If you have had the misfortune to study economics formally at university then you will recall sitting through endless and tedious lectures where the instructor asserted some superior knowledge about psychology and human behaviour. If you had combined the economics study with studies in psychology and sociology, you would have soon realised that what was being taught in your economics course was total nonsense. There was an article in the Fairfax press recently (August 6, 2017) – Crisis in high school economics a threat to national wellbeing – ruing the declining enrolments in secondary school economics programs. The point is that these courses are typically more damaging than useful and the contention of the journalist that we are reducing the quality of the economic debate as a result of less people studying economics is problematic. The typical economics program is simple indoctrination into a set of neoliberal principles that allow poor policy to continue despite it delivering disastrous outcomes. There is a crying need for more economic and financial literacy, but that requires an entirely different approach to be adopted rather than jamming more kids into the existing courses and having them come out dangerously brain dead....Bill Mitchell – billy blog
Falling enrolments in mainstream economics programs is a desirable outcome
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Fact of life: your econ prof is scientifically incompetent
ReplyDeleteEconomics is a cargo cult science because economists never understood what science is all about. Proof No 1: like the average commonsenser, economists maintain that science is about predicting the future.
John Kay explains why this does not work in economics: “Big data can help us understand the past and the present but it can help us understand the future only to the extent that the future is, in some relevant way, contained in the present. That requires a constancy of underlying structure that is true of some physical processes but can never be true of a world … in which important decisions or discoveries are made by processes that are inherently unpredictable and not susceptible to quantitative description.”
This so trivial that it hurts and, above all, it is false. It is not a specific failure of economics that it cannot predict the future because — as a matter of principle — science is NOT AT ALL in the business of prediction because it is long known among scientists: “The future is unpredictable.” (Feynman)#1
Only charlatans predict the future, and only morons take them seriously. The silly game, who predicted the last crash of the stock market or the real estate market, is the proper stuff for the Circus Maximus.
The first thing to understand is that science is NOT about prediction but about knowledge. So, to begin with, things that are not knowable are a priori OUT of science. Scientific knowledge satisfies two criteria: material and formal consistency. Everything else is storytelling, sitcom blather, and clueless filibuster about unknown unknowns.
Scientific knowledge is embodied in the true theory. The true theory is the best possible mental representation of reality.
Proof No 2: the representative economist does not realize that the four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/formally inconsistent and that ALL got the pivotal economic concept profit wrong.
The identifier of the representative economist is that he is content with the pluralism of provably false theories and that he tries to explain/excuse manifest failure away.#2
The final proof of scientific incompetence is that neither orthodox nor heterodox economists have gotten the foundational concepts of their subject matter ― profit and income ― right. Because of this economics stagnates since 200+ years at the proto-scientific level.
The study of economics is an intelligence test. Who does not realize until his final exam that supply-demand-equilibrium explains nothing, that DSGE and Post Keynesianism is provably false, and that the scientific content of economics textbooks from Samuelson to Mankiw is zero, and who becomes himself an economics teacher without any idea of how to get out of the swamp proves only a complete lack of scientific knack.
Egmont Kakarot-Handtke
#1 Scientists do not predict
https://axecorg.blogspot.de/2016/02/scientists-do-not-predict.html
#2 Failed economics: The losers’ long list of lame excuses
https://axecorg.blogspot.de/2017/01/failed-economics-losers-long-list-of.html
"Only charlatans predict the future"
ReplyDeleteIf you examine derivative action of a functional equation in time domain you can effectively predict the future...
If you examine derivative action of a functional equation in time domain you can effectively predict the future...
ReplyDeleteIf you know the value of the variables and constants involved based on measurements rather than assumptions or estimates.
If you examine derivative action of a functional equation in time domain you can effectively predict the future...
ReplyDeleteYeah?
So, did you predict Sept, 2008?
Those things are important Tom but they go towards accuracy... if you allow a "plus or minus" type of prediction .... or if you are adamant that you need it down to the millisecond and to the $0.01 ... we don't need any of these predictions to be of extreme accuracy...
ReplyDeleteOK, Matt. What's going to happen 10 years from now?
ReplyDeleteSo, did you predict Sept, 2008?
ReplyDeleteAs far as I can tell, no one's model predicted Sep. 2008 with any degree of precision.
The more precise the model, the more likely it was completely missed.
Some people did foresee a crisis in the making and warned about it, usually too early to be considered predictions. But that is different from writing equations that underly a mathematical model.
Those things are important Tom but they go towards accuracy... if you allow a "plus or minus" type of prediction .... or if you are adamant that you need it down to the millisecond and to the $0.01 ... we don't need any of these predictions to be of extreme accuracy...
ReplyDeleteWhen one writes a function one specifies the degree of accuracy, e.g., number of decimal places. The output cannot be more precise then the input.
In stat, some are questioning the level of significance. Why should there be some arbitrary cut off like .05 that decides what is publishable, where what is publishable defines science? Now some people are asking how much sense that makes scientifically.
My gps in my car predicts the exact time I will arrive at my destination everyday perfectly...
ReplyDeleteThis is a silly comparison. For starters, your theory supposes away all randomness that prove your model false (battery failure in gps, automobile collision, engine failure, satellite failure, road rage homicide of driver, traffic ticket, meteor strikes vehicle, meteor strikes satellite ... you get the picture). Furthermore, location via navaid triangulation is a relatively simple task compared to predicting the outcome of millions of agents acting independently with their own random impediments, externalities, predatory behavior due to power asymmetries, etc.
Delete"What's going to happen 10 years from now?"
ReplyDeleteWhatever it is that we want to be doing... materially...
????
My gps in my car predicts the exact time I will arrive at my destination everyday perfectly...
ReplyDeleteThere is no gps for the economy.
In the required macroeconomics course for economics PhD candidates at my alma mater, the students were specifically told not never to give their opinions when asked for predictions, but rather were told that they should only talk about what various models would say, and to make sure to include contradictory models. And this was a question that always came up in the finals.
ReplyDeleteTom, if the people in economics were working on gps there would be no gps ...
ReplyDeleteThey would look just look at 360 degrees and just say you had a 1 in 360 chance of getting where you wanted to go....
ReplyDeleteWhere is the model that predicts the universe will turn out exactly as it has? (Often in the next pay check, or the hierarchy). Why evolve a human being for instance? Why place your nose in front on the head, instead of right next door to your anus? That would be random; we could model that; predict that and pontificate about it. What if that Creative Energy (Consciousness) had a delightfully wicked sense of humour? Who are you going to complain to? Why not eyes on stalks, protruding from the top of the head; and we have to evolve under water and eat sea grass?
ReplyDeleteWhen the machine (built on a model) hooked up to the patient is flat lining, but the patient is still breathing, which one are you going to believe?
Lose sight of the magic of being alive, the miracle that you even exist, by elevating your temporary little social model above yourself, and you just threw out all of your human potential, and any chance of understanding it. Fortunately, Life doesn’t give up so easily on you; or consign you to your model. Life is too busy, leading you on to towards what is inside of you. Something you cannot model or limit by mind. ”No one is lacking the essential human treasures”.
battery failure in gps (I have iPhone superior power system and 12v jack) automobile collision (I've never had an accident) engine failure( I only buy Toyota and Honda) , satellite failure (terrestrial backup) road rage homicide of driver (never happened) , traffic ticket (only one in entire life) meteor strikes vehicle (never happens) , meteor strikes satellite(never happens)
ReplyDeleteIt's good enough...
For me, there are two approaches to this: - one is through mind, and the other is through consciousness.
ReplyDeleteTo mind, there are ‘random events’; mathematics and all the rest of it. The world is a billiard table and the scope of those random balls flying just about anywhere and creating just about anything are infinity-1. As I said, a lot of it appears to be in the pay check. Human motivation based on what is in the eye; and desirable.
To consciousness, nothing is random. To consciousness, there is no place in the universe where consciousness does not exist. Science will say that matter-electricity produces consciousness (no proof) and the Ageless Wisdom will say Consciousness is the child of Spirit – Matter (opposite poles of the same thing); but you have to be conscious enough to know it. Ergo – human potential and the path to peace. You can still play with your calculator.
Tom Hickey, Matt Franko
ReplyDeleteThe representative economist has no idea of what science is all about. What is called prediction in science is categorically different from the commonsensical meaning of ‘predicting the future’.
Scientists do not predict when the next apple will fall from the tree. What they indeed predict is position and velocity at any point in time once the apple has started to fall. The commonsenser’s view of reality is entirely DIFFERENT from the scientist’s view. The commonsenser’s view is practical, trivial, and false but utterly convincing for other commonsensers.
Each falling apple is a unique historical event. There are arbitrary many proximate causes for an apple to fall: a hailstorm, playing children, an exploding meteorite, material fatigue, an earthquake, and so on. In almost all cases the singular event is uncertain and unpredictable. That is so OBVIOUS that no physicist ever lost many words about the historicity and uncertainty of falling apples.
A SCIENTIFIC prediction is a conditional proposition which presupposes: (i) the exact knowledge of initial conditions, (ii) the knowledge of one or more universal laws, (iii) the absence of disturbances. (Popper, 1994)
The idiocy of economists consists in running around and warning of the next crash and making policy proposals without having the true economic theory, that is, without knowing how the economic system works, that is, without having figured out the objective systemic laws of the monetary economy, for example, the Profit Law. The idiocy of economists consists in not knowing after 200+ years what profit is. And this includes MMT.
There are, of course, economic laws but they do NOT, of course, relate to human behavior.
Egmont Kakarot-Handtke
"Scientists do not predict when the next apple will fall from the tree."
ReplyDeleteWe dont have to wait for that we just schedule harvest activities by PREDICTING WHEN IN THE FUTURE it will be appropriate to harvest the produce... for apples the PREDICTION is that it will be appropriate in the Sep/Oct months and they plan accordingly...
Here they already have a lot of stuff scheduled months in advance:
http://www.appleharvest.com/
First two weeks in October.... I PREDICT they will have tons of apples and apple products ready to go...
Matt Franko
ReplyDeleteWhen the apple fell on his head, Newton suddenly understood how gravitation works and he wrote down one of the most profound physical laws which enabled the prediction of planetary trajectories.
When the apple fell on his head, Matt Franko predicted that the next apple harvest will take place in the first two weeks in October.
Here you have the difference between a scientist and an imbecile economist in a nutshell.
Egmont Kakarot-Handtke
No one knows what gravity is let alone how it works. They just notice apples fall on heads and write some maths (story telling of the numerical kind). And some people don't have a whole big ego trip about it.
ReplyDelete... no idea what electricity is either. They still write the maths story.
ReplyDeleteThere will be some who stop and question: - ‘what is mind’? Well, we know it is the thing, along with ego, that gets us in to a whole lot of trouble. The reason why is because we do not use mind for the purpose nature intended. Mind is a bridge between the personality and the self. Once mind becomes aware of that, it begins to focus and build this bridge consciously. It can still be used for all of the other pursuits, but it has a focus and intention that is all the more concentrated, because it is doing what it is meant to be doing. This awareness and unfailing sense of direction, is one small step along the way. The consciousness that you are is aware of this step, and that you have made it. It is also aware you may not have made it. Mind, without this awareness will run anywhere, seeking knowledge; mind with this awareness knows it is seeking self-knowledge. An immature mind seeks to gratify its own image. That is a recipe for getting incredibly lost.
ReplyDeleteThe most direct path to self-knowledge is through feeling; mind learns how to be still, focused, concentrated - and through experience, understanding dawns. Mind begins to function as the bridge. It is literally an awareness of a new energy, dawning in consciousness – profoundly familiar, profoundly fresh, and profoundly unique. The personality no longer obscures the vision. This too, exists in the world.
:-) !