Comment on Peter Radford on ‘Lamppost Economics?’
Blog-Reference
With regard to the habitual lack of interest of the economics profession in distributional issues, you sum up “I may be misreading this, but what I think Krugman is telling us that only subjects that can be scrunched into models are suitable material for economic. ... Now I am lot more sympathetic towards Krugman than many of you are, I have a soft spot for his thinking because he is willing to lead the liberal charge, but this annoys me.” (See intro)
And you end with citing Fox’s concluding paragraph: “... I can’t help but wonder what important knowledge the economists are inadvertently suppressing today.”
Here is the important knowledge for all non-economists:
(i) Economics is a failed science and the majority of economists have not realized this.
(ii) Economists do not assess models/theories according to the scientific criteria true/false but according to political sympathies/antipathies for Liberalism, Communism, etcetera.
(iii) In more than 200 years economists have not risen above the proto-scientific level of political economics.
(iv) It is not at all important whether Krugman has said something about distribution before it became fashionable but whether this had any scientific value. All the more so, as it is well-known that Krugman is not a particularly sharp thinker (2014a).
(v) The fact of the matter is that the profit theory is false since Adam Smith (2014b). This means that neither Krugman nor his critics have any idea of the pivotal phenomenon of the market economy. Because profit theory is provably false distribution theory and all the rest is false, too.
(vi) Economists do not inadvertently suppress knowledge — they have none at all. This is not because models are applied selectively but because they are logically defective and this, in turn, is due to incurable scientific incompetence.
(vii) Because of this, it is of no use that economists busily produce more distribution models — or any other for that matter. The world has too much of this proto-scientific garbage.#1
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2014a). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
Kakarot-Handtke, E. (2014b). The Profit Theory is False Since Adam Smith. What About the True Distribution Theory? SSRN Working Paper Series, 2511741: 1–23. URL
#1 How the intelligent non-economist can refute every economist hands down
Related 'Addendum to ‘Musings on Whether We Consciously Know More or Less than What Is in Our Models’'
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January 12, 2016
August 30, 2017
Keynesians ― terminally stupid or worse?
Comment on Dirk Ehnts on ‘Keynes on Savings and Investment’
Blog-Reference and Blog-Reference
Eighty years ago, Keynes got macro wrong and Keynesians did not notice it until this very day.
Dirk Ehnts cites Keynes: “S=I at all rates of investment.” and comments enthusiastically: “This is very enlightening. The ‘General Theory’ also contained the issue of savings and investment, but the quote above nails it. There is no ‘supply’ and ‘demand’ for capital, hence savings and investment do not need anything to move so that there can be equilibrium.”
There is no better proof of the abysmal scientific incompetence of economists in general and of Keynesians in particular than S=I.
Here is the evidence from the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes did not come to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Because profit is ill-defined, the whole theoretical superstructure of Keynesianism is false. #1 Let this sink in: Keynes had NO idea of the fundamental concepts of economics, viz., profit and income. Keynes, though, was not alone: “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” (Mirowski) The fact is, the profit theory is false since Adam Smith. Economics is scientifically worthless for 200+ years.
What has to be done is to replace Keynes’s false macrofoundations with true macrofoundations. The elementary production-consumption economy is, for a start, defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw), and two definitions (monetary profit Qm≡C−Yw, monetary saving Sm≡Yw−C). The graphical representation is shown on Graphic. #2, #3
It always holds Qm≡−Sm, in other words, at the heart of the monetary economy is an identity: The business sector’s deficit equals the household sector’s surplus and vice versa. Put bluntly, the business sector's loss is the counterpart of the household sector's saving, and vice versa, profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. It follows directly from the definition of the business sector’s monetary profit Qm≡C−Yw and the definition of the household sector’s monetary saving Sm≡Yw−C. From this immediately follows that Keynes’ foundational identity “Income = value of output” is false, and After-Keynesians have not realized it to this day.
For the investment economy, the Profit Law reads Qm≡I−Sm. Legend: Qm monetary profit, I investment expenditures, Sm monetary saving/dissaving. The business sector’s investment expenditures and the household sector’s saving/dissaving are completely INDEPENDENT and NEVER equal.
There is NO such thing as equality of investment and saving, neither ex-ante nor ex-post, and there is NO such thing as an equilibrium of I, and S. Keynes was too stupid to understand this, and After-Keynesians are even worse. #4
Egmont Kakarot-Handtke
#1 Why Post Keynesianism Is Not Yet a Science
#2 Graphic AXEC31 The elementary production-consumption economy
#3 How the intelligent non-economist can refute every economist hands down
#4 For details of the big picture, see cross-references Refutation of I=S and cross-references Keynesianism.
You say: “I don’t understand your claim because it comes without any argument.”
The proof has been given that Qm≡−Sm in the pure production-consumption economy and Qm≡I−Sm in the elementary investment economy. In plain text, the proof says that saving and investment are NEVER equal. #1
You say: “Regarding wording, how about: ‘saving is the accounting record of investment’? I find it immensely useful!”
In their pathetic incompetence, economists got even the elementary mathematics of accounting wrong. #2 The wording ‘saving is the accounting record of investment’ is the very proof that economists cannot even put 2 and 2 together.
You say: “What I don’t find useful is the inclusion of profits in macroeconomic models.”
Macroeconomic profit exists, and economists should know and tell what it is. Neither orthodox nor heterodox economists do it, though, because they have no idea what the pivotal concept of their subject matter is. #3
You say: “Of course, the question of what drives investment needs to be attacked using the concept of profit, but that is a different question from what determines the level of unemployment, which was Keynes’ question in the GT!”
Keynes’ employment theory is false because I=S ― and, by implication, the multiplier ― is false, which, in turn, is false because Keynes never understood what profit is. #4
Because Keynes’ premise Income = value of output is false, ALL I=S/IS-LM models from Keynes/Hicks to Krugman/Ehnts are provably false. #5, #6
After-Keynesians are light-years behind the curve. The scientific level of economists in general and Dirk Ehnts, in particular, is worse than zero.
#1 How Keynes got macro wrong and Allais got it right and
The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment
#2 A tale of three accountants and cross-references Accounting
#3 Heterodoxy, too, is proto-scientific garbage
#4 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#5 Getting out of IS-LM = Getting out of despair
#6 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
Dirk Ehnts subscribes to: “S = I at all rates of investment. Y either definable as C+S or as C+I. S and I were opposite facets of the same phenomenon they did not need a rate of interest to bring them into equilibrium for they were at all times and in all conditions in equilibrium.”
Nick Edmonds maintains: “The expected real rate of interest is in some sense the price of savings and so, in principle, changes in this expected rate might be able to reconcile desired saving and desired investment. In a barter economy, goods for current delivery can be traded for promises of the same goods for future delivery.”
Keynes was right on two points: (i) he has to be credited for realizing that the economics of Jevons/Walras/Menger/Marshall was false at its core and that nothing less than a paradigm shift was needed, (ii) that economic analysis has to start with the ‘monetary theory of production’ and NOT with some silly barter economy of the Sraffa type. #1
From the analysis of the most elementary economic configuration, the pure production-consumption economy, follows for the balances Qm≡−Sm, in other words, at the heart of the monetary economy is an identity: the business sector’s deficit = loss (surplus = profit) equals the household sector’s surplus = saving (deficit = dissaving). Loss is the counterpart of saving, and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. #2
This, first of all, tells one that the profit theory is false since Smith and Ricardo. #3 And, secondly, this tells one that the theory of saving and investment is false by implication. It always holds Qm≡I−Sm, that is, investment and saving are NEVER equal, neither in accounting nor in reality. #4
All I=S/IS-LM models are provably false from Wicksell/Keynes/Hicks onward. Because MMT is built upon the false Keynesian balances equations it is false, too. #5
#1 The futile attempt to recycle Sraffa
#2 How the intelligent non-economist can refute every economist hands down
#3 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#4 Rectification of MMT macro accounting
#5 For the full-spectrum refutation of MMT, see cross-references MMT
Blog-Reference and Blog-Reference
Eighty years ago, Keynes got macro wrong and Keynesians did not notice it until this very day.
Dirk Ehnts cites Keynes: “S=I at all rates of investment.” and comments enthusiastically: “This is very enlightening. The ‘General Theory’ also contained the issue of savings and investment, but the quote above nails it. There is no ‘supply’ and ‘demand’ for capital, hence savings and investment do not need anything to move so that there can be equilibrium.”
There is no better proof of the abysmal scientific incompetence of economists in general and of Keynesians in particular than S=I.
Here is the evidence from the General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
This syllogism is conceptually and logically defective because Keynes did not come to grips with profit. “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Because profit is ill-defined, the whole theoretical superstructure of Keynesianism is false. #1 Let this sink in: Keynes had NO idea of the fundamental concepts of economics, viz., profit and income. Keynes, though, was not alone: “... one of the most convoluted and muddled areas in economic theory: the theory of profit.” (Mirowski) The fact is, the profit theory is false since Adam Smith. Economics is scientifically worthless for 200+ years.
What has to be done is to replace Keynes’s false macrofoundations with true macrofoundations. The elementary production-consumption economy is, for a start, defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw), and two definitions (monetary profit Qm≡C−Yw, monetary saving Sm≡Yw−C). The graphical representation is shown on Graphic. #2, #3
For the investment economy, the Profit Law reads Qm≡I−Sm. Legend: Qm monetary profit, I investment expenditures, Sm monetary saving/dissaving. The business sector’s investment expenditures and the household sector’s saving/dissaving are completely INDEPENDENT and NEVER equal.
There is NO such thing as equality of investment and saving, neither ex-ante nor ex-post, and there is NO such thing as an equilibrium of I, and S. Keynes was too stupid to understand this, and After-Keynesians are even worse. #4
Egmont Kakarot-Handtke
#1 Why Post Keynesianism Is Not Yet a Science
#2 Graphic AXEC31 The elementary production-consumption economy
#3 How the intelligent non-economist can refute every economist hands down
#4 For details of the big picture, see cross-references Refutation of I=S and cross-references Keynesianism.
***
REPLY to Dirk Ehnts on Sep 1,3 see also hereYou say: “I don’t understand your claim because it comes without any argument.”
The proof has been given that Qm≡−Sm in the pure production-consumption economy and Qm≡I−Sm in the elementary investment economy. In plain text, the proof says that saving and investment are NEVER equal. #1
You say: “Regarding wording, how about: ‘saving is the accounting record of investment’? I find it immensely useful!”
In their pathetic incompetence, economists got even the elementary mathematics of accounting wrong. #2 The wording ‘saving is the accounting record of investment’ is the very proof that economists cannot even put 2 and 2 together.
You say: “What I don’t find useful is the inclusion of profits in macroeconomic models.”
Macroeconomic profit exists, and economists should know and tell what it is. Neither orthodox nor heterodox economists do it, though, because they have no idea what the pivotal concept of their subject matter is. #3
You say: “Of course, the question of what drives investment needs to be attacked using the concept of profit, but that is a different question from what determines the level of unemployment, which was Keynes’ question in the GT!”
Keynes’ employment theory is false because I=S ― and, by implication, the multiplier ― is false, which, in turn, is false because Keynes never understood what profit is. #4
Because Keynes’ premise Income = value of output is false, ALL I=S/IS-LM models from Keynes/Hicks to Krugman/Ehnts are provably false. #5, #6
After-Keynesians are light-years behind the curve. The scientific level of economists in general and Dirk Ehnts, in particular, is worse than zero.
#1 How Keynes got macro wrong and Allais got it right and
The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment
#2 A tale of three accountants and cross-references Accounting
#3 Heterodoxy, too, is proto-scientific garbage
#4 Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster
#5 Getting out of IS-LM = Getting out of despair
#6 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
***
Graphic AXEC172
***
COMMENT on Nick Edmonds, Dirk Ehnts on Sep 5, see also hereDirk Ehnts subscribes to: “S = I at all rates of investment. Y either definable as C+S or as C+I. S and I were opposite facets of the same phenomenon they did not need a rate of interest to bring them into equilibrium for they were at all times and in all conditions in equilibrium.”
Nick Edmonds maintains: “The expected real rate of interest is in some sense the price of savings and so, in principle, changes in this expected rate might be able to reconcile desired saving and desired investment. In a barter economy, goods for current delivery can be traded for promises of the same goods for future delivery.”
Keynes was right on two points: (i) he has to be credited for realizing that the economics of Jevons/Walras/Menger/Marshall was false at its core and that nothing less than a paradigm shift was needed, (ii) that economic analysis has to start with the ‘monetary theory of production’ and NOT with some silly barter economy of the Sraffa type. #1
From the analysis of the most elementary economic configuration, the pure production-consumption economy, follows for the balances Qm≡−Sm, in other words, at the heart of the monetary economy is an identity: the business sector’s deficit = loss (surplus = profit) equals the household sector’s surplus = saving (deficit = dissaving). Loss is the counterpart of saving, and profit is the counterpart of dissaving. This is the most elementary form of the macroeconomic Profit Law. #2
This, first of all, tells one that the profit theory is false since Smith and Ricardo. #3 And, secondly, this tells one that the theory of saving and investment is false by implication. It always holds Qm≡I−Sm, that is, investment and saving are NEVER equal, neither in accounting nor in reality. #4
All I=S/IS-LM models are provably false from Wicksell/Keynes/Hicks onward. Because MMT is built upon the false Keynesian balances equations it is false, too. #5
#1 The futile attempt to recycle Sraffa
#2 How the intelligent non-economist can refute every economist hands down
#3 When Ricardo Saw Profit, He Called It Rent: On the Vice of Parochial Realism
#4 Rectification of MMT macro accounting
#5 For the full-spectrum refutation of MMT, see cross-references MMT
August 24, 2015
It’s the wage-price-productivity mechanism, stupid!
Comment on Mark Thoma on ‘The Fed Looks Set to Make a Dangerous Mistake’
Blog-Reference
The current situation is a clear refutation of both employment and quantity theory. It is an eerie déjà-vu: when things get tough, it becomes self-evident that economists have no idea how the economy works.
There is not much use in discussing defunct theories any further. The most elementary version of the correct Employment Law is summarized with Graphic AXEC62 #1
Blog-Reference
The current situation is a clear refutation of both employment and quantity theory. It is an eerie déjà-vu: when things get tough, it becomes self-evident that economists have no idea how the economy works.
There is not much use in discussing defunct theories any further. The most elementary version of the correct Employment Law is summarized with Graphic AXEC62 #1
This equation tells us three things:
(i) An increase in the expenditure ratio ρE leads to higher employment. A ratio ρE>1 means deficit spending. This option has been exhausted.
(ii) Increasing investment expenditures exert a positive influence on employment. This option, too, has been exhausted.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The factor cost ratio formally represents the price mechanism, which, however, works quite differently from what standard economics assumes. As a matter of fact, overall employment increases if the average wage rate W increases relative to average price P and productivity R. This is a systemic law and not a behavioral assumption. With price inflation greater than wage inflation, unemployment increases. Translated into a political slogan: price inflation is a bad thing, wage inflation is a good thing.
The core of the employment problem is that the price mechanism does not work as the textbook cliche says. It is contrary to habitual economic intuition (which rests on the Fallacy of Composition), yet there is no way around it: UPward wage rate stickiness produces unemployment and deflation. It is the wage rate and not the interest rate that is crucial in the current situation. Courtesy of the U.S., we now participate in the biggest real-life test in economic history and the most expensive refutation of silly economic theories.
Egmont Kakarot-Handtke
#1 Major Defects of the Market Economy
(i) An increase in the expenditure ratio ρE leads to higher employment. A ratio ρE>1 means deficit spending. This option has been exhausted.
(ii) Increasing investment expenditures exert a positive influence on employment. This option, too, has been exhausted.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The factor cost ratio formally represents the price mechanism, which, however, works quite differently from what standard economics assumes. As a matter of fact, overall employment increases if the average wage rate W increases relative to average price P and productivity R. This is a systemic law and not a behavioral assumption. With price inflation greater than wage inflation, unemployment increases. Translated into a political slogan: price inflation is a bad thing, wage inflation is a good thing.
The core of the employment problem is that the price mechanism does not work as the textbook cliche says. It is contrary to habitual economic intuition (which rests on the Fallacy of Composition), yet there is no way around it: UPward wage rate stickiness produces unemployment and deflation. It is the wage rate and not the interest rate that is crucial in the current situation. Courtesy of the U.S., we now participate in the biggest real-life test in economic history and the most expensive refutation of silly economic theories.
Egmont Kakarot-Handtke
#1 Major Defects of the Market Economy
For details of the big picture, see cross-references Employment/Phillips Curve.
March 1, 2019
Economists: Either stupid or corrupt or both
Comment on Noah Way on ‘Fed Chair Powell gets it wrong, just as did Bill Dudley’
Blog-Reference
There is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
The ancient Greeks introduced the distinction between opinion (= doxa) and knowledge (= episteme). This distinction parallels the distinction between political economics and theoretical economics and it parallels the distinction between the pseudo and the genuine inquirer: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham, and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)
Political economists are sham and fake reasoners. Economists never rose above the level of political economics.#1 The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
Economics is a failed science or, in Feynman’s description 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.”#2, #3, #4, #5
Cargo cult science is institutionally secured by a curriculum, textbooks#6, selection of teachers, financing, economic associations like the AEA, gatekeeping peer review, prestigious journals as career selectors, a recommendation and applause apparatus, False-Hero Memorials, and the establishment of authority vis-a-vis the general public through the economics Nobel Prize.#7 The purpose of this tightly interlocked apparatus is to foster the impression that economics is a science.
Fact is that economics is for 200+ years at the proto-scientific level and that economists simply recycle slightly modified variants of already refuted theories: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941) The replacement of falsified theories by superior theories does not happen.
Thus the proto-scientific swamp of political economics and false microfoundations and false macrofoundations is perpetuated.#8 Whoever looks with a scientific mind into this mess will find propaganda, senseless blather, and corruption in a dimension that fits the description of the classic Augean stable. Whoever looks for genuine scientific knowledge will not find much.#9
This holds also for the latest swamp creature called MMT. It provides NO exception to the verdict that economists are either stupid or corrupt or both.#10
Egmont Kakarot-Handtke
#1 There is NO such thing as “smart, honest, honorable economists”
#2 Economics and scientific foolishness
#3 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#4 Fake religion, fake science, fake news, and false complaints
#5 Economics: A science without scientists
#6 The father of modern economics and his imbecile kids
#7 The real problem with the economics Nobel
#8 From false microfoundations to true macrofoundations (II)
#9 Still beyond the reach of economists: The Holy Grail of Science
#10 The half-truths and half-falsehoods of MMT
Related 'Dear idiots, time to get saving and investment straight (II)' and 'Dear idiots, government deficits do NOT cause inflation' and 'Dear idiots, Marx got profit and exploitation wrong' and 'Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems' and 'Wikipedia and the promotion of economists’ idiotism (II)' and 'Heterodoxy and Pluralism, too, are proto-scientific garbage'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption and cross-references Failed/Fake Scientists.
Blog-Reference
There is political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, the scientific standards of material and formal consistency are observed.
Theoretical economics (= science) had been hijacked from the very beginning by political economists (= agenda pushers). Political economics has produced NOTHING of scientific value in the last 200+ years.
The ancient Greeks introduced the distinction between opinion (= doxa) and knowledge (= episteme). This distinction parallels the distinction between political economics and theoretical economics and it parallels the distinction between the pseudo and the genuine inquirer: “A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham, and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent.” (Haack)
Political economists are sham and fake reasoners. Economists never rose above the level of political economics.#1 The major approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and all got the foundational concept of the subject matter ― profit ― wrong.
Economics is a failed science or, in Feynman’s description 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.”#2, #3, #4, #5
Cargo cult science is institutionally secured by a curriculum, textbooks#6, selection of teachers, financing, economic associations like the AEA, gatekeeping peer review, prestigious journals as career selectors, a recommendation and applause apparatus, False-Hero Memorials, and the establishment of authority vis-a-vis the general public through the economics Nobel Prize.#7 The purpose of this tightly interlocked apparatus is to foster the impression that economics is a science.
Fact is that economics is for 200+ years at the proto-scientific level and that economists simply recycle slightly modified variants of already refuted theories: “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened.” (Morgenstern, 1941) The replacement of falsified theories by superior theories does not happen.
Thus the proto-scientific swamp of political economics and false microfoundations and false macrofoundations is perpetuated.#8 Whoever looks with a scientific mind into this mess will find propaganda, senseless blather, and corruption in a dimension that fits the description of the classic Augean stable. Whoever looks for genuine scientific knowledge will not find much.#9
This holds also for the latest swamp creature called MMT. It provides NO exception to the verdict that economists are either stupid or corrupt or both.#10
Egmont Kakarot-Handtke
#1 There is NO such thing as “smart, honest, honorable economists”
#2 Economics and scientific foolishness
#3 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#4 Fake religion, fake science, fake news, and false complaints
#5 Economics: A science without scientists
#6 The father of modern economics and his imbecile kids
#7 The real problem with the economics Nobel
#8 From false microfoundations to true macrofoundations (II)
#9 Still beyond the reach of economists: The Holy Grail of Science
#10 The half-truths and half-falsehoods of MMT
Related 'Dear idiots, time to get saving and investment straight (II)' and 'Dear idiots, government deficits do NOT cause inflation' and 'Dear idiots, Marx got profit and exploitation wrong' and 'Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems' and 'Wikipedia and the promotion of economists’ idiotism (II)' and 'Heterodoxy and Pluralism, too, are proto-scientific garbage'. For details of the big picture see cross-references Political Economics/Stupidity/Corruption and cross-references Failed/Fake Scientists.
July 31, 2017
Economists: too stupid for counting
Comment on Tim Johnson on ‘Why mathematics has not been effective in economics’
Blog-Reference and Blog-Reference
The mathiness problem of economists does not consist in the application of advanced mathematics but in the incapacity to apply the straightforward algebra of accounting.
Imagine we have two accountants, one for the business sector, Mr. B, and one for the household sector, Mrs. H. Mr. B is supposed to make an entry every time the firm makes a wage payment and every time the firm sells its output. To make matters simple, the condition of market-clearing holds, that is, quantity sold = output, that is, there is no change of inventory. Mrs. H is supposed to make an entry every time one of the households receives wage income and every time a household buys the firm’s product.
Nobody could be more down-to-earth and historically accurate than Mr. B and Mrs. H. At the end of the first period, they meet at the Honest Accountant Bar and compare their numbers:
(a) Graphic AXEC94 National accounts, elementary production-consumption economy, two sectors, initial period, consumption expenditures = wage income, C=Yw.
The accountants are pleased that their respective numbers are exactly equal. This means that both have captured reality, i.e., every single transaction in the period under consideration, accurately.
At the end of the second period, they meet again and compare their numbers. This time they have:
(b) Graphic AXEC95 National accounts, consumption expenditures greater than wage income, C > Yw.
The accountants are again pleased that their respective numbers are exactly equal, but this time their accounts show balances.
Says Mr. B, I call my balance profit or loss, as the case may be. More specifically, I define monetary profit as Qm≡C−Yw.
Well, says Mrs. H, I call my balance saving or dissaving, as the case may be. More specifically, I define monetary saving as Sm≡Yw−C.
Then they calculate their respective balances and find out, to nobody’s surprise, that Qm≡−Sm. Note that NO real transactions and transaction entries correspond to the balances. To draw the balances is an ex-post exercise that is NOT backed by a real-world transaction.
The next day, the two accountants hand their numbers = Figure (b), over to the economist. Says the economist, hmm, for my purposes, I have to rearrange the accounts, after all, profit has to be treated as the income of capital, analogous to wage income. I define Gross Domestic Income as GDI≡Yw+Qm. He does NOT realize that he puts a flow and a balance together, something no accountant worth his salt would ever do. Now the accounts look like this:
(c) Graphic AXEC97 National accounts, consumption expenditures greater than wage income, with profit redefined as a kind of income:
The economist now says to himself, obviously, Gross Domestic Income GDI is ‘equal’ to consumption expenditures, which follows from the definitions GDI≡Yw+Qm and Qm≡C−Yw, ergo GDI≡C. Let us call the right-hand side of the business sector’s account Gross Domestic Product GDP for the general case of the sum of consumption expenditures and investment expenditures, i.e., GDP≡C+I. Then we have GDI≡GDP by definition, more precisely, by FALSE definition. This ― Gross Domestic Income is ‘equal’ to Gross Domestic Product ― is the so-called fundamental macroeconomic accounting identity, the supposedly unassailable quantitative/empirical bedrock of economics.
The economist’s exercise is, of course, futile because profit is NOT the income of capital but the mirror image of dissaving, i.e., the household sector’s increase of debt. Income is a flow, and profit is a balance of flows, and to lump the two together is sheer stupidity.
From the graphics, it is immediately obvious that Keynes’ foundational identity “Income = value of output” is false. Why? Because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.) #1
Because economists ― Keynes, Keynesians, Post-Keynesians, Anti-Keynesians, and all the rest ― cannot even do the elementary mathematics of accounting, the profit theory is false since Adam Smith. #2 This means: because economists are too stupid for simple math, all of economics is proto-scientific garbage.
Egmont Kakarot-Handtke
#1 Economists do not solve problems; they are the problem
#2 For more details, see cross-references Accounting and cross-references Profit and cross-references Incompetence and cross-references Math/Mathiness.
Economics is a failed science because economists are scientifically incompetent. The proof is in the misapplication of mathematics. Of course, this is NOT how economists explain their failure. They come up like a Pavlovian dog with explanations = excuses #1 like these:
• “In mathematics, an object is something we can quantify. Now comes the problem: in economics, what we need to identify is the relation between emotions (greed, fear of loss, investor euphoria, etc.) and behavior (buying, selling, tolerance for risk, and so forth). Alas, this requires that we mathematize emotions. To my knowledge, no one has succeeded in doing this in some 8,000 years of recorded history.”
• “Isn’t the problem just the level of complexity of the system? The fundamental agents in economic models, people, all have huge variation in possible actions. We then have self-consciousness and reflexivity. We react to each other’s actions; then, as a system, react again to the changed situation.” #2
• “What economists ought to do is take a more inductive (historical) approach. This is exactly what the tradition’s best thinkers have done, but the approach is not currently popular in academia.” (Cavalla)
• “Economics uses mathematics in the same way medieval religions use Latin. It is to give an air of mystery and power to the charlatans doing the ‘interpretation’.” (Wilson)
All this sounds plausible, but it demonstrates only a poor understanding of science. Economics suffers from the fact that the subject matter is ill-defined. Economics is NOT a social science but a systems science. The subject matter is the structure and behavior of the economic system, and all questions about Human Nature/motives/behavior/action are the business of other disciplines (psychology, sociology, anthropology, political science, history, etc.). The beauty of the correct systemic approach is that a system is mathematically unambiguously defined. #3 So, there is no mathiness problem but only the problem of blatherers who pointlessly gossip about other people’s motives and behavior, but cannot tell for 200+ years what profit is.
#1 Failed economics: The losers’ long list of lame excuses
#2 Complexity and stupidity
#3 Graphic AXEC 25 The Economics God Equation
Blog-Reference and Blog-Reference
The mathiness problem of economists does not consist in the application of advanced mathematics but in the incapacity to apply the straightforward algebra of accounting.
Imagine we have two accountants, one for the business sector, Mr. B, and one for the household sector, Mrs. H. Mr. B is supposed to make an entry every time the firm makes a wage payment and every time the firm sells its output. To make matters simple, the condition of market-clearing holds, that is, quantity sold = output, that is, there is no change of inventory. Mrs. H is supposed to make an entry every time one of the households receives wage income and every time a household buys the firm’s product.
Nobody could be more down-to-earth and historically accurate than Mr. B and Mrs. H. At the end of the first period, they meet at the Honest Accountant Bar and compare their numbers:
(a) Graphic AXEC94 National accounts, elementary production-consumption economy, two sectors, initial period, consumption expenditures = wage income, C=Yw.
At the end of the second period, they meet again and compare their numbers. This time they have:
(b) Graphic AXEC95 National accounts, consumption expenditures greater than wage income, C > Yw.
The accountants are again pleased that their respective numbers are exactly equal, but this time their accounts show balances.
Says Mr. B, I call my balance profit or loss, as the case may be. More specifically, I define monetary profit as Qm≡C−Yw.
Well, says Mrs. H, I call my balance saving or dissaving, as the case may be. More specifically, I define monetary saving as Sm≡Yw−C.
Then they calculate their respective balances and find out, to nobody’s surprise, that Qm≡−Sm. Note that NO real transactions and transaction entries correspond to the balances. To draw the balances is an ex-post exercise that is NOT backed by a real-world transaction.
The next day, the two accountants hand their numbers = Figure (b), over to the economist. Says the economist, hmm, for my purposes, I have to rearrange the accounts, after all, profit has to be treated as the income of capital, analogous to wage income. I define Gross Domestic Income as GDI≡Yw+Qm. He does NOT realize that he puts a flow and a balance together, something no accountant worth his salt would ever do. Now the accounts look like this:
(c) Graphic AXEC97 National accounts, consumption expenditures greater than wage income, with profit redefined as a kind of income:
The economist’s exercise is, of course, futile because profit is NOT the income of capital but the mirror image of dissaving, i.e., the household sector’s increase of debt. Income is a flow, and profit is a balance of flows, and to lump the two together is sheer stupidity.
From the graphics, it is immediately obvious that Keynes’ foundational identity “Income = value of output” is false. Why? Because Keynes did not come to grips with profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.) #1
Because economists ― Keynes, Keynesians, Post-Keynesians, Anti-Keynesians, and all the rest ― cannot even do the elementary mathematics of accounting, the profit theory is false since Adam Smith. #2 This means: because economists are too stupid for simple math, all of economics is proto-scientific garbage.
Egmont Kakarot-Handtke
#1 Economists do not solve problems; they are the problem
#2 For more details, see cross-references Accounting and cross-references Profit and cross-references Incompetence and cross-references Math/Mathiness.
***
REPLY to Neil Wilson on Jul 31Economics is a failed science because economists are scientifically incompetent. The proof is in the misapplication of mathematics. Of course, this is NOT how economists explain their failure. They come up like a Pavlovian dog with explanations = excuses #1 like these:
• “In mathematics, an object is something we can quantify. Now comes the problem: in economics, what we need to identify is the relation between emotions (greed, fear of loss, investor euphoria, etc.) and behavior (buying, selling, tolerance for risk, and so forth). Alas, this requires that we mathematize emotions. To my knowledge, no one has succeeded in doing this in some 8,000 years of recorded history.”
• “Isn’t the problem just the level of complexity of the system? The fundamental agents in economic models, people, all have huge variation in possible actions. We then have self-consciousness and reflexivity. We react to each other’s actions; then, as a system, react again to the changed situation.” #2
• “What economists ought to do is take a more inductive (historical) approach. This is exactly what the tradition’s best thinkers have done, but the approach is not currently popular in academia.” (Cavalla)
• “Economics uses mathematics in the same way medieval religions use Latin. It is to give an air of mystery and power to the charlatans doing the ‘interpretation’.” (Wilson)
All this sounds plausible, but it demonstrates only a poor understanding of science. Economics suffers from the fact that the subject matter is ill-defined. Economics is NOT a social science but a systems science. The subject matter is the structure and behavior of the economic system, and all questions about Human Nature/motives/behavior/action are the business of other disciplines (psychology, sociology, anthropology, political science, history, etc.). The beauty of the correct systemic approach is that a system is mathematically unambiguously defined. #3 So, there is no mathiness problem but only the problem of blatherers who pointlessly gossip about other people’s motives and behavior, but cannot tell for 200+ years what profit is.
#1 Failed economics: The losers’ long list of lame excuses
#2 Complexity and stupidity
#3 Graphic AXEC 25 The Economics God Equation
 |
| The Economics God Equation ® |
April 15, 2019
Yes, economists are really that stupid
Comment on Alan Longbon on ‘U.S. Private Domestic Sector Balance Books A $147 Billion Surplus Through March 2019’
Blog-Reference
Alan Longbon reports: “The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income. Dollars added to the economy by the federal government allow the private sector to post a $147 billion surplus and add to its stock of net financial assets.”
This statement proves that, to this day, economists have no idea what profit is and what the decisive difference between income and profit is.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q=−S, i.e., the mirror image of household sector saving S is business sector loss (-Q). The mirror image of household sector dissaving (-S) is business sector profit Q. #1, #2 The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the State, the Profit Law boils down to Q=(G−T), i.e., Public Deficit = Private Profit.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on markup-setting, nor on risk-taking, (3) in order that profit comes into existence for the first time in the production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income, (10) total income is NEVER equal to total spending/value of output,#3 (11) saving and investment are causally independent and NEVER equal, (12) Keynesianism, Post-Keynesianism, I=S/IS-LM, New Keynesianism and all variants are scientifically worthless, (13) the foundational MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is false because it lacks the balance of the business sector Q.
“The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income.” is false and has to be replaced by “The US budget deficit is $147 billion in March 2019; this is a net add to the Oligarchy’s financial wealth.” Income is a flow, and financial wealth is a stock. And the link between stocks and flows is the differences of flows called profit/loss of the business sector Q or saving/dissaving of the household sector S. There is NO such thing as a “private sector” or a “private domestic sector income”.#4 Economists in general and MMTers, in particular, simply don’t get it.#5
Egmont Kakarot-Handtke
#1 The elementary production-consumption economy is, for a star,t defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw), and two definitions (Q≡C−Yw, S≡Yw−C).
#2 For details of the big picture, see cross-references Profit/Distribution
#3 Keynes got it wrong: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
#4 Dear idiots, government deficits do NOT fund private savings
#5 Why is MMT so false?
Related 'How the intelligent non-economist can refute every economist hands down' and 'Debunking Squared' and 'From Keynes’ fatal blunder to the true economic model' and 'MMT and the canonical macroeconomic model' and 'The clock runs down on economics' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Econogenics in action'. For details of the big picture, see cross-references Failed/Fake Scientists.
AXEC109i
Blog-Reference
Alan Longbon reports: “The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income. Dollars added to the economy by the federal government allow the private sector to post a $147 billion surplus and add to its stock of net financial assets.”
This statement proves that, to this day, economists have no idea what profit is and what the decisive difference between income and profit is.
To make matters short here, the macroeconomic Profit Law is given as Q≡Yd+(I−S)+(G−T)+(X−M). In the elementary case of a pure production-consumption economy, this reduces to Q=−S, i.e., the mirror image of household sector saving S is business sector loss (-Q). The mirror image of household sector dissaving (-S) is business sector profit Q. #1, #2 The point to grasp is that profit for the business sector as a whole depends on deficit spending and nothing else. With regard to the State, the Profit Law boils down to Q=(G−T), i.e., Public Deficit = Private Profit.
The Profit Law implies: (1) the business sector’s revenues can only be greater than costs if, in the simplest of all possible cases, consumption expenditures C are greater than wage income Yw, (2) macroeconomic profit/loss Q does neither depend upon the agents’ personal qualities, motives, their ideas about what profit is, nor on profit-maximizing behavior, nor on markup-setting, nor on risk-taking, (3) in order that profit comes into existence for the first time in the production-consumption economy, the household sector must run a deficit at least in one period, (4) this presupposes the existence of a credit-creating entity, (5) profit/loss is, in the most elementary case, determined by the increase/decrease of the household sector’s debt, (6) profit/loss Q is a factor-independent residual and qualitatively different from wage income Yw, (7) it is an elementary mistake to maintain that total income is the sum of wages and profits, (8) profit is NOT income, i.e. a flow, but a balance, i.e. the difference of flows, (9) distributed profit Yd is income and adds up with wage income Yw to total income, (10) total income is NEVER equal to total spending/value of output,#3 (11) saving and investment are causally independent and NEVER equal, (12) Keynesianism, Post-Keynesianism, I=S/IS-LM, New Keynesianism and all variants are scientifically worthless, (13) the foundational MMT sectoral balances equation (I−S)+(G−T)+(X−M)=0 is false because it lacks the balance of the business sector Q.
“The US budget deficit is $147 billion in March 2019; this is a net add to private domestic sector income.” is false and has to be replaced by “The US budget deficit is $147 billion in March 2019; this is a net add to the Oligarchy’s financial wealth.” Income is a flow, and financial wealth is a stock. And the link between stocks and flows is the differences of flows called profit/loss of the business sector Q or saving/dissaving of the household sector S. There is NO such thing as a “private sector” or a “private domestic sector income”.#4 Economists in general and MMTers, in particular, simply don’t get it.#5
Egmont Kakarot-Handtke
#1 The elementary production-consumption economy is, for a star,t defined by three macro axioms (Yw=WL, O=RL, C=PX), two conditions (X=O, C=Yw), and two definitions (Q≡C−Yw, S≡Yw−C).
#2 For details of the big picture, see cross-references Profit/Distribution
#3 Keynes got it wrong: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
#4 Dear idiots, government deficits do NOT fund private savings
#5 Why is MMT so false?
Related 'How the intelligent non-economist can refute every economist hands down' and 'Debunking Squared' and 'From Keynes’ fatal blunder to the true economic model' and 'MMT and the canonical macroeconomic model' and 'The clock runs down on economics' and 'Still beyond the reach of economists: The Holy Grail of Science' and 'Econogenics in action'. For details of the big picture, see cross-references Failed/Fake Scientists.
***
AXEC109i
September 11, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get economics wrong (IV)
#Walrasianism, #Keynesianism, #Marxianism, #Austrianism etc. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. So, in order to improve the #CultureOfScience, the faculties of #Economics have to be closed.
— E.K-H (@AXECorg) September 11, 2023
April 28, 2025
Occasional X: Economists are too stupid for macro accounting (VI)
#MMT#BadScienceBadPolicyBadPeople
— AXEC (@EgmontHandtke) April 28, 2025
“if the federal government has lots of red ink, somebody must have lots of black ink. It's called accounting” (whispers)
Yes, the government sector's red ink is the business sector's black ink. It's called macroeconomic profit. For details see… pic.twitter.com/BKqd4pRr1Z
January 24, 2017
Economists: Incompetent? Stupid? Corrupt?
Comment on Michael Norman on ‘Stephanie Kelton BLOCKED ME on Twitter. Wow.’
Blog-Reference
This is the normal reaction of a scientifically trained non-economist when he is for the first time confronted with standard economics: “What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse.” (McCauley, 2006)
Economists, though, are a different species.
(i) The representative economist who takes his academic degree and is convinced that supply-demand-equilibrium provides an acceptable theory of how the economic system works and accepts standard economics (with the usual reservations/disclaimers/excuses #1) is scientifically incompetent.
(ii) The representative economist who communicates/defends standard economics on his own blog or on the numerous economics blogs propagates a provably false theory. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong.
(iii) The representative economist who is given proof in the course of a discussion that standard economics is false and does not understand the argument is not only scientifically incompetent but stupid.
(iv) The economist who understands the proof and deletes it from his blog or automatically filters all serious counter-arguments out violates scientific standards and undermines the claim that economics is a science as expressed in the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
The current state of economics is that of a failed science. The propagation of the four main approaches, therefore, amounts to unintentional disinformation or intentional misinformation.
Which blogs promote serious research/discussion and which are corrupted can only be found out by testing, that is, by submitting well-argued posts. From concrete experience follows this random selection of blogs that block/delete occasionally/permanently challenging contributions (last updated Sep 20, 2019):
Note that the blog owner is entitled to reject submissions for whatever reason. There is nothing illegal in selecting the content of one’s own blog. What is at issue is the violation of well-established and well-known SCIENTIFIC standards.
How to double-check the past and actual intensity of scientific corruption in three easy steps:
(1) Go to the AXEC Blog
(2) Click the label zML (ML = missing link). All posts that have been submitted but did not appear or vanished later are selected.
(3) Click Blog-Reference at the post’s header to jump to the discussion thread and look for the submitted AXEC post.
If you cannot find it, this can mean two things: (i) a technical glitch, (ii) censorship. If this happens more than two times with the same blog, it is very probable (ii). What can also happen is that a post reappears after some time. In this case, the ML label is corrected as soon as it is noticed.
This exercise confirms in greater detail what is already known since the founding fathers: economics has been hijacked and corrupted by politics. The representative economist, as he presents himself on the economics blogs, is a rather stupid flag-waving agenda pusher and NOT acceptable in the scientific community.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
Related 'Why is economics a total scientific failure?' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Profit: after 200+ years still elusive' and 'Gossip economics' and 'Economics: communication without content' and 'What comes first: eco-self-destruction or oeco-self-destruction?' and 'Oxford economics — still at the proto-scientific level'. For details of the big picture, see cross-references Incompetence and cross-references Failed/Fake Scientists and cross-references Political Economics/Stupidity/Corruption.
You say: “I take from MMT certain parts that I like, and leave the rest.” This is (i) not very interesting for the rest of the world, (ii) entirely beside the point.
As a matter of principle, everybody has the right to their own opinion, no matter how stupid, crazy, wrong, or absurd; the only exception is scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof — belief or opinion counts for NOTHING.
Opinion is the currency in the political sphere, and knowledge is the currency in the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science, but they have never risen above the level of opinion, belief, wish-wash, storytelling, soapbox propaganda, and sitcom gossip. #1
So, the point with MMT is this:
1. There is a mistake/error/blunder in the formal foundations of MMT. In other words, MMT does not satisfy the scientific criterion of logical consistency.#2
2. The formal proof has been submitted to an MMT blog.#3
3. This proof has NOT been answered but simply deleted.
4. It is against the most elementary scientific rules to suppress refutation. As everybody knows from Popper, “... science is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected.”
5. MMT is fake science or what Feynman called cargo cult science. The same holds for Walrasianism, Keynesianism, Marxianism, and Austrianism.
The point is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
Economists do NOT have the true theory, and because of this, all economic policy proposals are worthless — nothing more than personal opinion and soapbox blather.
Economics, in general, and this includes MMT, has to be thrown out of science because of the 200+ years of violation of well-defined and well-known scientific standards.
#1 Gossip economics and Delusions of useful idiots
#2 The final implosion of MMT
#3 Modern Moronomic Theory
Dan Lynch says, “Instead it [economics] should be taught as philosophy, ethics, or religion.”
Now, this is exactly what has happened in the past 200+ years. #1 And this is why economics is a failed science: “... we know little more now about ‘how the economy works,’ ... than we knew in 1790 after Adam Smith completed the last revision of The Wealth of Nations.” (Clower) In the same time span, physics went from the Law of Gravity to Quantum Mechanics.
Imagine a philosopher and a guru discussing. Says the philosopher, let’s build an aircraft and fly to a South Sea island and have a good life there. Says the guru, better let’s fly to Tibet and search for spiritual enlightenment there. The physicist enters with the remark: You folks will go nowhere because you have no idea of the laws of aerodynamics, thermodynamics, material science, etc., and because of this, you will never get anything off the ground.
The situation in economics is analogous. The discussion about capitalism and communism has always been a pointless distraction because economists do NOT know how the monetary economy works. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong. Economists do not even understand the elementary algebra of accounting, as the discussion about MMT has shown. #2
The primary question is how to get out of the state of a proto-science, fake science, pseudoscience, cargo cult science, failed science ... Certainly NOT with more philosophy or religion or more sitcom blathering. #3
A side issue is how we get into this mess. The most obvious hypothesis is that both orthodox and heterodox economists are incompetent, stupid, and corrupt. Your brain-dead posts about capitalism and communism corroborate this hypothesis.
By the way, the economic laws for the monetary economy are the SAME under capitalism and communism, just as the laws of aerodynamics are the same whether one flies to the South Sea or to Tibet. #4
#1 Economics: Poor philosophy, poor psychology, poor science
#2 The final implosion of MMT
#3 From Orthodoxy to Heterodoxy to Metadoxy
#4 See the First Economic Law on Graphic AXEC06 and the Macroeconomic Profit Law on Graphic AXEC08.
Graphic AXEC144d
Blog-Reference
This is the normal reaction of a scientifically trained non-economist when he is for the first time confronted with standard economics: “What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse.” (McCauley, 2006)
Economists, though, are a different species.
(i) The representative economist who takes his academic degree and is convinced that supply-demand-equilibrium provides an acceptable theory of how the economic system works and accepts standard economics (with the usual reservations/disclaimers/excuses #1) is scientifically incompetent.
(ii) The representative economist who communicates/defends standard economics on his own blog or on the numerous economics blogs propagates a provably false theory. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong.
(iii) The representative economist who is given proof in the course of a discussion that standard economics is false and does not understand the argument is not only scientifically incompetent but stupid.
(iv) The economist who understands the proof and deletes it from his blog or automatically filters all serious counter-arguments out violates scientific standards and undermines the claim that economics is a science as expressed in the title: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.
The current state of economics is that of a failed science. The propagation of the four main approaches, therefore, amounts to unintentional disinformation or intentional misinformation.
Which blogs promote serious research/discussion and which are corrupted can only be found out by testing, that is, by submitting well-argued posts. From concrete experience follows this random selection of blogs that block/delete occasionally/permanently challenging contributions (last updated Sep 20, 2019):
- Economist’s View
- Uneasy Money
- Billy blog
- Real-World Economics Review blog
- Lars P. Syll blog
- EconoSpeak
- Worthwhile Canadian Initiative
- The Baseline Scenario
- Social Democracy For The 21st Century
- bradford-delong.com: Grasping Reality with Both Hands
- Stumbling and Mumbling
- Roger Farmer's Economic Window
- evonomics
- Critical Macro Finance
- Institute for New Economic Thinking
- Naked Keynesianism
- The Conversation
- Information Transfer Economics
- Bloomberg View
- Dietrich Vollrath
- EconBlog101
- heteconomist
- Fresh Economic Thinking
- Noahpinion
- Robert Skidelsky
- Angry Bear
- Renegade Inc
- Social Europe
- The Everyday Economist
- Dani Rodrik's Weblog
- On the Economy Jared Berstein Blog
- New Economic Perspectives
- Michael Roberts Blog
- The Harvard Crimson
- Asymptosis
- longandvariable
- taxresearchuk
- bruegel
- THE REAL MOVEMENT
- The Case For Concerted Action
- Mises Institute
- SEE IT market
- Progressive Pulse
- Mike Norman Economics
- The British Academy
- mainly macro
- J. W. Mason
- naked capitalism
- etcetera
Note that the blog owner is entitled to reject submissions for whatever reason. There is nothing illegal in selecting the content of one’s own blog. What is at issue is the violation of well-established and well-known SCIENTIFIC standards.
How to double-check the past and actual intensity of scientific corruption in three easy steps:
(1) Go to the AXEC Blog
(2) Click the label zML (ML = missing link). All posts that have been submitted but did not appear or vanished later are selected.
(3) Click Blog-Reference at the post’s header to jump to the discussion thread and look for the submitted AXEC post.
If you cannot find it, this can mean two things: (i) a technical glitch, (ii) censorship. If this happens more than two times with the same blog, it is very probable (ii). What can also happen is that a post reappears after some time. In this case, the ML label is corrected as soon as it is noticed.
This exercise confirms in greater detail what is already known since the founding fathers: economics has been hijacked and corrupted by politics. The representative economist, as he presents himself on the economics blogs, is a rather stupid flag-waving agenda pusher and NOT acceptable in the scientific community.
Egmont Kakarot-Handtke
#1 Failed economics: The losers’ long list of lame excuses
Related 'Why is economics a total scientific failure?' and 'Did economics fail? No! Yes, and everybody knows it!' and 'Profit: after 200+ years still elusive' and 'Gossip economics' and 'Economics: communication without content' and 'What comes first: eco-self-destruction or oeco-self-destruction?' and 'Oxford economics — still at the proto-scientific level'. For details of the big picture, see cross-references Incompetence and cross-references Failed/Fake Scientists and cross-references Political Economics/Stupidity/Corruption.
***
COMMENT on Dan Lynch on Jan 25You say: “I take from MMT certain parts that I like, and leave the rest.” This is (i) not very interesting for the rest of the world, (ii) entirely beside the point.
As a matter of principle, everybody has the right to their own opinion, no matter how stupid, crazy, wrong, or absurd; the only exception is scientists. The ancient Greeks started science with the distinction between doxa (= opinion) and episteme (= knowledge). Scientific knowledge is well-defined by material and formal consistency. Knowledge is established by proof — belief or opinion counts for NOTHING.
Opinion is the currency in the political sphere, and knowledge is the currency in the scientific sphere. It is extremely important to keep both spheres separate. Since the founding fathers, though, economists have not emancipated themselves from politics. They claim to do science, but they have never risen above the level of opinion, belief, wish-wash, storytelling, soapbox propaganda, and sitcom gossip. #1
So, the point with MMT is this:
1. There is a mistake/error/blunder in the formal foundations of MMT. In other words, MMT does not satisfy the scientific criterion of logical consistency.#2
2. The formal proof has been submitted to an MMT blog.#3
3. This proof has NOT been answered but simply deleted.
4. It is against the most elementary scientific rules to suppress refutation. As everybody knows from Popper, “... science is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected.”
5. MMT is fake science or what Feynman called cargo cult science. The same holds for Walrasianism, Keynesianism, Marxianism, and Austrianism.
The point is this: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
Economists do NOT have the true theory, and because of this, all economic policy proposals are worthless — nothing more than personal opinion and soapbox blather.
Economics, in general, and this includes MMT, has to be thrown out of science because of the 200+ years of violation of well-defined and well-known scientific standards.
#1 Gossip economics and Delusions of useful idiots
#2 The final implosion of MMT
#3 Modern Moronomic Theory
***
COMMENT on Dan Lynch, Neil Wilson on Jan 25Dan Lynch says, “Instead it [economics] should be taught as philosophy, ethics, or religion.”
Now, this is exactly what has happened in the past 200+ years. #1 And this is why economics is a failed science: “... we know little more now about ‘how the economy works,’ ... than we knew in 1790 after Adam Smith completed the last revision of The Wealth of Nations.” (Clower) In the same time span, physics went from the Law of Gravity to Quantum Mechanics.
Imagine a philosopher and a guru discussing. Says the philosopher, let’s build an aircraft and fly to a South Sea island and have a good life there. Says the guru, better let’s fly to Tibet and search for spiritual enlightenment there. The physicist enters with the remark: You folks will go nowhere because you have no idea of the laws of aerodynamics, thermodynamics, material science, etc., and because of this, you will never get anything off the ground.
The situation in economics is analogous. The discussion about capitalism and communism has always been a pointless distraction because economists do NOT know how the monetary economy works. Walrasianism, Keynesianism, Marxianism, and Austrianism are mutually contradictory, axiomatically false, and ALL got the foundational concepts of the subject matter, i.e., profit and income, wrong. Economists do not even understand the elementary algebra of accounting, as the discussion about MMT has shown. #2
The primary question is how to get out of the state of a proto-science, fake science, pseudoscience, cargo cult science, failed science ... Certainly NOT with more philosophy or religion or more sitcom blathering. #3
A side issue is how we get into this mess. The most obvious hypothesis is that both orthodox and heterodox economists are incompetent, stupid, and corrupt. Your brain-dead posts about capitalism and communism corroborate this hypothesis.
By the way, the economic laws for the monetary economy are the SAME under capitalism and communism, just as the laws of aerodynamics are the same whether one flies to the South Sea or to Tibet. #4
#1 Economics: Poor philosophy, poor psychology, poor science
#2 The final implosion of MMT
#3 From Orthodoxy to Heterodoxy to Metadoxy
#4 See the First Economic Law on Graphic AXEC06 and the Macroeconomic Profit Law on Graphic AXEC08.
***
***
#PointOfProof
#EconBlocker
August 27, 2018
MMT Progressives: stupid or corrupt or both?
Comment on Bill Mitchell on ‘The conservative polity is fracturing ― an opportunity for the Left’
Blog-Reference
Bill Mitchell explains his long-lasting critique of “the Left”: “Regular readers will know that I have spent a lot of time writing about the demise of the Left political parties as they became subsumed with neoliberal economic ideology, which blurred the political landscape as the ‘centre’ moved to the Right.”
The Progressives argue that what people think of “the Left” is false because “the Left” is (i) stupid and has bought into the neoliberal ideology of budget-balancing/austerity, and (ii), has been hijacked by Oxbridge careerists. In other words, the traditional Left is fake and the Progressives are the true fighters for the cause of WeThePeople.
According to Bill Mitchell: “The neoliberal wedge that has compromised the Left side of politics is now clearly splintering the conservative polity …” and, in order to take advantage of the situation “… the social democratic movements has to abandon every vestige of neoliberal economics ― the concepts, policies and language and framing.” which means “The progressive social policies that are core to social democratic parties has to be married with an economics that allows those policies to be advanced.”
This economics is MMT. In brief, WeThePeople is advised to swap “the Left” for “the Progressives” who apply a superior economic policy that is scientifically based on MMT.
What exactly has been the fatal blunder of “the Left”? “Think about British Labour, who told the people who have endured years of disastrous austerity that ‘Sound finances are the foundations on which everything else is possible’.”
The keyword is austerity, and austerity is ― everybody knows this ― a pivotal Neoliberal concept. Neoliberal policy, in turn, is the economic sadism that the Oligarchy applies to WeThePeople. The Progressives will change that by swapping austerity for deficit-spending/money-creation.
While it is true that Neoliberals have always talked much about budget-balancing, they in effect have practiced the exact opposite. Historically, the greater part of the now existing public debt has been produced by Neoliberals. Contrary to the rhetoric, deficit-spending/ money-creation is good old Neoliberal policy. #1, #2, #3 Deficit-spending/money-creation always and everywhere benefits the one-percenters.
This leads to the inescapable conclusion that Progressives are actually Neoliberals in a social guise. #4 Progressives are either stupid or corrupt or both.
Fact is
• The macroeconomic foundations of MMT are provably false. More specifically, the MMT sectoral balances equation is proto-scientific garbage. Because of this, MMT is scientifically worthless. #5
• According to the axiomatically correct macroeconomic Profit Law, it holds that Public Deficit = Private Profit. The MMT sales force, though, falsely claims that Public Deficit = Private Saving. #6
• Because all MMT policy guidance boils down to deficit-spending/money-creation, MMT policy directly and immediately increases macroeconomic profit. The effects on employment/ prices are uncertain and secondary.
• Contrary to the social rhetoric, MMT policy is for the benefit of the one-percenters. MMT is the easily recognizable tip of the iceberg of the political corruption of economics. #7
Egmont Kakarot-Handtke
#1 Austerity and the idiocy of political economists
#2 Austerity and the utter scientific ignorance of economists
#3 Austerity and the total disconnect between economic policy and science
#4 MMT and the promotion of Wall Street's idea of social policy
#5 For the full-spectrum refutation of MMT, see cross-references MMT
#6 For example Tweet of Aug 17, 2018
#7 Lock them up
Related 'How Bill Mitchell stalks Jeremy Corbyn' and 'MMT, Bill Mitchell, and the lack of basic scientific integrity' and 'MMT is criminal economics' and 'Austerity and the political games Progressives play' and 'MMT is dead: An unfriendly critique of Bill Mitchell' and 'Everything you know about MMT is wrong' and 'MMT: scientific incompetence or political fraud?' and 'Why the British Labor Party should NOT adopt MMT' and 'MMTers are false Progressives and false Friends-of-the-People'.
Blog-Reference
Bill Mitchell explains his long-lasting critique of “the Left”: “Regular readers will know that I have spent a lot of time writing about the demise of the Left political parties as they became subsumed with neoliberal economic ideology, which blurred the political landscape as the ‘centre’ moved to the Right.”
The Progressives argue that what people think of “the Left” is false because “the Left” is (i) stupid and has bought into the neoliberal ideology of budget-balancing/austerity, and (ii), has been hijacked by Oxbridge careerists. In other words, the traditional Left is fake and the Progressives are the true fighters for the cause of WeThePeople.
According to Bill Mitchell: “The neoliberal wedge that has compromised the Left side of politics is now clearly splintering the conservative polity …” and, in order to take advantage of the situation “… the social democratic movements has to abandon every vestige of neoliberal economics ― the concepts, policies and language and framing.” which means “The progressive social policies that are core to social democratic parties has to be married with an economics that allows those policies to be advanced.”
This economics is MMT. In brief, WeThePeople is advised to swap “the Left” for “the Progressives” who apply a superior economic policy that is scientifically based on MMT.
What exactly has been the fatal blunder of “the Left”? “Think about British Labour, who told the people who have endured years of disastrous austerity that ‘Sound finances are the foundations on which everything else is possible’.”
The keyword is austerity, and austerity is ― everybody knows this ― a pivotal Neoliberal concept. Neoliberal policy, in turn, is the economic sadism that the Oligarchy applies to WeThePeople. The Progressives will change that by swapping austerity for deficit-spending/money-creation.
While it is true that Neoliberals have always talked much about budget-balancing, they in effect have practiced the exact opposite. Historically, the greater part of the now existing public debt has been produced by Neoliberals. Contrary to the rhetoric, deficit-spending/ money-creation is good old Neoliberal policy. #1, #2, #3 Deficit-spending/money-creation always and everywhere benefits the one-percenters.
This leads to the inescapable conclusion that Progressives are actually Neoliberals in a social guise. #4 Progressives are either stupid or corrupt or both.
Fact is
• The macroeconomic foundations of MMT are provably false. More specifically, the MMT sectoral balances equation is proto-scientific garbage. Because of this, MMT is scientifically worthless. #5
• According to the axiomatically correct macroeconomic Profit Law, it holds that Public Deficit = Private Profit. The MMT sales force, though, falsely claims that Public Deficit = Private Saving. #6
• Because all MMT policy guidance boils down to deficit-spending/money-creation, MMT policy directly and immediately increases macroeconomic profit. The effects on employment/ prices are uncertain and secondary.
• Contrary to the social rhetoric, MMT policy is for the benefit of the one-percenters. MMT is the easily recognizable tip of the iceberg of the political corruption of economics. #7
Egmont Kakarot-Handtke
#1 Austerity and the idiocy of political economists
#2 Austerity and the utter scientific ignorance of economists
#3 Austerity and the total disconnect between economic policy and science
#4 MMT and the promotion of Wall Street's idea of social policy
#5 For the full-spectrum refutation of MMT, see cross-references MMT
#6 For example Tweet of Aug 17, 2018
Related 'How Bill Mitchell stalks Jeremy Corbyn' and 'MMT, Bill Mitchell, and the lack of basic scientific integrity' and 'MMT is criminal economics' and 'Austerity and the political games Progressives play' and 'MMT is dead: An unfriendly critique of Bill Mitchell' and 'Everything you know about MMT is wrong' and 'MMT: scientific incompetence or political fraud?' and 'Why the British Labor Party should NOT adopt MMT' and 'MMTers are false Progressives and false Friends-of-the-People'.
August 18, 2020
Occasional Tweets: Economists are too stupid for science
Twitter Aug 18
#Economics#FailedScience#Economists#StupidOrCorruptOrBoth#Reset— E.K-H (@AXECorg) August 18, 2020
Macroeconomics: Economists are too stupid for sciencehttps://t.co/vTNWwrNUxA
Profithttps://t.co/0i4XICiAtV
Economics as science begins on p. 1 of the textbook Sovereign Economicshttps://t.co/Gxuijmw6po
The entire point of MMT is to sell deficit-spending/money-creation as a social good deed to WeThePeople. This is a political fraud.https://t.co/F9uHrcRyWd— E.K-H (@AXECorg) August 18, 2020
What is worse is that MMT is a scientific fraud. So, S Kelton, B Mitchell, etc have to be urgently expelled from academia.
The macroeconomic Profit Law implies #PublicDeficitIsPrivateProfit. And from this follows for #PublicDebt #WeThePeopleOwsItOligarchyOwns it.— E.K-H (@AXECorg) August 18, 2020
MMT is the biggest distributional fraud of all time. And you are part of it.
#MMT#JustAnotherFraud— E.K-H (@AXECorg) August 17, 2020
MMT is refuted on all counts. Because of #PublicDeficitIsPrivateProfit, the MMT policy of deficit-spending/money-creation is a free lunch for the Oligarchy. MMT is the political deception of WeThePeople and you are part of it.
#MMT#FakeScience— E.K-H (@AXECorg) August 17, 2020
The MMT sectoral balances equation is provably false. MMTers are too stupid for the elementary algebra that underlies macro. MMT is scientifically worthless.
Master of MMT ― Master of proto-scientific garbagehttps://t.co/9g4sA44hdE#DrainTheScientificSwamp pic.twitter.com/QBJivmqAxN
Quit wasting your tweets on hashtags and insults and actually respond or I will assume that you are insane or being paid by the Lincoln proj— Optimist 🇳🇫💰🔋🚅 (@Optimistbot) August 18, 2020
Thanks. Im about done. Im just intrigued. It must be a bot or some sort of autoreply. I’m trying to wrap my head around the lack of humanity— Optimist 🇳🇫💰🔋🚅 (@Optimistbot) August 18, 2020
you're a conspiracy theorist.— Optimist 🇳🇫💰🔋🚅 (@Optimistbot) August 19, 2020
Blocking you.
September 8, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get economics wrong (II)
At some point in history, every #Science has been captured & weaponized by #Politics. The difference between #Physics & #Economics is that to the latter this happened at the beginning. Thus, #Econ became #FailedFakeScience. The #Distrust in #EconomicExperts is fully justified. pic.twitter.com/y0Xa8N18YN
— E.K-H (@AXECorg) September 8, 2023
September 9, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get economics wrong (II)
#FailedFakeScience#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. This holds for mainstream, pluralist & feminist econ. pic.twitter.com/R9zuaq00Gm
— E.K-H (@AXECorg) September 9, 2023
September 1, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get distribution wrong
#Distribution
— E.K-H (@AXECorg) September 1, 2023
The correct designation of the U.S. political system is NOT #Democracy but #Oligarchy with #Congress/#Treasury/#Fed/#BigBusiness as integral parts. The #ProfitLaw Q≡(G−T)+(I−S)+Yd implies #PublicDeficitIsPrivateProfit, so #PrivateFinancialWealth ≈ #PublicDebt. pic.twitter.com/ZWt6nvRjZn
September 13, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get economics wrong (VI)
#FailedFakeScience
— E.K-H (@AXECorg) September 13, 2023
The #EconNobel is NOT a recognition of genuine scientific merits ― there are none in #Economics ― but a reward for successful #AgendaPushing handed out by the Bank of Sweden on behalf of the #Oligarchy. Links ⇒https://t.co/ExJf3VErgZ pic.twitter.com/Pcr1RPp3h7
For more about scientific incompetence see AXECquery.
December 29, 2020
Occasional Tweets: Too stupid for science
A GIF is not exactly a clear argument but, to begin with, nobody ever expected anything intelligent from a guy whose main scientific achievement is a funny GIF collection.
— E.K-H (@AXECorg) December 29, 2020
The fact is: the #ProfitTheory is false since Adam Smith but W. Luther has not realized it to this day. pic.twitter.com/KqOSvFQi3r
Because you and the rest of the profession are too stupid for the elementary algebra of #Macroeconomics/#ProfitTheory, #Economics is proto-scientific garbage from peer-reviewed journals to the EconNobel.
— E.K-H (@AXECorg) December 30, 2020
The GDP-death-blow for the economics professionhttps://t.co/QJycQUh0Uj pic.twitter.com/gt0QLDGaBs
April 8, 2015
Lazy or stupid or both?
Comment on Lars Syll on ‘Modern macroeconomics — an intellectually lazy ideology’
Blog-Reference
Diane Coyle writes: “I think an honest conventionally-trained economist has to at least acknowledge that we grew intellectually lazy about this [the assumption of rational choice].” (See intro)
This statement implies that the representative economist is capable of thinking but only too lazy to apply his full capacities. An alternative explanation for the manifest scientific failure of economists could be that they are substandard thinkers.
Students in any scientific discipline are expected to find out whether their teacher's theory is true or false or incomplete. The growth of knowledge is what science is all about. Hence, the acceptance of basic tenets of conventional economics is strongly indicative of a lack of scientific acumen. From a student who has accepted utility maximization, rational choice, or supply-demand equilibrium as an explanation no contribution to real scientific progress is to be expected.
At the moment economics is the mindless perpetuation of proto-scientific stuff. An honest conventionally-trained economist has to at least ask himself how it could happen that he and other seemingly intelligent persons could ever accept the green cheese assumptionism and the logical defects of Econ 101.
The wonder of economics is a large number of generations of well-trained students that have faithfully recycled intellectual garbage.
In the final analysis, it is not a question of honesty but of scientific intuition to realize that the present state of economics calls for a Paradigm Shift#1 and not for another ridiculous discussion about efficient markets.
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Paradigm Shift.
Blog-Reference
Diane Coyle writes: “I think an honest conventionally-trained economist has to at least acknowledge that we grew intellectually lazy about this [the assumption of rational choice].” (See intro)
This statement implies that the representative economist is capable of thinking but only too lazy to apply his full capacities. An alternative explanation for the manifest scientific failure of economists could be that they are substandard thinkers.
Students in any scientific discipline are expected to find out whether their teacher's theory is true or false or incomplete. The growth of knowledge is what science is all about. Hence, the acceptance of basic tenets of conventional economics is strongly indicative of a lack of scientific acumen. From a student who has accepted utility maximization, rational choice, or supply-demand equilibrium as an explanation no contribution to real scientific progress is to be expected.
At the moment economics is the mindless perpetuation of proto-scientific stuff. An honest conventionally-trained economist has to at least ask himself how it could happen that he and other seemingly intelligent persons could ever accept the green cheese assumptionism and the logical defects of Econ 101.
The wonder of economics is a large number of generations of well-trained students that have faithfully recycled intellectual garbage.
In the final analysis, it is not a question of honesty but of scientific intuition to realize that the present state of economics calls for a Paradigm Shift#1 and not for another ridiculous discussion about efficient markets.
Egmont Kakarot-Handtke
#1 For details of the big picture see cross-references Paradigm Shift.
September 11, 2023
Occasional Xs: Stupid or corrupt? ― for 200+ years, economists get economics wrong (III)
#FailedFakeScience#Econ101#Walrasianism, #Keynesianism, #Marxianism, #Austrianism et al. are axiomatically false & materially/formally inconsistent & ALL got #Profit wrong. #Economics is scientifically worthless. So teaching introductory econ comes down to #BrainWashing. pic.twitter.com/zhevLSnB87
— E.K-H (@AXECorg) September 11, 2023
For details of the big picture see cross-references Econ 101/Old Curriculum/New Curriculum
March 13, 2016
It’s the price mechanism, stupid!
Comment on Bradford DeLong on ‘Ordoliberalismus and Ordovolkismus’
Blog-Reference and Blog-Reference on Mar 14
You present three propositions about output, deficit spending, and the Keynesian multiplier and then sum up: “That is the simple arithmetic of expansionary fiscal policy in a liquidity trap.”
The fact of the matter is that the multiplier arithmetic is flawed since Keynes. Therefore, the rest of your argument falls flat.
To cut the meticulous formal derivation short (2015; 2014; 2012), the most elementary version of the correct Employment Law for the economy as a whole is given under the label of Graphic as AXEC62:
Blog-Reference and Blog-Reference on Mar 14
You present three propositions about output, deficit spending, and the Keynesian multiplier and then sum up: “That is the simple arithmetic of expansionary fiscal policy in a liquidity trap.”
The fact of the matter is that the multiplier arithmetic is flawed since Keynes. Therefore, the rest of your argument falls flat.
To cut the meticulous formal derivation short (2015; 2014; 2012), the most elementary version of the correct Employment Law for the economy as a whole is given under the label of Graphic as AXEC62:
From this equation follows:
(i) An increase in the expenditure ratio ρE leads to higher employment L (the letter ρ stands for ratio). An expenditure ratio ρE>1 indicates credit expansion, a ratio ρE<1 indicates credit contraction/debt repayment of the household sector.
(ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export. From employment L, one comes to output O by multiplying both sides by productivity R. The employment/output equations contain but measurable variables and are testable.
Items (i) and (ii) are familiar since Keynes. What is missing in the Keynesian employment multiplier, though, is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment increases if the average wage rate W increases relative to the average price P and productivity R.
The Employment Law says that an increase in investment expenditure or deficit spending, i.e., ρE>1, increases employment. The multiplier, though, is different from Keynes’s flawed multiplier. The crucial difference consists of ρF.
The correct Employment Law reproduces the familiar Keynesian mechanisms. What is more important: it shows that the price mechanism, i.e., the relationship of wage rate, price, and productivity ρF, can be used to increase employment/output. Thus, there is, to begin with, no need to increase private/public debt or push investment. The crucial point is that the price mechanism does not work as standard economics claims, in other words, standard price theory is provably false.
Hence, the real problem is not at all that 'Ordoliberalismus and Ordovolkismus' do not understand the logic of deficit spending, but that both Keynesians and Walrasians have no idea of how the price mechanism in the monetary economy works.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Keynes’s Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
(i) An increase in the expenditure ratio ρE leads to higher employment L (the letter ρ stands for ratio). An expenditure ratio ρE>1 indicates credit expansion, a ratio ρE<1 indicates credit contraction/debt repayment of the household sector.
(ii) Increasing investment expenditures I exert a positive influence on employment; a slowdown of growth does the opposite.
(iii) An increase in the factor cost ratio ρF≡W/PR leads to higher employment.
The complete Employment Law is a bit longer and contains, in addition, profit distribution, public deficit spending, and import/export. From employment L, one comes to output O by multiplying both sides by productivity R. The employment/output equations contain but measurable variables and are testable.
Items (i) and (ii) are familiar since Keynes. What is missing in the Keynesian employment multiplier, though, is the ratio ρF as defined in (iii). This variable embodies the price mechanism. It works such that overall employment increases if the average wage rate W increases relative to the average price P and productivity R.
The Employment Law says that an increase in investment expenditure or deficit spending, i.e., ρE>1, increases employment. The multiplier, though, is different from Keynes’s flawed multiplier. The crucial difference consists of ρF.
The correct Employment Law reproduces the familiar Keynesian mechanisms. What is more important: it shows that the price mechanism, i.e., the relationship of wage rate, price, and productivity ρF, can be used to increase employment/output. Thus, there is, to begin with, no need to increase private/public debt or push investment. The crucial point is that the price mechanism does not work as standard economics claims, in other words, standard price theory is provably false.
Hence, the real problem is not at all that 'Ordoliberalismus and Ordovolkismus' do not understand the logic of deficit spending, but that both Keynesians and Walrasians have no idea of how the price mechanism in the monetary economy works.
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2012). Keynes’s Employment Function and the Gratuitous Phillips Curve Disaster. SSRN Working Paper Series, 2130421: 1–19. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL
August 14, 2015
Either stupid or duplicitous
Comment on Mean Squared Errors on ‘What is it with economists and accounting identities?’
Blog-Reference
You say: “It's very strange. There seems to be something about accounting identities that causes otherwise reasonable economists — pardon my bluntness — to become either stupid or duplicitous.” (See intro)
It is not strange at all if one drops the unwarranted premise that there is, in the beginning, something like a ‘reasonable economist.’ It is as simple as that: being habitually confused, confuser-economists did not miss the opportunity to mess up accounting, too. This holds for balance-of-payments accounting, but in fact, goes deeper.
It started with Keynes. He gave the following elementary formal description of the economy: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (Keynes, 1973, p. 63)
This is the most basic accounting identity and, no surprise, economists got it badly wrong — from Keynes to Hicks to Krugman to Wren-Lewis #1. Actually, the fault in Keynes's two-liner is in the premise income = value of output. This equality holds only in the limiting case of zero profit in both the consumption and investment goods industries.
Profit does not appear in Keynes's elementary formalism because he never came to grips with this pivotal economic phenomenon. Neither did the Post Keynesians until this day (2011). Unaware of the underlying conceptual and logical defects, economists finally messed up National Accounting (2012).
The root cause of all accounting errors/mistakes is a complete lack of understanding of what profit is. For an economist, this is disqualifying.
To make it short, here is the formally correct accounting identity Graphic AXEC09 for the closed economy (2014, eq. (47)). Derivation and explanation are to be found in the referenced papers.
Because the fundamental accounting identity for the closed economy has always been false, the identity for the open economy has also been false.
The problem with accounting identities has, indeed, something to do with equilibrium thinking, yet ultimately, the all-pervasive analytical blunder can be traced back to the provably false profit theory. #2
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415: 1–23. URL
Kakarot-Handtke, E. (2014). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.
#1 See the 2012 MM-post Savings Equals Investment?
#2 More than two centuries of waffling in the dark
Blog-Reference
You say: “It's very strange. There seems to be something about accounting identities that causes otherwise reasonable economists — pardon my bluntness — to become either stupid or duplicitous.” (See intro)
It is not strange at all if one drops the unwarranted premise that there is, in the beginning, something like a ‘reasonable economist.’ It is as simple as that: being habitually confused, confuser-economists did not miss the opportunity to mess up accounting, too. This holds for balance-of-payments accounting, but in fact, goes deeper.
It started with Keynes. He gave the following elementary formal description of the economy: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (Keynes, 1973, p. 63)
This is the most basic accounting identity and, no surprise, economists got it badly wrong — from Keynes to Hicks to Krugman to Wren-Lewis #1. Actually, the fault in Keynes's two-liner is in the premise income = value of output. This equality holds only in the limiting case of zero profit in both the consumption and investment goods industries.
Profit does not appear in Keynes's elementary formalism because he never came to grips with this pivotal economic phenomenon. Neither did the Post Keynesians until this day (2011). Unaware of the underlying conceptual and logical defects, economists finally messed up National Accounting (2012).
The root cause of all accounting errors/mistakes is a complete lack of understanding of what profit is. For an economist, this is disqualifying.
To make it short, here is the formally correct accounting identity Graphic AXEC09 for the closed economy (2014, eq. (47)). Derivation and explanation are to be found in the referenced papers.
Because the fundamental accounting identity for the closed economy has always been false, the identity for the open economy has also been false.
The problem with accounting identities has, indeed, something to do with equilibrium thinking, yet ultimately, the all-pervasive analytical blunder can be traced back to the provably false profit theory. #2
Egmont Kakarot-Handtke
References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415: 1–23. URL
Kakarot-Handtke, E. (2014). Economics for Economists. SSRN Working Paper Series, 2517242: 1–29. URL
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.
#1 See the 2012 MM-post Savings Equals Investment?
#2 More than two centuries of waffling in the dark
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