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Monday, May 23, 2016

Economics as religion

Steve Keen explained why the mainstream economists have completely failed to learn from their past failures at Brainstorm:
VOX: Why do you think the mainstream economists failed to learn anything from the 2008 crisis, given the fact that these minor school economists, the post-Keynesians and the Austrians in particular, have been correct about the crisis coming? Generally speaking, isn’t the idea that if the predictive model works, maybe we should pay attention to it?

KEEN: The reality is that economics is basically a set of competing religious schools. The case of the post-Keynesians predicting a crisis and some Austrians getting their heads around it as well and the Neoclassicals not predicting it is like saying the Muslims had discovered the body of Jesus Christ. The apt reply back from the Vatican is, no, you haven't, because it isn't here, it's in heaven. So, in that sense, the religious side of it came out and they have their own interpretation of the crisis. It was an exogenous shock.

VOX: From where, Mars?

KEEN: Yeah, they were looking for the meteor right now to see where it landed. It was an exogenous shock from outside the solar system! So this idea of an exogenous shock became their explanation. There's a classic paper over it by a guy who I think is named Peter Ireland, he's actually from Boston College, and he began a paperback in 2010 saying that we failed to see the crisis coming but it doesn't mean our models are useless. He dismissed the type of dynamic modeling that I do while simultaneously showing that he didn't understand my modeling. He wasn't reading a paper of mine, he was just saying that you can't make a deterministic model of this sort of phenomenon, showing he knew nothing about complex systems. But he then said what actually caused the crisis was an exogenous shock just like those that caused the 1992 crisis. However, the shocks lasted longer and they got bigger. Which means, of course, that a randomly distributed variable, which is what the exogenous shocks have to be, remained permanently negative and got bigger while still remaining randomly distributed.

So therefore there has to be, at some point, a really big shock in the opposite direction which hasn't arrived yet. So they just went back into saying that - and I have seen this happen so many times - that you can't predict the crisis because in our model a crisis can only occur if there's a large exogenous shock. Which, by definition can't be predicted, therefore, you can't predict it.

Now it really reminds me of one of the little questions I had in my mind. I said, how did Ptolemic astronomers explain comets? And it finally was explained to me that in that era, comets were considered an astronomic phenomenon because of course comets couldn't occur in the heavens because the heavens are perfect. It's the same thing with neoclassicals.

VOX: Yeah, it's interesting to me how in any field of science or even quasi-science, you can almost always tell whose models are ineffective and who really doesn't know what they're talking about because they always have to bring in some sort of bizarre epicycle to explain things away. The more epicycles and explanations that they have to come up with, the more certain you can be, even if you have no idea what they're talking about, the mere fact that they are engaging in the circles and epicycles means that you can be pretty confident that they're going to be wrong.
I thought this was an unusually good event, even by the high standards of Brainstorm. We'll try to get the transcript cleaned up and out to the members within the next two weeks or so.

Labels: ,

87 Comments:

Blogger Student in Blue May 23, 2016 8:12 AM  

Is it "econonomics" because there are several no-no's in treating it as a religion?

Blogger JP May 23, 2016 8:22 AM  

If there's a system, there's a way to game it.

Anonymous Eduardo May 23, 2016 8:44 AM  

Student

No, actually Keen is saying that dogmatic view of things equals religion or religious thought. Then he says economics is just oike that.

Basically the idea is that a evidence contrary to what is believed to be the general rule is found. Than you have to explain it away somehow, but the particular thought school usually assumes that to be impossibke or it couldn't occur in certain conditions. To Keen that assumption is religious thinking, hence economics is religion.

What? U_U you wanted the explanation!

Anonymous WinstonWebb May 23, 2016 8:45 AM  

Unrelated economics:

Brexit 'would spark year-long recession' - Treasury

Even if one assumes that prediction is absolutely accurate, why would the Brits not find such a trade off acceptable?

Blogger Rusty Fife May 23, 2016 8:51 AM  

JP wrote:If there's a system, there's a way to game it.

You would think so. Instead it looks to me that they are running the system open-looped or feed-forward. Now they've lost control of the process and it's running away from them. You can tell they aren't feeding back into their model because they keep ignoring information.

Anonymous Joe Blowe May 23, 2016 8:55 AM  

Most economists are like most journalists. They print up whatever propaganda tripe their paymasters demand.

It's like that old saying, "He who pays the piper calls the tune."

Blogger dc.sunsets May 23, 2016 9:09 AM  

This explanation can be taken to a deeper level. People are split into a few who think for themselves and the masses who predominantly herd. The distinction is not just a case of intelligence, most ver intelligent people still mostly herd, they just employ better rationalizations using far greater complexity (hence modern economists' obsession with quantitative models.)

In a time of information overload, even those who think for themselves are buried under mountains of misinformation and outright lies.

Blogger Student in Blue May 23, 2016 9:13 AM  

@Eduardo
What? U_U you wanted the explanation!

I was making a joke based on the typo before it got fixed...

Blogger Ron Winkleheimer May 23, 2016 9:13 AM  

in any field of science or even quasi-science, you can almost always tell whose models are ineffective and who really doesn't know what they're talking about because they always have to bring in some sort of bizarre epicycle to explain things away.

Which is why you can see climate change hysteria is a crock of crap.

Another good sign is attempts silence critics.

If 12 or so Democratic state AGs are using lawfare to try to silence you, then you can be sure you are threatening their rice bowl.

Mainstream economists are like geologists who derided plate tectonics. If it correct then their legacy is being wrong. So, it can't be correct.

Blogger Joe Doakes May 23, 2016 9:14 AM  

"The more epicycles required to make a theory sound plausible, the more likely the proponent has no idea what he's talking about."

Vox Day's First Law of Economics. I like it.

Anonymous Eduardo May 23, 2016 9:18 AM  

Oh well XD. U___U I kind of felt weird of someone not getting the idea.

Blogger Gaiseric May 23, 2016 9:19 AM  

JP wrote:If there's a system, there's a way to game it.
Only if you understand how it works.

Blogger dc.sunsets May 23, 2016 9:24 AM  

This is why I (try to) no longer debate people. "Experts" (professional economists, physicians, cosmologists, climatologists, etc.) can bury me under a mountain of their facts and detailed explanations to "prove" me wrong, but I still think their positions are based on nothing but extremely complex pyramids of error so debate is impossible.

Is debt-as-money in a consumption-obsessed economy wise? Does dietary cholesterol (or saturated fat itself) cause atherosclerosis and heart disease? Do radio-telescopes reveal quasars billions of light-years away and those quasars have the mass of millions the mass of our nearby sun, or was an astronomer, Halton Arp, right about how little we actually know about the universe? Is the climate of the planet warming, cooling or staying the same, and is the industry of humanity affecting it one way or another?

It is pointless to debate these and, for all practical purposes, all other complex phenomena with people whose professional existence depends on the dominant explanations for them, simply because none of those people can cash their paycheck if they admit the level of conjecture and uncertainty in which they actually swim.

Can we imagine someone who invested the years and effort to earn a Ph.D. in economics, cosmology, or climatology, or an M.D. or D.O. admitting to himself that despite all that education and study, he just didn't know for sure about almost everything in his profession?

Anonymous mature craig May 23, 2016 9:26 AM  

Maybe if there was more consensus in economics the correct ideas winning and being applied things would be better

Anonymous Eduardo May 23, 2016 9:31 AM  

Well you know scientists hate competition dude lol

How else would you ever settle with the: "oh screwing up multiple times in a consistent manner is just science in progress!!!!!11"

Come on anyyyy competitior would have already found a way to win absolutely. The scientists of yore are dead, and now all we have is agerage Joe in a lab coat... Well economics doesn't need the lab coat.

Blogger dc.sunsets May 23, 2016 9:35 AM  

@10 epicycles.

Yeah. But there are a lot of glass houses around.
https://www.youtube.com/watch?v=UlFVUozGWyU&feature=youtu.be&t=14m

Is there really a quasar that:
- is 12 billion light-years away?
- 20 billion times the mass of our sun?
- surrounded by a water cloud 140 trillion times the size of Earth's oceans?
- emits energy 100 trillion times that of our Sun?

Epicycles? You be the judge. I'm tired of seeing mountains of "ink" spilled describing things which rest on inferences built on assumptions.

Blogger Gaiseric May 23, 2016 9:40 AM  

mature craig wrote:Maybe if there was more consensus in economics the correct ideas winning and being applied things would be better
There's tons of consensus in economics about many issues. The point is; the consensus is not able to explain what's actually happening. Geez. No. More consensus isn't what we need. What we need is more people willing to buck the consensus and look for solutions outside of the current models which obviously don't work.

Anonymous Eduardo May 23, 2016 9:41 AM  

DC

You sure you wanna... You know... Bring in StickWick's wrath's upon you?

Come on we both know that water does not by any evapora.... Wait is what said correct??? O_O

Anyways lets stay on topic...

Blogger dc.sunsets May 23, 2016 9:44 AM  

I used to think there would be hard-stop physical limits to how far the Full-Fiat, Debt-is-wealth capital-consumption system established 40-50 years ago. I thought those limits were reached in 1987, 1992, 1995, 2000, 2007, and a year ago.

Silly me.

There are no limits in complex systems. There are only probabilities and fractals. We're living in a time analogous to that which generated the twin peaks of John Law's Mississippi Scheme in France, which was immediately followed by England's South Sea Bubble.

The amplitude of this iteration is not much different, but the duration is absurdly long...a condition I blame on today's high-tech, scientific-marvel mindset that is even more willing to believe in magic than were the people in France and England 300 years ago.

Magic Debt = Magic Dirt = Magic Equality. All of the world's mass manias are wrapped into One Big Narrative. This is the best explanation for why the catastrophe baked into this cake is of numerous, seemingly unrelated ingredients (any one of which would be good for a Grade A Apocalypse.)

Blogger Rusty Fife May 23, 2016 9:48 AM  

mature craig wrote:Maybe if there was more consensus in economics the correct ideas winning and being applied things would be better

Your statement fails because 'correctness' of ideas (economic models) is religious. There is already a consensus around the correctness of Keynes.

Whereas, there are different models that may be aplicable in different circumstances is probably a better understanding of the situation.

The most accessible idea of this conflict is between the technical and fundamental traders. Both models work in isolation; but you should pay attention to both of them to keep yourself from running off a cliff.

Blogger dc.sunsets May 23, 2016 9:50 AM  

@18 my point is just that the trust in economists is not limited to that field. The West is addicted to trust in experts, who then spin mountains of epicycles to keep the addicts in thrall. Addicts keep on doing self-destructive things until they either hit bottom and fix themselves, or they die.

The jury is out whether the people of the West will snort, smoke and inject all these obvious pathologies until death is already assured, or if we hit a bottom while still harboring the strength to (painfully) recover.

Blogger VD May 23, 2016 9:54 AM  

I was making a joke based on the typo before it got fixed.

And now you've learned why it's pointless to do that.

Maybe if there was more consensus in economics the correct ideas winning and being applied things would be better

Are you really this much of a jackass or are you just playing one online? Keen is criticizing the mainstream economic consensus. That's the core purpose of his book "Debunking Economics".

Seriously, is your IQ around 85 or something? I'm genuinely curious. I want to know what level of IQ is required to consistently churn out this optimistic, totally uncomprehending drivel.

Anonymous Eduardo May 23, 2016 10:01 AM  

Actually DC probably forgot a word there.

I think he means: "there should be more consesus that the correct ideas winning and being applied things would be better"

Anonymous mature craig May 23, 2016 10:04 AM  

Re 954 oh I see

Blogger FALPhil May 23, 2016 10:04 AM  

@13 dc.sunsets
...based on nothing but extremely complex pyramids of error...

I imagine that there is quite a bit of this kind of thing going on, especially when the proponents keep hammering the "consensus" aspect.

Anonymous labman May 23, 2016 10:05 AM  

@16

Are standard candles really standard?

Blogger CarpeOro May 23, 2016 10:07 AM  

When the spirits are restless, buy silver and gold.

A large portion of the wealthy and "educated" are preaching a system of laws that defy common sense. Anthropogenic global warming when math shows we don't put enough energy into the system for the effects they claim. The best mathematicians becoming mathmagicians creating formulas that "prove" derivatives work with mortgage loans that are dreck. Courts insisting that men can be women if they say they are. Economists still saying Keynes was right. Reality doesn't like being ignored. Reality will deliver a giant bitch slap at some point - don't be one of the people who deserve it.

Anonymous mature craig May 23, 2016 10:13 AM  

I was under the impression that there is a lack of consensus in economics I don't follow it closely though

Blogger swiftfoxmark2 May 23, 2016 10:18 AM  

I have noticed a definite trend of old-school idolatry amongst many economists.

Anonymous kfg May 23, 2016 10:18 AM  

" . . . comets were considered an atmospheric phenomenon . . ."

Blogger Cinco May 23, 2016 10:22 AM  

Prayer request: my two year old was bitten on the face by a brown recluse, please do what you will.

Blogger praetorian May 23, 2016 10:42 AM  

Most economists are like most journalists. They print up whatever propaganda tripe their paymasters demand.

I'd like to know if that's actually true. It seems to me that they follow whatever the (((mathematical obfuscators))) say, so long as it confirms their feels. It's a bad situation, where complex math is used to justify the desired conclusions because, as Keen said, it takes years to get to the point to realize the math is all bullshit and, at that point, you are in too deep to stop, but don't have enough power to say anything. Why bother? Just keep reaching for that junior faculty position and feeling good about your virtue-politics.

Blogger Ingot9455 May 23, 2016 10:44 AM  

Prayers sent.

We do have random exogenous shocks in the positive direction. They're called 'scientific advances.' For example, Clinton's last six years had the Internet Boom; a massive surge in increase in productivity and economic activity caused by the outgrowth of the Internet.

If, for example, Polywell Fusion pans out at the 100 megawatt scale, that would be another one.

Anonymous johnc May 23, 2016 10:54 AM  

tangentially related

Japan just posted a $7.5B trade surplus for the previous month.

When's the last time the US has posted a trade surplus?

Can someone explain to me why every first-, second-, and third-world nation is allowed to have a trade surplus but even raising the possibility of the same for the US is met with bristling hostility?

OpenID aew51183 May 23, 2016 10:56 AM  

@32

It is, at least in the top 10 institutions. There were expose's on the corruption in Harvard's economics dept for instance.

If you thought the Tobacco Institute was bad at spreading out-right disinformation, I have come to the conclusion that most major Economics departments are their own branches of the pseduo-academic propaganda machine aimed at pushing globalism, free trade, and undermining the economy of real goods.

The tells for me that they're part of this complex are their pushing either dogmatic free trade or the idea a nation doesn't need an industrial sector to be economically viable.

Blogger Student in Blue May 23, 2016 10:56 AM  

@mature craig
I was under the impression that there is a lack of consensus in economics I don't follow it closely though

If you "don't follow it closely", why are you giving your opinion like you do follow it closely?

Do you think it's a good idea for someone who doesn't know anything about football to just keep talking on and on about how "this rule is dumb and needs to get changed"?

Anonymous Eduardo May 23, 2016 11:05 AM  

Courtier's reply Student!!!!!!

Blogger Mr.MantraMan May 23, 2016 11:07 AM  

An ideology at some point requires magic thinking.

Blogger dc.sunsets May 23, 2016 11:15 AM  

We do have random exogenous shocks in the positive direction. They're called 'scientific advances.' For example, Clinton's last six years had the Internet Boom; a massive surge in increase in productivity and economic activity caused by the outgrowth of the Internet.

The jury is far from "in" on whether the (mis)Information Superhighway is boon or bane.

Humans have minds designed for an environment lacking 99.9% (guessing) of the artificial dopamine stimulators of the present technological age. Every human vice seems to grow from a misdirection of nature's pleasure signals, and look around at our saturation in such things.

Every time Mankind conquers one of Nature's scourges we seem to generate something to replace it. Anyone who thinks the Internet conquers ignorance might want to spend more time on Wikipedia. Our current Age doesn't unearth the truth, it insures that common sense and timeless truths are buried under the concrete of Modernism's hubris, leaving some of us astonished at the Madness of the Many.

Blogger bob k. mando May 23, 2016 11:19 AM  

i tried to say hello to Chuck but he wasn't home.

neighbor, name of Ted, tells me that Chuck is in California.

oh well, maybe next time.

Blogger FALPhil May 23, 2016 11:19 AM  

@28 mature craig
I was under the impression that there is a lack of consensus in economics I don't follow it closely though

I won't bitch slap you like Student did, but I would suggest that you follow economics rather closely. It is one of those things that can and will have a direct effect on what happens in your life, at least under the current system.

In the USA, meddling in the economy can be construed as a constitutional overreach. We won't be able to fix that short term. However, understanding what drives government decisions (the "consensus") will enable you to take action to soften the blows when they come, and come they will. I've said it before, and I'll say it again, you could pick 535 random people out of any large city phone book and have an excellent chance at a group of people who know much more about the economy than the US Congress. Congress relies on doofusses like Krugman, who, if judged on his predictive abilities, is an absolute Keynesian Kool-aid drinker, which is why the US economy is in the shape it is in.

Blogger Chent May 23, 2016 11:20 AM  

Cinco, prayers sent.

Blogger John Wright May 23, 2016 11:34 AM  

"The more epicycles and explanations that they have to come up with, the more certain you can be, even if you have no idea what they're talking about, the mere fact that they are engaging in the circles and epicycles means that you can be pretty confident that they're going to be wrong."

Hence Occam's razor. A simpler explanation that predicts the events is to be preferred.

Blogger praetorian May 23, 2016 11:38 AM  

Can someone explain to me why every first-, second-, and third-world nation is allowed to have a trade surplus but even raising the possibility of the same for the US is met with bristling hostility?

Because the US supplies the world with its reserve currency, and if it ran a trade surplus it would be deflationary, "rob" the U.S. Govt and, to a much larger extent since credit-money dominates government-money, the big banks of their seigniorage.

https://en.wikipedia.org/wiki/Triffin_dilemma

Accounting identities are a hell of a drug...

Anonymous mature craig May 23, 2016 11:40 AM  

Didn't mean to come across as if I am an expert but I felt I knew enough about the subject of economics to make a worthwhile comment. I sped read Voxs article and completely missed Vox's point.

Blogger praetorian May 23, 2016 11:42 AM  

It is, at least in the top 10 institutions. There were expose's on the corruption in Harvard's economics dept for instance.

That sounds entirely plausible and, mmmmm, confirms my (((biases))), but some light googling didn't turn much up. Do you have any good links on the issue?

Blogger Chent May 23, 2016 11:44 AM  

IMHO, the problem with economics is that modern intellectuals aim to convert any kind of knowledge into a science and, if possible, into a hard science. This is derived from our present scientism: only science gives truth (which is self-refuting, because this argument cannot be proven by science). Science enjoys a huge prestige in our society (even "social science" whose results can only be repeated 50% of times)

The thing that everybody admires are the physical sciences: a neat set of equations explains everything with a great accuracy and elegance. But physical sciences are the low-hanging fruit. The physical world is very big but very simple. This is why it can be easily modeled in a mathematical way.

The biological world is more complex. This is why it cannot be described by equations, but with mechanistic explanations (such as those of a machine).

The mental world is even more complex. The complexity of the mind and the brain are very high. This is why psychology does have equations or mechanistic explanations, but only some trends and concepts applied loosely.

If you gather lots of minds together, you have the most complex object in the Universe: a society. This cannot be dealt with equations or mechanistic explanations so it must be a series of concepts loosely bound (such as history). As with psychology, there are different schools and interpretations of facts.

The problem with economics is that it tries to apply the method of physical sciences to an economy. So it makes VERY SIMPLIFIED models and when these models predict something, they declare victory (most often than not, they only predict the past, and not even that). The fact that these models are mathematical gives a false feeling of being a hard science.

The rational position would be to take these models (neoclassical, keynesian) as imperfect tools that can be applied in some cases (such as the theories of psychology or history), not as equations of physics.

But this goes against the hubris of economists and the modern worldview that expect any discipline to resemble hard sciences as much as possible. So every school of economics deals with its model as if it was THE TRUTH PROVEN BY SCIENCE and label anything beyond this model as "beyond science", "dogmatic", "unscientific", "religion" or "not economics"(every economist thinks the others are religious but he is a scientist).

It would be more truthful to acknowledge the limitations of economics and its models, but this goes against the interest of the ruling class, which can further its interests by appealing to the rationalizations created by economists.

Anonymous Eduardo May 23, 2016 11:44 AM  

Wow Cinco how did that happen!?! Is your son okay??? How are the tests coming??? How the heck the person bit him???

*watch out for zombie signs

Geez... U_U this is allll you guys's racism turning back on y'all

-----------

John Wright

Well, Occam's razor was a nominalist-based idea. Since we can never know the truth, let alone know what truly explains an event, we ought choose the simpler explanation so as to make explaning something possible, even though we may never know if the explanation is real

Parsimony is similar, but it is pragmatic school of thought.

U____U noooow realism good sir... Realism is aaaaa whole new game. John, why don't you post on Edward Feser's blog, or read up on it, just in case you haven't already.

Anonymous Jack Amok May 23, 2016 11:49 AM  

The reality is that economics is basically a set of competing religious schools.

Some years ago, I realized most conflict had ersatz religion as the driving core, just as Keen describes. And I was congratulating myself for the brilliant insight when a friend suggested I read Hilaire Belloc...

...a crisis can only occur if there's a large exogenous shock. Which, by definition can't be predicted, therefore, you can't predict it.

I suppose an economist reading Taleb's Incerto trilogy would be like a vampire eating garlic fries in the noon-day sun, but the whole point of Black Swans is that even though you can't predict when one will come along, you can predict that one will swim by sooner or later. If your system cannot survive exogenous shocks, then your system is fragile and doomed.

Anonymous Eduardo May 23, 2016 11:50 AM  

Chent

I believe that some economists think that they can show through a number of concepts, the results we see today. Now it is true that many sciences are just imperfect tools, yet a hailed as the stargate to reality, but one must first show that economics can only reach only to a certain level of precision before protecting other economical theories through this argument.

Anonymous johnc May 23, 2016 11:52 AM  

@44 -- very interesting; thank you for that.

Blogger James Jones May 23, 2016 12:04 PM  

The Elite don't want to accept accurate economic models because it will hinder their desire to destroy Western civilisation.

Blogger SciVo May 23, 2016 12:17 PM  

mature craig wrote:I was under the impression that there is a lack of consensus in economics I don't follow it closely though

That is at best an illusion caused by reading here, where you are being exposed to heterodox explanations. There is definitely an economic orthodoxy among those with any say in policy.

You're waaaay behind the curve here. I suggest you lurk more.

Blogger Gaiseric May 23, 2016 12:21 PM  

mature craig wrote:Didn't mean to come across as if I am an expert but I felt I knew enough about the subject of economics to make a worthwhile comment. I sped read Voxs article and completely missed Vox's point.
Don't ever post if all you did was speed read. Helpful pro-tip useful generally.

Also; if your contribution is "we need more consensus" then no, you don't know enough about economics to add materially to the discussion. That's not only not worthwhile, it's anti-worthwhile.

Blogger Escoffier May 23, 2016 12:35 PM  

Cinco wrote:Prayer request: my two year old was bitten on the face by a brown recluse, please do what you will.

On it!

Blogger James Dixon May 23, 2016 12:48 PM  

Prayers offered, Cinco.

Anonymous mature craig May 23, 2016 12:55 PM  

Think it's a pretty reasonable comment I see republican economist saying a. I see democrat econmists saying b

Blogger Student in Blue May 23, 2016 1:43 PM  

Think it's a pretty reasonable comment I see republican economist saying a. I see democrat econmists saying b

Even then... say everyone's only saying A. What if A is wrong? How did increased consensus somehow prevent A from being wrong?

Anonymous mature craig May 23, 2016 2:04 PM  

@student in blue. You are right.



Blogger tz May 23, 2016 2:18 PM  

Half OT Gary Taubes commencement address how hard it is to get science right

One key perhaps with Keynes as a sodomite, "In the long run we are all dead" was true for him, but our children and grandchildren ought not be taken with us or be saddled with our creditory practices. For all the shrieking about climate change, when the $20+ trillion bomb goes off we will do a rewind of about 100 years. In Venezuela a hamburger costs $170 - if you can get it.

Blogger FALPhil May 23, 2016 2:32 PM  

@60 tz
... but our children and grandchildren ought not be taken with us or be saddled with our creditory practices.

Indeed. And they may take an opportunity to repudiate it, since they had no hand in creating it. At that point, "full faith and credit" becomes a footnote in history, that is, if history is even recorded after that.

Blogger James Dixon May 23, 2016 3:29 PM  

> And they may take an opportunity to repudiate it, since they had no hand in creating it.

May? Why on earth wouldn't they? It's not like it's going to be possible for them to pay it off. We're already over $19T in deb, and that's just what they'll admit to.

Anonymous mature-content May 23, 2016 4:31 PM  

I won't bitch slap you like Student did

thank God for that

Anonymous krymneth May 23, 2016 4:44 PM  

@48 - "Well, Occam's razor was a nominalist-based idea. Since we can never know the truth, let alone know what truly explains an event, we ought choose the simpler explanation so as to make explaning something possible, even though we may never know if the explanation is real."

I don't think that's quite right. Occam's Razor is the simplest explanation that fits the facts is the one most likely to be correct. It is only a heuristic to guide what you do if you have multiple explanations that fit the facts, it is not a promise that you will always have multiple explanations that fit the facts.

On the original topic, Keen's book is not about economics being "too simplified", it is about it not fitting the facts in the first place, a much more devastating criticism.

Anonymous Steed May 23, 2016 4:49 PM  

So when they claim that their economic system explains everything (closed system) yet have to explain away what they can`t predict (exogenous shock), they are really admitting it`s an open system and they don`t know what they`re talking about?

Blogger Stilicho May 23, 2016 5:22 PM  

Vox, speaking of religious belief, does Keen consider government debt an exogenous factor in his dynamic model?

Blogger Aeoli Pera May 23, 2016 5:31 PM  

Which means, of course, that a randomly distributed variable, which is what the exogenous shocks have to be, remained permanently negative and got bigger while still remaining randomly distributed.

So therefore there has to be, at some point, a really big shock in the opposite direction which hasn't arrived yet.


Gambler's fallacy.

Blogger dc.sunsets May 23, 2016 5:39 PM  

Excess debt is repudiated, not paid off.

The process just isn't called bankruptcy. Bondholders don't get paid. (Although often some politically connected opportunists sweep in, buy up the debt for pennies on the dollar and then later get their cronies to mandate it be paid.)

Blogger FALPhil May 23, 2016 5:43 PM  

@63 mature-content
I won't bitch slap you like Student did

thank God for that


Yeah, I bitch slapped clay a couple of weeks ago, and he took real offense. After thinking about it, I came to the conclusion that even if your friends are acting silly, they are still your friends. So, I made a resolution to, at most, poke light hearted fun at the Ilk, Dread Ilk, and VFMs.

@62 James Dixon
May? Why on earth wouldn't they? It's not like it's going to be possible for them to pay it off. We're already over $19T in deb, and that's just what they'll admit to.

I think it is actually over $20 trillion at this point. I don't know that the millennials will do a whole lot with it; they are already brainwashed. Even if the current economic system does not implode in the near future, at the very least the USA will end up looking like Venezuela eventually. There are only two ways to get rid of a debt that big - inflate or default.

Blogger weka May 23, 2016 7:13 PM  

But... That wipes out string theory!
(Yes, I know it fails Oscar's razor).

Anonymous krymneth May 23, 2016 8:01 PM  

@67 Aeoli Pera - It's not gamblers fallacy. If someone claims they are drawing from a normally distributed set of X centered on 0, but they draw a negative number, and then another, and then another, and then another... repeat for quite a while... then what you have there is not a normally distributed set of numbers centered on zero.

Technically no draw can ever disprove the claim, but you are entitled to come to the very-high-probability conclusion that the claimed distribution is incorrect.

In gambler's terms, if someone claims to be flipping a fair 50/50 coin and you make bets on the outcome, after your 50th straight loss you are entitled to assume there's some sort of shenanigans going on. (Well before that actually, but I don't want to get into arguments about the precise threshold.)

Blogger OldFan May 23, 2016 8:52 PM  

Another way of looking at economics is to consider it a set of competing schools of materialist philosophy. This explains why there is little agreement among them - they have differing axioms.

This is not science, because there are never any experiments to validate these elegant theories. Paul Krugman got his Nobel Prize for writing a paper - just a paper. No experiment, no data, no validation - just articulating an elaborate theory that pleased his reviewers.

Some economists, deSoto for one, actually do real science and validate their theories - but they are not considered mainstream because they do not support the prevailing narrative of the competing philosophy schools.

Also, consider this: The Economy can be considered "everything a society does," so what does "control the Economy" really mean?

The schools of economic theory may have agendas beyond just sounding important.

Blogger OldFan May 23, 2016 8:54 PM  

Oops, forgot the link:
https://en.wikipedia.org/wiki/Hernando_de_Soto_Polar

Anonymous George of the Jungle May 23, 2016 8:56 PM  

Politically, we've already had something like this with the Constitution, only it's called emanations and penumbras instead of epicycles.

Anonymous George of the Jungle May 23, 2016 9:37 PM  

Politically, we've already had something like this with the Constitution, only it's called emanations and penumbras instead of epicycles.

Anonymous Jack Amok May 23, 2016 9:45 PM  

One key perhaps with Keynes as a sodomite, "In the long run we are all dead" was true for him...

That's actually at the heart of a lot of our problems - people kicking cans down the road in the hopes it will be someone else's problem when the can is too big to kick any farther. Or, that some smart guy will figure out a way to make it all work before it blows up...

Either way, it's abdicating responsibility for making hard choices - aka "cowardice" - and our leadership selection process has gone haywire in preventing such people from getting power.

Blogger Groot May 23, 2016 10:53 PM  

Meh. At least they're doing the epicycles. One of my degrees is Economics, and here is their response to the fall of the Berlin Wall, the collapse of communism, and the global renunciation of the foundations of their beliefs (at a top-notch university): crickets. In course after course, they said nothing, not one word, not one reference, not even an embarrassed cough. Epicycles would have been refreshing.

In graduate school, I shamed some of them for this and they briefly did some arm waving, hangdog, some with Nobels. The default is silence, not epicycles.

Blogger tz May 23, 2016 11:05 PM  

@70 Cut the string with Occam's razor - sounds like a video game.

Are they riding an epicycle?

@43 Hence Occam's razor. A simpler explanation that predicts the events is to be preferred.

Not predicts, explains events.

But a case in point is all the evolutionary epicycles trying to deny something designed or created life on earth. Neither the epicycles nor God predict anything, but saying someone designed both the complex mind and body typing and the computer typing it are simpler than saying it all assembled from a tornado in a junkyard.

Anonymous mature-Craig May 24, 2016 12:05 AM  

Keen is criticizing the mainstream economic consensus. That's the core purpose of his book "Debunking Economics".

Just so I am clear Keen is not giving up on economics, but trying to improve it as are you obviously, or else you wouldn't had a free trade debate. You are trying to correct and improve both the republican and democrat views on the subject I assume?

Anonymous Eduardo May 24, 2016 1:02 AM  

Krymneth

Well that is not quite right. Yes Occam's Razor is supoose to fit the facts, or what we believe to be facts. But the razor was created under a nominalist view, so there was no more likely to be correct. That most likely to be correct was probably added after a few centuries of the dynamic of scientific enquiry. It was most likely perpetuated by skeptics and science popularizers, or maybe was just part of the beliefs of the scientific community. See lets say to explain a phenomena we need A, B and C. But for us there is only a need to utilize A and B, we currently see no reason for C. Then some maniac comes along and adds C, to our model, it still works but it is more complex... And correct. If we go with, simpler therefore more likely to be correct we will be wrong. Realism just doesn't believe that, we have to account for all complexity and all nuances, while pragmatism and nominalism just take that to be a waste of time for different reasons I think.

But yes... It is just an heuristics really. Not that people believe ot just happens to be that.

About Keen, I sincerely was just replying to.. Grent I think. I am not aware of the specifics of the book. But that being the case which is expected from this blog, the. YES... It totally ruins any theory, but it seems those theories are so vague they can simply Epicycle their way out of it (well assuming that it does have an epicycle like thinkig behind it)

Blogger Aeoli Pera May 24, 2016 2:30 AM  

krymneth wrote:@67 Aeoli Pera - It's not gamblers fallacy...

You're missing the context. I'll summarize.

Steve Keen says: "The outcome is deterministic but complex."
Peter Ireland says: "The outcome is caused by random shocks that are impossible to predict by definition. We've had a number of increasingly large shocks recently. Because shocks are distributed randomly (by definition), we ought to see some shocks from the other end of the spectrum to balance out the distribution."

Peter Ireland is committing the gambler's fallacy between his second and third statement in this summary.

Blogger Aeoli Pera May 24, 2016 2:33 AM  

What you're describing is more like the heuristic a gambler uses to decide their opponent must be cheating, which is reasonable and not a fallacy.

Blogger SciVo May 24, 2016 2:58 AM  

johnc wrote:Can someone explain to me why every first-, second-, and third-world nation is allowed to have a trade surplus but even raising the possibility of the same for the US is met with bristling hostility?

Because currency flows must balance (or the exchange rate would change), a sustainable reduction in our current account deficit (as a net importer and borrower) could only happen in conjunction with a sustained reduction in our financial account surplus.

So bankers demonize tariffs. Even though an expansion of national production could benefit them in the long run, it would come at the expense of their financial product exports in the short run -- and our degenerate financiers are remarkably short-term thinkers. (They think a quarter is medium and a year is long.)

Blogger LurkingPuppy May 24, 2016 4:39 AM  

I've been (re-)reading the Federalist Papers recently, and noticed that they attribute the strife between the states which they used to justify the Constitution partly to the issuance of ‘paper money’ by the states, and other economic actions. Two examples:

From Federalist Paper No. 10: A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State.

From Federalist Paper No. 85: The additional securities to republican government, to liberty and to property, to be derived from the adoption of the plan under consideration, consist chiefly in …; and in the precautions against the repetition of those practices on the part of the State governments which have undermined the foundations of property and credit, have planted mutual distrust in the breasts of all classes of citizens, and have occasioned an almost universal prostration of morals.

And now a pair of factions which agree on a rage for paper money have controlled the Federal government for decades, and are well on their way to undermining the foundations of property and credit and planting mutual distrust in the breasts of all classes of citizens. Oops.


OT: SciVo, I've been spitballing #RayGunAmerican tweets, to try to push Newt Gingrich for VP based on the 2012 National Review cover depicting him as President Ray-Gun. (Which National Review thought was an insult.) Do you have any suggestions to improve my rhetoric?

Blogger Dwain Dibley September 23, 2016 11:32 AM  

@LurkingPuppy

Newt Gingrich is a serving member of the CFR and Trilateral Commission, both organizations are dedicated to the New World Order and the destruction of national sovereign states.

Blogger Dwain Dibley September 23, 2016 12:40 PM  

I think Steve Keen is closer to the truth than others but he overcomplicates the issues and he too, conflates money and credit.

Within the U.S. there is a debt free money already available that circumvents bank lending, it's called "legal tender". Legal tender (public money*1) is not borrowed, loaned or spent into circulation and the only legal way to get it, is by your demonstrated productivity and by demand for the medium.

Another interesting thing, neither the Fed or the banks possess the legal authority to create money, and they don't. What they do create is asset backed, debt based private credit, not a legal tender.

You see, ours is a Legal Tender Monetary System. This means that our money is not defined by Ludwig von Mises, John Maynard Keynes, Murray Rothbard, Milton Friedman, Joseph Salerno, G. Edward Griffin, Paul Krugman, Mike Maloney, Peter Schiff, Tom Woods, Ron Paul, Steve Keen or any other economist or talking head. Nor is it defined by Austrian Economics, Keynesian Economics, Monetarist Economics, Capitalist Economics, Socialist Economics, Modern Monetary Theory, the Federal Reserve, the U.S. Banking system, conventional wisdoms, esoteric blather or what people may use. It means our money is Defined By Law. And nowhere in law does it designate or even acknowledge Fed and bank generated asset backed, debt based 'private credit' as being a legal tender, or money, or currency, or even a medium of exchange, it is 100% private issue 'Bank Debt', even when it comes from the Fed.

The legal tender (Federal Reserve notes, U.S. notes and coins) is the official currency of the United States, it is what the U.S.G. owes in payment of its debts and it is what the banks owe to their depositors. Fractional reserve banking allows banks to generate credit (a non-monetary unit) in excess of the legal tender held as reserves. The reason that the credit is a non-monetary unit is that it fails to meet any of the qualifying aspects of a money, it has no physical presence so it's not a medium, it doesn't store or transfer value, it's a marker of debt, and it requires an intermediary for its use and continued existence. The only reason private credit is accepted is the underlying belief that it represents the transfer and payment of actual legal tender money and that, the legal tender is available upon demand. In other words, it is the legal tender that is being utilized 'in absentia' by people in commerce, not the debt obligations (credit) of the banks.

Continued.

Blogger Dwain Dibley September 23, 2016 12:40 PM  

Continuation.

People are confusing a means of payment, the transfer of a debt obligation (credit), for the medium of exchange, what is owed as payment (an asset). By legal definition United States coins and currency, including Federal reserve notes, are legal tender money, a medium of exchange by law. Checks as well as debit cards, credit cards, money orders, etc., are a means of payment, referred to as a generally accepted (institutional) arrangement or method that facilitates delivery of money from one to another. Payment has not been made unless or until actual money proper has changed hands. All credit is debt outstanding.

All you’re doing when you use a debit/credit card (private bank credit) to make a purchase is, transferring your obligation to pay the vendor, to the bank, payment has yet to be made. The bank deducts the amount from its debt to you, as represented by your account with them, and adds that amount to the debt it owes to the vendor, as represented by his account with the bank. There was no money or currency of any type, digital, electronic or otherwise, used or exchanged in that transaction, just a transfer of an obligation to pay, which has yet to be met.

The notion that we’re using ‘digital money’ or ‘digital currency’ or ‘digital dollars’ or 'credit dollars' or 'credit money' (an oxymoron) as a medium of exchange is nothing more than a trick of the mind, a figment of our overactive imaginations, a deception, it’s how we rationalize the transaction, and it's how the banksters get away with stealing our labor and wealth.
http://carl-random-thoughts.blogspot.com/

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