The Hypothetical Theory Prison of Modern Economics

[cyu]

http://www.latimes.com/news/opinion/commentary/la-oe-weiner-youth-revolt-economics-20120411,0,6994951.story

historians likely will cite Nov. 2, 2011, as the start of the revolution. On that day at Harvard University, roughly 70 students organized a walkout of an introductory economics class taught by N. Gregory Mankiw.

Suddenly, many more economists started to acknowledge, at least in private, that something is terribly wrong with the field.

the discipline is so dominated by orthodox ideology that the students risk jeopardizing their careers simply by engaging in research that runs counter to economics' fundamental assumptions.

"During the last 40 years economics captivated itself in an axiomatic hypothetical theory prison. Freedom of opinion, one of the most fundamental characteristics of an enlightened and pluralistic society, disappeared."

it feels as if we're setting up the coffeehouses and backroom parlors for the fomenters of an underground uprising.

the global financial crisis brought the failures of the economics profession into stark relief. as the pernicious effects of instability and inequality become part of daily life, frustration with stale economic ideas is starting to turn into action

this is where economics finds itself today, stuck between failed methodologies and whispered realities. It can continue to produce elegant theorems that work only by ignoring obvious real-world situations and conditions.

The choice is up to the economics establishment. But the revolution has begun.

[Railyon]

N. Gregory Mankiw
Guy is a wanker anyway, for having written de facto standard literature in the field he's talking a lot of piss.



the discipline is so dominated by orthodox ideology that the students risk jeopardizing their careers simply by engaging in research that runs counter to economics' fundamental assumptions.
I can so fucking relate. :(
I feel like I'm about the only Marxist in the whole dept.



this is where economics finds itself today, stuck between failed methodologies and whispered realities. It can continue to produce elegant theorems that work only by ignoring obvious real-world situations and conditions.
Who then, if you call them out on their bullshit, tell you to "learn some economics for fucks sake".

Happened to me once, tables were flipped.

[cyu]

http://www.guardian.co.uk/commentisfree/2012/jun/06/economics-not-science

These highly skilled people carry on, though they exhibit not only a lack of foresight but an astonishing lack of hindsight. Why on earth are they taken seriously when they keep getting things wrong? We are silenced by some jargon and bogus maths (sorry, probabilities) because we are mostly innumerate and because economic orthodoxy presents itself as a higher faith.

we are in reduced circumstances when debate is reduced to bankers arguing with economists. This is not left versus right. It is more akin to fundamentalists talking to agnostics.

Economics is not a science; it's not even a social science. It is an antisocial theory. It assumes behaviour is rational. It cannot calculate for culture, altruism, fear, greed, love or humanity at all.

Only non-economists properly explain that money is not real and what was traded during the boom years were not real things, not even real futures, but guesstimates bundled where no one at the top could lose.

anti-globalisers had dreadlocks and dogs on string and were pepper-sprayed away. What they misjudged was how quickly developed countries would come to look like underdeveloped ones.

there are the incredibly wealthy and then those who sleep in the woods on the edge of broken cities; here, the unemployed are bussed in to "steward" the celebration of the billionaire monarch.

economic sense by the deliberately dumb bow down before the calculation that we can have even Spanish levels of youth unemployment (40%-50%) if it reduces the deficit by the next election.

Do not complain when economists and ministers tell you that what you thought had a social purpose must now be profit-driven. Money must be made from schools, hospitals and looking after the elderly. The privatisation of care is one of the only growth industries. This is what you get from this dictatorship of economists, and it should be overthrown.

[Dennis the 'Bloody Peasant']

Reminds me of the interviews on Inside Job, economists being quizzed about reports they'd produced favouring de-regulation and praising the stability of Iceland's economy.

Academic economists had for decades advocated for deregulation and helped shape U.S. policy. They still opposed reform after the 2008 crisis. Some of the consulting firms involved were the Analysis Group (http://en.wikipedia.org/wiki/Analysis_Group), Charles River Associates (http://en.wikipedia.org/wiki/Charles_River_Associates), Compass Lexecon (http://en.wikipedia.org/wiki/Jonathan_Orszag), and the Law and Economics Consulting Group (LECG (http://en.wikipedia.org/wiki/LECG)). Many of these economists had conflicts of interest, collecting sums as consultants to companies and other groups involved in the financial crisis.
From Wiki - Inside Job (film)

[cyu]

http://www.zerohedge.com/news/2014-03-03/former-central-banker-admits-they-are-making-it-they-go-along

A few weeks ago, William White (former economist at the Bank of England, the Bank of Canada, and Bank of International Settlements) made a frank admission.

virtually every aspect you can think of with respect to monetary policy, about best practice, has changed and changed repetitively over the course of the last 50 years. So, this stuff ain’t science. People are making it up as they go along.

what they’ve been making up as they go along actually differs across central banks [The Bundesbank, for example, is fighting the threat of high inflation, whereas the Fed is more concerned about the prospect of deflation]. They can’t even agree amongst themselves about what’s the best way to do things.

I’m becoming more and more convinced that all of the models we use are basically useless.

[RedMaterialist]

Reinhart and Rogoff's theories on austerity and debt have been completely destroyed. Mankwi's theory of the free market was destroyed in 2008. Yet they all still teach at Harvard. How is this possible?

[cyu]

Capitalists don't just corrupt politicians with their bribes. They corrupt academic departments and even other corporations as well =]

See also http://www.revleft.com/vb/showpost.php?p=2725608&postcount=26

[cyu]

For those who operate the Visible Hand, those who believe in the Invisible Hand are suckers.

http://www.zerohedge.com/news/2015-03-11/how-boj-stepped-143-times-send-japanese-stocks-soaring

in September 2014, The BoJ bought a record amount of Japanese stock ETFs taking its holdings to over 1.5% of the entire market cap, the largest individual holder of Japanese stocks. The BoJ has now gone full intervention-tard - buying Japanese stocks on 76% of the days when the market opened lower.

By directly underpinning the market, officials have tried to encourage private investors to follow suit and put more money in stocks.

“We led the cows to water, but they didn’t drink it, even though we told them it tasted good,” Miyako Suda, who was a board member then, wrote in a 2014 book discussing monetary easing at that time. “So we thought we should drink it ourselves, showing them it was tasty.”

[cyu]

On deflation, consumer confidence, velocity of money, and Keynesianism

If capitalists are going to control the economy, then we must force the poor to work for them.

If we want to force the poor to work, then we must punish the poor if they are unemployed.

If we have to punish the poor, then we must attack them if they try to eat food.

If people aren't buying as much as they used to, then existing producers will become unemployed.

If we must punish them when they are unemployed, then there will be increasing numbers of people being punished.

If increasing punishment makes revolution more likely, then we must force them to shop.