October 31, 2019

Links on the Phillips Curve

Comment on Brad DeLong on ‘Is the Phillips Curve Dead or Is It Just Hibernating?’

Blog-Reference and Blog-Reference

The NAIRU Phillips Curve is ― like the consumption function, IS-LM, or, for that matter, supply-demand-equilibrium ― a rather idiotic construct. So, the question of whether the Phillips Curve is dead is as meaningless as How-many-angels-can-dance-on-a-pinpoint. Economists, though, have not grasped it to this day. The question of whether economists are still intellectually dead has an unambiguous answer: YES.

► Right policy depends on true theory
► The end of Mankiw and his Phillips Curve
► NAIRU, wage-led growth, and Samuelson's Dyscalculia
► Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
► Essentials of Constructive Heterodoxy: Employment
► The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment


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Wikimedia AXEC36b The structural-axiomatic 2-sector Employment Law/Phillips Curve


October 29, 2019

Why economists always seem to lose the fight against inequality

Comment on Editor on ‘Rising global income inequality is not inevitable in the future’

Blog-Reference and Blog-Reference

David Ricardo defined the task of economics back in 1821 “To determine the laws which regulate this distribution [between rent, profit, wages], is the principal problem in Political Economy.” (Principles, p. 5)

Ricardo failed and so did economists to this day.#1 Neither orthodox nor heterodox economists know what profit is and therefore, they cannot solve the “principal problem in Political Economy”.

The reason for the failure of economists is trivial: economists are too stupid for the elementary algebra that underlies macroeconomics.

The axiomatically correct macroeconomic Profit Law is given by Q≡Yd+(I−S)+(G−T)+(X−M). With regard to the state, the Profit Law boils down to Q≡G−T, i.e. Public Deficit = Private Profit.

Public deficit-spending/money-creation is a free lunch program for the Oligarchy.#2 The fact is that the so-called free market economy is already for a long time on the life support of the State. 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, judiciary institutions.#3

Needless to emphasize that economists, too, work for the Oligarchy. Naive MMTers, who present themselves as Progressives and propagate deficit-spending/money-creation do not know or do not care that their policy is to the detriment of WeThePeople.#4 They instead enthuse about the blessings of a Job Guarantee or a Green New Deal.

It is economists themselves who work ― intentionally or unintentionally does NOT matter ― for the growing inequality of income and wealth.

Egmont Kakarot-Handtke


#1 See cross-references Profit/Distribution
#2 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#3 Criminals and the monetary order
#4 Dear idiots, MMTers are Wall Street’s agenda pushers

Related 'Econogenics in action' and 'How the 99 percent can bring overall profit of the 1 percent legally down to zero in 2017' and 'Economists’ periodically recurring crocodile tears about inequality'.
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Home > Uncategorized > Rising global income inequality is not inevitable in the future

Rising global income inequality is not inevitable in the future

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  1. Ken Zimmer-man
    October 28, 2019 at 1:38 am
    Another indicator that the US, despite the propaganda has not fostered income and wealth fairness for about 40 years. Historically, that’s been the case for well over half the life of the nation. The question: how do we change the long- and short-term trends for the US?
  2. Helge Nome
    October 28, 2019 at 4:15 am
    By We The People demanding it Period
    • Ken Zimmer-man
      October 28, 2019 at 5:06 am
      According to the polling ‘we the people’ have demanded it since the 1970s. And I remember protests, letters to legislators, and hundreds of petitions over the last 50 years demanding it. Yet US voters keep returning to office legislators and presidents who ignore these demands. It’s time ‘we the people’ become a lot tougher with its demands and the force they exert on politicians. Do they have the courage and strength to do this?
      • Craig
        October 28, 2019 at 4:24 pm
        The people don’t see a simple, workable and transformational solution that is decidedly in their self interests, that’s why. That’s what the 50% Discount/Rebate policy at retail sale awakens them to. MLK’s freeing civil rights movement awakened self interested purpose in people, and the freeing effects of the new monetary paradigm will awaken us all and give us the purpose of ending monetary, financial and economic slavery.
  3. Jorge Buzaglo
    October 28, 2019 at 9:12 am
    Some pessimists affirm that war is the only great leveler. Or, somewhat more rationally, we could say that extreme inequality leads to war — external aggression defuses the internal tensions caused by inequality. War induces/requires internal cohesion, which induces/requires reduced inequality. However, modern (e.g. nuclear) war is not at all “labor-intensive”, and would not “solve the problem” either.
    • Ken Zimmer-man
      October 28, 2019 at 9:59 am
      Jorge, war today may not be labor intensive, but up to and including the war in Vietnam, war is very labor intensive. In the US, even today many poor young people or young people with few job prospects join the military. That was even more the case during previous wars. And while WWII decreased both economic inequality and class distinctions, World War I had only slight effect on both of these. The Great Depression effected both more than did WWI. And seldom, in my view does the chaos of war defuse the internal struggles in a nation before the war. The compressed violence, blood, and terror of war mostly just adds the additional problems of mental health and caring for the wounded. I’ve participated in three wars and studied them for most of my life. They seldom cure anything.
      • October 28, 2019 at 10:21 am
        Ken Zimmerman
        The macroeconomic Profit Law Q=Yd+(I−S)+(G−T)+(X−M) tells one that government deficit-spending/money-creation is the main driver of profit. Thus the Oligarchy’s financial wealth and public debt grow in lockstep. For details see cross-references Profit/Distribution.
        Egmont Kakarot-Handtke
      • Jorge Buzaglo
        October 28, 2019 at 3:01 pm
        My idea and warning were that if nothing is done to rampant inequality, the consequence might in the end be global war(s). An absolute evil, of course.
    • Ken Zimmer-man
      October 29, 2019 at 2:58 am
      Jorge, sorry about my misunderstanding. I agree about war being one of the very likely results of “rampaging” economic inequality.
  4. Ken Zimmer-man
    October 29, 2019 at 3:05 am
    Egmont, I suggest we eliminate both profit and government debt from all economists’ equations. Both were invented for nefarious purposes.
    • October 29, 2019 at 8:24 am
      Ken Zimmerman
      You say: “Another indicator that the US, despite the propaganda has not fostered income and wealth fairness for about 40 years. Historically, that’s been the case for well over half the life of the nation. The question: how do we change the long- and short-term trends for the US?”
      You say also: “Egmont, I suggest we eliminate both profit and government debt from all economists’ equations.”
      No, because the macroeconomic Profit Law shows us how to effectively “change the long- and short-term trends for the US.”#1
      You say: “It’s time ‘we the people’ become a lot tougher with its demands and the force they exert on politicians.” Toughness, though, does not help much. In order to improve the economy, one must know precisely how the machinery works. If one wants to get a plane/rocket off the ground one needs scientific knowledge, wishful thinking or “tough demands” do NOT help. It is the same with economic policy.#2
      Egmont Kakarot-Handtke
      • Ken Zimmer-man
        October 29, 2019 at 2:42 pm
        Egmont, there are no laws (in the universal, everywhere “sciencee” sense) in human societies and cultures. There are rules that people create to explain themselves and the events they perceive around them, guide their actions. And since humans create all the physical sciences, as well the same can be said for physical laws. What humans take as fixed and universal, as laws is usually the result of limited humans perspectives. For example, most physicists are now certain that the speed of light is not fixed. It seems fixed due to these limitations. It seems unlikely, in light of the remarks above that any equation or group of equations can change any trends, economic or otherwise. In most instances we don’t have that kind of control. Sometimes, no control at all. Social scientists, the honest ones, have hit the government, the wealthy, and their fellow scientists with scientific facts for decades. The result, moves toward authoritarianism grow stronger and economic inequality gets bigger and bigger. This is a political fight, and a dirty one.
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Source: Twitter

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#PointOfProof

October 26, 2019

The sectoral balances obfuscation: stupidity or corruption?

Comment on Andrea Terzi on ‘Euro area sectors’ balances’

Twitter-Reference*

In order to determine the sectoral balances, one first needs a description of the elementary production-consumption economy. This economy is constructed from scratch with the following set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X. For the graphical representation of the analytical starting point see Wikimedia AXEC31.#1

In this elementary economy, three configurations are, under the conditions of market-clearing X=O, logically possible:
(i) consumption expenditures are equal to wage income C=Yw, i.e. the budget is balanced,
(ii) C is less than Yw,
(iii) C is greater than Yw.

In case (i) the monetary saving of the household sector Sm≡Yw−C is zero and the monetary profit of the business sector Qm≡C−Yw, too, is zero. In case (ii) monetary saving Sm is positive and the business sector makes a loss, i.e. Qm is negative. In case (iii) monetary saving Sm is negative, i.e. the household sector dissaves, and the business sector makes a profit, i.e. Qm is positive.

It holds Qm+Sm=0 (1), i.e. the balance of the business sector Qm and the balance of the household sector Sm add up to zero. This is the Fundamental Law of Macroeconomic Accounting.

The causal form of (1) reads Qm=−Sm (2), i.e. if the household sector saves Sm>0 the business sector makes a loss Qm<0 of equal amount and if the household sector dissaves Sm<0 the business sector makes a profit Qm>0 of an equal amount. This is the Fundamental Law of Balance Mechanics. In order to stress the causality, (2) is rewritten as Qm⇐−Sm.

When the complexity is increased the macroeconomic Profit Law reads Qm≡Yd+I−Sm+(G−T)+(X−M) (3) or in causal form Qm⇐Yd+I−Sm+(G−T)+(X−M) (4) which says that monetary profit depends on (i) distributed profit Yd, (ii) investment expenditures I, (iii) household sector saving Sm, (iv) government surplus/deficit (G−T), (v) Rest of the World surplus/deficit (X−M).#2 While the items (iii) to (v) are identical to Andrea Terzi’s balances chart, the items (i) and (ii) are thrown together with the balance of the business sector, i.e. profit Qm. This is formally inadmissible because it obscures the causality and makes the pivotal magnitude of economics ― profit ― disappear.#3 MMTers apply the sectoral balances equation (I−Sm)+(G−T)+(X−M)=0 (5) which shows neither profit nor distributed profit.#4 Strictly speaking, equation (5) says that profit and distributed profit are always zero which, of course, is brain-dead nonsense.

In reality, profit and distributed profit are different from zero and most of the time greater than zero. This is what most people see as the defining characteristic of Capitalism. The macroeconomic Profit Law (4) consists of variables that are measurable with the precision of two decimal places and is readily testable.

Why, then, is profit missing in the MMT balances equation and in Andrea Terzi’s chart? It could be stupidity but actually, it is fraud.#5

Equation (4) boils down to Qm⇐G−T (6) which says that the public deficit causes the profit of the business sector. MMTers, who present themselves as Progressives, can obviously not tell WeThePeople that their policy of deficit-spending/money-creation benefits the Oligarchy. So they talk instead of the blessings of a Job Guarantee and a Green New Deal.#6

Economics is NOT a science and has NEVER been. Economists in general, and MMTers, in particular, are too stupid for the elementary algebra that underlies macro. They are neither scientists nor Friends-of-the-People but agenda-pushers for the Oligarchy.

Egmont Kakarot-Handtke


* Twitter and Twitter

Source: Twitter/Andrea Terzi 


#1 Wikimedia AXEC31


#2 Wikimedia AXEC143d


#3 MMT and the magical profit disappearance
#4 Down with idiocy!
#5 The Kelton-Fraud
#6 Criminals and the monetary order

Related 'A tale of three accountants' and 'Rectification of MMT macro accounting' and 'A crash course in macro accounting' and 'Economics: a hereditary mental disease with scientific incompetence as father and political fraud as mother' and 'Wikipedia and the promotion of economists’ idiotism (I)' and 'Wikipedia and the promotion of economists’ idiotism (II)' and 'How Randall Wray takes the piss out of the House Budget Committee'.


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Twitter Jun 5

Source: Twitter

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Source New Economic Perspectives Eric Tymoigne Another Take on the Financial Balances

-GFB ≡ NGFB

Source: New Economic Perspectives

October 23, 2019

Links on Paul Krugman, proto-scientific impresario

Comment on Lars Syll on ‘Paul Krugman ― finally ― admits he was wrong!’

Blog-Reference and Blog-Reference and Blog-Reference on Oct 25

Paul Krugmann has always been a clown and useful idiot in the political Circus Maximus. But Lars Syll has NOT been one iota better. Both, Krugmanian Orthodoxy and Syllian Heterodoxy are proto-scientific garbage.

► Krugman and the scientific implosion of economics
► Krugman is not an economist
► Paul the Menace
► Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
► Forget Krugman, forget Keynes, forget economists
► Profit and Distribution Theory is false for 200+ years
► Hooray! The formalization issue is finally settled
► Economics: a comedy of errors full of intrigue and aberration
► Paul’s and Stephanie’s economic delirium talk
► The stupidity of Heterodoxy is the life insurance of Orthodoxy

October 22, 2019

Criminals and the monetary order

Comment on Paul Koning on ‘If Nick’s tech-fueled counterfeiting story doesn’t explain why bank IOUs beat out coins, what does?’

Twitter-Reference and Blog-Reference on Oct 23

In order to determine the effects of criminals on the monetary order, one first needs a description of the elementary production-consumption economy. This economy is constructed from scratch with the following set of macroeconomic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

Under the conditions of market-clearing X=O and budget-balancing C=Yw in each period, the price is given by P=W/R (1), i.e. the market-clearing price is equal to unit wage costs. This is the most elementary form of the macroeconomic Law of Supply and Demand. For the graphical representation see Wikimedia AXEC31.


The firm pays the monthly wages with a standardized IOU and declares that this conveniently denominated title will be unconditionally accepted at the firm’s store. The employees accept that the IOUs discharge their wage claim against the firm. The firm issues private money that takes the material form of a slip of paper. It is assumed that the total monthly wage is Yw/12 = 100 monetary units (Euro, Dollar, Ruble, Yuan, etc.). The household sector fully spends its period income, so consumption expenditures C per period are equal to wage income Yw, i.e. C=Yw, i.e. 1,200=1,200

The IOUs are created out of nothing by the firm, handed over to the household sector in the form of wages, return in the form of consumption expenditures, and are thereby destroyed. There is NO such thing as a fixed quantity of money.

The value of money follows from (1) and is given by W/P=R (2), i.e. the real wage W/P is equal to the productivity R. The value of money depends alone on the production conditions of the economy and NOT on the material value of the firm’s IOUs which is virtually zero.

The difference between the real value of money (= R) and the lower real production costs of IOUs opens an opportunity for criminals. What happens if counterfeiters exploit this difference?

It is assumed that the counterfeiters bring the fake IOUs at the demand side into circulation, that is, they buy stuff. The market-clearing price is determined by P'=(C+C')/O which is higher than P=C/O=W*L/R*L=W/R. Because the new real wage W/P' is lower, the part of total output O that the wage income recipients receive is lower and the difference O−O' goes to the counterfeiters as booty. The redistribution of output is carried out via the price. The higher market-clearing price does not signal increased natural scarcity but indicates that the hidden hand of criminals is at work.

For the business sector as a whole, profit is defined as Q≡C−Yw. Under the initial condition of budget-balancing C=Yw, macroeconomic profit is zero. With the counterfeiters’ additional expenditures C' the business sector posts a profit of Q=C'. Because the business sector gets more IOUs back than it had issued in the form of wages, macroeconomic profit in a private money economy takes the form of surplus IOUs.

In a world of honest people, IOUs could be a functionally satisfactory type of money. In a world of crooks, though, the incentives for corruption have to be eliminated. One obvious way to close the difference between the high real value of money and the low real production costs is to increase the production costs, for example by replacing the cheap data carrier paper by the expensive data carrier gold/silver. This, of course, runs against the principle of economic efficiency.

Let us now replace private money by public money which is produced by the Central Bank. Instead of issuing its own IOUs, the business sector now becomes the debtor of the Central Bank in the form of overdrafts and gets uno actu deposits of the same amount. Central Bank deposits are money. These deposits are used for wage payments and subsequently for the households’ purchases of the consumption good. Thus, the business sector’s overdrafts are again reduced to zero. The idealized transaction pattern is shown on Wikimedia AXEC98.


Money is created out of nothing and is again zero at the end of the period. Money consists of a number on the liability side of the Central Bank’s balance sheet that is exactly equal to the number on the asset side. The real value of money is not in these numbers but depends on the productivity R.

The average stock of transaction money is given as M=κYw, with κ determined by the payment pattern. In other words, the ‘quantity of money’ M is determined by the autonomous transactions of the household and business sector and created out of nothing by the Central Bank in the form of deposits and overdrafts. The economy never runs out of money.

In this monetary system, the challenge for criminals consists of creating a deposit on the own account and an overdraft on somebody else’s. Again, the Central Bank’s counter-measures consist of driving up the production costs of counterfeit money by making their IT systems impenetrable.

In a fiat money system, the production of counterfeit money assumes an entirely different form and a gigantic dimension. If the Central Bank creates money on behalf of the State and the amount G is spent into the economy with taxes left at zero, the effect is the same as money-printing by the counterfeiter. The market-clearing price P'=(C+G)/O increases and the part of the output that is available to the wage income receivers diminishes. The redistribution of output happens via the price mechanism. The real wage is now lower than productivity. All this is nontransparent to the general public who is told that the invisible hand pushes the levers of the price mechanism.

With the State’s additional expenditures G, the business sector posts a profit Q=G or Q=G−T in the general case of a budget deficit. So, it holds Public Deficit = Private Profit. Because the business sector gets more deposits back than it had spent in the form of wages, macroeconomic profit in a public money economy takes the form of an increase of the stock of Central Bank deposits, i.e. money. The counterpart of the business sector’s deposits is overdrafts of the State. The financial wealth of the business sector grows in lockstep with public debt. The general public is not aware that it owns the public debt which has to be repaid at some unknown date in the future.

Public deficit-spending is the wrong way to inject money into the economy. This way is NOT different from bringing counterfeit money in the economy. Both the printing of counterfeit money and public deficit-spending have in real terms the same negative effect on WeThePeople. The only difference is that private counterfeiting is illegal but public deficit spending is legal.

The foundational defect of the fiat money system is NOT that the Central Bank can create money out of nothing and charge interest to cover its costs, or that the money is not backed by gold, the defect is that the Central Bank enables the State’s deficit-spending which worsens the real situation of WeThePeople and increases the financial wealth of the Oligarchy.

From the macroeconomic perspective, running a public deficit is as criminal as printing counterfeit money. The first rule for a Central Bank is NOT to keep inflation at 2% but to prevent both surpluses and deficits and to keep the public deficit at zero.

In a well-designed corruption-free monetary order, the Central Bank is by law committed to a Schwarze-Null/Black-Zero government budget. The fighting of inflation or unemployment requires other tools.

Egmont Kakarot-Handtke


Related 'The right and the wrong way to bring money into the economy' and 'Swabian housewife vs Wall Street loan shark' and 'Deficit cheerleaders ― the Oligarchy’s useful idiots' and 'How to pay for the war and to be bamboozled by economists' and 'Keynes, Lerner, MMT, Trump, etc. and exploding profit' and 'Pareto-efficiency, Hayek’s marvel, and the invisible executor' and 'Is MMT good for WeThePeople or for the Oligarchy?' and 'How counterfeiters save America with an extra profit and make WeThePeople pay for it' and 'Reconstructing the Quantity Theory (I)'.

October 14, 2019

Scrap the EconNobel

Comment on Alex Tabarrok on ‘The Nobel Prize in Economic Science Goes to Banerjee, Duflo, and Kremer’

Blog-Reference

Economists are NOT scientists but clowns and useful idiots in the political Circus Maximus. The EconNobel is a fraud. For details see here.

Egmont Kakarot-Handtke

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Comment on Peter Dorman on ‘A Nobel for the Randomistas’

Blog-Reference and Blog-Reference and Blog-Reference

Peter Dorman comments: “I don’t think anyone was surprised by this year’s ‘Nobel’ prize in economics, which went to three American-based specialists in the design of on-the-ground experiments in low income countries, Abhijit Banerjee, Esther Duflo and Michael Kremer.”

Indeed, the EconNobel has been criticized on various grounds: (i) male-predominance, (ii) theory-predominance, (iii) rich-western-capitalism-focused, (iv) geriatric-predominance, (v) white-predominance, (vi) University of Chicago bias. All these biases have been addressed and solved to everybody’s satisfaction with the team of young/bi-gender/ poverty-concerned/empirical/multicultural Cambridge-MA prize winners.

One problem, though, has been carefully avoided, i.e. that economics is NOT a science to this day. 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. Economics is a failed science.

Economics has NEVER been a science but a smokescreen for political agenda-pushing. Both orthodox and heterodox economists are NOT scientists but clowns and useful idiots in the political Circus Maximus. The “Bank of Sweden Prize in Economic Sciences” is a fraud for 50 years.#1

Peter Dorman wonders “Carefully controlled social experiments can be very expensive! When I read the work of the prize-winners and their coauthors, I often find myself wondering how much did it cost to do this research, and who paid for it? This is a form of Big Science, and it requires big support.”

This is an easy question. Economics departments, chairs, institutions, and pre-selected individuals are traditionally funded by the Oligarchy. Rockefeller called the university ‘the best investment’ he ever made. In our days, though, the quality of sponsors/funders/ agenda-pushers has considerably deteriorated. The active players are not at all secret, the New York Times shows a meeting-photo of well-known billionaire Jeffrey Epstein and well-known Harvard economist and political busybody Larry Summers.#2

From all this, one can conclude with a high degree of probability that the EconNobel is a well-calculated, Oligarchy-sponsored, aristocracy-decorated PR stunt that has much to do with the deception of the general public and NOTHING at all with science.


#1 For details see Links on the Economics Nobel
#2 New York Times

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REPLY to Barkley Rosser on Oct 17

You say: “To a large degree the Nobel for Chinese growth was given a long time ago to Robert Solow. A nation that invests more grows more. That is pretty much it, …” and “Look, Nobel prizes, including even the ‘fake’ economics one given out by the Sveriges Riksbank for the last half century, focus on people who generate new ideas, not policymakers who may have achieved successful outcomes. You suggest that ‘a poverty-oriented Chinese economist’ deserves the prize, but somehow you do not provide a name. And I would suggest you will not be able to because no Chinese economist has generated any important new ideas on this.”

Solow criticized the DSGE-Orthodoxy: “Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous ― that is, by laughing at it ― so as not to fall into the trap of taking it seriously and passing on to matters of technique.”#1

The same holds, though, for Solow’s own growth model.#2

Nevertheless, the EconNobel “was given a long time ago to Robert Solow”.

It is pretty obvious why the EconNobel will not be given to a Chinese economist. The EconNobel is a Hollywood production for the western audience initiated and sponsored by the US Oligarchy to reward US economists for their propaganda services to “scientifically” prove the superiority of the US-version of self-optimizing supply-demand-equilibrium.

The EconNobel had NO scientific significance 50 years ago and has none this year. And this is NOT because “no Chinese economist has generated any important new ideas” but because no US economist has generated any important new ideas. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT is ludicrous proto-scientific garbage to this day.


#1 Solow and the ludicrousness of economics
#2 Sending Solow’s growth model to the dump of proto-scientific history

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REPLY to Barkley Rosser on Oct 18 and Blog-Reference

You say: “Look, Nobel prizes, including even the ‘fake’ economics one given out by the Sveriges Riksbank for the last half century, focus on people who generate new ideas, not policymakers who may have achieved successful outcomes.”

This, of course, is absolutely correct. But then, is your discussion about whether China or the Massachusetts team has been more successful in alleviating poverty not a bit beside the point?

What you are constantly doing is to confound science and politics. This is a hereditary mental and moral disease among economists since Adam Smith. However, the founding fathers were at least honest people and called themselves Political Economists. The denomination “political” was later scrapped by Jevons. This was roughly at the same time when the War Ministries were renamed Defense Ministries.

What the general public does not understand is that 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 fraud of economists consists of telling the public that they are doing science while, in fact, they are doing agenda-pushing. The fraud is in the title “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. There would be no problem at all if the title was “Bank of Sweden Prize in Economic Propaganda on Behalf of the US Oligarchy”.

With regard to ‘Economic Sciences’, economists are still behind the curve:
• Science manifests itself in the form of the true theory.
• Truth is well-defined by material and formal consistency.
• Logical consistency is secured by applying the axiomatic-deductive method and material consistency is secured by applying state-of-art testing.
• The true theory/model is the humanly best mental representation of reality.
• The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism, MMT ― are axiomatically false, materially/formally inconsistent, and mutually contradictory.
• Orthodox and heterodox economics is failed/fake/cargo-cult science, i.e. political agenda-pushing without valid scientific foundations.

The “alleviation of global poverty” by the Massachusetts team is politically fictitious and scientifically worthless.

The political reality is that MMT academics claim on the basis of an algebraically false sectoral balances equation that public deficits are beneficial for WeThePeople and that they increase “private wealth” while the analytically correct balances equation says that Public Deficit = Private Profit which is obviously beneficial alone for the Oligarchy.

So, while academic economists pretend with this year’s EconNobel to care about the alleviation of poverty, they politically accept/promote the explosion of the Oligarchy’s financial wealth by exploding the public debt.

Clearly, economists have to be expelled of the scientific community.

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REPLY to Ken Zimmerman on Oct 24

You say: “Anthropologists and government policy designers went down this road, fruitlessly 50 years ago. The culture of poverty is a notion in social theory asserting that the values of people experiencing poverty play a significant role in perpetuating their impoverished condition, sustaining a cycle of poverty across generations.” and “If economists were educated beyond economic theories and mathematics and had at least a modicum of curiosity about events around them, they’d know that the work for which these folks [Abhijit Banerjee, Esther Duflo, Michael Kremer] were awarded a Noble Prize is not either innovative or new.”

Yes, indeed, the culture of poverty is the subject matter of Anthropology/Sociology/ Psychology and other so-called social sciences. No, Psychology, Sociology, etcetera ― PsySoc for short ― is NOT the subject matter of economics. The subject matter of economics is how the economic system works. Economic is a systems science and NOT a social science.#1, #2

The fact is that economics is a failed science. 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. Economists have NO valid theory about how the actual economy works but this does not prevent them from taking part in the political Circus Maximus and giving economic policy advice.#3

There have always been 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 (= true theory). (ii) In political economics anything goes; in theoretical economics, scientific standards are observed.

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.#4

Because economics is NOT a science but Oligarchy-sponsored political agenda-pushing, the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” is a deception of the general public since the first EconNobel 50 years ago.#5

It is high time to sue the Bank of Sweden for damages and waste of the Swedish peoples’ money.


#1 Economics is NOT about Human Nature but the economic system
#2 PsySoc — the scourge of economics
#3 Econogenics in action
#4 Economists: scientists or political clowns?
#5 Links on the Economics Nobel

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REPLY to Ken Zimmerman on Oct 28

You say “Egmont, thanks for your comments. You’re correct that economists today spend little time or effort studying poverty. But anthropologists and sociologists do.”

In fact, I said that economists spend TOO MUCH time with PsySoc. The subject matter of economics is NOT Human Nature/motives/behavior/action but how the economic system works.

Economists are known to have dabbled in virtually every discipline: Psychology, Sociology, Political Sciences, Geopolitics, Law, History, Anthropology, Social Philosophy, Philosophy, Theology, Pedagogic, Biology/Evolution, and whatnot. This somewhat perverse habit has been called Economics Imperialism. The perversity consists of the fact that economists have utterly failed in their own discipline. Walrasianism, Keynesianism, Marxianism, Austrianism, MMT are mutually contradictory, axiomatically false, and materially/formally inconsistent.

In 200+ years, economics has not risen above the proto-scientific level. For details see Economists: Jacks-of-all-trades ― except economics.

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Wikimedia AXEC136g

October 10, 2019

Tribalism is NOT the problem of economics

Comment on Blair Fix on ‘Tribalism in Science (and Economics)’

Blog-Reference

Blair Fix summarizes: “If you ask the average person what ‘science’ is, they’ll probably answer something like ‘it’s what we know about the world’. To the lay person, ‘science’ is a body of facts. To the trained scientist, however, ‘science’ means something different. It’s not a body of knowledge. It’s a method for determining what’s true and what’s not. To determine the way the world works, science appeals to evidence. The ideal of science is beautifully summarized by the motto of the Royal Society: nullius in verba. It means ‘take nobody’s word for it’. In science, there is no authority. There are no gods, no kings, and no masters. Only evidence.”

In more technical terms: “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)

Economics claims to be science#1 but is merely what Feynman called a cargo cult science. As always and everywhere, there is the genuine thing and the look-alike: “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 spontaneously tell the difference between the genuine thing and the look-alike and this provides a comfortable ecological niche for the look-alikes in all walks of life from the ordinary impostor to the fake scientist.#2

Strictly speaking, there is no such thing as economics. 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.

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.

Theoretical economics has to be judged according to the criteria true/false and NOTHING else. Theoretical economics, though, had been hijacked from the very beginning by the agenda pushers of political economics.

Blair Fix thinks this is due to our evolutionary heritage: “When we do science, we have to fight against this tribal instinct. Not surprisingly, we often fail. Rational skepticism gets overpowered by the instinct to trust members of our group. If the group happens to be powerful — say it dominates academia in a particular discipline — then false ideas get entrenched as ‘facts’. This is a problem in all areas of science. But it’s a rampant problem in economics. The teaching of economics is dominated by the neoclassical sect, which has managed to entrench itself in academia. Among this sect, I believe, tribal instincts trump the rational appeal to evidence.”

This evolutionary explanation is a bit silly. Economics is not science but the propaganda arm of the Oligarchy. 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. 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 ― and NOT biologically entrenched tribalism ― is the built-in bias of economics. Economics is controlled with the usual incentives of prestige and money and publicity. Economists are  the useful idiots of the Oligarchy which selects their agenda pushers systematically and rewards them handsomely.#3 Arrow, Debreu and other members of the Cowles “tribe” were awarded the “Nobel” for the “proof” of the superiority of the market economy, i.e. for a political PR stunt and not for a genuine scientific achievement.#4

Tribalism is NOT the problem of economics, scientific incompetence is.

Egmont Kakarot-Handtke


#1 About the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel” see here.
#2 The economist as storyteller
#3 How to spot economics trolls
#4 Economics, math, pluralism, and corruption

Related 'Circus Maximus: Economics as entertainment, personality gossip, virtue signaling, and lifestyle promotion' and 'Economics ― not science, not ideology, just useful idiocy' and 'Economics, too, is pre-truth' and 'There is NO such thing as “smart, honest, honorable economists”' and 'Economists’ silly kindergarten games' and 'Links on capital-T Truth, stupidity, corruption' and 'Links on the Economics Nobel'.

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REPLY to Yoshinori Shiozawa on Oct 11

You say: “What do you propose as theoretical economics that challenges to explain how the actual economy works? This is the most important point. Criticizing neoclassical economics alone does not bring a new economics i.e. theoretical economics that explains how the actual economy works.”

True indeed and basic methodological stuff: “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)

So, a Paradigm Shift is indispensable. Economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations and false heterodox Pluralism to true macrofoundations.

For details of the big picture see cross-references Paradigm Shift.

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REPLY to Ken Zimmerman on Oct 13

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.

The axiomatically correct macroeconomic Profit Law is given by Q=Yd+(I−S)+(G−T)+(X−M) and 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 mainly by the government through deficit-spending/money-creation.#1 The Oligarchy, in turn, uses the opulent free lunches to corrupt what remains of the State’s legislative, executive, judiciary institutions, including academia.#2

All this happens openly before the authors and commentators of the RWER blog. These folks, though, in their bottomless stupidity realize NOTHING but instead blather about biology/evolution, god/religion, astronomy, and the invention of human sociality about 20,000-30,000 years ago.

This senseless blather, of course, distracts from the biggest deficit-coup of all times that the Oligarchy is currently pulling off with the help of a bunch of MMT academics.#3

Economics has NEVER been a science but a smokescreen for political agenda pushing. BOTH orthodox and heterodox economists are stupid or corrupt or both. And the whole pile of scientific and human crap is tomorrow crowned for the 50th time with the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.


#1 Keynes, Lerner, MMT, Trump, etc. and exploding profit
#2 For a meeting-photo of billionaire Jeffrey Epstein and economist Larry Summers see Twitter and New York Times

Source: Twitter

#3 Dear idiots, MMTers are Wall Street’s agenda pushers

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#PointOfProof
Oct 15