tag:blogger.com,1999:blog-2761684730989137546.post8178964929552191411..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Brian Romanchuk — NAIRU Should Be Bashed, Smashed, And Trashedmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger52125tag:blogger.com,1999:blog-2761684730989137546.post-50391093458534998862017-02-21T07:59:47.483-05:002017-02-21T07:59:47.483-05:00ICYMI
Comment on Simon Wren-Lewis (post on mainly...ICYMI<br /><br />Comment on Simon Wren-Lewis (post on mainly macro)<br /><br />You say: “What I find very dispiriting about most of the comments on this post is a complete failure to engage with what I have said, and say where they disagree. Instead it is more along the lines of repeating the NAIRU is rubbish, without ever giving a coherent account of what exactly is rubbish.”<br /><br />The microfounded NAIRU-Phillips curve has first of all to be rectified.* The macrofounded SYSTEM-Phillips curve is shown on Wikimedia<br />https://commons.wikimedia.org/wiki/File:AXEC62.png<br /><br />From this correct employment equation follows in the MOST ELEMENTARY case that an increase of the macro-ratio rhoF=W/PR leads to higher total employment L.<br /><br />The ratio rhoF embodies the price mechanism. Let the rate of change of productivity R for simplicity be zero, i.e. r=0, then there are three logical cases:<br />(i) The rate of change of the wage rate W is equal to the rate of change of the price P, i.e. w=p, then employment does NOT change NO MATTER how big or small the rates of change are. That is NO amount of inflation or deflation has any effect on employment.<br />(ii) The rate of change of the wage rate is greater than the rate of change of the price then employment INCREASES.<br />(iii) The rate of change of the wage rate is smaller than the rate of change of the price then employment DECREASES.<br /><br />So, it is DIFFERENCES in the rates of change of wage rate and price and not the absolute magnitude of change. Every PERFECTLY SYNCHRONOUS inflation/deflation is employment-neutral, that is, employment sticks indefinitely where it is. In more general terms the neutrality condition reads W(1+w)/P(1+p)(R(1+r)=rhoF=constant.<br /><br />There is NO such thing as a NAIRU, all depends on relative rates of change. This is a testable proposition.<br /><br />Egmont Kakarot-Handtke<br /><br />* See ‘NAIRU: an exhaustive dancing-angels-on-a-pinpoint blather’<br />http://axecorg.blogspot.de/2017/02/nairu-exhaustive-dancing-angels-on.htmlAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-33115054705537545252017-02-21T04:11:19.156-05:002017-02-21T04:11:19.156-05:00ICYMI
Comment on Blissex (post on Economists’ Vie...ICYMI<br /><br />Comment on Blissex (post on Economists’ View blog)<br /><br />You comment on the rectification of the obsolete NAIRU-Phillips curve: “That sounds very plausible, and the replacement of the imaginary Phillips curve(s) is welcome, but your comment lacks one very important detail, the ‘central banker’s’ question.”<br /><br />It is a matter of indifference whether ‘that sounds very plausible’. The point is whether the hallucinatory NAIRU-Phillips curve or the objective SYSTEMS-Phillips curve is the TRUE representation of the determinants of employment/unemployment.<br /><br />Scientific truth is methodologically well-defined by material and formal consistency and is established by PROOF and NOT by what ‘sounds plausible’ to Blissex. <br /><br />Because the NAIRU-Phillips curve is PROVABLE false NO economic policy conclusions can be drawn from it, neither with regard to monetary nor to fiscal policy. Because economists lack the true theory their economic policy guidance has NO sound scientific foundation since Adam Smith.<br /><br />Everybody has the right to climb on a soap box and to address the Circus Maximus with policy proposals EXCEPT economists. Economics is supposed to be a science and economists are supposed to adhere to scientific standards. This means that economists have to make sure that they have the true theory about how the economy works BEFORE they tell the world how to save the economy.<br /><br />The fact of the matter is that profit theory, IS theory, monetary theory, and employment theory is false.#1 Because employment theory is false, economic policy guidance regularly WORSENS the situation, that is, economists bear the intellectual responsibility for unemployment, deflation, depression, stagnation.#2<br /><br />Before economists in general and Wren-Lewis in particular can address ‘the central banker’s question’ there is a lot of scientific homework to do.#3<br /><br />Egmont Kakarot-Handtke<br /><br />#1 See ‘The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment’<br />https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2489792<br />#2 See ‘How economists murdered the economy and got away with it’<br />http://axecorg.blogspot.de/2016/11/how-economists-murdered-economy-and-got.html<br />#3 See ‘If it isn’t macro-axiomatized, it isn’t economics’<br />http://axecorg.blogspot.de/2017/02/if-it-isnt-macro-axiomatized-it-isnt.htmlAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-13818747956054643062017-02-20T14:25:49.360-05:002017-02-20T14:25:49.360-05:00Matt,
The unspent income story is what leads the ...Matt,<br /><br />The unspent income story is what leads the idiots to recommend negative interest rates.<br /><br />The compelling part of MMT is that you understand you don't need rich people's money to advance an agenda, except to the extent that those people use their money and influence to oppose it. They can stand aside or lose it all, I say.<br /><br />If we're just going to focus on bullshit like PPPs, what's the point? We already have those and they don't help most people.Jeff65https://www.blogger.com/profile/10718489243428165684noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57926535512355999912017-02-20T12:00:26.264-05:002017-02-20T12:00:26.264-05:00ICYMI
NAIRU: an exhaustive dancing-angels-on-a-pi...ICYMI<br /><br />NAIRU: an exhaustive dancing-angels-on-a-pinpoint blather<br />Comment on Simon Wren-Lewis on ‘NAIRU bashing’<br /><br />NAIRU is dead, not because of measurement problems, but because the underlying employment theory is false.<br /><br />You say: “The way economists have thought about the relationship between unemployment and inflation over the last 50 years is the Phillips curve.”<br /><br />This hallucinatory Phillips curve has first of all to be rectified.#1 The objective systemic employment equation is shown on Wikimedia<br />https://commons.wikimedia.org/wiki/File:AXEC62.png<br /><br />From this equation follows:<br />(i) An increase of the expenditure ratio rhoE leads to higher employment (the Greek letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates credit expansion, a ratio rhoE less than 1 indicates credit contraction.<br />(ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown of growth does the opposite.<br />(iii) An increase of the factor cost ratio rhoF=W/PR leads to higher employment.<br /><br />The complete employment equation contains in addition profit distribution, government deficit/surplus, and the trade balance.<br /><br />Item (i) and (ii) cover Keynes’s well-known arguments about aggregate demand. The factor cost ratio rhoF as defined in (iii) embodies the price mechanism which, however, does NOT work as standard economics hallucinates. As a matter of fact, overall employment INCREASES if the average wage rate W INCREASES relative to average price P and productivity R and vice versa. If the average price increases faster than the average wage rate employment decreases.<br /><br />The systemic employment equation fully replaces the hallucinatory Phillips curve and NAIRU. The equation contains nothing but measurable variables and is therefore testable. No prohibiting measurement problems at all!<br /><br />Right policy depends on true theory: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)<br /><br />Economists do NOT have the true employment theory and this explains their endless inconclusive blather about NAIRU which is a NONENTITY like the Tooth Fairy or dancing-angels-on-a-pinpoint.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 See ‘Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2130421AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-82426759752289872302017-02-20T08:54:51.412-05:002017-02-20T08:54:51.412-05:00"Another step toward a market state."
N..."Another step toward a market state."<br /><br />No... as govt retains 80% ownership of the PPP shares....<br /><br />Some form of general taxes (fuel tax/vehicle sales tax...) is replaced with a toll or fee for use of the specific segment of the infrastructure...<br /><br />Private partner is also the managing partner responsible for operation and maintenance so they get first position on the toll flow....<br /><br />Tolls are split 80/20 after O&M is covered...<br /><br />Is more efficient because the toll flow can never be diverted from the partnership interests and only the excess is returned to govt general accounts...Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10261391398116542582017-02-20T07:34:13.143-05:002017-02-20T07:34:13.143-05:00Neil,
You say "Because you have nothing to s...Neil,<br /><br />You say "Because you have nothing to sell that is worth that much." What's that supposed to mean?<br /><br />Car manufacturers, and tens of thousands of other manufacturers and retailers have hundreds of thousands of tons of "stuff" to sell. And given more demand they'd bring more to market.<br /><br />But if demand rose too far I reckon they'd be liable to raise prices. Inflation ensues.<br /><br />But according to those deluded NAIRU bashers, inflation DOESN'T ensue when demand rises and unemployment falls, because apparently there's no relationship between inflation and unemployment.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-39352298249194275062017-02-20T07:24:20.318-05:002017-02-20T07:24:20.318-05:00AX,
Imo anybody who talks about "inflation&...AX, <br /><br />Imo anybody who talks about "inflation" under a numismatic system is a moron.Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-14192398934804509682017-02-20T07:22:14.696-05:002017-02-20T07:22:14.696-05:00Jeff,
"Govt doesn't need the money"...Jeff, <br /><br />"Govt doesn't need the money"<br /><br />Nobody believes that... maybe you haven't noticed?<br /><br />As Warren says "it's always an unspent income story..."<br /><br />Maybe change tactics and work on ways to reduce the unspent income....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44855370009383686842017-02-20T06:58:53.200-05:002017-02-20T06:58:53.200-05:00"Full employment could easily be achieved by ..."Full employment could easily be achieved by increasing social security benefits to livable levels and lowering the retirement age to make way for young workers."<br /><br />It can't. That's pump priming and has precisely the same failures as thinking you can sort out the economy by altering the amount of borrowing in the system. <br /><br />It's rather more than just an aggregate demand problem that is sorted out by magic with 'markets'. Unless you anchor the markets they drop out of control. And at the moment we anchor the markets with 5% unemployment - millions of people in destitution scrabbling to find bones that aren't there. <br /><br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-27491634272429063962017-02-20T06:55:39.290-05:002017-02-20T06:55:39.290-05:00"Then why don’t we bump up demand to astronom..."Then why don’t we bump up demand to astronomic levels, e.g. by printing and distributing $1tr of $100 bills?"<br /><br />Ralph,<br /><br />That is very simple. Because you have nothing to sell that is worth that much. <br /><br />Government is about buying things. IF you don't have anything worth buying you're not going to get any money are you. And that is what provides the natural limit - nothing to buy means no extra spending. <br /><br />As I keep saying governments, or central banks for that matter, are not in the business of spending. They are in the business of buying. That shift in focus means everything. <br />NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-48605460759522516222017-02-20T02:16:21.700-05:002017-02-20T02:16:21.700-05:00Matthew Franko, Tom Hickey
Seems you lost your wa...Matthew Franko, Tom Hickey<br /><br />Seems you lost your way. The point at issue is NAIRU and not the relationship between investment and saving. The latter is given by Qm=I-Sm, i.e. monetary profit is equal to the difference between investment and monetary saving. For more details see ‘Wikipedia and the promotion of economists’ idiotism’<br />http://axecorg.blogspot.de/2016/11/wikipedia-and-promotion-of-economists.html<br />and cross-references Refutation of I=S<br />http://axecorg.blogspot.de/2015/01/is-cross-references.html<br /><br />Egmont Kakarot-HandtkeAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-84167476361852085882017-02-19T20:33:24.713-05:002017-02-19T20:33:24.713-05:00Matt,
> You have to create incentive for some ...Matt,<br /><br />> You have to create incentive for some people to spend some of that unspent (saved) income<br /><br />Why???<br /><br />The govt doesn't need money.<br /><br />And if savers are so clever wouldn't they make a lot more money without govt sweetening the deal? The only way this works is if the govt essentially subsidizes the investment or underwrites the risk. Nothing smart or clever here, just people who already have money with their hands out. A scam.<br /><br />We have PPPs here in Australia - that is how they work.Jeff65https://www.blogger.com/profile/10718489243428165684noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72694082180764048032017-02-19T20:05:51.765-05:002017-02-19T20:05:51.765-05:00Means redefining infrastructure as a capital good ...Means redefining infrastructure as a capital good rather than a public good. Another step toward a market state.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66614308180863240562017-02-19T19:52:14.208-05:002017-02-19T19:52:14.208-05:00"Savings funds investment?"
Part of it...."Savings funds investment?"<br /><br />Part of it... <br /><br />Warren via rote: "its always an unspent income story..."<br /><br />You have to create incentive for some people to spend some of that unspent (saved) income...<br /><br />Look at Trump's infrastructure plan via the PPPs, 20% of that will typically come from the Private Partner...<br /><br />So if he is talking about $1T, then this is potentially going to get $200B of current savings out of the mattress and creating investment flow...<br /><br />http://www.foxnews.com/opinion/2016/10/27/wilbur-ross-peter-navarro-trump-vs-clinton-on-infrastructure-and-why-it-matters.htmlMatt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-23661385021812861142017-02-19T15:40:27.872-05:002017-02-19T15:40:27.872-05:00They put up their savings (ie foregone consumption...<i>They put up their savings (ie foregone consumption) to pay for the construction of material productive systems in expectation of a return of their savings + an increase...</i><br /><br />Savings funds investment?Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-71990371861372211002017-02-19T14:36:53.903-05:002017-02-19T14:36:53.903-05:00Tom Hickey
Science is about invariances (Nozick) ...Tom Hickey<br /><br />Science is about invariances (Nozick) but there is NO such thing as behavioral invariances. Because of this the neo-Walrasian axioms* are methodological madness to begin with. There is NO need to invoke the Sonnenschein-Mantel-Debreu theorem in order to refute/unlearn standard economics.<br /><br />The subject matter of economics is NOT the behavior of humans but the behavior of the economic system.** See ‘The existence of economic laws and the nonexistence of behavioral laws’<br />http://axecorg.blogspot.de/2015/12/the-existence-of-economic-laws-and.html<br /><br />Egmont Kakarot-Handtke<br /><br />* The microfoundations approach is defined with these five hard core propositions, a.k.a. axioms: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)<br /><br />** The macrofoundations approach is defined with these three BEHAVIOR-FREE systemic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.AXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-83805865653757612152017-02-19T13:53:12.633-05:002017-02-19T13:53:12.633-05:00Tom,
You seem to be making my case for me. You sa...Tom,<br /><br />You seem to be making my case for me. You say (to summarise) that writing laws that describe human behaviour (in particular large groups of humans) is difficult because humans are more complicated than atoms. Quite agree! That helps explain my above point that empirical confirmation of the NAIRU idea is difficult because of background noise.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-1863428071121152202017-02-19T13:50:19.389-05:002017-02-19T13:50:19.389-05:00"certainly if the total number of dollars spe..."certainly if the total number of dollars spent on BIG is approximately balanced by numbers of dollars collected in tax,"<br /><br />Ralph this is monetarist thinking...<br /><br />Even if the govt is providing USDs and taxing out all previous provided USDs during some fiscal interval (ie no USD savings), if the govt increases the loan limits for single family homes during that same interval, the price of housing has been increased...<br /><br />ie the rote MMT statement: 'its about price not quantity'...<br /><br />Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-90452264009812710392017-02-19T13:38:02.803-05:002017-02-19T13:38:02.803-05:00Greg,
Your claim that printing and distributing $...Greg,<br /><br />Your claim that printing and distributing $1tr of $100 bills is the same as a basic income scheme is absurd. The “print” scheme would not be the same as basic income unless great care was taken to ensure the freshly printed bills were VERY evenly distributed among the population. The standard helicopter drop scenario normally envisages a RANDOM distribution of $ bills, not a careful distribution.<br /><br />Next: “I know of no one who has argued that basic income schemes wont be inflationary.” Hilarious. I imagine about 95% of advocates of basic income claim it won’t be inflationary: certainly if the total number of dollars spent on BIG is approximately balanced by numbers of dollars collected in tax, there is no reason for BIG to be inflationary.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-20241849517237348852017-02-19T13:16:18.372-05:002017-02-19T13:16:18.372-05:00" grifters (rent-seeking parasites)."
T..." grifters (rent-seeking parasites)."<br /><br />They put up their savings (ie foregone consumption) to pay for the construction of material productive systems in expectation of a return of their savings + an increase...<br /><br />this manifestly results in more efficient outcomes in real terms than any alternative approach to material endeavors...<br /><br />This is where someone like Hudson is blind to what is really going on... and hence all he can come up with some idiot "debt foregiveness!" thing...Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-90817083174016848532017-02-19T12:34:46.959-05:002017-02-19T12:34:46.959-05:00The fact that there is little empirical evidence t...<i>The fact that there is little empirical evidence to support NAIRU is easily explained by the amount of background noise. Same problem applies in other subjects (chemistry, astronomy, etc). But in subjects other than economics, it is normally possible to do experiments where non-relevant variables , i.e. “other stuff”, is held constant. In economics that is not possible normally.</i><br /><br />This argument depends on the homogeneity or close similarity of the subject matter of the natural, life and social sciences, which is a false assumption empirically, which should be obvious based on the differences between atoms and cells, and cells and human beings. Human being are not homogenous enough behaviorally to be additive other than in the most simple way. Assuming homogeneity and additivity involves the fallacy of composition, as Keynes observed. This is clearly the case with saving and interest rate setting is supposed to work on the basis of its effect on the saving-investment curve.<br /><br />But even in the natural sciences there is emergent behavioral. There is no problem aggregating atoms since they are additive. The number of atoms doesn't affect the behavior of a gas. The number of elections doesn't affect the operation of a circuit, so determinative "laws" can be formulated. They are called "laws" because of the degree of confirmation, which is very precise regardless of time. In other words, history is not relevant. <br /><br />However, when atoms join with atoms one element of other elements, emerge properties develop. This is the case with individuals and groups. An individual's preferences are affected by group affiliation and institutional arrangements, resulting in emergence. This generates many causal factors that become confounding.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89404670426271326282017-02-19T12:20:14.233-05:002017-02-19T12:20:14.233-05:00Unlearning on SMD conditions:
The first example i...Unlearning on SMD conditions:<br /><br /><i>The first example is the Sonnenschein-Mandel-Debreu (SMD) Theorem. Broadly speaking, this states that although we can derive strictly downward sloping demand curves from individually optimising agents, once we aggregate up to the whole economy, the interaction between agents and resultant emergent properties mean that demand curves could have any shape. This creates the possibility of multiple equilibria, so logically the system could end up in any number of places. The SMD condition is sometimes known as the ‘anything goes’ theorem, as it implies that an economy in general equilibrium could potentially exhibit all sorts of behaviour.</i><br /><br /><a href="https://unlearningeconomics.wordpress.com/tag/smd-theorem/" rel="nofollow">The DSGE Dance</a>Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-32275271883894450002017-02-19T10:43:21.747-05:002017-02-19T10:43:21.747-05:00Ralph Musgrave
You argue: “The fact that there is...Ralph Musgrave<br /><br />You argue: “The fact that there is little empirical evidence to support NAIRU is easily explained by the amount of background noise. Same problem applies in other subjects (chemistry, astronomy, etc). But in subjects other than economics, it is normally possible to do experiments where non-relevant variables , i.e. ‘other stuff’, is held constant. In economics that is not possible normally.”<br /><br />This is one of the oldest excuses of economists which can be traced back to Hume and Mill: “There is a property common to almost all the moral sciences, and by which they are distinguished from many of the physical; this is, that it is seldom in our power to make experiments in them.” (Mill)#1<br /><br />The solution of this methodological problem consists in making a system science out of the moral or behavioral or social proto-science of economics. To get out of failed economic theory requires nothing less than a full-blown paradigm shift from accustomed behavioral microfoundations to entirely new systemic macrofoundations.<br /><br />In the following a sketch#2 of the correct employment theory is given. The most elementary version of the objective systemic employment equation is shown on Wikimedia<br />https://commons.wikimedia.org/wiki/File:AXEC62.png<br /><br />From this equation follows:<br />(i) An increase of the expenditure ratio rhoE leads to higher employment (the Greek letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates credit expansion, a ratio rhoE less than 1 indicates credit contraction.<br />(ii) Increasing investment expenditures I exert a positive influence on employment, a slowdown of growth does the opposite.<br />(iii) An increase of the factor cost ratio rhoF=W/PR leads to higher employment.<br />The complete employment equation contains in addition profit distribution, government deficit/surplus, and the trade balance.<br /><br />Item (i) and (ii) cover Keynes’s well-known arguments about aggregate demand. The factor cost ratio rhoF as defined in (iii) embodies the price mechanism which, however, does NOT work as standard economics hallucinates. As a matter of fact, overall employment INCREASES if the average wage rate W INCREASES relative to average price P and productivity R and vice versa.<br /><br />The systemic employment equation fully replaces the bastard Phillips curve and NAIRU.#2, #3 The equation contains nothing but measurable variables and is therefore testable.<br /><br />Right policy depends on true theory: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991)<br /><br />Economists do NOT have the true theory and this explains their endless inconclusive wish-wash. In their scientific incompetence both orthodox and heterodox economists are ultimately responsible for the enormous social devastations of mass unemployment. Economists are not only hopeless blatherers but a real danger for their fellow citizens.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 See also ‘Failed economics: The losers’ long list of lame excuses’<br />http://axecorg.blogspot.de/2017/01/failed-economics-losers-long-list-of.html<br />#2 See ‘Keynes’ Employment Function and the Gratuitous Phillips Curve Disaster’<br />https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2130421<br />#3 For the relationship between profit and employment see ‘Have data, lack theory’<br />http://axecorg.blogspot.de/2016/02/have-data-lack-theory.htmlAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44030250085447078912017-02-19T09:44:43.306-05:002017-02-19T09:44:43.306-05:00The critical levels of unemployment are the points...The critical levels of unemployment are the points at which the number of consumers (the employed) is reduced to the point of effecting consumption or increased to the point of effecting labor costs. With global markets domestic consumption is a smaller share and labor is available for pennies on the dollar, thus domestic employment is less important. Most obviously, reduced employment holds down wages via increased competition and provides manpower for the "voluntary" military - those who join because they have no better - or other - options. All the esoteric BS economic theories do not change this reality, they only mask it to provide cover for the failed (for the vast majority at least) capitalist system.<br /><br />Full employment could easily be achieved by increasing social security benefits to livable levels and lowering the retirement age to make way for young workers. Increasing minimum wage to livable levels (some multiple of the so-called poverty level) would also create more space in the job market as many people work multiple low-wages jobs just to survive. <br /><br />Universal health care (Medicare for all) would relieve companies of the responsibility (economic burden) of this expense, which is of course an enemy of profit. Additionally we must consider child raising as a productive social function and support caregivers economically. I know a woman, who because she spent her life raising children, gets $200 a month in Social Security, $100 of which is deducted for Medicare. This is both unjust and inhumane.Noah Wayhttps://www.blogger.com/profile/12012500819097539976noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57888648444543877382017-02-19T09:02:34.183-05:002017-02-19T09:02:34.183-05:00I think you are mistaken on what NAIRU means for m...I think you are mistaken on what NAIRU means for most economists in most policy making circles: They pretend you can model and acknowledge the unemployment rate at which inflation won't accelerate and hence use that rate an anchoring mechanic to keep inflation tight. It's a load of garbage, period (and that is what Bill Mitchel attacks).<br /><br />Precisely because is a non-linear system where you cannot establish causality tightly you cannot anchor inflation through unemployment. Not to say that is a load of unsustainable crap socially speaking because is the equivalent of saying: "we got inflation, so let's throw people under the bus to get prices down".<br /><br />OFC at certain levels of consumption at full employment you will get consumption, but making the leap of faith from there to that you have to destroy employment to reduce inflation is quite stupid on the level only economists can achieve.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.com