Lars P. Syl — Is economics — really — predictable?

There is a big difference between predicting and forecasting. Scientific theory is about causal explanation and prediction through formulating testable hypothesis that challenge the theory rigorously based on experimental evidence. Forecasting is making educated guesses based on limited and variable information information. The former applies chiefly to ergodic systems and the latter to non-ergodic, or if the system is actually ergodic, not enough it known about it to construct a rigorous causal explanation.

The ideal causal explanation is in terms of deterministic functions in which a rule applied to a single measurable input results invariably in a single measurable output. The debate over whether statistics can deliver on causal explanation is still raging, in light of the principle that correlation is not causation. For example, Einstein rejected that it could and continued to seek for a set of deterministic functions as the basis for causal explanation in physics, viewing QM as an admission of lingering ignorance about the laws of nature owing to QM being stochastic.

Libraries are full of tomes debating the details of this, but this is a rough outline to which most agree. Thus, forecasting can be "scientific" and even based on causal explanation, but it fails the test of prediction strictly speaking based on performance. The subject matter of the social sciences is more like the weather than planetary motion, and so the results are mixed. There is no ephemeris for economic cycles.

The question how sharp the line dividing prediction and forecasting may be, and this is a matter of argument since no set of criteria are universally agreed upon. Some conventional economists seek to categorize economics with the natural sciences rather than the social sciences, for example. Is that justifiable?

To understand Keynes, it is necessary to take his Treatise on Probability as a starting point.

Why is this important other than philosophically? Because humans are ideological and affected by presumptions as hidden assumptions. We tend to overestimate our level of knowledge, on one hand, and other the other, we inflate our degree of confidence.

To paraphrase Richard Feynman the purpose of science is to prevent us from fooling ourselves and we ourselves are the easiest people to fool (owing to cognitive-affective bias).

Lars P. Syll’s Blog
Is economics — really — predictable?
Lars P. Syll | Professor, Malmo University

Peter Dorman — Economics, the Realm of Money and the Significance of GDP Growth, with an Application to Child Labor

Peter Dorman reflects broadly on what economics is about. Worth considering, although it is only tangentially relevant to MMT as a school of monetary economics. But it does bring up key questions that extend from philosophy to sociology, anthropology, history, and political science, as well as economics. Economies are embedded in societies as their material provisioning mechanism. In doing economics the way it is usually done, it is easy to loose a lot of this, especially in focusing on economic theory.

Econospeak
Economics, the Realm of Money and the Significance of GDP Growth, with an Application to Child Labor
Peter Dorman | Professor of Political Economy, The Evergreen State College

Barkley Rosser — Who Is Really A Socialist? [Updated]

Barkley Rosser either makes a bad mistake in starting with Marx's definition of "socialism" as state-ownership of the means of production as exclusive, or he is carrying water for the ownership class that uses this arbitrary definition to demonize the opposition to its rent-seeking and parasitic rent extraction, e.g., by socializing negative externality, the result of which is now climate change. I suspect that he was shooting from the hip and shot himself in the foot instead of hitting his target. Disappointing for a smart guy. On the other hand, I often disagree with his analysis when it exceeds the scope of his field, which is economics within the scope of the conventional approach to it. Such is the case here, in my view, although he does bring it non-economic factors.

Wikipedia:

Socialism is a range of economic and social systems characterised by social ownership and workers' self-management of the means of production[10] as well as the political theories and movements associated with them.[11] Social ownership can be public, collective or cooperativeownership, or citizen ownership of equity.[12] There are many varieties of socialism and there is no single definition encapsulating all of them,[13] with social ownership being the common element shared by its various forms.[5][14][15]

Socialist systems are divided into non-market and market forms.[16] Non-market socialism involves the substitution of factor markets and money with engineering and technical criteria based on calculation performed in-kind, thereby producing an economic mechanism that functions according to different economic laws from those of capitalism. Non-market socialism aims to circumvent the inefficiencies and crises traditionally associated with capital accumulation and the profit system.[25]By contrast, market socialism retains the use of monetary prices, factor markets and in some cases the profit motive, with respect to the operation of socially owned enterprises and the allocation of capital goods between them. Profits generated by these firms would be controlled directly by the workforce of each firm, or accrue to society at large in the form of a social dividend.[26][27][28] The socialist calculation debate concerns the feasibility and methods of resource allocation for a socialist system.

Socialist politics has been both internationalist and nationalist in orientation; organised through political parties and opposed to party politics; at times overlapping with trade unions, and at other times independent and critical of unions; and present in both industrialised and developing nations.[29] Originating within the socialist movement, social democracy has embraced a mixed economy with a market that includes substantial state intervention in the form of income redistribution, regulation, and a welfare state. Economic democracy proposes a sort of market socialism where there is more decentralized control of companies, currencies, investments, and natural resources.

In particular, critics of "socialism" that charge it is a failed system that history exposes as inferior ignore a factor that I regard as the most salient one, namely, the ferocious opposition and actual violent attacks of the capitalist, so-called liberal order  (read "bourgeois liberal" plutonomy)  on any hint of social power and control that would limit the power and control of the privileged elite and which imposes a dictatorship of the ruling class through their minions, behind a facade of representative democracy. In the US, for instance, the a bipartisan establishment is rife with corruption, much of it legalized.

Economists simply are not in a position to hold themselves out as experts capable of commenting definitively on these matters since they have put so many relevant factor beyond the scope of their subject matter. The result is an economics devoid of connection with reality.

In the real world, capitalism has been linked historically with imperialism and colonialism. Neoliberalism can be viewed as joined at the hip with neo-imperialism and neocolonialism. Neoconservative and liberal internationalism/interventionism are both based on "spreading freedom and democracy" which is equated with economic liberal as bourgeois liberalism, which is liberal chiefly in the sense that powerful elites are enabled by capture of the state to extract rent without limitation and to do so globally, backed by a powerful military and control of the global financial system.

This is becoming especially important now that "socialism" is becoming a hot topic and economists think that they are are in a position to be best informed about it and comment on it. That is not necessarily so. Very few have the breadth and depth of knowledge of Michael Hudson, for instance.

Socialism involves not only economics, but also other fields such as political theory, sociology, anthropology, history, general systems theory, psychology, and philosophy.

Oh, and did I forget physics, you know, like neoclassical economics is trying to imitate? See Albert Einstein, Why Socialism?

Is genuine socialism best characterized in terms of government that is actually "of the people, by the people and for the people" rather than being controlled by a ruling class and operated for special interests as a representative democracy under capitalism and the way the US was really organized under the Constitution?

Econospeak

Who Is Really A Socialist?
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

UPDATED

Yves Smith weighs in here. Useful in my view, but also incomplete. She also ignores the political aspect of external pressure, including threat of force and actual force, that I brought in above. It is very difficult to disentangle the social, political, financial and economic, especially when it involves key international and geopolitical input. Characterizing "socialism" based on such historical examples is naive, in my view.

For example, is Venezuela a "failed state" entirely owing to "socialist" policy or in part, even great part, owing to US pressure since Chavez, including a former coup attempt. Moreover, the sorry state that Venezuela was in prior to Chavez and which underlay his rise was a result of the comprador government that served as US puppet, a state to which is the US is working reestablish there. Simlarly, a great deal of Soviet and Red Chinese policy was a response to pressure, threat of force and actual application of force from the "free world" dominated by "capitalism" as the mortal enemy of "socialism"

Moreover, "capitalism" and "socialism" are such high level abstractions they are difficult to define technically in a way that can be measured quantitatively. And quantitative modeling is a sine qua non of science these days. Otherwise it is speculative in a way that is undecidable on data-based evidence. However, to reduce the problem to what is measurable often excludes material factors that are relevant. So the end-result is based on opinion, which famously suffers from cognitive bias, including ideological bias.

Peter Cooper — MMT is Politically Open and Applicable to Both Capitalism and Socialism

Modern Monetary Theory (MMT) offers an understanding of sovereign (and non-sovereign) currencies that is applicable to a wide range of economic systems, including capitalist and socialist ones. Irrespective of the personal political preferences of its proponents, the theoretical framework in itself is neutral on the appropriate balance between public sector and private sector activity, or the relative merits of capitalism and socialism. In contrast to neoclassical theory, which starts from a general presumption in favor of private market-based activity except where the existence of market failure in excess of government failure can be explicitly established, MMT as a theory characterizes the appropriate mix of public and private activity as a social (or political) choice....

This is important because the substantive and procedural assumptions of an approach to inquiry, coupled with presumptions that are often unstated assumptions, determine the framework and therefore bias the outcome of analysis toward the assumptions, both stated and unstated. If assumptions and presumptions contain a normative element in addition to a positive (descriptive) one, then the approach is values-based, which in scientific terms implies subjective rather than objective.

It is difficult to impossible to formulate a theory involving social, political or economic data that is not normative to some degree owing to cultural and subcultural bias in that cognitive biases are endemic. For example, cognitive science reveals that reason cannot be completely disentangled from feeling in brain. Scientists recognize that attempt to minimize the subjective factors in the interest of approaching objectivity as closely as possible.

heteconomist
MMT is Politically Open and Applicable to Both Capitalism and Socialism
Peter Cooper

Andrew Gelman — Our hypotheses are not just falsifiable; they’re actually false.

On the practical side of philosophy of science. Adding nuance to Karl Popper on falsification.

Further argument for the view that theories are useful but not "true." This may seem to contradict the realist view that theories are general descriptions of causal relationships. But I don't think that this is what is is implied. Rather, useful theories can be viewed as fitting the data because they reveal underlying structures that are not observed directly but only indirectly. 

There is a often a tendency to transfer simple analogies too complicated and complex situations and events. Some causal relationship are observable, as it a hammer driving a nail, with the physical theory explaining it in terms of simple variables related in a function. 

But most interesting issues are much more complicated and nuanced and may be complex, e.g., subject to emergence owing to synergy. There may a constellation of factors involved, and this may be difficult to order in a hierarchy. Some factors may be catalysts that are necessary for an operation but do not themselves enter into it. These may be presumptions that are hidden assumptions.

In addition, statistics is by definition "inexact" in that it deals with probabilities, unlike deterministic functions in which the variables are all known and measurable, and are expressible in terms of a simple function.

While physics is mostly tractable other than at the edges, life sciences are less so, and social sciences and psychology even less. Economics combines social science and psychology, especially macroeconomics and political economy. Economic sociology and economic anthropology take this into account, global economic history also demonstrates it.

This is coming to the fore now as some critics of MMT, the Green New Deal, and "socialism" demand to see data-based model that "prove" proposed solutions have worked in the past. Of course, the record is important, but the demand for "proof" requires a degree of stringency that is not applied in social science and psychology because it is unattainable. Nor is this standard applied to conventional economics either, its econometric approaching being based on formalism rather than being empirically based.

Another important point that Andrew Gelman makes is the futility of pitting theories against each other. That is a recipe for disagreement in that the party that determines the framing wins. Whose assumptions are going to set the criteria? Why?

And, no, I don’t think it’s in general a good idea to pit theories against each other in competing hypothesis tests. Instead I’d prefer to embed the two theories into a larger model that includes both of them.

This is a good suggestion but it is general. Often, the disagreement is over fundamental criteria that determine a frame of reference. This should be obvious in the different approaches to economic theory and economic practice., e.g., econometric and institutional, static and dynamic, simple and complex, natural and historical.

Obviously, a short post like this can only suggest matters that need deeper reflection, open inquiry and sincere debate aimed at solutions to pressing design problems. This is no long just "theoretical." Humanity has to get this right to survive, let alone prosper. We have seemingly dug ourselves into a hole based on policy that is has turned out to impractical in the extreme, such as socializing negative externalities that have led to environmental degradation and threaten ecological collapse if not addressed successfully in a timely fashion. So, let's get with it.

Statistical Modeling, Causal Inference, and Social Science
Our hypotheses are not just falsifiable; they’re actually false.
Andrew Gelman | Professor of Statistics and Political Science and Director of the Applied Statistics Center, Columbia University

Clint Ballinger — 1000 CASTAWAYS: Fundamentals of Economics

Here is a draft of all five chapters of 1000 CASTAWAYS: Fundamentals of Economics. Previous chapters have been linked to here at MNE. This is the complete work.

This is a pre-publication copy. Comments and constructive criticism of the draft appreciated.

1000 CASTAWAYS: Fundamentals of Economics

Clint Ballinger

Clint Ballinger — 1000 Castaways, Chapter 3: Balancing the Two Systems

Clint invites comments and critique.

1000 Castaways: Fundamentals of Economics, Economics, Macroeconomics
1000 Castaways, Chapter 3: Balancing the Two Systems

Clint Ballinger

Clint Ballinger — 1000 Castaways, Chapter 2: System Two

Next installment. Clint invites comments and constructive criticism pre-publication.

Clint Ballinger
1000 Castaways, Chapter 2: System Two

Clint Ballinger — 1000 Castaways, Chapter 1: System One

"A FLEET OF A THOUSAND COLONISTS are blown off course for weeks by a series of violent cyclones, eventually crashing onto the reefs of a large uncharted island. All of their ships and provisions are lost to sea. They wash ashore, all surviving the stormy night. As morning breaks they begin their search for water and possible food sources.

"The survivors struggle in this foreign land at first. They collect crabs at the rocky tideline, forage along the dense forest-edge, and weave simple palm leaf baskets to collect the many unidentifiable fruits they find in the forest. Eventually they begin to be more successful at fishing and manage to get some shoots of wild yam-like tubers to sprout in small raised-mound gardens. Eventually they begin to have enough food and to build stronger, larger, and more permanent shelters. In time they have enough goods to live in relative comfort..."

1000 Castaways, Chapter 1: System One
Clint Ballinger

Clint Ballinger — 1000 CASTAWAYS: Fundamentals of Economics — Introduction

I know people would have clicked through to it from the last post, but I
wanted to have the Table of Contents as a separate post.

Clint Ballinger
1000 CASTAWAYS: Fundamentals of Economics–Introduction

Noah Smith — "Theory vs. Data" in statistics too

Important.

I think Noah has this right. Fit the tool to the job, rather than the job to the tool.

Aristotle defined speculative knowledge in terms of causal explanation. This definition stuck although Aristotle's analysis of causality did not.

In the Posterior Analytics, Aristotle places the following crucial condition on proper knowledge: we think we have knowledge of a thing only when we have grasped its cause (APost. 71 b 9–11. Cf. APost. 94 a 20). That proper knowledge is knowledge of the cause is repeated in the Physics: we think we do not have knowledge of a thing until we have grasped its why, that is to say, its cause (Phys. 194 b 17–20). Since Aristotle obviously conceives of a causal investigation as the search for an answer to the question “why?”, and a why-question is a request for an explanation, it can be useful to think of a cause as a certain type of explanation. (My hesitation is ultimately due to the fact that not all why-questions are requests for an explanation that identifies a cause, let alone a cause in the particular sense envisioned by Aristotle.) — Stanford Encyclopedia of Philosophy

There is a distinction between reasons and causes. Some types of explanation seek only reasons, while other seek causes. Causation subsequently came to be viewed in terms of articulating mechanisms or lines of transmission (models) that are substantiated in evidence.

Explanation by reasons is different since the strict criterion of articulating mechanisms or lines of transmission that can be checked against evidence is not required.

Explanation by reasons rather than strictly by establishing causation is based on the principle of sufficient reason, which is usually credited to Spinoza and Leibnitz.

In philosophical logic, two negative criteria are foundational. Valid reasoning is vitiated by 1) arguing in a circle and 2) infinite regress.

Without recourse to checking against evidence there is no stopping point in assigning causes other than stipulation, e.g. of a first cause.

However, there may be a reason for a stopping point that doesn't involve causality based on evidence from observation or only stipulation, for example, principles that are "self-evident" based on intuition such as Aristotle's conception of intellectual intuition, or Kant's synthetic a priori propositions as articulated in the Critique of Pure Reason. 

On the other hand, Hume argued that causality is merely over-interpretation of constant correlation, there being no knowledge of the world other than that based on sense data. There is no observable causal link.

Cutting to the chase, scientific explanation based on causality is grounded in models that articulate causal mechanisms or lines of transmission that show how things change invariantly, which is the basis for deterministic functions. Where this is not possible, then there are two other avenues. The first is explanation by giving reasons, which is the domain of speculative philosophy. The second is employing statistics to explore patters of correlation. The question then is to what degree causal models can be gained from statistical methods, or whether it is possible at all. 

This is the issue that Noah Smith's post is getting at.

Noahpinion
"Theory vs. Data" in statistics too
Noah Smith | Bloomberg View columnist

Andrew Gelman — Why they aren’t behavioral economists: Three sociologists give their take on “mental accounting”

The other thing—and this is important—is that the perspectives coming from these three academic disciplines are not competing; they’re complementary. It’s important that money in different bank accounts is liquid—or, to be more precise, it can be liquid for those people who choose to let it be so. It’s important that people often seem to behave as if there are walls between the accounts, restricting their transactions and “freezing” the money, as it were. And it’s important to understand the social context of these behaviors.

Analogously, in section 5.2 of our paper on rational-choice models of voting, Edlin, Kaplan, and I discuss how the rational model is complementary with a psychological understanding of voters. It’s my impression that Bandelj, Wherry, and Zelizer are in agreement with me on this general point, that patterns of human behavior can be usefully understood in different theoretical frameworks. There’s no “right” or “wrong” framework (although one can come to correct or incorrect conclusions within any framework), rather, each framework gives us a way of thinking about the behavior, and entry points into studying it further.

I talk more about frameworks, and how they differ from theories, here.*

Statistical Modeling, Causal Inference, and Social Science
Why they aren’t behavioral economists: Three sociologists give their take on “mental accounting”
Andrew Gelman | Professor of Statistics and Political Science and Director of the Applied Statistics Center, Columbia University

* Philosopher of science Karl Popper and others have criticized such theories as being nonscientific because they are non-refutable, but I prefer to think of them as frameworks for doing science. As such, Freudianism or Marxism or rational choice or racism are not theories that make falsifiable predictions but rather approaches to scientific inquiry. Taking some poetic license, one might make an analogy where these frameworks are operating systems, while scientific theories are programs. That’s why I wrote that I can’t say that Wade is wrong, just that I don’t find his stories convincing.…

I respect the effort to push such theories as far as they can go, but I find them generally less convincing as they move farther from their home base. Similarly with economists’ models: they can make a lot of sense for prices in a fluid market, they can work OK to model negotiation, they seem like a joke when they start trying to model addiction, suicide, etc.

All-encompassing frameworks are different from scientific theories. Both are valuable — frameworks motivate theories and help us interpret scientific results — but I also think it’s important to be clear on the distinction.

The Undercover Historian — Do current debates reflect diverging definitions of economics?

Important backgrounder. A takeaway is that economists haven't agreed on what they are doing.

For me, economics is the study of the material life support system of society. An economy is a subsystem in the overarching system that constitutes a society. As a subsystem in functions interdependently with other subsystems and the society in which the subsystems are embedded.

A society is an integrated whole whose components cannot be disentangled without destroying the system. However, the system can be analyzed intellectually using conceptual and mathematical models. But to the degree that the aspects of the system are viewed apart from the system, they are stylized and therefore limited by the assumptions  on which analysis is based.

The Undercover Historian
Do current debates reflect diverging definitions of economics?
Beatrice

OMG...Trump picks John Paulson to be on his economic team. JOHN PAULSON!!!

This takes the cake.

Trump picks John Paulson to be on his economic team. Paulson? Economics???

Paulson's the guy who bet big on gold--and lost--because he thought that Fed monetary policy owuld result in hyperinflation. He's like Peter Schiff.

The only reason anyone even knows about Paulson is because he made a ton of money shorting subprime back in 2007. But that's only because he got Goldman Sachs to create a RIGGED TRADE that was guaranteed to make money.

That was the infamous "Abacus Deal" and Goldman eventually admitted to fraud on that and paid a fine. (Of course, a fine, no jail for anyone.)

Trump's a clown. I only support him because I think that is our only chance of keeping out of a war with Russia, however, I am resigned now to the idea that Hillary will be our next president. I only hope she doesn't start World War 3.

Branko Milanovic — In defense of equality (without welfare economics)

Important in the current debate about policy, political economy and politics with respect to the rising significance of economic (income and wealth) distribution.

Global Inequality
In defense of equality (without welfare economics)
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Brian Romanchuk — A Postscript On Barter

Brian answers objections raised here and elsewhere on why the history of money is still relevant in economics as practiced today.

It is relevant not because economics discuss barter any longer but because they assume a barter-based economy, in which goods are traded for goods. 

This is the basis of Say's law, which even Say came to recognize is not a "law" in a monetary economy. Say's law is the basis of the modern assumption of general equilibrium, that all markets clear in the long run.

Related to this is the assumption that money is a neutral veil so the monetary aspects of a modern economy don't really matter in the long run, although there can be short run effects. 

Moreover, it is is at the foundation of Friedman's monetarism, which is based on Hume's analysis holding that at increase in the money supply will drive up the price level cet. par. Monetarism assumes cet. par, even though empirical evidence runs counter to it.

The neutrality of money view also underpins the assumption of conventional economics that finance can be ignored in econometric analysis. The banking system just intermediates between borrowers and savers, so the interest rate is determinative in economic activity. While it can be used as a lever by the monetary authority, the central bank is reactive rather than proactive, responding to markets rather than determining them.

Keynes's General Theory of Employment, Interest and Money is grounded in effective demand, which is income and consumption based. Neoclassical economics is grounded in production, hence investment based. Keynes agreed that production (supply) is investment-based and that investment is the driver of growth. But he pointed out that investment is consumption-driven and consumption is demand-driven. 

Firms produce goods to sell, and when sales lag owing to lagging demand, they unplanned inventories rise and firms reduce quantity rather than price, as neoclassical economics wrongly assumes. Modern economies are "monetary production economies." they don't produce just to produce because they can. They produce in order to make a money profit. Marx had observed this as the difference between C-M-C' as classical economists assumed and M-C-M' as he theorized. See Wray, "Theories of Value and the Monetary Theory of Production" (Levy Working Paper No. 261).

 

The insight of Keynes was that lagging demand, that is, effective demand insufficient to purchase the quantity of goods that can be output using available resources efficiently, results from demand leakage to saving rather than being initiated by a market failure involving the factors of production, e.g., an exogenous shock. This vitiates Say's law "in the short run" as long as liquidity preference remains high enough to inhibit spending and there is no monetary offset. And "in the long run we are all dead." Waiting for the system to autocorrect is folly when the government sector can offset lagging demand by accommodating liquidity preference (saving desire) to return the economy to capacity and full employment "in the short run".

There are other reasons that the history of money is still important in the study of economics and finance, which are joined at the hip in a monetary economy. But just from the point of view of the fundamental assumptions of conventional economics — even Krugman and DeLong self-identity as neoclassical economics — the history of money is important in understanding the basis of fundamental neoclassical assumptions that run counter to the operation of a modern monetary economy, as well as the failure of neoclassical economists to correctly understand and incorporate finance and monetary operations in their models.

While may not be necessary to know how the erroneous assumptions were arrived at based on the assumption of money arising from barter and economic exchange being essentially barter, it accounts for what might otherwise be surprising. Why would intelligent people think that monetary operations, banking, and finance were irrelevant to economic analysis, miss a major crisis and still be mystified about policy to correct for it. The conclusion is that they are either morons, or are using the wrong model. 

Keynesian, Post Keynesian and MMT analysis may not depend on the history of money, but the history of money illuminates the analysis.

It also shows the value of studying the history of money and theory of money, Neoclassical economics is a development of classical economics and also a response to issues previous raised by Smith and Ricardo in particular. The foundations for the neoclassical view of money were laid by the classical economists and Hume. Menger's analysis of money, that is, money as barter-based and gold as the basis of commodity money (numeraire), dominated early neoclassical thinking and influenced neoclassical assumptions.

Keynes apparently developed his views on the monetary theory of production from both Marx (see Wray above) and also Knapp's Chartalism or state money. Post Keynesian later developed understanding of the monetary circuit that corresponds to the circular flow of production-distribution-consumption that underlies neoclassical thinking. This led to an accounting approach and sectoral balance stock-flow consistent analysis by Tobin and Godley. Neoclassical economists have largely either ignored this development, or rejected it, claiming that methodological issues are settled, so history is irrelevant.

Bond Economics
A Postscript On Barter
Brian Romanchuk

I like Trump, but he's really misinformed on a lot of his economics. (And, no, not the trade stuff.)

I like Trump. I like his lack of political correctness. I like his foreign policy: end senseless wars, do away with NATO, normalize relations with Russia, etc

I like his proposal to rebuild the infrastructure of the USA, replace Obamacare with affordable, universal health care.

I even like his policy on trade: force the foreign sector to run deficits by imposing tariffs on them, while at the same time, ramping up domestic output and employment.

All good.

However, on some other economic things he's really misinformed.

Look at these comments...

“I think there are times for us to refinance debt with longer term, we owe so much money,” Trump said.

“I am the king of debt, I love playing with it, but now we’re talking about something very, very fragile,” he said.

“If we raise interest rates and if the dollar starts getting too strong, we’ll have some very major problems.”

“I have nothing against Janet Yellen whatsoever, she’s very capable person. But she’s not a Republican,” Trump said. “When her time is up I would most likely replace because of the fact it would be appropriate.

“I love the concept of a strong dollar, but when you look at the havoc that a strong dollar causes ... it sounds better to have a strong dollar than it actually is.”

So he thinks we borrow from someone and we have to "lock in" low rates, long term, to "save."

He thinks high rates makes the dollar strong. It's in fact the opposite.

He thinks it's better to have a weak currency. It's the opposite, at least if a nation desires a high standard of living.

He wants to politicize the Fed by putting a Republican even though he admits that Janet Yellen is capable and he likes her policies. He says, "It's just that, it wouldn't be appropriate."

As you can see, he's got some work to do. Especially on the refinancing the debt stuff. Hey, maybe he can just ask his new Republican Fed Chairman to set rates at zero all along the curve. There ya go!

Francois Badenhorst — Martin Luther King Jr. Asked This Economist a Profound Question

The interesting career of Sam Bowles. His latest book, The Moral Economy, will be available in March.

Evonomics
Martin Luther King Jr. Asked This Economist a Profound Question
Francois Badenhorst

Diane Coyle — Books to look forward to in 2016

Heads up! Economics and related.

The Enlightened Economist

Books to look forward to in 2016 – part 1

Books to look forward to in 2016 – part 2

Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

A Cartoonist Nails Economics ... In One Fell Panel Sweep

A picture is worth a thousand words ... and a panel cartoon is worth 14,000 words?

The Ethical Fourier Transform