Letting Go of Macroeconomics

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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Fri Mar 30, 2012 2:39 pm

Face_Palm wrote:Alright there professor. It seems like you've got things figured out. Now run for office. But of course political interests will conspire against the truth, right? For money I would presume? Do you know what the word 'dehumanize' means? Pull your head out of the conspiracy theory gutter and lighten up. Life might be passing you by.

Oops, my Gibberish to English Translator Robot just horked up a hairball.
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Re: Letting Go of Macroeconomics

Post by Face_Palm » Fri Mar 30, 2012 2:54 pm

Let me land a hand. You are asserting that you know fundamental economic truths that are being covered up by the political and financial elites for their own gain at the expense of the people at large. Or maybe the elites are just misguided? Take your pick. You assert that conditions would be so much better for the common man if the system began working in his or her favor.

Sounds to me like you should run for office and rescue the people from their plight. So why not? The evil capitalists are too evil and powerful? What's the flavor of evil this month?
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Fri Mar 30, 2012 5:18 pm

Face_Palm wrote:Greece has nothing to do with Keynesian economics. According to Keynes you deficit spend during an economic crisis. To do that you need room to expand your debt. Greece's problem was precisely its debt and that it was on the verge of bankruptcy. That's why austerity measures were taken as opposed to a straightforward Keynesian stimulus.

This is freaking macro economics 101. You people should be ashamed of your ignorance. Public opinion on things is frightening. What the hell do you do so much reading for when you have no foundation? As Dave Chappelle would say, "They should have never given you people money! You don't appreciate [bleep]!"

If you're going to judge, condemn, and start talking about myths or whatever other nonsense spinning in your head, pray do at least know the basics.


Greece was attempting to borrow and spend its way to prosperity, as per Lord Keynes. I'm not for the austerity package, though. IMHO Greece should firmly repudiate all its debt and tell the International Monetary Fund to go bail itself.
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Re: Letting Go of Macroeconomics

Post by Face_Palm » Fri Mar 30, 2012 7:02 pm

Per Lord Keynes you borrow and spend during a downturn. Then you cover the debt. Otherwise, in the long run we are all dead. Both a Republican and a Democratic president implemented massive bailouts and stimulus spending. The Chinese did it too, and probably every other significantly affected country/region. Do you think they did so on a whim? As for Greece, economies nowadays are very interconnected. Look at who is bailing Greece out in exchange for austerity measures that should make the country solvent. If it were as easy as Greece going bankrupt and dropping the euro the past couple of years would have gone differently.
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Fri Mar 30, 2012 7:35 pm

Face_Palm wrote:Per Lord Keynes you borrow and spend during a downturn. erThen you cover the debt. Otherwise, in the long run we are all dead. Both a Republican and a Democratic president implemented massive bailouts and stimulus spending. The Chinese did it too, and probably every other significantly affected country/region. Do you think they did so on a whim? As for Greece, economies nowadays are very interconnected. Look at who is bailing Greece out in exchange for austerity measures that should make the country solvent. If it were as easy as Greece going bankrupt and dropping the euro the past couple of years would have gone differently.


Greece is in a heckava downturn, and thus, per Lord Keynes, should be borrowing and spending, instead of inplementing austerity measures. The problem is that it's been borrowing and spending that got them in the position they are in now, no?

The IMF probably has some people on its masthead with good intentions, but to me it looks like a Las Vegas casino operation. "Come on in, we'll give you a line of credit until you max out, then go out and work your butt off and if you get partially solvent, come on back so we can fleece you again. And a lot of IMF bankster money seems to go to dictators and their minions to be paid off later by taxing the commoners.

http://www.imf.org/external/np/adm/rec/recruit.htm
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Re: Letting Go of Macroeconomics

Post by Face_Palm » Fri Mar 30, 2012 10:20 pm

One, I would wager Lord Keynes was not a proponent of unconditional and perpetual borrowing and spending. What got Greece into their predicament has little to do with the Lord. Two, as already pointed out, in order to borrow and spend during a downturn you actually need to be solvent. Greece was on the verge of default. So it got bailed out by Europe and I guess to perhaps a lesser extent the IMF on the condition that it implement significant austerity measures in order to reign in its debt.

Lord Keynes wasn't Lord Vader. He couldn't solve all the world's problems. Lord Vader on the other hand can obliterate Earth with the Death Ray and choke the survivors floating by his Destroyer. But there's only one Lord Vader, he is probably not in our sector (in fact, he has been converted to his light form and is no longer aboard a Death Star), and he is fictional, just like all the panaceas people have been coming up with for thousands of years and continue to pursue in vain.
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Sun May 27, 2012 5:47 pm

Face_Palm wrote:One, I would wager Lord Keynes was not a proponent of unconditional and perpetual borrowing and spending. What got Greece into their predicament has little to do with the Lord. Two, as already pointed out, in order to borrow and spend during a downturn you actually need to be solvent. Greece was on the verge of default. So it got bailed out by Europe and I guess to perhaps a lesser extent the IMF on the condition that it implement significant austerity measures in order to reign in its debt.

Lord Keynes wasn't Lord Vader. He couldn't solve all the world's problems. Lord Vader on the other hand can obliterate Earth with the Death Ray and choke the survivors floating by his Destroyer. But there's only one Lord Vader, he is probably not in our sector (in fact, he has been converted to his light form and is no longer aboard a Death Star), and he is fictional, just like all the panaceas people have been coming up with for thousands of years and continue to pursue in vain.


Keynes was actually given the title of Baron Keynes of Tilton by King Geore VI, after which he sat in Parliament with the Liberal Party in the House of Lords, and was called Lord Keynes by some.
http://www.google.com/images?q=lord%20j ... sult_group
What got Greece into the situation it is now, if not its economic policies? I know that some people blame Germany's economic policies for Greece's problems, but that doesn't quite compute for me.
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Re: Letting Go of Macroeconomics

Post by rickoshay85 » Sun May 27, 2012 6:06 pm

Tom-Palven wrote:
Matthew Ellard wrote:
Tom-Palven wrote:Economics has been called "the dismal science", but macroeconomics, the branch of economics that deals with government policies, could well be called "the dead science", if we can say that macroeconomics is a science at all.


Validity testing, makes macroeconomics a science. The poor application of macroeconomics can ruin its impact as can the poor application of any scientific rule. Economists don't initiate political and governmental activities, politicians do based on the vote.


If it's "governmental activities" and not macroeconomics that are the problem, Matt, maybe we should be Letting Go of Government. Suits me.


You seem to forget that the government (taxes) pays the Congress, both Dems and Reps, not just monthly checks but transportation and all kinds of other perks
What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is WHAT WE DO. John Ruskin (1819 - 1900)

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Sun May 27, 2012 9:24 pm

rickoshay85 wrote:
Tom-Palven wrote:
Matthew Ellard wrote:
Tom-Palven wrote:Economics has been called "the dismal science", but macroeconomics, the branch of economics that deals with government policies, could well be called "the dead science", if we can say that macroeconomics is a science at all.


Validity testing, makes macroeconomics a science. The poor application of macroeconomics can ruin its impact as can the poor application of any scientific rule. Economists don't initiate political and governmental activities, politicians do based on the vote.


If it's "governmental activities" and not macroeconomics that are the problem, Matt, maybe we should be Letting Go of Government. Suits me.


You seem to forget that the government (taxes) pays the Congress, both Dems and Reps, not just monthly checks but transportation and all kinds of other perks


No, I don't think I've forgotten about that, but could you explain further?
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Face_Palm » Mon May 28, 2012 2:44 am

And what economic policies were those, and what do those economic policies have to do with a Keynesian response to significant economic downturns, the downturn being a full-blown crisis in this case? Why tarnish the Lord's name? I know many Lords, and it is typically not a good idea to {!#%@} with them.
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Mon May 28, 2012 1:22 pm

Face_Palm wrote:And what economic policies were those, and what do those economic policies have to do with a Keynesian response to significant economic downturns, the downturn being a full-blown crisis in this case? Why tarnish the Lord's name? I know many Lords, and it is typically not a good idea to {!#%@} with them.


Keynes advice, as I understand it, was for governments to spend more money in order to stimuilate economices during downturns in the business cycle, and to cut back spending when things "heat up." My objections to this are:

1. The theory is useless because it doesn't comport with the reality that human being politicians will always increase spending, the evidence being that they always have.

2. Downturns in business cycles are probably of some benefit in that they weed out malinvestment.

3. The whole pseudoscience of macroeconomics is unethical because it presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Face_Palm » Mon May 28, 2012 1:59 pm

Tom-Palven wrote:1. The theory is useless because it doesn't comport with the reality that human being politicians will always increase spending, the evidence being that they always have.


This is a non sequitur. The theory is about mitigating the effects of the troughs and amplitudes of the business cycle on society. Whether spending trends upward over time is irrelevant (make sure you're talking about real spending too, adjusted for inflation and relative to GDP as well). Also, spending doesn't trend upward because of selfish politicians. On the contrary, those politicians are less selfish than the people who explain their stances in terms of personal material gain.

Tom-Palven wrote:2. Downturns in business cycles are probably of some benefit in that they weed out malinvestment.


Not the way society experiences them. Bad investments can be weeded out at the same time as society is kept out of the crapper.

Tom-Palven wrote:3. The whole pseudoscience of macroeconomics is unethical because it presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.


A rather colorful way of putting it but what you are talking about isn't presupposed but a fact. While plenty of conservatives believe in an array of fairy tales fortunately there's hardly a chance government and society will revert to the 18th and 19th centuries. Unselfishness is winning over selfishness. It's hilarious when the latter is coupled with Christianity, though I know this observation doesn't apply to you.
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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Mon May 28, 2012 2:04 pm

Tom-Palven wrote:presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.

Even though 97% of Peter's income comes from robbing the Paul's of the world?
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Mon May 28, 2012 2:28 pm

OlegTheBatty wrote:
Tom-Palven wrote:presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.

Even though 97% of Peter's income comes from robbing the Paul's of the world?


Are you referring to Bill Gates? The wealthy Bill Clinton? Can you give me some examples of the Peters you are referring to and the robbery involved?

BTW, you have an open invitation to come down to Florida to have few beers and discuss this stuff further. :D

http://articles.latimes.com/2008/apr/05 ... /na-taxes5
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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Tue May 29, 2012 3:16 pm

Tom-Palven wrote:
OlegTheBatty wrote:
Tom-Palven wrote:presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.

Even though 97% of Peter's income comes from robbing the Paul's of the world?


Are you referring to Bill Gates? The wealthy Bill Clinton? Can you give me some examples of the Peters you are referring to and the robbery involved?

I didn't say they were all crooks. Most of the robbery is perfectly legal.

Why do you think the middle class in the US is shrinking, while the low-income classes and the numbers of extremely wealthy is increasing?

BTW, you have an open invitation to come down to Florida to have few beers and discuss this stuff further. :D

Thank you. I hope the invitation is still open when you don't have a hurricane on. :lol:
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Tue May 29, 2012 3:24 pm

OlegTheBatty wrote:
Tom-Palven wrote:
OlegTheBatty wrote:
Tom-Palven wrote:presupposes an elite empowered to rob Peter to pay Paul, in violation of the time-honoured ethical standards of reciprocity and equality, ie. the Golden Rule.

Even though 97% of Peter's income comes from robbing the Paul's of the world?


Are you referring to Bill Gates? The wealthy Bill Clinton? Can you give me some examples of the Peters you are referring to and the robbery involved?

I didn't say they were all crooks. Most of the robbery is perfectly legal.

Why do you think the middle class in the US is shrinking, while the low-income classes and the numbers of extremely wealthy is increasing?
BTW, you have an open invitation to come down to Florida to have few beers and discuss this stuff further. :D

Thank you. I hope the invitation is still open when you don't have a hurricane on. :lol:


I don't know why the middle class is shrinking. Why is it?
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by rickoshay85 » Thu May 31, 2012 7:18 pm

Face_Palm wrote:Let me land a hand. You are asserting that you know fundamental economic truths that are being covered up by the political and financial elites for their own gain at the expense of the people at large. Or maybe the elites are just misguided? Take your pick. You assert that conditions would be so much better for the common man if the system began working in his or her favor


All the government needs to do is honor FDRs four freedoms.

Freedom of speech, freedom of worship, freedom from WANT, freedom from FEAR.
What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is WHAT WE DO. John Ruskin (1819 - 1900)

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Tue Jun 05, 2012 12:28 am

How well do FDR's Four Freedoms comport with Confucius' Golden Rule of reciprocity which seems imho to be a fair and just ethical standard?
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Martin Brock » Tue Jun 05, 2012 4:14 pm

"Freedom from want' is clearly a lot of political BS. So is "freedom from fear". FDR had no means of freeing everyone from want or from fear, other than the often well-founded fear of himself. I'm guessing that the march to a Japanese concentration camp was fearful.
People associating freely respect norms of their choice, and relationships governed this way are necessarily interdependent.

More central authorities conquer by dividing, imposing norms channeling the value of synergy toward themselves.

"Every man for himself" is the prescription of a state, not a free community. A state protects the poor from the rich only in fairy tales.

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Sun Jun 10, 2012 9:05 am

Freedom from BS, itself, would be really novel.
What's the macroeconomic prescription for Spain? Magical Mystery Bonds backed by the full faith and credit of Bernie Madoff?
http://www.youtube.com/watch?v=JDzQLQ952ZU
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Re: Letting Go of Macroeconomics

Post by rickoshay85 » Sun Jun 10, 2012 8:56 pm

Matthew Ellard wrote:
Tom-Palven wrote:Economics has been called "the dismal science", but macroeconomics, the branch of economics that deals with government policies, could well be called "the dead science", if we can say that macroeconomics is a science at all.


Validity testing, makes macroeconomics a science. The poor application of macroeconomics can ruin its impact as can the poor application of any scientific rule. Economists don't initiate political and governmental activities, politicians do based on the vote.


How many microeconomics does it take to make one macroeconomics?
What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is WHAT WE DO. John Ruskin (1819 - 1900)

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Re: Letting Go of Macroeconomics

Post by Austin Harper » Mon Jun 11, 2012 3:32 pm

There are π microeconomics in one macroeconomic.
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Mon Jun 11, 2012 4:43 pm

Microeconomics describes such laws as those of "supply and demand" governing how individuals and businesses operate
Macroeconomics, credited as an innovation of Lord John Maynard Keynes, on the other hand, is predicated on the existence of coercive nation-states with the power to tax and spend; and describes how these states should behave, similar to the way in which Niccolo Machiavelli described how nation-states, and also principalities and fiefdoms, should operate.
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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Mon Jun 11, 2012 5:15 pm

Tom-Palven wrote:Microeconomics describes such laws as those of "supply and demand" governing how individuals and businesses operate
Macroeconomics, credited as an innovation of Lord John Maynard Keynes, on the other hand, is predicated on the existence of coercive nation-states with the power to tax and spend; and describes how these states should behave, similar to the way in which Niccolo Machiavelli described how nation-states, and also principalities and fiefdoms, should operate.

http://en.wikipedia.org/wiki/Macroeconomics

Macroeconomics was no more invented by Keynes than gravity was invented by Newton. However, Newton's model has better predictive qualities than any macroeconomic model yet devised.
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Re: Letting Go of Macroeconomics

Post by Tom Palven » Mon Jun 11, 2012 7:04 pm

OlegTheBatty wrote:
Tom-Palven wrote:Microeconomics describes such laws as those of "supply and demand" governing how individuals and businesses operate
Macroeconomics, credited as an innovation of Lord John Maynard Keynes, on the other hand, is predicated on the existence of coercive nation-states with the power to tax and spend; and describes how these states should behave, similar to the way in which Niccolo Machiavelli described how nation-states, and also principalities and fiefdoms, should operate.

http://en.wikipedia.org/wiki/Macroeconomics

Macroeconomics was no more invented by Keynes than gravity was invented by Newton. However, Newton's model has better predictive qualities than any macroeconomic model yet devised.


I said Keynes is credited as the innovator. While you and others may disagree, Wiki says:
"Macroeconomics, at least in its modern form,[20] began with the publication of John Maynard Keynes's , [i]General Theory of Employment, Interest, and Money[/i]"
http://en.wikipedia.org/wiki/Macroeconomics

Yes, Newton's model has predictive value, although physicists apparently still don't understand how gravity works, while Keynes model is, #1. unethical because it relies upon coercion and #2. has no predictive value because it relies on the proposition that politicians will make decisions that favor everyone's long-term best interests.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Sat Jun 30, 2012 7:31 am

Tom-Palven wrote:Yes, Newton's model has predictive value, although physicists apparently still don't understand how gravity works, while Keynes model is, #1. unethical because it relies upon coercion and #2. has no predictive value because it relies on the proposition that politicians will make decisions that favor everyone's long-term best interests.


Predictive macroeconomic models should not be compared to Newton's law. Macroeconomics falls under Arrow's Impossibility theorem, where there is no singular correct answer or explanation for observed trends. Gravity will have one explanation. It is bad maths to make such a comparison.

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Tue Jul 10, 2012 12:41 am

Matthew Ellard wrote:
Tom-Palven wrote:Yes, Newton's model has predictive value, although physicists apparently still don't understand how gravity works, while Keynes model is, #1. unethical because it relies upon coercion and #2. has no predictive value because it relies on the proposition that politicians will make decisions that favor everyone's long-term best interests.


Predictive macroeconomic models should not be compared to Newton's law. Macroeconomics falls under Arrow's Impossibility theorem, where there is no singular correct answer or explanation for observed trends. Gravity will have one explanation. It is bad maths to make such a comparison.


How 'bout I compare macroeconomics to reilgion, instead? The majority of Americans, including some smart, "well-educated" ones believe that Jesus died for their sins, and even very bright guys like Barack Obama thought that a macroeconomic cure consisting of of a huge new government spending package would boost the US economy out of stagnation.

There are probably many similarities between religion and macroeconomics including the neccessity of blind faith versus evidence, but the one I'd like to point to is that If Nothing Fails Like Prayer, macroeconomics places a close second.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Tue Jul 10, 2012 5:42 am

Tom-Palven wrote: How 'bout I compare macroeconomics to reilgion, instead?
Well, you could if you wanted to......but macroeconomics can predict results, which religion can't.

Tom-Palven wrote:The majority of Americans, including some smart, "well-educated" ones believe that Jesus died for their sins, and even very bright guys like Barack Obama thought that a macroeconomic cure consisting of of a huge new government spending package would boost the US economy out of stagnation.
America is coming out of its recession. However Jesus is not coming back. The comparison fails.

Tom-Palven wrote:There are probably many similarities between religion and macroeconomics including the neccessity of blind faith versus evidence, but the one I'd like to point to is that If Nothing Fails Like Prayer, macroeconomics places a close second.
Would you like to give me an example of blind faith using macroeconomics? I think your confusion is coming from political people throwing around the word macroeconomics when they don't know what it is. Considering the basic premise of macroeconomics is validity testing suggests you don't know what macroeconomics is either.

Here are examples

http://scholar.google.com.au/scholar?q= ... CE8QgQMwAA

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Tue Jul 10, 2012 10:59 am

I may well be wrong, but in today's rant :mrgreen: it seems to me that those economic models are pure BS. Even before Nixon removed almost the last vestiges of the gold standard (If there is gold left in Ft Knox, why?) in 1971 (The Swiss held out a little longer.) and said "We are all Keynesians now" macroeconomists have been producing all kinds of smoke and mirrors and fancy equations that are as useless as teats on a bull.

In today's paper economists are expressing concern over the banking system in Spain and the rest of the Eurozone. The reports indicate that just a few new banking regulations are necessary to solve Europes problems, which according to them have little to do with deficit spending by the countries involved, deficit spending actually being a good thing.

While politicians who appeal to a fiscal conservative minority for donations usually pay a little lip service to fiscal restraint, even they seem to now know that such lip service must also be counterbalanced by promises of pie-in-the-sky in order to get elected, while those politicians appealing to the majority simply promise pie-in-the-sky produced automatically by wind and solar-powered magic and delivered to everyone equally by the grace of government.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Tue Jul 10, 2012 5:11 pm

Matthew Ellard wrote:
Tom-Palven wrote: How 'bout I compare macroeconomics to reilgion, instead?
Well, you could if you wanted to......but macroeconomics can predict results, which religion can't.

How well did those macroeconomic models predict the biggest economic collapse since the Depression?
How accurately have they predicted the results of the massive bank bailouts?
How well are they doing in the Eurozone as we speak?
Etc.

It isn't just us peasants calling macroeconomic models a religion. Growing numbers of economists are too. Trouble is, it is the econoreligionists who have the politicians ears because those models serve to justify the massive movement of wealth out of the economy and into the hands of an elite few.
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Tue Jul 10, 2012 11:53 pm

OlegTheBatty wrote: How well did those macroeconomic models predict the biggest economic collapse since the Depression?


Fair question.

A model is only as good as its data
You are arguing on the premise there were extremely complex macroeconomic models for the world economy into which someone punched accurate data concerning the forthcoming wars, forthcoming natural disasters, forthcoming consumer demand slump and forthcoming over supply of cheaper manufactured commodities. Obviously any form of "model" is only as good as the information entered into it and no such macroeconomic model exists that could predict the future. Once, the USA entered ito wars, consumer demand collapsed and "rough" estimates could be entered, the "models" start producing good predictive data. This is not just macroeconomic models but all models including simple "national cashflow budgets" and very simple "trend lines".

But in a closed simple economic system....
For a closed economic system model without surprise externalities, for example the Australian government wishing to increase consumer spending, an accurate predictive, macroeconomic model can be created. This is exactly what Treasury predicted , suggested and what the government followed through on by giving every Aussie who lodged a tax return exactly $900. It worked. No recession.

Back to Arrows Impossibility theorem
There is no single "right way" to run an economy. No macroeconomic model can ever say "run your economy like this". At best a government can enter its specific financial policies and observe the predicted result and modify as a result. If you flip this over into predicting economic collapse, you can see that no government sits around entering all the bad potential disasters as these can't be controlled.

Politics vs Economics.
When Bush increased tax breaks for the middle & upper class, he did so based on a simplified "macroeconomic maxim" citing the "trickle down effect" and he did this for political purposes. He then entered into two big very expensive wars. I believe (but don't know) that no single macroeconomic model was used to consider both these events at the same time and I assume two different models were used. ( West Point's School of Economic Warfare probably raised an eyebrow in self reflection at the government's activities and the USA's welfare, at this point.). Again, my point is macroeconomic models are only as good as the data entered into them and secondly, that political decisions are not always based on complex macroeconomic models being created first that contain all the economic environment data.

For this reason I say macroeconomics is not a religion.


OlegTheBatty wrote: It isn't just us peasants calling macroeconomic models a religion. Growing numbers of economists are too. Trouble is, it is the econoreligionists who have the politicians ears because those models serve to justify the massive movement of wealth out of the economy and into the hands of an elite few.

Well.... you are not a peasant and what you are doing is forcing me to explain my views in depth. I have to supply you with strong robust arguments that make sense or I must retract my view. This is a good thing to do. A religion cannot do this. Macroeconomics can.

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Wed Jul 11, 2012 11:53 am

The only area that I see macroeconomics being both logical and ethical is when it exceeds its definition and extends into the realm of microeconomics- laws of supply and demand, insurance actuarial tables, and so on, but this is just an opinion, and it seems that the world could be in for a long, hard, debate about all this.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Fri Jul 13, 2012 8:51 pm

Matthew Ellard wrote:
OlegTheBatty wrote: How well did those macroeconomic models predict the biggest economic collapse since the Depression?


Fair question.

A model is only as good as its data
You are arguing on the premise there were extremely complex macroeconomic models for the world economy into which someone punched accurate data concerning the forthcoming wars, forthcoming natural disasters, forthcoming consumer demand slump and forthcoming over supply of cheaper manufactured commodities. Obviously any form of "model" is only as good as the information entered into it and no such macroeconomic model exists that could predict the future. Once, the USA entered ito wars, consumer demand collapsed and "rough" estimates could be entered, the "models" start producing good predictive data. This is not just macroeconomic models but all models including simple "national cashflow budgets" and very simple "trend lines".

A model which cannot predict is of little use. I grant that the data is neither comprehensive nor flawless, but it would not matter how good the data was if the model is fatally flawed. Some economists, such as Nouriel Roubini and Steve Keen did predict the meltdown, though for different reasons. I'm surprised that you are blaming the wars for the collapse of consumer demand. Demand collapsed when the housing bubble burst putting a lot of Americans into financial difficulties with too much private debt, and the consequent deleveraging, which is still going on. Deleveraging = not-spending.
As for the assumptions I am making, here is a good analysis of the role of assumptions in economic modelling.

But in a closed simple economic system....
For a closed economic system model without surprise externalities, for example the Australian government wishing to increase consumer spending, an accurate predictive, macroeconomic model can be created. This is exactly what Treasury predicted , suggested and what the government followed through on by giving every Aussie who lodged a tax return exactly $900. It worked. No recession.

Thank you, you make my point for me - That is a Keynsian approach to the problem, not a Neoclassical one. The American government chose to bail out the banks instead, a Neoclassical approach (though many labelled it Keynsian), and we can all see how that worked.

Back to Arrows Impossibility theorem
There is no single "right way" to run an economy. No macroeconomic model can ever say "run your economy like this". At best a government can enter its specific financial policies and observe the predicted result and modify as a result. If you flip this over into predicting economic collapse, you can see that no government sits around entering all the bad potential disasters as these can't be controlled.

Nonsense. If a model is predictive for even one fiscal year, it is worthless if it cannot detect financial calamity within that year - as none of the government Neoclassical models did (but some non-Neoclassical ones did).
Besides, governments often make fiscal decisions based on ideology rather than models, and, when they don't pan out, blame something the opposition did when THEY were in power (or something, there is always something to blame). No government ever blows up the economy then says "Oops, our model sucked!"

For this reason I say macroeconomics is not a religion.

Neoclassical models are not based on reality, but are adhered to despite any and all facts that display that unreality. That makes it a religion. You might find this an interesting read.
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Sat Jul 14, 2012 4:34 am

OlegTheBatty wrote: A model which cannot predict is of little use. I grant that the data is neither comprehensive nor flawless, but it would not matter how good the data was if the model is fatally flawed.
Well that's true. A good car driven by a bad driver is useless. The best oil paints in the hands of a four year old are useless...that doen't mean the car and paint was useless itself.

OlegTheBatty wrote: I'm surprised that you are blaming the wars for the collapse of consumer demand.
I wrote that quickly as an example. Obviously there were many contributing reasons and other early indicators. The housing bubble is right up there. The extension of US copyright was an early indicator that government had concern over (then) current national revenues. The wars were more a tipping point.

OlegTheBatty wrote:Neoclassical models are not based on reality, but are adhered to despite any and all facts that display that unreality. That makes it a religion. You might find this an interesting read.


This paper argues that the international financial crisis is just the last in a series of economic calamities produced by a type of theory that converted the economics profession from a study of real world phenomena into what in the end became mathematized ideology.....This paper argues that it is necessary to see these developments as one continuous process over more than three decades of applying neoclassical economics and neo-liberal economic policies that destroyed, rather than created, real wages and wealth

Firstly the paper is knocking its application and not macroeconomics. Secondly, I didn't say all Neoclassical Macroeconomic models are based on models of reality. Again that is back to the bad driver blaming their good cars. As for "neo-liberal economic policies destroying real wages and wealth" well my "Neo-liberal macroeconomic budgeted" country seem to be doing very well. Perhaps the USA has the same goals but with political mismangement and some huge externalities hindering the good result.

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Sat Jul 14, 2012 8:12 am

OlegTheBatty wrote:
Matthew Ellard wrote:
OlegTheBatty wrote: How well did those macroeconomic models predict the biggest economic collapse since the Depression?


Fair question.

A model is only as good as its data
You are arguing on the premise there were extremely complex macroeconomic models for the world economy into which someone punched accurate data concerning the forthcoming wars, forthcoming natural disasters, forthcoming consumer demand slump and forthcoming over supply of cheaper manufactured commodities. Obviously any form of "model" is only as good as the information entered into it and no such macroeconomic model exists that could predict the future. Once, the USA entered ito wars, consumer demand collapsed and "rough" estimates could be entered, the "models" start producing good predictive data. This is not just macroeconomic models but all models including simple "national cashflow budgets" and very simple "trend lines".

A model which cannot predict is of little use. I grant that the data is neither comprehensive nor flawless, but it would not matter how good the data was if the model is fatally flawed. Some economists, such as Nouriel Roubini and Steve Keen did predict the meltdown, though for different reasons. I'm surprised that you are blaming the wars for the collapse of consumer demand. Demand collapsed when the housing bubble burst putting a lot of Americans into financial difficulties with too much private debt, and the consequent deleveraging, which is still going on. Deleveraging = not-spending.
As for the assumptions I am making, here is a good analysis of the role of assumptions in economic modelling.

But in a closed simple economic system....
For a closed economic system model without surprise externalities, for example the Australian government wishing to increase consumer spending, an accurate predictive, macroeconomic model can be created. This is exactly what Treasury predicted , suggested and what the government followed through on by giving every Aussie who lodged a tax return exactly $900. It worked. No recession.

Thank you, you make my point for me - That is a Keynsian approach to the problem, not a Neoclassical one. The American government chose to bail out the banks instead, a Neoclassical approach (though many labelled it Keynsian), and we can all see how that worked.

Back to Arrows Impossibility theorem
There is no single "right way" to run an economy. No macroeconomic model can ever say "run your economy like this". At best a government can enter its specific financial policies and observe the predicted result and modify as a result. If you flip this over into predicting economic collapse, you can see that no government sits around entering all the bad potential disasters as these can't be controlled.

Nonsense. If a model is predictive for even one fiscal year, it is worthless if it cannot detect financial calamity within that year - as none of the government Neoclassical models did (but some non-Neoclassical ones did).
Besides, governments often make fiscal decisions based on ideology rather than models, and, when they don't pan out, blame something the opposition did when THEY were in power (or something, there is always something to blame). No government ever blows up the economy then says "Oops, our model sucked!"

For this reason I say macroeconomics is not a religion.

Neoclassical models are not based on reality, but are adhered to despite any and all facts that display that unreality. That makes it a religion. You might find this an interesting read.


The article on Neo-clasical economics by Erik Reinert was interesting, but not compelling. He seems to try to take a middle ground position void of specifics. which doesn't seem to please Matt, who leans more toward interventionist command economics, nor does he take the noninterventionist economic approach that allows for noncoercive spontaneous order, either, that would please the likes of me. Maybe he's trying to sort things out, but the result is just more mumbo-jumbo.
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Sun Jul 15, 2012 3:53 am

Tom-Palven wrote:The article on Neo-clasical economics by Erik Reinert was interesting, but not compelling. He seems to try to take a middle ground position void of specifics. which doesn't seem to please Matt, who leans more toward interventionist command economics, nor does he take the noninterventionist economic approach that allows for noncoercive spontaneous order, either, that would please the likes of me. Maybe he's trying to sort things out, but the result is just more mumbo-jumbo.


I need to be careful here so I am going to check my own position.

I agree with both of you if your position is "Macroeconomics is tool that can never fully create a 100% detailed model of an actual economy and therefore the potential remedies suggested by twigging such a model are never going to be 100% successful in their application to the real economy".

I think we all agree on the above.

I think we would all agree with this position..."Macroeconomics, the word, is now bantered around politically as a justification in the same way as the expressions "our christian values" or "our libertarian views" although the politician using these expressions has not actually considered them in any depth"

I'm hoping that we now sort of agree that "Macroeconomics is like a computer program. The software is valid but if the software does not match the actual scenario being modelled or rubbish data is fed in....then poor results will be forthcoming".

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Re: Letting Go of Macroeconomics

Post by Tom Palven » Sun Jul 15, 2012 8:22 am

Matthew Ellard wrote:
Tom-Palven wrote:The article on Neo-clasical economics by Erik Reinert was interesting, but not compelling. He seems to try to take a middle ground position void of specifics. which doesn't seem to please Matt, who leans more toward interventionist command economics, nor does he take the noninterventionist economic approach that allows for noncoercive spontaneous order, either, that would please the likes of me. Maybe he's trying to sort things out, but the result is just more mumbo-jumbo.


I need to be careful here so I am going to check my own position.

I agree with both of you if your position is "Macroeconomics is tool that can never fully create a 100% detailed model of an actual economy and therefore the potential remedies suggested by twigging such a model are never going to be 100% successful in their application to the real economy".

I think we all agree on the above.

I think we would all agree with this position..."Macroeconomics, the word, is now bantered around politically as a justification in the same way as the expressions "our christian values" or "our libertarian views" although the politician using these expressions has not actually considered them in any depth"

I'm hoping that we now sort of agree that "Macroeconomics is like a computer program. The software is valid but if the software does not match the actual scenario being modelled or rubbish data is fed in....then poor results will be forthcoming".


I agree with the points you made, Matt, and thinking them over pushes me further toward individualism than ever. For today's wacky and windy rant, I'd like to start with something that should be over in the What's Jerking Your Chain Today thread, and that is the constant media question of how "the "Black Community" views the upcoming US presidential election. What I think annoys me about "Black Community" is that it really doesn't exist. I, for example, have a lot more in common with some black friends here in north Florida than I do with Bill Gates, Vladimir Putin, Charles Manson, Pat Robertson, Bashar Assad, and others, who I guess reporters would call parr of "the White Community." Same goes for the word "society" and the phrase "for the good of society". I don't think that there is any such thing as an inclusive social/geographical thing as an Austrailan society, American society, Canadian society, or North American society.

Further, I don't think that George Bush had a legitimate claim to be "The Decider" for anyone living in central North America any more than Bashar Assad has a "right" to call himself The Decider for all those living in the area called Syria. That Bush had power and Assad has power is indisputable, but legitimate voluntarily given authority from each and every one of their "citizens?" No.

So, the point is that when yoy say that it is not possible to make a 100% detailed model of "an economy" you are right, because there is no actual thing as "an economy" anymore than there is an actual "society" or "balck community". You, Oleg, and I each have different personal economies, and if we lump all the stats togerther we come up with nothing, just as if you lump Gates, Buffett, Manson, Assad, and Robertson together and try to say that they constitute something discrete.

The bottom line, imho, is not a particular economic system, whether you label it monetarism, Keynesianism, "supply-side" economics, socialism, or whatever The bottom line is whether to accept the non-coercive ethics of the Golden Rule of reciprocity as a standard, or accept some form of centralized or quasi-centralized authority and coerciion as having legitimacy..

(Note: I'm just talking philisophy here- what I think is logical and ethically legitimate, not neccessarily what I think is possible.)
If one can be taught to believe absurdities, one can commit atrocities. --Voltaire

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Re: Letting Go of Macroeconomics

Post by OlegTheBatty » Sun Jul 15, 2012 3:08 pm

Matthew Ellard wrote:
Tom-Palven wrote:The article on Neo-clasical economics by Erik Reinert was interesting, but not compelling. He seems to try to take a middle ground position void of specifics. which doesn't seem to please Matt, who leans more toward interventionist command economics, nor does he take the noninterventionist economic approach that allows for noncoercive spontaneous order, either, that would please the likes of me. Maybe he's trying to sort things out, but the result is just more mumbo-jumbo.


I need to be careful here so I am going to check my own position.

I agree with both of you if your position is "Macroeconomics is tool that can never fully create a 100% detailed model of an actual economy and therefore the potential remedies suggested by twigging such a model are never going to be 100% successful in their application to the real economy".

I think we all agree on the above.

I think we would all agree with this position..."Macroeconomics, the word, is now bantered around politically as a justification in the same way as the expressions "our christian values" or "our libertarian views" although the politician using these expressions has not actually considered them in any depth"

I'm hoping that we now sort of agree that "Macroeconomics is like a computer program. The software is valid but if the software does not match the actual scenario being modelled or rubbish data is fed in....then poor results will be forthcoming".

I think that pretty much sums up my attitude to macro. One of the problems is that there are enough economists pandering to the political positions to give it a momentum all its own. The vast majority of people are too ignorant of economics to make a rational analysis of anything to do with macro, so they make emotional analyses and stick to them come what may. Politicians love that.
. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Sun Jul 15, 2012 11:33 pm

Tom-Palven wrote:For today's wacky and windy rant, I'd like to start with something that should be over in the What's Jerking Your Chain Today thread, and that is the constant media question of how "the "Black Community" views the upcoming US presidential election. What I think annoys me about "Black Community" is that it really doesn't exist.


Well we don't have a black community in Australia so I'm not really experienced enough to make a comment. Aussies get to read about the American elections, policies and "tid bits" but this isn't enough for us to make any opinion.

I'm sort of pleased that Obama is in, but his relationship with the black voters in a mystery to me.

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Re: Letting Go of Macroeconomics

Post by Matthew Ellard » Sun Jul 15, 2012 11:42 pm

OlegTheBatty wrote:One of the problems is that there are enough economists pandering to the political positions to give it a momentum all its own.


That's why I self reflected. I studied at ATAX which was a university taxation research advisory school to the government, tax office and accounting/auditing self regulatory bodies. ATAX had to obtain funding and thus was always at risk of being compromised in pushing its own service. Simultaneously politicians could simply pick and choose bits of ATAX recommendations based on the political benefit rather than the global economic good of "the whole package". This is exactly what you are saying goes on..."in action"