Why Economics is Bunk

[Denny Crane!]

http://www.bbc.co.uk/radio/player/b01j5h51

This is an iPlayer program, I hope everyone who wants to can listen. Tonight I'll provide a transcript when I have time to type it out if people can't.

Mostly this guy reinforces my already fairly strongly held beliefs about economics but he is the first person to explain why Austerity might be exacerbating the crisis rather than helping it. His solutions however mirror exactly what I have said though I suspect he envisions it done in a much grander way. Quantative easing given directly to the people. If you have debt you are legally obliged to pay it off using the money otherwise it is a cash bonus. There is a brief discusssion over the harm this would cause as well.

One of the most interesting things he discusses and I agree with is that modern economics is a self congratulatory failure that constantly seeks to innovate around the fact that there are absolute fundamental structural problems with the way the economy is ran. That fringe economists whilst not necessarily correct are unfairly dismissed whilst pointing out real problems.

[Thorn777]

So the creditors end up with lots of fluent cash ready to do what? Or lets say trustfund, hedgefund managers of theirs, ready to do what?

I do agree with lots of it though. This level of debt needs to go. Its as essential as it gets and you cant shove it from one place to the other no more. I think though monetarism needs to go with it. The believe that the wealthy are better at creating more wealth for everyone. I think we need high taxes on unearned incomes, reverse redistribution, resulting in investments from the bottom up again. Away with big business and give people the financial choice to buy local and sustainable, instead of leaving them with just enough to shop at wallmart.

I was for bail-outs since day one, but only if we use it to buy time and change the nonsense laying the foundation. We did the exact opposite And Im clueless why people dont get freaked out about this.

[Denny Crane!]

Not so much that creditors end up with more cash, in the UK the Central Bank is giving the creditors money directly through quantative easing. What he is saying is that people have been abused by a broken structural system and the net result is people in far to much debt.

Not only is the system broken but the only way out is to help people by allowing them to deleverage their debt through a cash injection given directly to the people.

[Thorn777]

I get it, but that means the creditors will be paid off. So what do they do with all that sudden fluent money? Lending it out again? Propping up commodity bubbles and with it inflation?

It needs a structure and a structural understanding.

[Denny Crane!]

I get it, but that means the creditors will be paid off. So what do they do with all that sudden fluent money? Lending it out again? Propping up commodity bubbles and with it inflation?

It needs a structure and a structural understanding.

In the interview he rather clearly and repeatedly makes the assertion that there needs to be serious structural changes, banks put into receivership only allowed to invest and not to speculate etc. etc.

The Quantative easing and allowing ordinary people to deleverage the debt was an addendum to get the economy moving again and help people who are victims of the system.

[Thorn777]

^There you have it. The "rational actors" displaying their fundamentalist opions while leaving aside the facts that they just cant be bothered by, time and time again. Let alone just grasping that economies are supposed to be serving the people. At least that was the propagated rational used to coherece the population behind ever increasing liberlaization of the economies. Funny that you dont hear that much more, unless of course when we all turn really theoclassical-economics purist and let the markets do its "magic".

All your dealings are debunked a zillion times, including in that radio show in the OP. Plz stop embarrassing yourselves-

In the interview he rather clearly and repeatedly makes the assertion that there needs to be serious structural changes, banks put into receivership only allowed to invest and not to speculate etc. etc.

The Quantative easing and allowing ordinary people to deleverage the debt was an addendum to get the economy moving again and help people who are victims of the system.

After listening to it, two questioneers adressed what I said, but he didnt give a clear answer. He did however spoke of an "affluency problem replacing a liquidity problem". But I guess the format did not give enough room to expand, because there is lots of room for expansion given the state we are now in and how much it would take to get away from it towards a more sane system. Dont think 30 minutes presentations can really answer any of that. It also takes time for contemplation and reviewing issues again.

[Claudius Gothicus]

Ok, well I wouldn't go on full-attack mode and simply destroy the entirity of Economic Theory just because of a general crisis. There are theorethical problems with economics nowadays, on one side you have people who can make empirical diagnoses and more-or-less predictive analysis but lacking a great deal of theorical work while on the other hand you have great theorists who have deviced enourmously complex Models which are logically sound yet have not succed in being translated to reality.

That's one big problem for economics right now... and yes, we are dealing with long-term structural problems on the real level as well, but what else can we do? The Division of Labor and the inherent systemic complexity that it carries with it is getting ahead of our analyses, the financial sector especially, and even if we turn to ''the fringe'' of the spectrum we will still find more or less ''simplistic'' answers about what to do. The problem is in trying to defeat the cognitive bias present in most political parties regarding the mechanisms which rule both our economic and moral existence. What I've been leaning to recently is that trying to defeat political bias and misconceptions is as useless as fighting the tides with the current arrangement of Parties, and even though I'm a Liberal kind of person, I've been tending toward the Technocratic solution more and more.

I'm not saying that Technocrats are unbiased(they are as biased as everyone else really) but the Goal-Attainment functions of modern society are supedited to a structure of politics that can very well misjudge about everything about our ''enviroment'', and not only due to an intention of evil-doing but more than even due to misunderstanding.

We have people collecting stats, we have people on Health Services, Educational Ones, Commercial and Economic ones, we have endless groups of people(in governments) dedicated to the rational improvement of society and yet, the people who make the laws the final descisions, are still voted through democratic means... and the people, the people doesn't know .

[Kitsunegari]

Soros, who i consider to be one of the most vile and immense threats of our time, gave a good speech on this a couple of days ago:

Ever since the Crash of 2008 there has been a widespread recognition, both among economists and the general public, that economic theory has failed. But there is no consensus on the causes and the extent of that failure.
I believe that the failure is more profound than generally recognized. It goes back to the foundations of economic theory. Economics tried to model itself on Newtonian physics. It sought to establish universally and timelessly valid laws governing reality. But economics is a social science and there is a fundamental difference between the natural and social sciences. Social phenomena have thinking participants who base their decisions on imperfect knowledge. That is what economic theory has tried to ignore.
Scientific method needs an independent criterion, by which the truth or validity of its theories can be judged. Natural phenomena constitute such a criterion; social phenomena do not. That is because natural phenomena consist of facts that unfold independently of any statements that relate to them. The facts then serve as objective evidence by which the validity of scientific theories can be judged. That has enabled natural science to produce amazing results.
Social events, by contrast, have thinking participants who have a will of their own. They are not detached observers but engaged decision makers whose decisions greatly influence the course of events. Therefore the events do not constitute an independent criterion by which participants can decide whether their views are valid. In the absence of an independent criterion people have to base their decisions not on knowledge but on an inherently biased and to greater or lesser extent distorted interpretation of reality. Their lack of perfect knowledge or fallibility introduces an element of indeterminacy into the course of events that is absent when the events relate to the behavior of inanimate objects. The resulting uncertainty hinders the social sciences in producing laws similar to Newton’s physics.
Economics, which became the most influential of the social sciences, sought to remove this handicap by taking an axiomatic approach similar to Euclid’s geometry. But Euclid’s axioms closely resembled reality while the theory of rational expectations and the efficient market hypothesis became far removed from it. Up to a point the axiomatic approach worked. For instance, the theory of perfect competition postulated perfect knowledge. But the postulate worked only as long as it was applied to the exchange of physical goods. When it came to production, as distinct from exchange, or to the use of money and credit, the postulate became untenable because the participants’ decisions involved the future and the future cannot be known until it has actually occurred.

http://www.georgesoros.com/interview...s_trento_italy

[justicar5]

http://www.bbc.co.uk/radio/player/b01j5h51

This is an iPlayer program, I hope everyone who wants to can listen. Tonight I'll provide a transcript when I have time to type it out if people can't.

Mostly this guy reinforces my already fairly strongly held beliefs about economics but he is the first person to explain why Austerity might be exacerbating the crisis rather than helping it. His solutions however mirror exactly what I have said though I suspect he envisions it done in a much grander way. Quantative easing given directly to the people. If you have debt you are legally obliged to pay it off using the money otherwise it is a cash bonus. There is a brief discusssion over the harm this would cause as well.

One of the most interesting things he discusses and I agree with is that modern economics is a self congratulatory failure that constantly seeks to innovate around the fact that there are absolute fundamental structural problems with the way the economy is ran. That fringe economists whilst not necessarily correct are unfairly dismissed whilst pointing out real problems.

I listened to that yesterday, Steve Keen is a very interesting man, and his point about what would happen to any other profession that lead to collapses as often as economists do is valid imho.

I get it, but that means the creditors will be paid off. So what do they do with all that sudden fluent money? Lending it out again? Propping up commodity bubbles and with it inflation?

It needs a structure and a structural understanding.

one of his more interesting ideas was to have shares only exchangeable a limited number of times before they effectively become 50 year bonds (he said 7 times as an example), so that they can find there level, but that speculation would be made much harder to do.

[Denny Crane!]

See Justi regardless of the wide gulf of differences there must be some merit in the common ground!

[Simon Cashmere]

Economics isn't bunk. It is the anti-economics of the welfare state that is bunk. Whether you are speaking of an individual, a family, a company or a sovereign state - that must all live within their means. The idea that the welfare state can borrow money and sustain deficits on and on forever is just leading to financial calamity. Big business itself is only doing badly because the financial ruin of sovereign states by having financially perilous debt arrangements is now dragging down the private economy as well.

If sovereign states took the approach of cutting their spending, and living within their means, and were to stop borrowing monies that they cannot hope to repay the economies of the western world would slowly recover.

While borrowing more money might for a time paper over the cracks, eventually that money will need to be repaid and the borrowing gravy train will eventually pull into the station and ask everyone to get out. Obama has taken the view that he does not care how much money he needs to borrow, the good times will roll and someone else will have to fix up the problem long after he has left office, what does he care? He will be out on the talk show circuit by then. People in the modern age have this sense of entitlement under the welfare state. The gov ment gonna gimme som mo' money! The government only has the money it has taken from other people, it generates very little of its own. Insisting on the 'government has to help them!' is just like going over to your neighbour's house and taking his TV. The money comes from somewhere.

At the moment, the money is coming from unsustainable borrowing. And when the day of reckoning comes, it will be a massive calamity. The worst of all will be the United States, where the current estimates from the White House Budget Office is that the United States economy will completely cease to function as of 2027. That's not so long away.

[Nikitn]

Yeah Greek spending on foreign wars really tipped them over the edge. I hear ya there brother. Same for Spain, Portugal, Ireland, and Italy - SUCH WAR MONGERS! If only they had started singing 'All we are saying, is give peace a chance!....their economies would be fine! No welfare state ripoff sending them into bankruptcy, that's just a conspiracy theory. It was really all the wars they were in.

Those countries fell due to a variety of reasons. Greece fell due to corruption and incompetence, true. Ireland and Spain due to a housing-bubble crash (a result of foolish liberalist policies arguing for little regulations in the finance sector). Italy is kinda corrupt, but it's mainly getting screwed because the other PIGS are getting screwed. idk about Portugal.

Economics isn't bunk. It is the anti-economics of the welfare state that is bunk. Whether you are speaking of an individual, a family, a company or a sovereign state - that must all live within their means. The idea that the welfare state can borrow money and sustain deficits on and on forever is just leading to financial calamity. Big business itself is only doing badly because the financial ruin of sovereign states by having financially perilous debt arrangements is now dragging down the private economy as well.

If sovereign states took the approach of cutting their spending, and living within their means, and were to stop borrowing monies that they cannot hope to repay the economies of the western world would slowly recover.

While borrowing more money might for a time paper over the cracks, eventually that money will need to be repaid and the borrowing gravy train will eventually pull into the station and ask everyone to get out. Obama has taken the view that he does not care how much money he needs to borrow, the good times will roll and someone else will have to fix up the problem long after he has left office, what does he care? He will be out on the talk show circuit by then. People in the modern age have this sense of entitlement under the welfare state. The gov ment gonna gimme som mo' money! The government only has the money it has taken from other people, it generates very little of its own. Insisting on the 'government has to help them!' is just like going over to your neighbour's house and taking his TV. The money comes from somewhere.

At the moment, the money is coming from unsustainable borrowing. And when the day of reckoning comes, it will be a massive calamity. The worst of all will be the United States, where the current estimates from the White House Budget Office is that the United States economy will completely cease to function as of 2027. That's not so long away.

A welfare-state can sustain itself. Look at the Scandinavian countries or Germany. It just means that private-consumption is weakened, and state consumption is increased. Though naturally a welfare state requires an uncorrupt population, something hard to find nowadays.

PS. The US is not a welfare state. The main reason it has to borrow so much money is actually the military.

[Lord Thesaurian]

A welfare-state can sustain itself. Look at the Scandinavian countries or Germany. It just means that private-consumption is weakened, and state consumption is increased. Though naturally a welfare state requires an uncorrupt population, something hard to find nowadays.

I should assert here that this is because these counties have much greater resources to call on to export and counter balance their socialist policies, in a similar way to Red China. Scandinavia has oil and some industry and technology, Germany has tremendous industry and technology and a fiscal policy that is a well oiled machine. Germany has basically carried the EU for years and still does, which is the only reason the EU survived the recent debt crises. The more committedly socialist regimes ran out of other people's money and raided Germany again for more cash to prop up the failing system. Thus I wonder how so many Europeans who call themselves socialists bite the hand that feeds them and call for a dissolution of the EU because they dislike the fact that Germany leads the continent.

[Nikitn]

I should assert here that this is because these counties have much greater resources to call on to export and counter balance their socialist policies, in a similar way to Red China. Scandinavia has oil and some industry and technology, Germany has tremendous industry and technology and a fiscal policy that is a well oiled machine. Germany has basically carried the EU for years and still does, which is the only reason the EU survived the recent debt crises. The more committedly socialist regimes ran out of other people's money and raided Germany again for more cash to prop up the failing system. Thus I wonder how so many Europeans who call themselves socialists bite the hand that feeds them and call for a dissolution of the EU because they dislike the fact that Germany leads the continent.

Only Norway has oil, and even without it it would do absolutely fine. My point was, that a welfare-state is perfectly possible as long as the population is effective and not whiny/greedy.

[Lord Thesaurian]

Only Norway has oil, and even without it it would do absolutely fine. My point was, that a welfare-state is perfectly possible as long as the population is effective and not whiny/greedy.

...Then why has the Eurozone failed? It seems increasingly acknowledged that the Euro will fail within the next couple years if drastic measures and restructuring does not take place. I can't understand why the more collectivist economic theories want to cling to the idea that people will work and produce without the possibility of gaining wealth and prosperity as long as their basic necessities are provided to them. The opposite has proven true. In most European welfare states and in communist countries, people settle for a lower and lower standard of living just so they can continue to qualify for government assistance and not need to work in a job devoid of goals or achievement.

The same thing has happened in the US. By 1890 the US was the world's strongest economy by a wide margin, even over the British Empire. We had no entitlements, few federal taxes, and a federal government that at times seemed non-existent. Somehow the world still turned. But the Progressive movement changed all that. Now we have a massive entitlement and military complex that everyone thinks we can't do without. And such people are partially correct, since for over a century we've become utterly dependent on it. I personally know people who deliberately limit their income and live in dumps just so they can continue to collect unemployment, food stamps, medicare, medicaid, and social security benefits, not to mention tax rebates. 50% of eligible people pay no federal income tax and the top 10% of incomes pay over 70% of total income tax revenue. This is the lunacy of Progressive economics. Meanwhile the west breaks under the weight of entitlement and military spending while the east waits to fill the power vacuum. Sure, welfare-state democracies can function and appear wonderful for a while, but sooner or later they run out of money and are replaced by a dictatorship of some kind. It is the oldest cycle of modern times.

[Menelik_I]

http://www.bbc.co.uk/radio/player/b01j5h51

This is an iPlayer program, I hope everyone who wants to can listen. Tonight I'll provide a transcript when I have time to type it out if people can't.

Mostly this guy reinforces my already fairly strongly held beliefs about economics but he is the first person to explain why Austerity might be exacerbating the crisis rather than helping it. His solutions however mirror exactly what I have said though I suspect he envisions it done in a much grander way. Quantative easing given directly to the people. If you have debt you are legally obliged to pay it off using the money otherwise it is a cash bonus. There is a brief discusssion over the harm this would cause as well.

One of the most interesting things he discusses and I agree with is that modern economics is a self congratulatory failure that constantly seeks to innovate around the fact that there are absolute fundamental structural problems with the way the economy is ran. That fringe economists whilst not necessarily correct are unfairly dismissed whilst pointing out real problems.

I can't listen to the video because the internet around here is payed by the MB

But from the resume you made, I can say that you can't say that economics is bunk because of this crisis because (1) Economics is not an unified field and there are a handful of strains, and (2) because this is not the result of a ''pure'' economics but of a mixture of Economical, political and geopolitical policies.

The whole crisis is in part the result of the political decision of economic stimulus in the US and Europe, partly via the promotion of debt and home-ownership, part the result of the geopolitical decision to create an European Federal state under the cover of economic integration and a single currency. There is nothing in the theories of economics that can account for these 2 components of the crisis, much less analyse the things as irrational as political aspiration, ideologies and empire building.

If anything, the crisis shows that the majority of the electorates and political elites in various countries are living in the land of unicorns.

Also you should separate economics as a science from economics as a tool of political expediency.

Take the example of Paul Krugman and his 2 distinct personalities, some times He is a distinguished scholar who write about international and at other times He is a fully committed Obama shill who will find difference that don't exist between Obama and Bush economic policies to make points and deny the reality of the recession for political gains.

There is also a strain of economics whose sole purpose is to give political covers to the various political parties.

So economics is not bunk, most of humanity is bunk

[Denny Crane!]

I'll give a more detailed reply later but Thorn: This interview came about partly because of a new book he has released, I would assume there is more detail in there.

[Platon]

I'm reading his book Debunking economics right now. Very interesting for those who know a thing or two about economics...

[Dr. Croccer]

The fundamental fact has always been that you simply can't spend money that you don't have.

It isn't rocket science, some common sense needs to be applied.

[Col. Tartleton]

The fundamental fact has always been that you simply can't spend money that you don't have.

It isn't rocket science, some common sense needs to be applied.

But surely you can spend money you might have in the future...