Rebirth of Reason

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Sunday, October 28, 2012 - 12:06pmSanction this postReply
Or, is there just 'math?'


My political opinions do not influence the truth of that assertion; it is objectively true. If I try to finesse that with my plans for the future, I will likely fail.

When, as Bacon once said, we obey Nature, we have a shot at playing by its rules; we rule it only to the extent that we obey its rules.

There clearly is no conservative math and liberal math, there is only objective math. Arithmetic, calculus, algebra, set theory, logic. Nothing even remotely political about math.

Now, ask the same question about what we call 'economics.'

Is there a conservative economics and a liberal economics?

You're damn right there is. The real question is, is there any such thing as a neutral, objective economics?

No evidence whatsoever.

So when we are confronted with 'an economist' who presents himself as an expert in something called 'economics', the first question one must ask is, "Are you an expert in conservative economics or liberal economics?" Because when one is studying 'economics' one is clearly firmly planted in the field of Political Science. It might be dressed up in the lab clothing of mathematics, but again, Feynman well warned the world (well, a tiny fraction of the technological world graduating at Cal Poly in '74) against the dangers of homage to Cargo Cult Sciences. Lab coats and equations and charts and spread sheets don't make economics anything like mathematics.

As soon as Marx asserts "PRICE=COST+PROFIT" -- and Samuelson parrots him -- he is primarily asserting a political argument, not declaring an absolute fact of any kind. And when young 17 year old skulls of mush slouch in their seats, eager to please the in loca parentis "not their parents" authorities handing out both grades and social status, they recognize something that looks like what they see in math class and -mistakenly- attribute to it the same regard as some mathematical 'truth.'

The slight of hand in writing down such an equation is that it stealths the political argument that PRICE is asserted after COST by adding an arbitrary PROFIT. Much of Marx's argument depends on this baseless assertion. Did he ever actually take on risk and attempt to run a business? No-- he was forever purely an academic/journalist/author, never ran a business in his life. Who does that sound like?

If we don't want to be pick-pocketed by politicos, then we need to stop regarding economics as something akin to mathematics; it is not anything remotely like mathematics. It is political science. It is political argument by other means, including, taking on the veneer of mathematics, presenting charts and equations, and blustering about like those natives in those South Pacific Islands in their grass hut airfields and wooden airplane replicas trying to take on the form if not essence of that which has the power to bring silver birds down from the sky and deliver bellies full of goods to a wondrous tribe.

Is it hard to identify these 'economists' as being in any particular camp?

Paul Krugman; any guess?

Milton Friedman; any guess?

Friedrich A Hyek; any guess?

John M. Keynes; any guess?

Karl Marx; any guess? Karl Heinrich Marx (Berlin German pronunciation: [kaːɐ̯l ˈhaɪnʀɪç ˈmaːɐ̯ks], 5 May 1818 – 14 March 1883) was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist.

"economist." The Hell you say? What kind?

Joseph Stiglitz; any guess?

Joseph Eugene Stiglitz, ForMemRS, FBA (born February 9, 1943) is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former senior vice president and chief economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists"), and some international institutions like the International Monetary Fund and the World Bank.

In 2000, Stiglitz founded the Initiative for Policy Dialogue (IPD), a think tank on international development based at Columbia University. Since 2001, he has been a member of the Columbia faculty, and has been a University Professor since 2003. He also chairs the University of Manchester's Brooks World Poverty Institute as well as the Socialist International Commission on Global Financial Issues and is a member of the Pontifical Academy of Social Sciences.

... and yet, we claim it is possible to study something called 'economics' and become an 'economist.' Well for sure, that is possible.

What I am asserting is not possible is, to do so and not be uniquely either a conservative or liberal economist. There is no such thing as objective economics, it is not a 'science' any more than Political Science is a 'science.'

It is political wrestling by other means, by means of taking on the veneer of science for a respectability ("here comes some objective truth")that is undeserved. When someone is selling an economic argument, they are selling a political argument, period.

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Sunday, October 28, 2012 - 7:32pmSanction this postReply
Really great observations Fred, I have long held that every dn one of them(economists) do not have a single freeking clue about how Anyyything works. Bloody witch docters, all smoke n mirrors and would starve to death if they had to attempt to run a business in the real world.

Throw them out of academia.
I think that in order to qualify to beeee an economist one should have real world experience before even being able to apply to be one.
Bill Gates, he could teach the world a thing or two about how economics "works" give him a degree! John Paul Getty Jr!! Listen to what HEE would have to say.
(Edited by Jules Troy on 10/28, 7:36pm)

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Sunday, October 28, 2012 - 10:46pmSanction this postReply
In Economics 101, the Supply curve and the Demand curve are displayed. The point where they intersect is called “equilibrium” where the most efficient allocation of resources is claimed to occur. This ignores the fact that every point on either curve represents a choice, an exchange of a lower valued good (or service) for one of higher value. On each curve, the quantity demanded (or supplied) changes. But where they intersect is only one such point. The other choices do not disappear. People are still demanding and supplying all along both curves.

Supply and Demand Curve

The danger – the tragedy – is that claiming that the intersection of these two curves indicates a special equilibrium causes those in political control to believe that they should or must force all supplies and demands to be at this point. Interest rates are raised or lowered; money is created (rarely destroyed); tax laws are written or rewritten. In some societies criminal penalties are enacted and enforced for prices other than the approved one.
At the very least, and as the foundation of the wrongs cited above, economists teach that any other price except the equilibrium is inefficient and thus markets are not perfect.
The curves should be called "Supplies" and "Demands" and their intersection should called the "modal point." This is where "most" trades take place. But nothing else is special about it.

from my blog Necessary Facts here

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Monday, October 29, 2012 - 8:17pmSanction this postReply
The notion of economic "equilibrium" in the chart in Michael's post #2 is as false as the notion of biological "equilibrium". Ecosystems do not have equilibrium points, they constantly fluctuate based on changing climate, and biological advancements in predator-prey relationships, and lots of other factors.

Economics is essentially a special case of describing a particular biological ecosystem -- it is the description of how individual homo sapiens have actions and interactions that try to meet our individual desires and needs in a changing ecosystem, with "ecosystem" including such things as fashion and mate selection and hunger and everything else that motivates us to act.

What we desire is inextricably subjective -- it is based on emotions and desires and levels of satiation and other constantly changing things, not some objective unchanging value that is exactly the same for everyone.

Thus, all those seemingly tidy scientific and precise Keynesian charts and graphs based on an assumption of equilibrium are false, while messy Austrian economics comes closer to describing objective reality.

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Friday, November 2, 2012 - 6:03amSanction this postReply
The notion of economic "equilibrium" in the chart in Michael's post #2 is as false as the notion of biological "equilibrium". Ecosystems do not have equilibrium points, they constantly fluctuate based on changing climate, and biological advancements in predator-prey relationships, and lots of other factors.


Thus, all those seemingly tidy scientific and precise Keynesian charts and graphs based on an assumption of equilibrium are false, while messy Austrian economics comes closer to describing objective reality.

I disagree.
1. Such graphs were used long before Keynes.
2. One or two points on the graph's curves are realistic with the rest being hypothetical. It's one point if the prevailing market price is a market clearing one and two points if it's not.
3. There are varying views among Austrian economists, but most subscribe to the idea of  market clearing prices, i.e. equilibria. E.g. see here and here.
4. An important concept in biology is homeostasis, i.e. equilibrium.  

(Edited by Merlin Jetton on 11/02, 6:07am)

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Friday, November 2, 2012 - 2:01pmSanction this postReply

That is exactly right-- those curves are pure hypotheticals, models in which to assess -- in model land -- the likely impact of a lever or string pulled if ceteris is paribus.

But ceteris is never paribus, and strings and levers are never pulled ceteris paribus. Strings are pulled blindly in a hurricane of strings and levers being pulled and pushed, including, strings and levers not modeled.

It is a purely academic experiment in modeling.

And yet, we persist in believing they accurately reflect reality... without calibration, without even the -possibility- of calibration.

Which is why the entire field serves primarily as a kind of foundation for political argument, not science.

Its practitioners have long acknowledged this, self referring to their science as 'the dismal science.'

Meaning, not anything like science.

It is a useful discipline for formulating political arguments; both conservative political arguments as well as liberal political arguments. It serves both conflicting sets of goals (ride/don't be ridden) equally...and dismally.



Same mathematical information; totally different political arguments.

Marx, the academic who never ran a business in his life, had a religious belief that PRICE=COST+PROFIT

Anyone who has ever actually ran a business knows that


Math is neutral, and assesses each equation with the same regard; politics is not, and posing the 'same' equation in those two forms are used to push two entirely different and opposite political views of markets.


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