Quotes Critical of Economics

This is an assorted collection of quotes I have found useful from time to time in different contexts. I am putting them all together for my own reference, as well as for the benefit of others who may find them similarly useful to make points.

JM Keynes Quotes (mostly from General Theory GT):

The composition of this book has been for the author a long struggle of escape, and so must the reading of it be for most readers if the author’s assault upon them is to be successful,— a struggle of escape from habitual modes of thought and expression. The ideas which are here expressed so laboriously are extremely simple and should be obvious. The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. (GT)

It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam. (GT)

It is astonishing what foolish things one can temporarily believe if one thinks too long alone, particularly in economics (along with the other moral sciences), where it is often impossible to bring one’s ideas to a conclusive test either formal or experimental. (GT)

For if orthodox economics is at fault, the error is to be found not in the superstructure, which has been erected with great care for logical consistency, but in a lack of clearness and of generality in the premisses – (GT)

For professional economists, after Malthus, were apparently unmoved by the lack of correspondence between the results of their theory and the facts of observation;— a discrepancy which the ordinary man has not failed to observe, with the result of his growing unwillingness to accord to economists that measure of respect which he gives to other groups of scientists whose theoretical results are confirmed by observation when they are applied to the facts. (GT)

The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required today in economics. (GT)

I cannot persuade myself that this sort of treatment of economic theory has anything significant to contribute. I suspect it of being nothing better than a contraption proceeding from premises which are not stated with precision to conclusions which have no clear application … [This creates] a mass of symbolism which covers up all kinds of unstated special assumptions. RWER blog: Letter from Keynes to Frisch.

To understand my state of mind, however, you have to know that I believe myself to be writing a book on economic theory which will largely revolutionalise – not, I suppose, at once but in the course of the next ten years – the way the world thinks about economic problems. When my new theory has been duly assimilated and mixed with politics and feelings and passions, I can’t predict what the final upshot will be in its effect on action and affairs. But there will be a great change, and, in particular, the Ricardian foundations of Marxism will be knocked away. — [[ The hopes of Keynes were partially realized, but also partially frustrated. See Understanding Macro: The Great Depression, and also the Keynesian Revolution and the Monetarist Counter-Revolution]]

For many more quotes from Keynes, see: WikiQuote Entry on General Theory

Robert M Solow:

Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous — that is, by laughing at it — so as not to fall into the trap of taking it seriously and passing on to matters of technique.

RM Solow, “How Did Economics Get That Way and What Way Did It Get?Daedalus, Vol. 126, No. 1, American Academic Culture in Transformation: Fifty Years, Four Disciplines (Winter, 1997), pp. 39-58 — Article describes the shift from historical/qualitative mode to mathematical model building, while defending this transition as basically useful, with some flaws. One quote: ” Oscar Wilde described the fox hunt as the unspeakable in search of the inedible. Perhaps here we have the over-educated in pursuit of the unknowable.” — this is about use of overly mathematical models pursuing questions which are far beyond ability of data to answer. But still, he is satisfied with this: “But it sure beats the alternatives.:.

Prepared Statement by Robert Solow, Professor Emeritus, MIT for House Committee on Science and Technology Subcommittee on Investigations and Oversight, “Building a Science of Economics for the Real World” July 20, 2010

I do not think that the currently popular DSGE models pass the smell test. They take it for granted that the whole economy can be thought about as if it were a single, consistent person or dynasty carrying out a rationally designed, long-term plan, occasionally disturbed by unexpected shocks, but adapting to them in a rational, consistent way.
I do not think that this picture passes the smell test. The protagonists of this idea make a claim to respectability by asserting that it is founded on what we know about microeconomic behavior, but I think that this claim is generally phony. The advocates no doubt believe what they say, but they seem to have stopped sniffing or to have lost their sense of smell altogether.

(On the use of DSGE models for policy);  A thoughtful person, faced with the thought that
economic policy was being pursued on this basis, might reasonably wonder what planet he or she is on.

 Steve Keen :How anybody can think they can analyze capital while leaving out Banks, Debt, and Money is a bit to me like an ornithologist trying to work out how a bird flies whilst ignoring that the bird has wings…”
Paul Krugman:

How did Economists Get it So Wrong?” the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth

By the early 1980s it was already common knowledge among people I hung out with that the only way to get non-crazy macro-economics published was to wrap sensible assumptions about output and employment in something else, something that involved rational expectations and intertemporal stuff and made the paper respectable. And yes, that was conscious knowledge, which shaped the kinds of papers we wrote.

Ariel Rubinstein: Nearly every book on game theory begins with the sentence: ‘Game theory is relevant to …’ and is followed by an endless list of fields, such as nuclear strategy, financial markets, the world of butterflies and flowers, and intimate situations between men and women. Articles citing game theory as a source for resolving the world’s problems are frequently published in the daily press. But after nearly forty years of engaging in this field, I have yet to find even a single application of game theory in my daily life

Card & Krueger wrote “Myth & Measurement” in which they established that a rise in minimum wages led to an increase in employment, contrary to predictions of Supply and Demand. In an interview, Card said: I’ve subsequently stayed away from the minimum wage literature for a number of reasons. First, it cost me a lot of friends. People that I had known for many years, for instance, some of the ones I met at my first job at the University of Chicago, became very angry or disappointed. They thought that in publishing our work we were being traitors to the cause of economics as a whole. [[ See POSTSCRIPT to Understanding Macro for more details on “70 years of economists’ failure to understand labor supply and demand]]

When Joseph Stiglitz was asked at a private dinner party how economists can make repeated falsified claims without having their careers terminated, he reportedly answered: “I agree with you, but I don’t understand why you are so puzzled. What you should be assuming is that — as is done by most economists — economics is really a religion. So why should you be puzzled by the fact that they cling to and never give up their views despite frequent falsification?” – from Jon Elster: Explaining Social Behavior.

Stiglitz: Ricardian equivalence is taught in every graduate school in the country. It is also sheer nonsense.

Ricardo J. Caballero: Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome –In this paper I argue that the current core of macroeconomics – by which I mainly mean the so-called dynamic stochastic general equilibrium approach – has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one  [[Common Problem: Confusing Models with Reality]]

John Cassidy: After the Blowup – [[Cassidy went hunting for apostates in Chicago. Posner has recanted his free market stance, and several others are expressing doubts. But Fama is sticking to his guns — argues that recession was caused by (unknown phenomena, phlogiston) and the stock market forecast the coming recessing and turned down earlier!]] Surely, I said, we had experienced a giant credit bubble, which eventually had burst. “I don’t know what a credit bubble means,” Fama replied, his eyes twinkling. “I
don’t even know what a bubble means. These words have become popular. I don’t think they have any meaning.”

Narayana Kocherlakota: Minneapolis Federal Reserve President (2010-2015), “Toy Models”, July 14 2016  “The starting premise for serious models is that there is a well-established body of macroeconomic theory… My own view is that, after the highly surprising nature of the data flow over the past ten years, this basic premise of “serious” modeling is wrong: we simply do not have a settled successful theory of the macroeconomy.”

Olivier Blanchard IMF Chief Economist (2010-2015), “Do DSGE Models Have a Future?”, August 2016  “DSGE models have come to play a dominant role in macroeconomic research. Some see them as the sign that macroeconomics has become a mature science, organized around a microfounded common core. Others see them as a dangerous dead end…”  and “There are many reasons to dislike current DSGE models. First: They are based on unappealing assumptions. Not just simplifying assumptions, as any model must, but assumptions profoundly at odds with what we know about consumers and firms.”

Lord Mervyn King: Governor, Bank of England, speech speech in New York in October 2010, Banking: from Bagehot to Basel, and back again “Of all the many ways of organising banking, the worst is the one we have today.” and    “Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis. This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too.”

Alan Greenspan😦co-winner of Dynamite Prize, for causing the GFC)

quotes from I was wrong about the economy — sort of (title of Guardian article).

“I have found a flaw (in my economic philosophy) I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

“I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,”

Greenspan, 82, who retired in 2006, called the financial crisis a “once-in-a-century credit tsunami” and said it had “turned out to be much broader than anything I could have imagined”.

He suggested his trust in the responsibility of banks had been misplaced: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity (myself especially) are in a state of shocked disbelief.”

The congressional committee’s Democratic chairman, Henry Waxman, pressed him: “You found that your view of the world, your ideology, was not right, it was not working?” Greenspan agreed: “That’s precisely the reason I was shocked because I’d been going for 40 years or so with considerable evidence that it was working exceptionally well.”

Bernanke Quote:

Despite these and other policy successes, the episode as a whole has not been kind to the reputation of economic and economists, and understandably so. Almost universally, economists failed to predict the nature, timing, or severity of the crisis; and those few who issued early warnings generally identified only isolated weaknesses in the system, not anything approaching the full set of complex linkages and mechanisms that amplified the initial shocks and ultimately resulted in a devastating global crisis and recession. Moreover, although financial markets are for the most part functioning normally now, a concerted policy effort has so far not produced an economic recovery of sufficient vigor to significantly reduce the high level of unemployment. As a result of these developments, some observers have suggested the need for an overhaul of economics as a discipline, arguing that much of the research in macroeconomics and finance in recent decades has been of little value or even counterproductive.

Lawrence Summars (co-winner of Dynamite Prize, for causing the GFC) quotes from Economics in Crisis, by Bradford De Long. Financial Times columnist Martin Wolf quizzed former United States Treasury Secretary Larry Summers, President Barack Obama’s ex-assistant for economic policy. “[Doesn’t] what has happened in the past few years,” Wolf asked, “simply suggest that [academic] economists did not understand what was going on?”Here is the most interesting part of Summers’ long answer: “There is a lot in [Walter] Bagehot that is about the crisis we just went through. There is more in [Hyman] Minsky, and perhaps more still in [Charles] Kindleberger.” That may sound obscure to a non-economist, but it was a devastating indictment. [[Because, Summers was forced to name three dead men, and old and forgotten books, as the only ones who had explanations for the crisis, completely incomprehensible to modern economists like himself]]

Barbara Bergmann: Needed: A New Empiricism — [[ Opening paragraphs explains how marine biologists studied dolphin behavior for hundreds of hours to come up with conclusions; in contrast ]] “The material about business behavior that students read about in economics textbooks, and almost all of the new theoretical material developed
by mainstream professionals and published in the profession’s leading journals was
composed by economists who sat down in some comfortable chair and … simply made it up.” [[In addition, people who study actual behavior of humans and business firms are regarded as irrelevant pests — Barbara arranged a talk by Nobel Laureate Herbert Simon at University of Maryland ]]  “but my colleagues were not impressed. They let me know that his talk had wasted their time. It wasn’t economics, they said.”

Finally, we provide a brief outline of Romer, picking out quotable quotes:

Paul Romer: The Trouble With MacroEconomics

For more than three decades, macroeconomics has gone backwards

Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as “tight monetary policy can cause a recession.” Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by the action that any person takes

[Modern macro started with the Lucas critique of incredible identifying assumptions used in econometric models, but, after thirty years of work instead of progress, there has been regress] Canova and Sala (2009) signal with the title of a recent paper, we are now “Back to Square One.” Macro models now use incredible identifying assumptions to reach bewildering conclusions.

[Romer finds it incredible that a leading macroeconomist would feign ignorance about effects of monetary policy] To appreciate how strange these conclusions can be, consider this observation, from a paper published in 2010, by a leading macroeconomist:
… although in the interest of disclosure, I must admit that I am myself less than totally convinced of the importance of money outside the case of large inflations.

Macroeconomists got comfortable with the idea that fluctuations in macroeconomic
aggregates are caused by imaginary shocks, instead of actions that people take, after
Kydland and Prescott (1982) launched the real business cycle (RBC) model.

In this [RBC] model, the effects of monetary policy are so insignificant that, as Prescott taught graduate students at the University of Minnesota “postal economics is more central to understanding the economy than monetary economics” (Chong, La Porta, Lopez-de-Silanes, Shliefer, 2014).

[After discussing an episode of tightening of monetary policy by the FED] If the Fed can cause a 500 basis point change in interest rates, it is absurd to wonder if monetary policy is important. Faced with the data in Figure 2, the only way to remain faithful to dogma that monetary policy is not important is to argue that despite what people at the Fed thought, they did not change the Fed funds rate; it was an imaginary shock that increased it at just the right time and by just the right amount to fool people at the Fed into thinking they were the ones who were the ones moving it around.
To my knowledge, no economist will state as fact that it was an imaginary shock
that raised real rates during Volcker’s term, but many endorse models that will say
this for them

Macroeconomists got comfortable with the idea that fluctuations in macroeconomic
aggregates are caused by imaginary shocks, instead of actions that people take, after
Kydland and Prescott (1982) launched the real business cycle (RBC) model. The real business cycle model explains recessions as exogenous decreases in phlogiston (an unexplained residual).

The noncommittal relationship with the truth revealed by these methodological
evasions and the “less than totally convinced …” dismissal of fact goes so far beyond
post-modern irony that it deserves its own label. I suggest “post-real.”

Once macroeconomists concluded that it was reasonable to invoke an imaginary
forcing variables, they added more. The resulting menagerie, together with mysuggested names now includes:
• A general type of phlogiston that increases the quantity of consumption goods
produced by given inputs
• An “investment-specific” type of phlogiston that increases the quantity of
capital goods produced by given inputs
• A troll who makes random changes to the wages paid to all workers
• A gremlin who makes random changes to the price of output
• Aether, which increases the risk preference of investors
• Caloric, which makes people want less leisure
With the possible exception of phlogiston, the modelers assumed that there is
no way to directly measure these forces. Phlogiston can in measured by growth
accounting, at least in principle. In practice, the calculated residual is very sensitive
to mismeasurement of the utilization rate of inputs, so even in this case, direct
measurements are frequently ignored.

To allow for the possibility that monetary policy could matter, empirical DSGE
models put sticky-price lipstick on this RBC pig. The sticky-price extensions allow
for the possibility that monetary policy can affect output, but the reported results
from fitted or calibrated models never stray far from RBC dogma. If monetary policy
matters at all, it matters very little

[[FWUTV — Facts with unknown truth value — Romer shows that in order to identify parameters, we feed in lots of arbitrary assumptions — which he calls FWUTVs — into the model. Shows several specific examples of this in action. Lucas critique said that use of arbitrary assumption to identify econometric models made estimates unreliable. However, their techniques introduce even more arbitrary assumptions to identify their models.]] “Post-real macroeconomists have not delivered the careful attention to the identification problem that Lucas and Sargent (1979) promised. They still rely on FWUTV’s. All they seem to have done is find new ways to fed in FWUTV’s ”

[[ Romer explains how identification is achieved by hiding the assumption within a maze of mathematics almost impossible to track down, and never made explicit. He provides a specific example where an assumption the E log u = 0, about an unobservable error creates identification. Assumptions on unobservables are hard to spot, and harder to challenge, since they are, after all, unobservable — hence the term FWUTV. Another way to achieve identification is via Bayesian priors. You can put anything you like into the priors, which are arbitrarily chosen, and achieve identification. This section reminds us of the following Keynes quote:]]

Keynes: Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols. GT Book 5, Chapter 21,Section 3, p. 298

[[Romer shows how members of the Chicago school support each other, even in face of conflicting evidence known to them. He explains the sociology of knowledge, how the publications process ensures loyalty. He explains that he is free of the constraints, and therefore free to express his deep dissent, because he is no longer operating within an Academic environment. Parenthetically, it is similarly true, that I can make very bold attacks on economics and economists ONLY because my pay, promotions, publications are no longer dependent on how professional economists in the USA evaluate me. Those operating within the Western academia find that severe penalties are imposed upon them if they dare to step outside the boundaries of permissible dissent.  ]]

Back to Square One: I agree with the harsh judgment by Lucas and Sargent (1979) that the large Keynesian macro models of the day relied on identifying assumptions that were not credible. The situation now is worse. Macro models make assumptions that are no more credible and far more opaque.

[[Romer argues that the Chicago School criticized Keynesian harshly for failing to predict stagflation. However, the Lucas prophecy that there would be no more recessions is an even more dramatic prediction failure.]] ” what Lucas and Sargent wrote of Keynesian macro models applies with full force to post-real macro models and the program that generated them: That these predictions were wildly incorrect, and that the doctrine on
which they were based is fundamentally flawed, are now simple mattersof fact …
… the task that faces contemporary students of the business cycle is that of sorting through the wreckage …(Lucas and Sargent, 1979, p. 49)”

Some economists counter my concerns by saying that post-real macroeconomics is a
backwater that can safely be ignored; after all, “how many economists really believe
that extremely tight monetary policy will have zero effect on real output?”
To me, this reveals a disturbing blind spot. The trouble is not so much that
macroeconomists say things that are inconsistent with the facts. The real trouble is
that other economists do not care that the macroeconomists do not care about the
facts. An indifferent tolerance of obvious error is even more corrosive to science
than committed advocacy of error.
It is sad to recognize that economists who made such important scientific
contributions in the early stages of their careers followed a trajectory that took them
away from science. It is painful to say this so when they are people I know and like
and when so many other people that I know and like idolize these leaders

 

 

 

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40 comments
  1. Prof Dr James Beckman, Germany said:

    As usual, Asad, thanks for your great efforts! As I was reading, I was comparing the words of well-known economists with those of D. Trump, the man whose unTruths are regularly reported in the press. Could he have been a clever student of econ who realized that you don’t need to know much about what is really happening in order to get ahead?

  2. Not one quote about the money system or banking. That in itself shows that this profession is not just a failure on its own terms endlessly whining about its self-described shortcomings – it is CRIMINALLY NEGLIGENT in failing to examine money and banking. Millions have suffered loss and death thanks to economists’ refusal to critically examine that which pays their salaries.

    • Prof Dr James Beckman, Germany said:

      Hi, Paul, in business schools we have business economics which usually touches on finance, as well as full-blown courses in finance/accounting or even financial engineering if the setting is oriented towards STEM. I use a few basics from my econ training, & the rest is largely organizational behavior divided into strategy, operations & the like. Perhaps you well know this. This is what I did in California & continue to do around the world.

      • Hello Professor,

        Do you ever ask these questions?

        If I create $100,000 as my principal debt to a bank on a time schedule for repayment and then the bank encourages someone else to save that $100,000 indefinitely, allowing the bank to create another $100,000 of principal debt to a bank for someone else:

        1. with what do I pay off my loan?
        2. What is the total principal debt to a bank?
        3. How much money is available to pay it?

        In the USA M2 ( total principal DEBT TO BANKS ) is normally 4 times M1 (checking and cash).
        All bank credit money is created as M1 and replaced when saved in ( M2-M1)
        How is it possible for M2 to be 4 times M1?

        Note: at the Crash of 2007-8 the ratio hit an unprecedented 5.26:1

        http://paulgrignon.netfirms.com/MoneyasDebt/Grignon_Recursive_Re-lending_Analysis.pdf

      • Prof Dr James Beckman, Germany said:

        Hi, Paul, a good, thoughtful question but irrelevant to us. Our self-questioning: 1) Can I make repayments on schedule?
        2) Am I making the best personal use of this loan? There might be a third for some, as I see so much building in my German city near Frankfurt: 3) If I am a private investor in such speculative building, can I expect a high rate of return, suggested but not guaranteed? A lot of Germans lost big in over-building after the Berlin Wall came down. I don’t know here, but after a while I might pick up a few at great discount & find some profitable use. A new school for Real Economics? (I know the quality is good as my apartment building has been added to for 15 months, having both a bank & bakery on the lowest level.)

      • Anonymous said:

        If the root cause of financial collapses and a great deal of social injustice is irrelevant to you because your concern is only about yourself (as indicated) so be it.

      • Prof Dr James Beckman, Germany said:

        In business schools the Atlantic nations (EU+North America) generally encourage that personal values such as benevolence be kept low-key, as professors are regularly chastised for introducing their personal values. When they come from a church background like I do, & then go to teach in a religiously-affiliated school, normally not a problem. But try doing that at a large public institution & either the prof would be considered “weird” or even challenged legally, I have seen. This saves possible conflict between various flavors of Christianity as well as with non-Christian faiths. I do know some Hare Krishna folks in various parts of the world, who might want to visit you with their singing, dancing & clanging of symbols, as one example. This is only to point out that collectively we have a wide variety of value-systems globally.

      • You should try to answer the simple questions I put to you.

        1+ 1 = 2 in any religion or ethical system, even a criminal one!!!

      • Prof Dr James Beckman, Germany said:

        Except when you are trying to put two people of differing cultural values & probably experience in a work team or social setting. Then 1+1 = 0 perhaps until they separate. That’s world in which I operate.

      • Those are very simple questions that you and the entire herd of economists and finance types including the Bank of England itself, continue to evade. No one has proved any of my facts, logic or arithmetic to be in error. All of my facts come from the central banks themselves and are not in dispute. The logic and arithmetic are grade school simple.

        Digging Deeper into Debt-Money
        The Bank of England’s confessional isn’t the whole story
        http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/DiggingDeeper_Grignon2017.pdf

        “… just consider what might happen if mortgage holders realized the money the bank lent them is part of an invisible trap, a game of musical chairs designed by the bankers in which losers are mathematically predetermined to default whenever the creation of new debt to banks slows down, for any reason. The only way to keep the music playing is for all of us as a whole to go further and further into debt to banks forever.”

      • Prof Dr James Beckman, Germany said:

        Hi, Paul, in America too many debts, personally considered invalid or not, can yield a bankruptcy costing less than $1,000 in most places, I believe. Two years later you have new credit if you have continued to pay some bills. Here in Germany the social welfare system is supposed to cover people who are so deeply in debt they have insufficient food or are unable to pay rent. I know nothing of how it works for Germans. Foreigners, I expect, would just leave the country.
        Most people, I believe, have neither the training nor inclination to have the discussions we do here. Personally, I find them fascinating.

      • So you are saying that, for you, the Crash of 2007-8 was inconsequential and of no importance.

        More than eight million Americans lost their jobs, nearly four million homes were foreclosed each year, and 2.5 million businesses were shuttered. This occurred due to the DESIGN of our money system. The ratio of savings (much of it corporate) to checking hit an unprecedented high in 2007, meaning that the money mortgage borrowers needed to extinguish their principal debts was NOT available to them except as another loan. That is a Perpetual Debt Trap from which there is no escape except default. This is designed into the system itself which would be quite clear to you should you actually address and answer my questions rather than evading them.

      • Prof Dr James Beckman, Germany said:

        Paul, you are a debater. Of course, I didn’t say that. I said that millions dug themselves out from debt after losing their houses & perhaps businesses. In Germany, I suspect there would have been suicides & drug overdoses, much as the Indian farmers commit suicide in the tens of thousands each year over their debts. At least in Southern California, & reading the national press, I saw nothing of the sort in the US. Interestingly, the current deaths from opiaids seem closely tied to job loss, although perhaps the majority of users either owned their homes free, rented or lived with folks who were NOT pushed over the edge by recent home purchases & readjusting interest rates.
        Also, interesting, is that people who come to Europe from the killing fields of their countries have greater concerns than home loss, whether from warfare or payments’ issues.

      • millions dug themselves out from debt after losing their houses & perhaps businesses

        Which they lost due to the design of the banking system, not by any fault of their own, which is what I am attempting to prove to you by challenging you to prove any of my facts (all from the central banks themselves), grade school logic or arithmetic to be in error. Over the past 9 years have challenged many economists and bankers to prove me wrong, including the Bank of England itself. All just evade the question as you are doing.

      • Prof Dr James Beckman, Germany said:

        Paul, I quite agree with you that the banking system seems designed to trap the customer. Teaser interest rates. Add- on loans, etc. However, in a land of personal responsibility it becomes unclear whether our parents, our teachers, our ministers or anyone should help people become sophesticated in the ways of the world. Same with product quality & quantity in many parts of the world–but normally not in the US, due to government action.
        My point was that it is easier to get out from under these debts in the US than in many countries where you literally must flee your creditors. Perhaps this is one reason why some European citizens tend to be very conservative in their ways. As an American, after more than a decade in Europe, I have picked up their ways, driving a vehicle more than 10 years of age although it seems in perfect shape due to maintenance which is legally forced upon us by regular inspections.

      • Anonymous said:

        You still miss the point.

      • Prof Dr James Beckman, Germany said:

        Anonymous, please explicate my “missing the point”, which is to say “I appear to be missing your point”. This happens in marriages all the time, so why not between professional colleagues.

      • Anonymous is me. Posted by accident.

      • It’s not about teaser rates or anything like that.

        My point is that banking creates impossible contracts (in the aggregate) by design. An impossible contract is a form of fraud. The DESIGN of banking is also the source of the grow or collapse imperative driving us towards extinction. My “personal responsibility” in regards to an act of fraud (and indirectly, ecocide) that I am aware of is to alert people to it, which is what I have been doing since I warned of a debt crisis in 2006 with my first movie Money as Debt.

        There is no way you can educate people to avoid losing their seats in a game of musical chairs. No amount of “personal responsibility” will change the DESIGN of the game.

      • Prof Dr James Beckman, Germany said:

        Paul, I sympathize with you. “Free money” (credit) often only requires a signature before the new home or vehicle is in your control. What’s not to like–oh, payments. But we’re all heard of unplanned pregnancies, too, haven’t we?

      • Money once created by a signature gets lent again and again as existing money by non-banks (including bank depositors) creating multiple simultaneous principal debts of the same money, a situation that can only be escaped by default and only maintained by perpetually increasing our aggregate debt to banks. There’s no resemblance to an “unplanned pregnancy” as this Perpetual Debt and Grow or Collapse Imperative are created by the DESIGN of the banking system.

      • Prof Dr James Beckman, Germany said:

        Hi, Paul, of course the lenders do the planning while the borrowers have their joys of the moment.

      • Yet another glib and vacuous response to a serious question.

        Clearly you intend to continue benefiting from your position as a coverup artist for the bankers’ criminal fraud. That seems to be the ONLY actual purpose of economics and economists …prevent the people from UNDERSTANDING the trap they are in. And the best way to do that is to brainwash your students with complete nonsense, omitting the most relevant real information, until the brain damage is permanent and they can no longer think straight.

        The person on the street can answer all of my questions correctly without any difficulty. Even when I start with “Do you know that money is created when someone promises to pay it back to a bank?” it takes less than 1 minute to explain how multiple principal debts of the same money lead to inevitable mass defaults and the grow-or-collapse imperative that is pushing us towards our own extinction.

        That economists refuse to understand something so simple and irrefutable can only be explained by conscious criminal complicity, unconscious brain damage or fear for your paycheck. Which is it in your case?

      • Paul Grignon,

        I have watched some of your videos and you have a knack for it. I wouldn’t mind hitting you up one day to maybe put to video some of my own work.

        Very few are ever going to attempt to answer your questions; the primary reasons being, they either already know, or they don’t want to be told something different to what they were taught, or they simply don’t care. But at the end of the day, because the whole economic system (since we left feudalism) is based on politics, which is based on competing self-interests (I know of no economist who claims humans inherently put society before themselves, even if some of those economists then claim we should), then everyone has the right ‘not to care’.

        As it was said in: MILLS & ORS v SHEAHAN [2007] SA Supreme Court 365 (16 October 2007)

        “In a competitive world where one person’s economic gain is commonly another’s loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another’s personal property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage: Thus, as long as a person is legitimately protecting or pursuing his or her commercial interests, the common law does not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons.”

        Whilst I am in complete agreement with you that the system is DESIGNED to default people, one cannot be defaulted against if they don’t buy homes, if they don’t enter into legally binding agreements, and if they don’t rely on money. At the end of the day, the real question is ‘who is designing this system and who is perpetuating this system?’. We all are, because the facts are, based on the evidence, everyone wants to own their own homes and wants to enter into legally binding agreements (and enforce them) and wants to earn money; they want to rely on government and corporations (if we didn’t then why do we have retirement funds invested in the stock markets?); they want to compete in the market place and they want to retire. And most of all, they don’t want to have to care whether their actions contribute to homelessness, poverty or crime, instead they demand government do something about it.

        As far as my years of research and self-observations have shown me, the moment anyone treats their labour (and any fruits thereof) as a commodity to be exchanged, and they intend to legally enforce any exchange, they have entered the competitive realm of political economy. It matters not if you don’t own land, or you don’t lend money at interest (although who doesn’t have a bank account paying some amount of interest?), or that you don’t extract economic rent from others (it is now mandatory in most developed countries to have money invested in the stock markets for retirement), the fact that we legally enforce our agreements means that we must compete.

        You have a lot of videos explaining a credit system. My question is, how would contracts in this system be settled if there was a breach of contract? Would they be based on damages or specific performance, or would agreements operate under trusts or other mutual arrangements as opposed to legally enforceable contracts? Also, how does the government fit in with this arrangement?

        Cheers

      • I’m glad you looked into my proposed solution.

        “You have a lot of videos explaining a credit system. My question is, how would contracts in this system be settled if there was a breach of contract?”

        Producer Credits are payable in goods and/or services of the Producer ONLY. If the Producer has a temporary shortage of stock Producer Credits can be rolled over for later redemption. The Producer can also buy them back with money or other Producer’s Credits to satisfy the holder. Therefore, the only situation likely to produce a breach of contract is the total and permanent failure of the business to deliver on its promised goods. Those who hold Producer Credits (secured by a claim on real goods) should be first in line at the liquidation of assets.

        I am assuming the use of the court system and bankruptcy procedures to settle all this.

      • Thanks for answering.

        It will probably be the case that business failure rates would be lower, but they will never reach zero, because one can never predict the future or what nature will do.

        My next question is, do you believe your system can operate successfully no matter how many operate under it (obviously it would need at least a couple of people to get it going), and could the government itself be a party to it (i.e. offering services/resources particular to the goals of the group in exchange for services/resources from the group), or do you feel it can only work if everyone is operating under it?

      • it is conceived as a world money system AND a local one. Toyota’s Producer Credits are spent to produce Toyota products, circulate as money worldwide and ultimately spent to buy Toyota Products. Any tax-collecting government can spend Tax Credits to provide government services and collect the Tax Credits back as taxes. A local market garden could spend Producer Credits acceptable only in its own community, have them used as money and then finally spent on produce. Your local Whole Foods store could sell vouchers for its retail products and finance its entire supply chain by having customers buy things a year in advance of delivering them (at a discount that beats any bank interest).

        It is all explained in great detail at my website. Start here:

        http://paulgrignon.netfirms.com/MoneyasDebt/MAD2014/solution.htm

      • Right. So what this implies is that people can choose to operate outside of the debt/leveraged based banking system if they can get enough people to set things up in an orderly fashion. What this should also imply is that the debt/leveraged system can still exist, alongside the un-leveraged system, but where assets are not allowed to be co-mingled. This also demonstrates that multiple economic models can co-exist, which also then means, that all those who are spending so much energy trying to get the whole world to agree to one type of economic ideology are wasting their time.

      • Prof Dr James Beckman, Germany said:

        Well said; Dingo, as I also inquire as to how we go from what we have to where we might want to go. I have just read a statement on Democratic Socialism, which is close to the heart of Yank Bernie Sanders. Their main quest at the moment is for medical coverage for all & free education through university, also for all following some European nations. Obama failed on the former & the US state university system has been demolished at the state level.

    • The market-led model of globalization ultimately depended on the idea that, left to their own devices, increasingly internationalized markets could generate outcomes that were both in every body’s self-interest and in societies’ collective interests. Yet, following the financial crisis, it was no longer obvious that this idea was in any way credible. Indeed, Alan Greenspan, former Chairman of the Federal Reserve and for much of his life a cheerleader for market forces, was forced to admit as much while giving evidence to the US House Committee on Oversight and Government Reform in October 2008: ‘Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.’ Markets cannot function in a vacuum. They need to operate within some kind of institutional framework. But which one? (King 2017, 79)

      ~ King, Stephen D. Grave New World [The End of Globalization, the Return of History]. London: Yale University Press; 2017; p. 79.

  3. Thanks. Post-real is also mechanized intelligence and calling it artificial intelligence.

  4. Patrick J Fowler said:

    “other moral sciences” Do we continue to consider economics a science of morality?

    • Prof Dr James Beckman, Germany said:

      Hi, Patrick, our good Adam Smith added morality as a post-script, but economics is now a morality of self-interest, as Ayn Rand so quaintly wrote about. It justfifies gentlemen like the Koch Brothers to grind people into dust at some point in the lives of the latter. The Kochs were born billionaires as Donald T became, so no sense of needing but only adding to for the sake of temporary enjoyment. Quite similar to random, additional sex partners. homes or vehicles, it seems to me.

  5. Roy Langston said:

    Economics, if it is anything useful, is the empirical science of relieving scarcity. It requires an exercise of the imagination to think that a genuine empirical science of scarcity relief could be build on refusal to know the difference between a return obtained by relieving scarcity and one obtained by inflicting it.

  6. Satyabrata Panda said:

    Great collection of wits. Helpful for writing articles on economics

  7. “In business schools the Atlantic nations (EU+North America) generally encourage that personal values such as benevolence be kept low-key, as professors are regularly chastised for introducing their personal values. When they come from a church background like I do, & then go to teach in a religiously-affiliated school, normally not a problem. But try doing that at a large public institution & either the prof would be considered “weird” or even challenged legally, I have seen. This saves possible conflict between various flavors of Christianity as well as with non-Christian faiths. I do know some Hare Krishna folks in various parts of the world, who might want to visit you with their singing, dancing & clanging of symbols, as one example. This is only to point out that collectively we have a wide variety of value-systems globally.”

    There is an increasing number of scholars/economists who are writing about religion and economics and their intertwined history. A classic is Economics as Religion: From Samuelson to Chicago and Beyond by Robert H. Nelson (http://a.co/bhX16S8). Then there is Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street by Tomas Sedlacek et al. (http://a.co/et09HT7). Much has been written on the subject in the Journal of Business Ethics as well over the years, usually after some substantial economic crisis due to unethical business behavior.

    Perhaps it is time to open up a space for comparative cross-disciplinary studies in the fields of science, religion, and economics? We have Buddhist Economics: An Enlightened Approach to the Dismal Science by Clair Brown (http://a.co/c5uQ5Ms), First Principles of Islamic Economics by Sayyid Abul A’la Mawdudi (http://a.co/2XMTZ9F), and in Illiberal Reformers: Race, Eugenics, and American Economics in the Progressive Era by Thomas C. Leonard (http://a.co/5vNevhz) Leonard documents the origins of early 19th century social science and the rise of economics as a science as being rooted in the religious motivations of the Social Gospel movement only to be eclipsed in the rise of secular materialism in the quest for greater authority in the idea that social science was being made “scientific” by the mathematization of the field.

  8. Real-World Economics: The sanctuary of stupidity and corruption
    Comment on Asad Zaman on ‘Quotes critical of economics’

    Heterodox economists do not get tired of telling the world that orthodox economics ≈ mainstream economics ≈ textbook economics is false in all dimensions. But with this, they are already at the end of their wits: “As will become evident, there is more agreement on the defects of orthodox theory than there is on what theory is to replace it: but all agreed that the point of the criticism is to clear the ground for construction.” (Nell)

    Orthodoxy has been deconstructed multiple times by now but traditional Heterodoxy has obviously failed at construction. Worse, the representative economist has not grasped what the state of his discipline is and what, by logical implication, his most urgent mission should be.#1, #2, #3

    Fact is that economists have messed up
    • profit theory, for 200+ years,
    • microfoundations, for 140+ years,
    • macrofoundations, for 80+ years,
    • the application of elementary logic and mathematics since the founding fathers.

    Because both orthodox and heterodox economics is a hopeless failure, the way forward requires, in methodological terms, a Paradigm Shift, that is, the full replacement of Walrasian microfoundations and Keynesian macrofoundations by an entirely new set of axioms.#4

    Economists do understand the full implications of the situation. Neither have they any idea how to get out of their self-created swamp. Just the opposite, they are hellbent on keeping everything as it is, i.e. to stage their zero-brain wrestling shows, to carry on with their vacuous palaver, and to hold on to the accustomed pluralism of false theories while telling the general public that New Economic Thinking is in overdrive and the breakthrough is just around the next corner.

    The general public has the impression that economics consists of a pro-capitalist faction and an anti-capitalist faction and both claim to work/fight for the betterment/salvation of society/humanity. Nothing could be further from the truth. Both factions are in the propaganda and disinformation business. Both factions are scientifically incompetent, both factions are stupid and corrupt. This becomes always plain when the discussion turns to methodology.#5, #6, #7

    The editors and main contributors#8 and regular commentators#9 of the Real-World Economics Review Blog actively promote proto-scientific BS and actively hinder everything that makes even remotely the impression of leading out of the swamp. That much is plain, whatever the RWER Blog is set up to achieve, it is NOT a Paradigm Shift.

    Egmont Kakarot-Handtke

    #1 The present non-existence of economics
    https://axecorg.blogspot.com/2018/07/the-present-non-existence-of-economics.html

    #2 What’s the use of economists?
    https://axecorg.blogspot.com/2018/07/whats-use-of-economists.html

    #3 The miracle cure of economists’ micro-macro schizo
    http://axecorg.blogspot.com/2018/07/the-miracle-cure-of-economists-micro.html

    #4 For details of the big picture see Paradigm Shift
    http://axecorg.blogspot.com/2015/02/essentials-cross-references.html

    #5 Real-World Economics Review Blog, Radical paradigm shifts
    https://rwer.wordpress.com/2018/07/19/radical-paradigm-shifts/

    #6 Real-World Economics Review Blog, What are axiomatizations good for?
    https://rwer.wordpress.com/2018/07/14/what-are-axiomatizations-good-for/

    7# Hooray! The formalization issue is finally settled
    https://axecorg.blogspot.com/2018/06/hooray-formalization-issue-is-finally.html

    #8 Edward Fullbrook, Lars Syll,, Asad Zaman, David Ruccio, Dean Baker, Maria Alejandra Madi, Mark Weisbrot, Merijn Knibbe, Norbert Häring, Peter Radford

    #9 Prof Dr James Beckman Germany, Dave Marsay, Vladimir A. Masch, Edward K Ross, Frank Salter, Craig, Helen Sakho, John Vertegaal, Jan Milch, Calgacus alias Some Guy, dingo342014, Robert Locke, davetaylor1, Ken Zimmerman

    • I loved reading all the well deserved economist-bashing (all guilty of criminal negligence IMHO) but I note that none of your criticisms deal with money or banking either. That’s a bit like doctors ignoring blood.

      The following is just elementary logic applied to verified facts and official statistics from the central banks themselves,

      Economists and a Pile of Nuts
      This animation runs just over 2 minutes
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/economists_play.htm (2:17)

      Mr. IMF and the Mystery of the Thirsty Swans
      This is the much more detailed explanation also in animation form.
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD2016/ThirstySwans.htm (13:18)

      • Paul Grignon,
        I have read your comments and am going to look further into your work.

        On first glance it seems you have seen similar issues to me with the two BOE publications, that whilst they demonstrate that banks create most of the money, and also that all money is debt and make the following statement (in the intro doc)

        “If all assets and debt were pooled together, all financial assets – including money – would cancel out, leaving only tangible things.”

        what they DONT say, is that, if all assets and debts were pooled together, although all principle debts would cancel out, all remaining interest would still be outstanding, and yet there would be no money left by which to pay it; which really puts the owners of the debt in the same boat as the owners of all the land.

        Of course economists aren’t going to admit this, they contribute nothing to society and simply suck off the hard work of everyone else just like landlords and financiers do.

        As an aside, I have some court cases where mortgagors went to court against banks on the basis that banks were not lending out savings, but simply creating money (and many of these were before 2014), and these cases demonstrated that the courts know far more about how the monetary economy works than economists.

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