy, THREE configurations are logically possible: (i) consumption expenditures are equal to wage income C=Yw, (ii) C is less than Yw, (iii) C is greater than Yw.
• In case (i) the monetary saving of the household sector S≡Yw−C is zero and the monetary profit of the business sector Q≡C−Yw, too, is zero. The product market is cleared, i.e. X=O in all three cases. For a start, the market-clearing price as the dependent variable is given by P=C/X=W/R for any employment level.
• In case (ii) saving S is positive and the business sector makes a loss, i.e. Q is negative. The market-clearing price P is less than W/R.
• In case (iii) saving S is negative and the business sector makes a profit, i.e. Q is positive.

It always holds Q≡−S, in other words, the balances of the business and the household sector always add up to zero. This is the Fundamental Law of Macroeconomic Accounting.#1

In other words, the business sector’s loss is equal to the household sector’s saving. Vice versa, the business sector’s profit is equal to the household sector’s dissaving, i.e. the growth of the household sector’s debt. The non-equality of “nominal (money) values of spending” and wage income is the very cause of profit/loss. Profit/loss is the difference of flows and not a flow like wage income. Wage income and profit are NOT two different forms of income. So the lethal methodological blunder of the representative economist consists of confusing a balance with a flow.

3. Conclusion: Elementary algebra tells one that the premise of macroeconomics, i.e. “nominal (money) values of spending must equal income as an accounting statement”, is provably false since Keynes.

Because MMTers in general and Bill Mitchell, in particular, are too stupid for elementary math they have to be expelled from the sciences just like their mainstream colleagues. Economics, including MMT, is failure/fake/fraud from the curriculum to the peer-review of journals to the faux Nobel Prize.

Egmont Kakarot-Handtke


#1 Macro for dummies (II)

Related 'Economists/MMTers: agenda pushers, distractors, blockers, muters, censors' and 'Mission accomplished: Economists as useful idiots of the Oligarchy' and 'Economics ― the science that never was'.

August 29, 2019

Links on Diane Coyle

Comment on Diane Coyle’s ‘Once upon a time’

Blog-Reference

All appearances to the contrary, economics is NOT a science but political agenda pushing. The format of popular propaganda is, of course, NOT the abstract theory but a concrete narrative. For a narrative, there is NO need to satisfy the scientific criteria of material and formal consistency. Doing away with semantic smoke what remains is the plain fact that narrative is just another word for political fraud. The self-styled enlightened economist Diane Coyle herself is a talented producer of proto-scientific garbage.

► The economist as storyteller
► Media-fake-farce-fraud-storytelling-macro
► Economics as storytelling and entertainment for the masses
► If religion is opium of the people, economics is crack of the people
► Economists simply don’t get it
► Macroeconomics ― dead since Keynes
► Knowledge only — no opinion
► How to be a good scientist
► Lazy or stupid or both?
► Circus Maximus: Economics as entertainment, personality gossip, virtue signaling, and lifestyle promotion

Egmont Kakarot-Handtke


Related 'Narrative economics and the imperatives of the sitcom' and 'Economics: stories, narratives, and disinformation'.

August 28, 2019

On the deliberate creation of institutional shitholes

Comment on Brian Romanchuk/Matt Franko on ‘So Are We All MMTists Now?’

Blog-Reference

Matt Franko recaps: “No there was a policy change post GFC which created different regulatory conditions... ie depositories are required to possess $Ts more as % total assets of Tier1 QUALITY assets in order to comply with the CCAR... TODAY... So the effect of rate increases TODAY UNDER DIFFERENT REGULATORY CONDITIONS has a differing effect than under previous conditions.”

Life insurers, for example, have a demand for very long-term government securities. What they have done in the past is to buy bonds and to put them with the actual purchase prices on the books and to hold them until maturity. This type of buy-and-hold investors did not up-value the bonds when the interest rate fell and accordingly needed no down-valuation in the opposite case. These corporations normally sat on a buffer of hidden reserves that could be activated in case of emergency.

The same holds for banks with a significant share of bonds in their portfolio.

Now, with the continuous decrease of interests since the Volcker heights these buy-and-hold investors were told to be a bit retarded. Why not apply mark-to-market valuation and show the paper profits in the profit and loss account as a sign of the success of a smart investment strategy? And why not increase profit distribution to the shareholders? Quite naturally, mark-to-market was pushed by hedge funds, Wall Street, and other folks with a short time horizon and a commitment to shareholder value.

The drawback of this strategy makes itself felt when the Central Bank switches eventually to a policy of rising interest rates. In this case, paper losses show up in the profit and loss accounts and the structural balance relations deteriorate.

The effect is that the Central Bank is now practically locked-in at the zero interest level. Interest increases tend to automatically put the whole finance sector at risk with spill-overs to the real economy. Mark-to-market eventually shows its ugly face.

All these problems were perfectly foreseeable and could have been avoided by sticking to the tried and tested principles of prudent valuation that were and still are characteristic of an institutionally sound finance sector.

There has been a general trend in the political, social, and economic realm of throwing the principles of sound institution-building overboard with the unsurprising result that a growing number of states has finally turned into institutional shitholes.

MMT’s policy of deficit-spending/money-creation has been and still is a driver of this development.#1

Egmont Kakarot-Handtke


#1 MMT undermines democracy

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Twitter Sep 5

Source: Bloomberg

August 23, 2019

Deficit cheerleaders ― the Oligarchy’s useful idiots

Comment on Peter Dorman on ‘Cheerleading for Austerity’

Blog-Reference

It is generally known by now that economics is NOT a science and that economists are NOT scientists but agenda pushers. Currently, economists are given new marching orders.#1 And MMTers with their mantra of deficit-spending/money-creation are paraded in the media as the avant-garde of new economic thinking#2

Peter Dorman frames the issue psychologically by evoking the sufferings of WeThePeople:#3 “… the [NYT] article simply assumes that ‘large’ deficits are unsustainable and bad, and that only irresponsible political motives prevent action on them. In the name of a nebulous, unspecified Evil of Debt, the population of the US must be subjected to a regime of austerity, beginning with cuts in the programs many depend on to keep themselves and family members out of poverty.”

Then comes the economic expert with the tranquilizer: “To begin with, federal debt is denominated entirely in US dollars, so servicing is not a problem. Countries that borrow in foreign currencies, like Greece (which had no control over the euro) and Argentina, can default; that’s not a problem for the US.” No need for WeThePeople to worry about public debt because the US government neither intends to pay it back nor can it default on it.

And here are the really good news: “Meanwhile, government debt is an injection of spending power into the economy that counterbalances the leakage of a significant, ongoing trade (and current account) deficit. That’s not quite the right way to put it, since private and public net deficits, taken together, are the current account deficit. Once you understand what this means, you can’t avoid the economic shrinkage — austerity — aspect of deficit-cutting, since that’s what keeps the identity identical at any point in time.”

Obviously, Peter Dorman refers to the MMT/Keynesian/macroeconomic sectoral balances equation (I−S)+(G−T)+(X−M)=0. Unfortunately, this equation is provably false but Peter Dorman has no realized it to this day. In the equation above the most important balance ― the profit of the business sector ― is missing.

What does this tell us? (i) Academic economists do not know what profit is and how the monetary economy works. (ii) Academic economists are too stupid for the elementary mathematics of macroeconomic accounting. (iii) Academic economists either unintentionally or intentionally push the agenda of the Oligarchy.

The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 with Q as macroeconomic profit. The macroeconomic Profit Law boils down to Public Deficit (G−T>0) = Private Profit Q which means that the Oligarchy’s financial wealth and public debt grow in lockstep. It is the very characteristic of the free-market economy that it is already for a long time on the life support of the state. Profit is produced by the government through deficit-spending/money-creation. The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the state’s legislative, executive, and judiciary institutions.

Needless to emphasize that this state of affairs cannot be communicated to WeThePeople. This is why MMT repackages deficit-spending/money-creation as a social program for the benefit of WeThePeople. The propaganda says that deficit-spending/money-creation is the solution for all problems beginning with unemployment and ending with global warming. This is just a political fraud.#4 And there is nothing new about it, actually, this is very old economic thinking.#5 A public debt of currently $22 trillion has taken two centuries to build up.

The free-market economy runs on profit, and macroeconomic profit comes mainly from a permanently growing public debt. To tell WeThePeople that all is just fine is the task of academic agenda pushers. In economics, scientific fraud is traditionally rewarded with the EconNobel a.k.a. “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.#6

Egmont Kakarot-Handtke


#1 See the Tweets from Jackson Hole
#2 Stephanie Kelton: MMT’s public farce
#3 This is propagandistic standard operation procedure since Friedrich Engels’ The Condition of the Working Class in England,
#4 Is MMT good for WeThePeople or for the Oligarchy?
#5 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#6 Economics ― not science, not ideology, just useful idiocy

Related 'Economics ― from attention and reputation management to science' and 'Cheerleading the cargo cult' and 'MMT Progressives: stupid or corrupt or both?' and 'Links on Austerity' and 'Austerity and the political games Progressives play' and 'The biggest scientific mistake of the last centuries, and it has much to do with academic economists' and 'The decisive reason to worry about government debt' and 'Safe assets ― how the state pampers the Oligarchy' and 'Stephanie Kelton: “All deficits are good for someone” Yes, Someone=Oligarchy' and 'Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks' and 'The irrelevance of populism for economics' and 'From the debt economy to the gift economy: how America is brainwashed to love budget deficits' and 'MMT works just fine'.

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REPLY to evodevo on Aug 25

The macroeconomic Profit Law entails Public Deficit = Private Profit. Because of this, the Oligarchy and their useful academic/journalistic spokespersons should consistently argue FOR deficit spending, and WeThePeople and their academic/journalistic spokespersons should consistently argue AGAINST it. So, it is very easy to test the competence/honesty of economists/politicians. For details see

► Austerity and the idiocy of political economists
► Austerity and the utter scientific ignorance of economists
► Austerity and the total disconnect between economic policy and science
► Austerity and the political games Progressives play
► Austerity: Who takes the little man for a ride?

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REPLY to Barkley Rosser

You say: “We do tolerate Egmont, but do realize that none of us take him seriously. His ‘profit law’ is total bs accepted by no other economists.”

The non-acceptance of the macroeconomic Profit Law#1 by economists means the non-acceptance of economics as a science. In science, proof counts and NOT the opinion of folks who are too stupid for the elementary algebra that underlies macroeconomics.#2

Economists are NOT tolerated in the scientific community because of proven incompetence over the last 200+ years.


#1 Wikimedia AXEC143d Macroeconomic Profit Law (with increasing complexity) and Balances Equation
#2 I=S is provably false since Keynes but neither you nor your “other economists” have realized it.

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REPLY to Barkley Rosser on Aug 27

You say: “Go to the end, your claim that I=S is not true. Sorry, but in terms of US national income and product accounts, they do by definition. You can claim that this is not the right definition all you want, but it is the one that is used. This is a hard fact.”

Indeed. There was a time when saying the sun goes around the earth was a hard fact. Among imbeciles it still is. The scientific hard fact, though, is that the Profit Theory is false since Adam Smith and that the blunder quite naturally sneaked in the conventions of National Accounting.#1, #2 So, the hardest of all hard facts is that economists and national accountants are too stupid for the elementary mathematics that underlies macroeconomics.

Proof:
1. Premises: The elementary production-consumption economy is given by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditures C is equal to price P times quantity bought/sold X.

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

It always holds Q≡−S, in other words, the balances of the business and the household sector always add up to zero. This is the Fundamental Law of Macroeconomic Accounting.#3

In other words, the business sector’s loss is equal to the household sector’s saving. In still other words, saving is NOT equal to investment (because there is NO investment in the elementary production-consumption economy) but saving is equal to loss. Vice versa profit is equal to dissaving, i.e. the growth of the household sector’s debt.

3. Conclusion: Simple algebra tells everybody that saving is NEVER equal to investment and that, as a logical consequence, macroeconomics is provably false since Keynes. This carries over to National Accounting. So, actual National Accounting practice proves NOTHING except mathematical incompetence.

4. Generalization: The axiomatically correct macroeconomic Profit Law says for the general case Q≡Yd+(I−S)+(G−T)+(X−M). For the elementary investment economy this boils down to Q=I−S, i.e. macroeconomic profit is the difference between business sector investment and household sector saving. The empirical fact that macroeconomic profit has been greater than zero for most of the time since the Industrial Revolution tells everyone with more than two brain cells that there NEVER was equality of I and S in the whole history of Capitalism.

You say: “Bottom line is that your profit law is just a definition you made up nobody else agrees with, nobody. You are all alone with your precious tautology. This is why you have been unable to publish a single paper in an actual economics journals, and I note that there are now way over 1000 economics journals, with them having a wide range of views.”

In the genuine sciences, peer review has been institutionalized as quality control, in economics it has been perverted to an instrument for perpetuating the 200+ years stranglehold of the proto-scientific academic mob.

Because the profit theory is provably false all microeconomic and all macroeconomic models are false and, therefore, 99 percent of the content of peer-reviewed journals is proto-scientific garbage. In economics, the publication in a journal is NOT a quality characteristic but a reliable indicator that both the author and reviewer are either stupid or corrupt or both.


#1 The Common Error of Common Sense: An Essential Rectification of the Accounting Approach
#2 Is Nick Rowe stupid or corrupt or both?
#3 For details of the big picture see cross-references Accounting

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#PointOfProof
Aug 27
Post missing
#EconBlocker

August 21, 2019

Economics: No method to the madness

Comment on Lars Syll/Tom Hickey on ‘Econometrics and the problem of unjustified assumptions’

Blog-Reference

Neither Lars Syll nor Tom Hickey is known for having contributed anything of substance to the scientific progress of economics yet they cannot stop waffling about methodology.

Lars Syll tells us: “Econometrics is basically a deductive method. Given the assumptions, it delivers deductive inferences. The problem, of course, is that we almost never know when the assumptions are right. Conclusions can only be as certain as their premises ― and that also applies to econometrics.”

Wake up, Lars Syll, this is a truism for about 2300 years: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle)

J. S. Mill was well aware of the pivotal question of methodology: “What are the propositions which may reasonably be received without proof? That there must be some such propositions all are agreed, since there cannot be an infinite series of proof, a chain suspended from nothing. But to determine what these propositions are is the opus magnum of the more recondite mental philosophy.”

Now, what are the foundational propositions of mainstream economics? The verbalized Walrasian axiom set reads: “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)

Because these foundational propositions are shock-full of NONENTITIES all mainstream models that are based upon them are methodological garbage and therefore econometric testing cannot possibly work. This does NOT mean that econometrics has to be thrown on the muck heap. Lars Syll’s conclusion “Econometrics doesn’t establish the truth value of facts. Never has. Never will.” is plain methodological nonsense. What is called for is a Paradigm Shift, i.e. the replacement of the Walrasian axiom set.#1

Keynes understood that microfoundations are false but he messed up macrofoundations. The historical fact is that Keynes was too stupid for the elementary math that underlies macroeconomics. To this day, Keynesians, Post-Keynesians, and MMTers use the sectoral balances equation (I−S)+(G−T)+(X−M)=0 which is provably false because it lacks the balance of the business sector, i.e. macroeconomic profit.

Macroeconomic profit is determined by macroeconomic accounting which is nothing but elementary math. The philosopher Tom Hickey maintains: “Accounting is a formal method that is proto-scientific in the sense that double entry it is made up of tautologies. But the entries can be checked for substance against journals and inventories. … When accounting tautologies (identities) are interpreted causally, then causal explanation demands empirical corroboration through data, e.g., measurable changes in stocks and flows.”

The point is that economists are too stupid to get macroeconomic accounting right and to determine macroeconomic profit: “His [Keynes’] 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.)#2, #3

To this day, economists do not get the pivotal economic magnitude profit right. Econometric testing cannot work when applied to misspecified models by folks who fail already at the level of the elementary mathematics of macroeconomic accounting.

There is no point in expecting from Lars Syll/Tom Hickey or any other orthodox/heterodox methodological loser to ever produce the true macrofoundations or even to see them when they are just before their eyes.#4

Egmont Kakarot-Handtke


#1 For details of the big picture see cross-references Methodology
#2 For details of the big picture see cross-references Accounting
#3 For details of the big picture see cross-references Profit
#4 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0 with Q as macroeconomic profit. See also Wikipedia and the promotion of economists’ idiotism (II)

Related 'Economics ― not science, not ideology, just useful idiocy' and 'How to get out of the swamp of ignorance' and 'Warning: Einstein can be hazardous to heterodox methodology' and 'Heterodoxy, you have a problem' and 'The inexorable Paradigm Shift in economics' and 'True macrofoundations: the reset of economics' and 'Show first your economic axioms or get out of the discussion'.


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Wikimedia AXEC121f

August 20, 2019

Links on Alfred Marshall

Comment on Timothy Taylor on ‘Alfred Marshall in 1885: The Present Position of Economics’*

Blog-Reference

Marshall got the subject matter of economics wrong. Economics is NOT about how humans behave but about how the economic system behaves. Time to bury Marshall in the darkest corner of the Flat-Earth-Cemetery. For details see

► Marshall: a monument of scientific incompetence
► A note on Marshall's Magic Wand
► From Marshall to Georgescu-Roegen
► Marshall and some skewed arguments
► What engine?
► Marshall and the Cambridge School of plain economic gibberish
► Misled by ordinary intuition and common sense
► Hooray! The formalization issue is finally settled

Egmont Kakarot-Handtke


CONVERSABLE ECONOMIST

Related 'Show first your economic axioms or get out of the discussion' and 'The Cambridge crap curriculum'. For details of the big picture see cross-references Not a Science of Behavior.

Economics ― not science, not ideology, just useful idiocy

Comment on Simon Wren-Lewis on ‘How should academic economics cope with ideological bias’

Blog-Reference

A closer look at the history of economic thought reveals that there are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.

The historical fact is that theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years: Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, and materially/formally inconsistent. This pluralism of provably false theories is NOT science.

However, from Adam Smith/Karl Marx onward to the faux ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’ academic economists claim to do science. As Simon Wren-Lewis asserts: “Economics can only be called a science because it embraces the scientific method. The moment evidence is routinely ignored by academics because it does not help some political project economics stops being the science it undoubtedly is.”

It is NOT. Fact is that economists continuously violate scientific standards which are well-defined since antiquity: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

The scientific method implies the elimination of falsified approaches/hypotheses/theories. This does NOT happen in economics as Morgenstern criticized 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.” Or as Hands put it: “... suppose they did reject all theories that were empirically falsified ... Nothing would be left standing; there would be no economics.”

Economists never managed to produce more than proto-scientific garbage or to rise above the level of what Feynman called 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.”

What is missing to this day is the materially/formally consistent theory of how the monetary economy works. Economists do NOT strive for clear-cut true/false answers but instead, keep everything in the swamp between true false where “nothing is clear and everything is possible.” (Keynes)#1 Vagueness is a tried and tested survival strategy because “… you cannot prove a vague theory wrong.” (Feynman)

The historical fact is that economists are too stupid for the elementary math that underlies macroeconomics. To this day, Keynesians, Post-Keynesians, and MMTers use the sectoral balances equation (I−S)+(G−T)+(X−M)=0 which is provably false because it lacks the balance of the business sector, i.e. macroeconomic profit.#2 This is not a minor mistake but invalidates the whole of macroeconomics and microeconomics. Because economic theory is false, economic policy guidance NEVER has had sound scientific foundations.

The heap of inconsistent economic approaches has no truth-value, however, this does not matter much in the political realm where all that counts is propagandistic use-value. This is why proto-scientific garbage is still around. Economics has always been a well-stocked rummage table for arguments that help to secure the status quo. More has not been expected by the founders and funders of economics departments, chairs, and institutions. And this has always been delivered. Rockefeller called the university ‘the best investment’ he ever made.

This is the built-in bias of economics since J. S. Mill, who was 35 years on the payroll of the East India Company and defined economics as “inexact and separate science”. Economics is NOT a science and NOT an ideology.#3 Economics is agenda-pushing in the cloak of science. To this day, economics lacks valid scientific foundations. This holds for both orthodox and heterodox economics and Simon Wren-Lewis is no exception.#4-#7

Egmont Kakarot-Handtke


#1 And the answer is NCND ― economics after 200+ years of Glomarization
#2 The axiomatically correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0. See also: Wikipedia and the promotion of economists’ idiotism (II)
#3 An ideology is a manufactured ensemble of ideas/beliefs/norms/symbols as a means of creating/upholding/mobilizing group identity, i.e. a more or less sharp distinction between We (inclusion) and the Rest (exclusion). See also Wikipedia.
#4 Macro ignorance: Why Simon Wren-Lewis does not come to grips with the plain MMT-fraud
#5 Economic policy and the skirmishes of failed/fake scientists
#6 Are economics professors really that incompetent? Yes!
#7 The retirement of a fake scientist and real agenda pusher

Related 'Links on the Economics Nobel' and 'The end of political economics (I) and 'The end of political economics (II)'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption'.

August 19, 2019

MMT: The new Center of the Universe of political fraud

Comment on Warren Mosler on ‘Full Employment AND Price Stability’*

Own post, no external Blog-Reference

MMT claims that mainstream employment theory is false. So far, MMT is correct, mainstream economics is proto-scientific garbage since Adam Smith. But MMT claims also that MMT’s employment theory is superior. This claim is known to be false.#1, #2, #3

MMT is for the greater part storytelling and for the smaller part proper scientific analysis. The analysis is based on the MMT sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0. This equation is provably false. The correct balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0.#4 It boils down to Public Deficit (G−T) = Private Profit Q. Proper scientific analysis tells one that the MMT policy of deficit-spending/money-creation is a free-lunch program for the Oligarchy.#5

Needless to emphasize that such a program cannot be sold to WeThePeople. This is why MMT is repackaged as a social program. The argument of the MMT snake oil sellers is simply that MMT has the solution for all problems beginning with unemployment and ending with global warming.#6 This is just a political fraud.#7 Because MMT’s foundational equation is false the whole analytical superstructure is false. Because the theory is false, MMT’s economic policy advice has NO valid scientific foundations.

From this follows that both academic and non-academic MMTers are either stupid or corrupt or both. MMT is a plain political fraud and Warren Mosler is one of Wall Street’s loudest and busiest agents.#8-#14

Egmont Kakarot-Handtke


* The Center of the Universe
#1 Full employment through the price mechanism
#2 Full employment, the Phillips Curve, and the end of Gaganomics
#3 For details of the big picture see cross-references Employment/Phillips Curve
#4 Controlled demolition of MMT ― an exercise in elementary logic
#5 MMT’s true program
#6 MMT: If you’ve got a problem, I don’t care what it is, let me help
#7 MMT Progressives: The knife in the back of WeThePeople
#8 MMT, Warren Mosler, and the little helpers from Wall Street and Academia
#9 Warren Mosler: scientific dilettante and political fraudster
#10 You know you are in the political Circus Maximus when economists talk about Democracy/Liberty/Freedom
#11 Very busy these days: Wall Street’s agents
#12 MMT: fundamentally false
#13 MMT: The one deadly error/fraud of Warren Mosler
#14 Stephanie Kelton: MMT’s public farce

Related 'Keynes, Lerner, MMT, Trump, etc. and exploding profit'. For the full-spectrum refutation of MMT see cross-references MMT.

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Twitter Oct  30

Source: Twitter

August 8, 2019

Stephanie Kelton: MMT’s public farce

Comment on Tom Hickey on ‘MMT in the news’

Blog-Reference

The philosopher Tom Hickey is happy: “Stephanie Kelton is solidifying in the role of being the public face the MMT. This is doubly beneficial. Not only is it good for popularizing MMT, but also there are not many other women among economists that the public is familiar with.”

For a philosopher, this may be important. For a scientist, the person/messenger is of NO importance at all. For a scientist only content counts. The crucial question is always and everywhere: Is it true or false what the person says? Scientific truth is well-defined by material and formal consistency.

Now it is known that the MMT sectoral balances equation, i.e. (I−S)+(G−T)+(X−M)=0, is false.#2 Because the foundational equation is false the whole analytical superstructure of MMT is false. Because the theory is false, economic policy advice has NO sound scientific foundations. Any statement that has no sound scientific foundations is merely gossip or propaganda or entertainment or disinformation or storytelling or blather.

This applies to the communication of MMT’s public face Stephanie Kelton. For details of the proto-scientific farce see #3-#9

Egmont Kakarot-Handtke


#1 The axiomatically true balances equation reads (I−S)+(G−T)+(X−M)−(Q−Yd)=0.
#2 For the full-spectrum refutation of MMT see cross-references MMT
#3 The Kelton-Fraud
#4 Down with idiocy!
#5 Stephanie Kelton’s legendary Plain-Sight-Ink-Trick
#6 How Stephanie Kelton brain-washes a lovely young English girl
#7 Prophet Stephanie divines the seizure of the means of production of currency
#8 Stephanie Kelton and the self-destructive stupidity of the super-rich
#9 Stephanie and Noah ― economics at the intellectual zero lower bound

Related 'Show first your economic axioms or get out of the discussion' and 'MMT, Warren Mosler, and the little helpers from Wall Street and Academia' and 'Mission impossible: economists join WeThePeople' and 'MMT = proto-scientific garbage + deception of the 99-percenters' and 'MMT and grassroots movements' and 'MMT is ALWAYS a bad deal for the 99-percenters' and 'MMT: So-called Progressives as trailblazers for Trumponomics' and 'MMT: The new Center of the Universe of political fraud' and 'MMT’s true program' and 'The state of MMT? Stone-dead!'.

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The midwives manual for the Birth of the "People's Economy"




The gender-neutral version

August 2, 2019

MMT: Wondering where the catastrophe is

Answering Michael Norman’s Tweet

Blog-Reference

Michael Norman asks: “Can anyone in the debt/doomsday crowd explain why, after rising nearly 30-fold since 1980, the debt hasn’t created catastrophe? And why interest rates and inflation are lower? Do they care or is it just about incessantly spewing hysterics? Do they even pay attention?”#1

The macroeconomic Profit Law Q≡Qm+Qn with Qm≡Yd+(I−Sm)+(G−T)+(X−M) boils down to Public Deficit (G−T) = Private Profit Qm. So, by deficit-spending/money-creation the government continuously fills the coffers of the Oligarchy which, in turn, is looking out for some safe and juicy assets. Again, the government lends a helping hand and offers treasuries/bonds/etcetera thereby consolidating its overdrafts at the Central Bank. This is a case of simultaneous supply/demand creation: the government continuously accumulates overdrafts at the Central Bank and the Oligarchy continuously accumulates deposits. All other influences excluded, this should drive the interest rate for ultra-safe treasuries down over time because, in a fiat money regime, the Oligarchy needs safe financial assets more than the government needs the Oligarchy’s money.

Deficit-spending/money-creation causes a one-off price hike but NO inflation. Inflation depends on the relation of wage rate increases to productivity increases.#2

MMT is a free lunch program for the Oligarchy. Financial wealth and public debt grow in lockstep. The Profit Law explains how billionaires are able to accumulate that much money and why they can buy all the bonds the Treasury issues and cash in the ultra-safe interest that is reliably taxed from WeThePeople as long as the debt is rolled over. This can function for a very long time but eventually, the economy breaks down because infinite growth is impossible on a finite planet and this holds also for public debt.#3

In the meantime, the catastrophe Michael Norman is wondering about has already materialized in the distribution of income and wealth. After the debt rising 30-fold since 1980: “The 400 richest Americans, the top 0.00025%, have tripled their share of the nation’s wealth.”#4 Admittedly, in the eyes of Michael Norman and the rest of Wall Street this does not exactly fit the definition of catastrophe.

The MMT Ponzi scheme works (i) as long as public debt grows, (ii) as long as the redistributive interest payments on government debt do not wreck the budget, (iii) as long as the Oligarchy sticks to the scheme even at negative interest rates, (iv) as long as the general public can maintain the illusion that public debt is nobody’s debt, (v) as long as the Central Bank supports the scheme.

Egmont Kakarot-Handtke


#1 Twitter
#2 MMT was right all along: Gov-Deficits do NOT cause inflation
#3 The decisive reason to worry about government debt
#4 Washington Post

August 1, 2019

The apocalypse of stupidity

Comment on Richard Westra/Tom Hickey on ‘Apocalypse economics and economic apocalypse’*

Blog-Reference

Richard Westra argues: “… economic reproduction is an existential facet of all existing human societies it had always been intermeshed with other social practices–culture, religion, ideology, politics, and so on–and indistinguishable from them. Only under capitalism does economic life emerge transparently, as a separate sphere, permitting systematic study of ‘the economy’ in economic theory.” and “Mainstream economics in the neoclassical tradition which gained hegemonic status across much of the world by the early 20th century never problematizes the above important ontological fact.”

And the philosopher Tom Hickey adds: “A further complicating factor is that human knowledge is based on conceptual structures that are not fully systematized. That is, they are not algorithms. Rather, the basis of human known is narrative, a world view that is embedded in the cultural narrative.”

This is certainly true for the crap that fills the heads of ninety-nine percent of any population. The remarkable conclusion from archaeologically well-documented history is that one can tell people virtually any impossibility between prelife, the talking apple-tree snake, the apocalypse, and the afterlife and they will take it for real. The ninety-nine percenters live in the narrative fog that has been produced by storytellers, priests, historians, propagandists, the entertainment industry, and politicians. Only the one percent of scientists apprehend reality, at least a significant part of it.

Economists have not made it into the ranks of scientists in the last 200+ years. They started as political agenda pushers with pamphlets like The Wealth of Nations or Das Kapital and never got above the proto-scientific level.

Tom Hickey summarizes: “It [modern economics] is the attempt to explain the ‘economic life’ of society in terms of mechanistic and naturalistic principles that are based on equating naturalism as a methodological assumption with materialism as an ontological assumption. The units of society are viewed as individuals functioning like atoms in physics so that economics is assumed to be based on laws of nature which do not differ materially from the laws of nature discovered in physics. Thus the assumption that the methodological debate is decided, with methodological individualism and microfoundations established as key assumptions along with equilibrium and rational maximization of economic benefit for the agent.”

True enough. Standard economics is built upon this verbalized Walrasian axiom set: HC1 There exist economic agents. HC2 Agents have preferences over outcomes. HC3 Agents independently optimize subject to constraints. HC4 Choices are made in interrelated markets. HC5 Agents have full relevant knowledge. HC6 Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states.” (Weintraub)

This set of hardcore propositions is shock-full of NONENTITIES and therefore requires the same level of counterfactual belief (credo quia absurdum) as any religious narrative. HC1 to HC6 makes it abundantly clear that economics is NOT a science but a 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.” (Feynman)

What is missing? Scientific competence! Neither orthodox nor heterodox nor pluralist economists are scientists but political agenda pushers. To this day, economists do not understand how the monetary economy works. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, materially/formally inconsistent, and all approaches got profit ― the foundational concept of the subject matter ― wrong.

“The result is caricature rather than science.” (Hickey) Make no mistake, though, this plain scientific failure is not due to some insurmountable methodological difficulties of the economist’s subject matter but to the fact that economists to this day have neither grasped the difference between absurd narrative and true theory nor between showmanship and scientific competence nor between confused blather and material/ formal consistency.#1, #2

Egmont Kakarot-Handtke


* MRonline
#1 Circus Maximus: Economics as entertainment, personality gossip, virtue signaling, and lifestyle promotion
#2 How to spot economics trolls