Showing posts sorted by relevance for query master economist. Sort by date Show all posts
Showing posts sorted by relevance for query master economist. Sort by date Show all posts

October 5, 2019

Keynes ― the poster boy for the weakness of the economist’s mind

Comment on David Glasner on ‘Jack Schwartz on the Weaknesses of the Mathematical Mind’

Blog-Reference

David Glasner quotes Jack Schwartz approvingly: “In a psychological description of the computer intelligence, three related adjectives push themselves forward: single-mindedness, literal-mindedness, simple-mindedness. Recognizing this, we should at the same time recognize that this single-mindedness, literal-mindedness, simple-mindedness also characterizes theoretical mathematics, though to a lesser extent.”

This worn-off cliche of the small-minded mathematician is contrasted with the flamboyant artistic scientist: “Part of what goes into the making of a good scientist is a kind of artistic feeling for how to adjust or interpret a mathematical model to take into account what the bare mathematics cannot describe in a manageable way.”

This echoes Keynes’ hallucinatory self-description of the master economist: “The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher ― in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.”

Never has scientific incompetence advertised itself better. The fact is that Keynes was too stupid for the elementary algebra that underlies macroeconomics. #1

Keynes ― the trained mathematician ― stated in his General Theory: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63) This is provably false. The mathematically correct relationship reads Q≡I−S with Q as macroeconomic profit. #2, #3

Let this sink in, the master-economist Keynes had NO idea of 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.) Now it holds: when the foundational concepts are false, the whole analytical superstructure is false. In other words, Keynes’ General Theory is scientifically worthless. #4

That is bad enough, but it gets worse: After-Keynesians did NOT spot Keynes’ blunder to this day. For example, Paul Krugman still applies IS-LM. So, not only Keynes but Post- and Anti-Keynesians alike have been too stupid for the elementary algebra that underlies macroeconomics.

Economics (Walrasian, Keynesian, Marxian, Austrian) is mathematically flawed. As Georgescu-Roegen put it: “It is difficult to contemplate the evolution of the economic science over the last hundred years without reaching the conclusion that its mathematization was a rather hurried job.” This means that economic policy guidance NEVER had valid scientific foundations. Note that the fault lies NOT with mathematics but with economists. Their proven mathematical/scientific incompetence notwithstanding, the pathetic master economists award themselves the “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”. #5

Egmont Kakarot-Handtke


#1 Economics, math, pluralism, and corruption
#2 How Keynes got macro wrong and Allais got it right
#3 Graphic AXEC143: Macroeconomic Profit Law with increasing complexity of the economy
#4 For details of the big picture, see cross-references Keynesianism
#5 Economics: The greatest scientific fraud in modern times

Related 'What it takes to become a great economist' and 'Who or what exactly did Keynes save?' and 'The unfinished Keynes (III)' and 'Keynes, the methodologist' and 'Hooray! The formalization issue is finally settled' and 'Marshall and the Cambridge School of plain economic gibberish' and 'Links on ‘Keynes: socialist, liberal, or conservative?’' and 'Forget Keynes' and 'Why Post Keynesianism Is Not Yet a Science' and 'Keynesianism is broken: Get over it!' and 'From Keynes’ fatal blunder to the true economic model' and 'Economics as storytelling and entertainment for the masses' and 'The economist as storyteller' and 'The real problem with the economics Nobel' and 'The canonical macroeconomic model' and 'Your economics is refuted on all counts: here is the real thing'.


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Twitter/FRED The correlation of profit and investment

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February 7, 2017

Economics, methodology, morals ― a creepy freak-show

Comment on Sheila Dow on ‘People Have Had Enough of Experts’

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After 80+ years, everybody can ― nay, must ― know that Keynes was an incompetent scientist and that his General Theory does not satisfy the well-defined scientific criteria of material and formal consistency. #1 Sheila Dow, though, does not seem to know this and advertises Keynes as an exemplary master-economist. In Keynes’ own words: “[T]he master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.”

No, not at all, it suffices that the economist comes forward with the true theory of how the market economy works. Or, in Keynes’ own words: “If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!”

During his lifetime, Keynes held every position and the very opposite of it, and because of this, he is eminently quotable but cannot be taken seriously.

Keynes’ self-description of the master-economist is as delusional as one can get because he never even understood what profit is: “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.)

Can there be anything more ridiculous than an economist who has no idea of the foundational concept of his subject matter? Yes, worse than an incompetent economist is an incompetent methodologist who has not realized until this very day the lethal conceptual flaw of Keynesianism, or, for that matter, of Walrasianism, Marxianism, and Austrianism. #2

An economic methodologist whose first and last sentence is not ‘Economics is a failed science and urgently needs a Paradigm Shift’ is an unwitting but effective promoter of ignorance and confusion.

There is politics, and there is economics, and both must be strictly separated because politics cannot do anything other than corrupt science. Accordingly, every methodological discussion has to start with the distinction between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, and 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 has to be judged according to the criteria true/false and NOTHING else. The criteria like/dislike or good/bad or good/evil or useful/useless do NOT apply. They apply in the political sphere but not in the scientific sphere.

The history of political economics from Adam Smith to Keynes and beyond can be summarized as an utter scientific failure. #3 Economics had been hijacked from the very beginning by the agenda pushers of political economics. Can there be the slightest doubt that Smith, Ricardo, Malthus, Marx, Keynes, Hayek, Friedman, Krugman, Lucas, and almost everybody in between falls into the category of a political economist or fake scientist?

However, in economics, too, newspeak prevails. Just like the former ministries of war have been all over the world renamed to ministries of defense, the Political Economy of the founding fathers has been renamed to economics, with the understanding that economics is a science. The change of name, though, did not change the practice.

What should have happened was the strict separation of politics and science. In the words of John Stuart Mill: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

Because the separation never happened, economics is still at the proto-scientific level of political economics. Political economics has produced NOTHING of scientific value in the last 200+ years. Neither Orthodoxy nor Heterodoxy has to offer anything in the way of a materially and formally consistent theory, only storytelling and agenda-pushing. What we have is the pluralism of false theories.

What Sheila Dow has not realized is that not only orthodox economics is an abysmal scientific failure but Heterodoxy, too: “... we may say that the ... omnipresence of a certain point of view is not a sign of excellence or an indication that the truth or part of the truth has at last been found. It is, rather, the indication of a failure of reason to find suitable alternatives which might be used to transcend an accidental intermediate stage of our knowledge.” (Feyerabend)

Let us briefly address the worst of Sheila Dow’s red herrings.
― ‘Voters have become contemptuous of economic experts.’ This is absolutely irrelevant because, firstly, voters cannot tell the difference between a scientific expert and a doorpost. Secondly, there is NO such thing as an economic expert because the representative economist lacks the true theory. #4

― The prediction/forecast/prophesy competition, which is the great attraction in the Circus Maximus, is pointless because all four political sects, that is, Walrasians, Keynesians, Marxians, and Austrians, lack the true theory. #5 The problem with forecasts is not a lack of pluralist methodology but the lack of true theory.

― Keynes’ and Friedman’s musings about methodology cannot be taken seriously because both were political economists, that is, scientifically incompetent.

― The problem of economic models is not that they are unduly mathematical but that they are axiomatically false. Economics has to move from false Walrasian microfoundations and false Keynesian macrofoundations to true macrofoundations. #6

― ‘There is no escaping the fact that economics continues to be a moral science.’ This is the self-delusion of political economists. The fact of the matter is: economics is neither a moral nor a social science but a systems science. #7

― ‘Knowledge about the economy is uncertain, severely limiting the scope for classical logic.’ False. Lack of knowledge is due to the scientific incompetence of economists for 200+ years. #8

― Economists are not expected to utter their opinion about the Good Society and to dabble in psychology, sociology, history, political science, etc., but to eventually come forward with a scientifically valid explanation of how the market economy works.

The current state of economics proves beyond any doubt that political economists have done a lousy job, and so have political methodologists. The representative economist cannot even tell the difference between profit and income until this very day. Hence, new economic thinking means, in very concrete terms, to leave political economists and methodologists like Sheila Dow where they have always been: behind the curve. #9 People have enough of scientifically incompetent agenda pushers.

Egmont Kakarot-Handtke


#1 How Keynes got macro wrong and Allais got it right
#2 Axiomatized NONENTITIES and the failure of methodologists
#3 Cross-references Political Economics
#4 There is NO such thing as an economic expert
#5 Science does NOT predict the future
#6 Cross-references Paradigm Shift
#7 Lawson’s fundamental methodological error and the failure of Heterodoxy
#8 Failed economics: The losers’ long list of lame excuses
#9 New economic thinking, or, let’s put lipstick on the dead pig

Related 'The economist as moralist' and 'Ditch scientific incompetence!' and 'The thinking economist' and 'Making the economy the focus of the economists’ dialogue' and 'Swedish muddle' and 'Eclecticism, anything goes, and the pluralism of false theories' and 'A brief history of soapbox economics' and 'Macroeconomics ― dead since Keynes' and 'In the grand scheme of things, Lord Keynes was only a small-time crook' and 'Your economics is refuted on all counts: here is the real thing'.
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December 1, 2024

Occasional X: Clueless economists / Science (CXXXII)

 


For more about the master economist see AXECquery.
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November 30, 2015

The Representative Economist: cross-references

Posts
Working papers
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June 14, 2022

Occasional Tweets: Brainpower and hard work are hallucinatory characteristics of the representative economist

 


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The master-economist ― Keynes' famous exercise in hallucinatory self-aggrandizement

Source: Screenshot from Goodreads
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February 4, 2021

Occasional Tweets: Keynes and Keynesianism are scientifically worthless (I)

 

Keynes / Keynesianism

“Economics is the study of the economy, not the study of economists.” (Ricardo Reis)

“The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher ― in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.” (J. M. Keynes)


For Keynes' lethal macroeconomic blunder, see Ch. 13, The indelible scientific disgrace of economics, in Sovereign Economics.

For more about Keynes, see AXECquery.
For more about Keynesianism, see AXECquery.
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November 19, 2018

Macroeconomics: Drain the scientific swamp

Comment on Matt Franko/Nick Rowe on 'Why is macroeconomics so hard to teach?'

Blog-Reference

Macro is hard to teach because it is failed/fake science. Nick Rowe, according to The Economist, “a master of the craft”, realized nothing during his whole career. Too bad for his poor students. For details, see:
Egmont Kakarot-Handtke


Related 'Economics: No method to the madness' and 'Macroeconomics: Economists are too stupid for science' and 'The canonical macroeconomic model'.

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AXEC136


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#DrainTheScientificSwamp on Nov 20

Both Walrasian microfoundations and Keynesian macrofoundations are materially and formally inconsistent, that is, scientifically worthless. In order to advance from brain-dead storytelling to science, economics needs a Paradigm Shift from provably false Walrasianism, Keynesianism, Marxianism, Austrianism, and MMT to true macrofoundations.#1, #2

Economics is a failed/fake science, and MMTers are part of it.


#1 New Economic Thinking: The 10 crucial points
#2 If it isn’t macro-axiomatized, it isn’t economics

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REPLY to Matt Franko on Nov 20

Science is well-defined: “Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

Often, research comes to the conclusion that a theory is materially/formally inconsistent. In this case, one has a failed theory. The Flat Earth Theory is a case in point. This theory is NO longer part of the scientific process.

In economics, things are special insofar as the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― and all variants thereof are mutually contradictory, axiomatically false, materially/formally inconsistent, and all got profit ― the pivotal concept of the subject matter ― wrong.

Thus, economics is a failed/fake science or what Feynman called a cargo cult science. #1

Your assertion: “There is no such thing as a ‘failed science’... science is a process...” proves that you are so far behind the curve that it is worse than comical. #2

The point is that economists in their utter scientific corruption simply sweep clear-cut refutation under the carpet: “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)

Take notice that MMT has been refuted. To “continue to write about it as if nothing had happened” is an act of plain scientific corruption.


#1 What is so great about cargo cult science? or, How economists learned to stop worrying about failure
#2 Economists cannot do the simple math of profit — better keep them out of politics

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REPLY to S400 on Nov 20

The Economist summarizes: “Macroeconomic theorists disagree on almost everything. That is one of the reasons it is such a hard subject to teach.”

In other words, after 200+ years, there is still no such thing as macroeconomics. And microeconomics is known to be a bad joke. So, there is NO economics.

Peirce said: “That the settlement of opinion is the sole end of inquiry is a very important proposition.”

Economists never got out of the swamp of worthless opinions and never reached the firm ground of scientific knowledge.

The intelligent layman can refute every supply-demand-equilibrium teacher. #1 Economics students, though, swallow this proto-scientific garbage hook, line, and sinker for generations.

MMT, too, is provably false. You neither understand the proof nor its far-reaching implications.


#1 How the intelligent non-economist can refute every economist hands down

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REPLY to S400 on Nov 21

Science is about true/false and nothing else. So, tell the blog audience which of the two macroeconomic relations a.k.a. sectoral balances equations, is true/false
(i) (I−S)+(G−T)+(X−M)=0 
(ii) (I−S)+(G−T)+(X−M)−(Qm−Yd)=0

Nick Rowe, who is regarded among his silly academic peers as “a master of the craft”, could not do it.#1, #2

“That the settlement of opinion is the sole end of inquiry is a very important proposition.” (Peirce)

So, this is the big chance of your sorry troll existence: settle the pivotal question of macroeconomics.

Perhaps one of the MMT geniuses, Mitchell, Mosler, Kelton, Tcherneva, Wray, Fullwiler, Forstater, Kaboub, Pettifor, Keen, Tymoigne, Willingham, Grumbine, Murphy, etc., can help you.


#2 Wikipedia and the promotion of economists’ idiotism (II)

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REPLY to Matt Franko, S400, Andrew Anderson, Konrad, Noah Way on Nov 22

The question of this thread is: “Why is macroeconomics so hard to teach?”

The answer is: “Because there is NO valid macroeconomics.

Why?

Because economists in general, and MMTers in particular, cannot answer the simple question of which of the two macroeconomic relations is true/false:
(i) (I−S)+(G−T)+(X−M)=0
(ii) (I−S)+(G−T)+(X−M)−(Qm−Yd)=0. #1

After having flunked the intelligence test at the entry level, the MMT promotion team should focus on what they are really good at. As Matt Franko said: “You are authorized to return to your finger painting...”


#1 MMT is idiocy and fraud

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AXEC121i

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November 1, 2015

Humpty Dumpty is back again

Comment on Henry/David Glasner on ‘Keynes on the Theory of Interest’

Blog-Reference

“Research is, in fact, a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)

So, science is about formal and material consistency. Economists fail on both counts since Adam Smith, and for this reason, economics is not a science. It is as simple as that.

What has the outer appearance of science is, in fact, a proto-science to this very day. This includes Orthodoxy and Heterodoxy and Keynesianism in particular. With regard to consistency, Keynesians have conveniently defined their own methodological rules: “For Keynes as for Post Keynesians, the guiding motto is ‘it is better to be roughly right than precisely wrong!’” (Davidson, 1984, p. 574)

With regard to definitions, the representative economist easily takes sides with Humpty Dumpty: "‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that's all.’” (Carroll Through the Looking-Glass)

That is not how science works. The freedom or arbitrariness of definition is a methodological illusion. It applies only to the first definition. Subsequently, one has to make sure that every new definition is consistent with the preceding ones. Overall consistency cannot be achieved in the economist's cavalier fashion: “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen, 2009, p. 344)

Keynes got the fundamental concepts of income and profit wrong. The formal core of the General Theory is given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (1973, p. 63)

This is rather elementary mathematics, and it should not be too hard to get it right. Actually, Keynes got it wrong, and neither Keynesians, nor Post-Keynesians, nor New Keynesians, nor the Anti-Keynesians ever spotted the logical blunder.

The axiomatically correct relationship is given on Graphic AXEC143d. It says: the business sector's monetary profit Qm is equal to distributed profit Yd plus investment expenditure I minus the household sector's monetary saving Sm (2014, Sec. 3). Alternatively, the business sector's retained profit Qm−Yd is equal to the difference between investment and saving. In short, household sector saving is NEVER equal to business sector investment, that is, all I=S models, including IS-LM are provably false. And this, in turn, means that all theories of interest that are predicated on the equalization/ equilibrium of investment and saving are false. All attempts to filibuster this fact away are self-defeating.

It is pretty obvious that Henry goes straight off into a parallel universe with what Keynes rightly condemned as ‘method of blind manipulation’ (1973, p. 297).

As mentioned above, there is no such thing as freedom or arbitrariness of definition. This freedom is restricted by the requirement of consistency. The fault in Henry's argument lies in the redundant on-top definitions of total income and total saving St which actually yield I=St. What Henry does not notice is that St is different from S, so the intended proof of I=S fails. This has already been demonstrated in Section 17 of Keynes’s Missing Axioms.

There is no hope that the Keynesian Humpty Dumpties will ever understand what formal consistency is all about. After all, they did not get it in the last 80+ years.

Egmont Kakarot-Handtke


References
Davidson, P. (1984). Reviving Keynes’s Revolution. Journal of Post Keynesian Economics, 6(4): 561–575. URL
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. 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.
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield: Edward Elgar.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, Vol. 1. Norderstedt: Books on Demand BoD, 2nd edition. URL

Immediately preceding Accounting basics.

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ICYMI (comment on FedUp of Nov 1 on Nov 2)

Imagine that, starting at zero, the national accountant records every single transaction between the business sector and the household sector in the investment economy. At any arbitrary point in time, he may close the books and draw the balances. What the balances show is with mathematical certainty Q≡Yd+I−S. Let us simplify matters with Yd=0, then the accountant ends up with Q≡I−S. Accounting is the natural measurement instrument in economics, and the underlying math is indeed elementary. The sad fact is that the representative economist does not even understand the principles of accounting.

With closing the books and arriving at Q equals I−S, the accountant’s job is done. Like a physicist, he has taken a correct measurement with the precision of two decimal places. Every time he makes his measurement, i.e., entirely independent of the period length, he verifies the formula.

Enters the representative economist in his full smartness and says: Let’s play with the symbols and make a new definition, that is, let total saving Σ be the sum of household sector saving S and profit Q, which we rename as the business sector's saving, so Σ≡S+Q. Note in passing that renaming profit as saving is semantic idiotism, hence the concept of total saving is a NONENTITY.

But now, look what we get: I≡Σ, i.e., total saving is invariably equal to investment. Yes, but look carefully, this is different from I=S. What this formal shell game amounts to is a substitution of Σ and S and an unnoticed verbal equalization of saving and "total saving".

Every accountant who carries out the economist’s redundant add-on book entry is either fired for incompetence or jailed for cooking the books.


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ICYMI comment on JKH of Nov 2

In Keynes' derivation of I=S neither profit nor retained profit appears (Keynes, 1973, p. 63).

Now, you assert “Saving by firms amounts to their retained profit.” This add-on definition is nowhere to be found in the General Theory. The simple reason is that Keynes never understood what profit is: “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 and Bezemer, 2010, pp. 12-13, 16)

Because Keynes never came clear with either profit, distributed profit, or retained profit — not to speak of those who came after him — one will not find a correct definition of these concepts in all of Keynesianism. Yet, one can find the consistent definitions in Allais or in my paper, Keynes's Missing Axioms.

The final result of correct accounting is invariably Qre≡I−S. Your definitions are (i) a superfluous add-on, (ii) formally illegitimate, (iii) a semantic shell game that proves, if anything, a complete lack of understanding of the mechanisms of profit generation and distribution.

Keynesianism has been formally deficient from the very beginning. Because the multiplier and IS-LM rely on Keynes's profitless I=S all Keynesian policy advice has been nothing more to this very day than reading tea leaves and telling the silly ex-ante/ex-post story. Monetary policy that relies on the familiar interest mechanism has no theoretically sound foundation.

The equality/equilibrium of saving and investment has been academically declared dead with Allais’ publication of 1993. In the history of science, I=S will forever stand out as a monument of utter scientific incompetence.


References
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34. URL

Related 'Down and out'

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Graphic AXEC129d The Humpty Dumpty Fallacy "Income"


Graphic AXEC128b The Humpty Dumpty Fallacy "Saving"

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November 30, 2015

Pluralism: cross-references

Posts
  • The GDP-death-blow for the economics profession   here
  • Economists: at the end of the wrong track   here
  • Wikipedia, economics, scientific knowledge, or political agenda pushing?   here
  • Your economics is refuted on all counts: here is the real thing   here
  • Profit   here
  • Master of MMT ― Master of proto-scientific garbage   here
  • Mindfuck or the Eternal Return of dead economic theories   here
  • There are NO crank scientists in economics because economics is NOT a science   here
  • Economics: Not a pretty story   here
  • Economics, MMT, and the corruption of science   here
  • Bill Mitchell, MMT, Progressives: economists as Oligarchy hacks   here
  • The problem with economics as a discipline   here
  • Lars Syll, MMT, and the other failures of New Economic Thinking   here
  • “Inhumane stupidity” ― bad economic policy as inevitable consequence of false economic theory   here
  • The objective reality of economics   here
  • Economic narratives are for the scientific garbage dump   here
  • Microfoundations have been dead for 150+ years: high time to move on   here
  • Trust in science? Yes, but economics is NOT a science   here
  • Economics ― the science that never was   here
  • New Economic Thinking ― the definitive results   here
  • Links on the Economics Nobel   here
  • Links on Diane Coyle   here
  • Links on Asad Zaman’s ‘Defining Islamic Economics’   here
  • What it takes to become a great economist   here
  • Economics as storytelling and entertainment for the masses   here
  • Links on Lars P. Syll’s ‘Wren-Lewis insults medical science’   here
  • Both Mainstreamer and MMTer are either stupid or corrupt or both   here
  • #DeleteKeynes #ExpelAllKeynesians   here
  • Economics: Math is NOT the problem, scientific incompetence is   here
  • Real-World Economics: The sanctuary of stupidity and corruption   here
  • What’s the use of economists?   here
  • There is no soft science only soft brains   here
  • Is Lars Syll’s stupidity really infinite?   here
  • Cryptoeconomics ― the best of Real-World Economics Review’s spam folder   here
  • Again and again: economists are incompetent scientists   here
  • Freedom for fake scientists?   here
  • Heterodoxy and Pluralism, too, are proto-scientific garbage   here
  • This is New Economic Thinking? Give me a break!   here
  • Economists: only good at excuses   here
  • Economics is not a science, not a religion, but proto-scientific rubbish   here
  • Does Asad Zaman fly with POL or SCI Airlines?   here
  • True macrofoundations: the reset of economics   here
  • How Heterodoxy became the venue for science’s scum   here
  • The Law of Economists’ Increasing Stupidity   here
  • From the pluralism of false models to the true economic theory   here
  • Review of the economics troops   here
  • Economic policy guidance NEVER had sound scientific foundations   here
  • The non-existence of economics   here
  • Why not simply throw all economists under the bus?   here
  • Failed economics: The losers’ long list of lame excuses   here
  • Economics: The pluralism of false theories is over   here
  • A rough business plan for science   here
  • The futile synthesis of neoclassical rubbish and Keynesian garbage   here
  • Economics ― a Zombie wrestling show   here
  • It is better to be precisely right than roughly wrong   here
  • Go, Heterodoxy, move on!   here
  • Prediction/Forecasting   here
  • Heterodoxy’s scientific self-deception   here
  • All models are false because all economists are stupid   here
  • From subjective weighing of motives to objective systemic properties   here
  • Nothing to choose between Orthodoxy and traditional Heterodoxy   here
  • Eclecticism, anything goes, and the pluralism of false theories   here
  • Economics: The Battle of Frogs and Mice is over   here
  • Enough! Economists, retire now!   here
  • The economist as second-guesser, mind reader, and folk psychologist   here
  • Ending the economic Froschmäusekrieg a.k.a. Batrachomyomachia   here
  • The scientific self-elimination of Heterodoxy   here
  • History delivers the questions but not the answers   here
  • From proto-science to science   here
  • Yes, orthodox economics is poor science, but can Heterodoxy raise hope?   here
  • The pluralism of nonsense is still nonsense  here
  • Pluralism and the thickness of confusion  here
  • Pluralism and truth  here
  • Pluralism and the long shadow of Bentham  here
  • EconoPhysics and pluralism  here
Debate
  • Reforming economics: Pluralism is not enough  here
Related
  • Cross-references Political Economics/Stupidity/Corruption   here
  • Cross-references New Economic Thinking   here
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August 18, 2018

“I never learned maths, so I had to think” ― another false-hero memorial

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

Blog-Reference

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

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

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

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

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

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

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

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

Egmont Kakarot-Handtke


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

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

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AXEC144c

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January 1, 2016

Economics as fool’s paradise


Comment on Ken Zimmerman on ‘Clarence Ayres on the economic concept of capital’

Blog-Reference

Ken Zimmerman says: “The confusion and uncertainty is inherent in the social sciences, including economics.” Here you have in a nutshell the triple self-deception of Heterodoxy which neatly explains its own failure.

(i) I said: “The confusion starts already with the elementary concepts of income and profit.” This, clearly, has nothing to do with the distinction between social and natural sciences but only with logical consistency, which applies to all sciences. Now, the fact of the matter is that four heterodox economists apply four different definitions of income/profit. #1 Elementary logic tells one that not all four can be true (in fact, all four are provably false #2). This conceptual confusion is indefensible. Heterodoxy, as it stands now, is outside of science just like Orthodoxy. The utter foolishness of Heterodoxy consists of idealizing its own unresolved contradictions as pluralism. Pluralism is a political concept that relates to opinions. In science, there can be no pluralism of false theories.

(ii) But things are far worse. When the representative economist is criticized for his gross conceptual blunders, he defends them like a feudal prerogative. Both orthodox and heterodox economists subscribe to the Humpty Dumpty methodology:"‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that's all’.” (Carroll, Through the Looking-Glass). #3 The utter foolishness of Heterodoxy consists of idealizing arbitrariness and sloppiness as superior methodology and praising Keynes and the Cambridge School of Loose Verbal Reasoning as a role model. #4

(iii) The worst self-deception of Heterodoxy, though, is not to realize that economics, to begin with, is not a science of behavior (Hudík, 2011). Economics is NOT a social science like psychology/sociology and NOT a natural science like physics, but a systems science. #4 The foolishness of Heterodoxy consists of sharing with Orthodoxy the fundamental error that economics is primarily about individual/social behavior. The not-so-new news is that the so-called social sciences are not sciences at all but what Feynman famously called cargo cult sciences because “By having a vague theory it is possible to get either result. ... It is usually said when this is pointed out, ‘When you are dealing with psychological matters things can't be defined so precisely’. Yes, but then you cannot claim to know anything about it.” (Feynman, 1992, p. 159)

Science, to recall, is about knowledge. Waffling about things that cannot be known is left to sitcoms.

As you correctly observe, ‘confusion and uncertainty is inherent in the social sciences’. The fact of the matter is that Heterodoxy has not found in the last 100 years — roughly since Veblen — the way out of the fool’s paradise ‘where it is possible to get either result’ or, as Keynes aptly put it, where ‘nothing is clear and everything is possible’ (1973, p. 292). On the contrary, it is pretty obvious that most orthodox and heterodox economists feel well at home there.

Heterodoxy, though, has one valid point: there is no good reason at all why orthodox fools should occupy more space in academia than heterodox fools.

Egmont Kakarot-Handtke


References
Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
Hudík, M. (2011). Why Economics is Not a Science of Behaviour. Journal of Economic Methodology, 18(2): 147–162.
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 Heterodoxy, too, is proto-scientific garbage
#2 How the intelligent non-economist can refute every economist hands down
#3 The Humpty Dumpty methodology
#4 Sloppiness as economic methodology
#5 Still on the wrong track

Related 'Conceptual blunder' and 'The future of economics: why you will probably not be admitted to it, and why this is a good thing' and 'Are economists natural born scientific failures?'.
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November 14, 2022

Occasional Tweets: The "greatness of economists" is just silly self-hype of failed scientists

 



For details of the big picture see cross-references Failed/Fake Scientists.

For more about the master economist see AXECquery. 
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August 8, 2015

The Humpty Dumpty methodology

Comment on Nick Rowe on ‘On defining "recession"’

Blog-Reference

With regard to definitions, the representative economist easily takes sides with Humpty Dumpty. "’When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master — that's all’.” (Carroll, Through the Looking-Glass)

That is NOT how science works. The freedom or arbitrariness of definition is a methodological illusion. It applies only to the first definition. Subsequently, one has to make sure that every new definition is consistent with the preceding ones. Overall consistency cannot be achieved in the economist's cavalier fashion: “The only way to arrive at coherent languages is to set up axiomatic systems implicitly defining the basic concepts.” (Schmiechen, 2009, p. 344)

The fact is that economists got the fundamental concepts of income and profit wrong. Keynes is a case in point. The formal core of the General Theory is given with: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (Keynes, 1973, p. 63)

This is rather elementary mathematics, and it should not be too hard to get it right. Actually, the fault in Keynes's two-liner is in the false 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. That is, he in effect talks about capitalism without profit. The simple reason for this analytical blunder is that Keynes NEVER got the profit theory right. This sad fate is shared by the representative economist (2014), among many others, by Nick Rowe.

The axiomatically correct relationship is given with the 2-sector Profit Law Qm≡Yd+I−Sm.

It says that the business sector's monetary profit Qm is equal to distributed profit Yd plus investment expenditures I minus the household sector's monetary saving Sm (2014, Sec. 3). Alternatively, the business sector's retained profit Qm−Yd is equal to the difference between investment and saving.

In short, household sector saving is never equal to business sector investment; that is, all I=S models, including the later developments of IS-LM, are provably false. #1

From this follows in turn that Nick Rowe's blog post of 2011 #2 is logically defective, as well as the recent posts on the Origin of Specious blog. #3

The problem here, as everywhere in economics, is the false definition of profit, which in turn leads to a false definition of income, which in turn leads to a false definition of saving. All mistakes together produce a closed and stable framework of self-delusion. After-Keynesians have been trapped in this logical fallacy for 80+ years.

Egmont Kakarot-Handtke


References
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. 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.
Schmiechen, M. (2009). Newton’s Principia and Related ‘Principles’ Revisited, volume 1. Norderstedt: Books on Demand, 2nd edition. URL

#1 See also cross-references Refutation of I=S
#2 here
#3 here

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Graphic AXEC128c


Graphic AXEC129f

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