We're All Studying The Wrong Things

   (Commentary posted by Roger Erickson)



Or at least too much isolated detail, and too little context.

What'd Walter Shewhart say? "Data is meaningless without context."
Take our aggregate fiscal policy ... please!

The details in this essay by Bill Mitchell are depressingly astounding.

How Two Nations That Drove The Renaissance Eventually Joined At The Hip And Then Purposely Shot Both of Their Own Feet

I'll mention just one. "France was determined to stop Germany ever invading it again."

So, armed with that fixation, France ended up guaranteeing that German export industries would invade France, armed with THEIR fixation on a pegged Fx. And now they profess surprise.

Have A Steady Stream Of Changing Contexts

And Won't Explore Them Without Prejudice?*

Humans have been "Context Nomads" since before we were modern humans. Given that long habit, it is simply amazing that countries with such a history of brilliant physiologists, physicists and chemists can't figure out the rudimentary demands of the dynamic system we call a currency supply.

For heaven's sake! Amoebas figured this out a billion years ago! Even bacteria did. Just follow the damn operations, and keep them going, and evolving?

What should we be studying? How to systematically control the frictions that cause entire human cultures to take one giant step backward for every two aggregate steps forward.

Otherwise, how do we manufacture adaptive Public Purpose? Not just randomly diverted consent?


* We are Context Nomads: human nomads migrating through contexts with UNPREDICTABLE characteristics. Just explore without prejudice? Life is no more difficult than Kindergarten, where we first learn OBT&E. 

Why Isn't Aggregate Policy A Science?

   (Commentary posted by Roger Erickson)



A very useful review article has been posted at NEP, by Randy Wray, about JF Foster

The Reality of the Present and the Challenge of the Future: Fagg Foster for the 21st Century

Reading the Foster quotes drives home that enough Americans understood aggregate economics ... but never managed to convey their insights to enough Americans to consistently leverage those insights.

One in particular stands, out, a conclusion that is stated differently in system science. Namely, that most people get no practice discerning the difference between current fiat and future options. Foster clearly did, 50 years ago, rather like Beardsly Ruml, Michael Kalecki, Abba Lerner, Marriner Eccles, and a few others, on to the present flowering of the miniature MMT community.

So how many people must understand MMT, before it matters? How many Americans must know what some Americans know - to reinstitute operations allowing political economy?  

If we're lucky, even 50 Key People in Key Positions in Key Institutions can make a dramatic difference, as FDR's Brain Trust did. 

However they obviously couldn't ensure that our electorate could MAINTAIN that level of success. To RETAIN aggregate success, many have estimated that 10% of the electorate must grasp the emerging operations that made success possible.  Today that would mean at least 16 million citizens!

It's ironic that the legions of Keynes' followers & opponents alike largely misunderstood the messages of Lerner, Kalecki, Ruml & Keynes.

Worse, it's doubly ironic that the legions of Americans, in both policy positions, universities & electorate, didn't understand the operational functions that Marriner Eccles & the rest of FDR's Brain Trust introduced ... who themselves DID NOT READ Lerner, Kalecki, Ruml or Keynes, or acted largely before most of their summary articles were published.

Finally, it's triply ironic that pundits throughout the ages were right. Humans - and human aggregates too - often stumble over new truths, then pick themselves up and go on in their old ways - for astoundingly long periods of stagnation - as though nothing new had happened.

Yet does that seem to happen MORE often in disciplines not yet favored with the audacity and openness of a science? Other professions glom onto every new advance like a dog on a bone, using the basic, questioning methods of the "scientific method" - aka, to question EVERYTHING, and answer every operational RESULT relentlessly, with yet more questions.

This sums to a simple but profound question. Why isn't aggregate policy dealt with as a science? 

It's not that difficult for aggregates to determine the best course of aggregate action. We mobilize to do it well, in times of crisis or war, but during peacetime we go right back to purposely maintaining a significant, completely unnecessary Output Gap. 

Is it only the frictions of politics that makes us treat the operations of functional democracy (always changing, uniquely scale-dependent) as a fearful taboo? Is that what FDR meant when he said that the only thing we have to fear is fear itself? We're afraid to play as an aggregate team? We're terrified of the return-on-coordination? 

Maybe we should let sports coaches, choreographers and band-leaders run the country? They'd remind us that there's no "I" in team, and also nothing taboo about teamwork.