Category: Commentary, Critique, and Response

RESPONSE TO ‘GOOD’ CRITICISM OF MY FRAMING OF ECONOMIC SCHOOLS

To Alex Pareto;

This is an awesome criticism, thank you but is off the mark because it is half true and half false, and one point rather ridiculous. So given that this is exceptionally good criticism lets walk through it and explain why you don’t see what I see. 　 And why I am correct.

Let’s make four preliminary points that constitute a theory:

(1) One of the central if not most central propositions in my work is to ignore arguments (excuses) and simply measure advocated changes in capital (what I call ‘property in toto’.) By ignoring all justification and simply looking at outputs we can then back into incentives. By knowing incentives and changes in capital we have a pre-cognitive rather than justificationary explanation of what our ‘genes’ instruct us to do, no matter what excuses we make for our actions. In other words your intentions are meaningless since we can derive your incentives and recommended changes in capital.

(2) What is the moral intuition of the peoples who select for each of the schools, and why do they self select for other than mainstream keynesian? In other words, given that the tools of analysis are the same, then why do people choose to work in each discipline, and if we look at the papers and books produced by members of each discipline what arguments are they making? Why do people self select into the various disciplines? (The answer isn’t unique to economics, it’s universal to all disciplines.) The answer is selection bias given one’s reproductive strategy and group evolutionary strategy.

3) There exist only so many known policy levers, in order of their response times: monetary policy, fiscal policy (spending), regulatory and trade policy(including immigration), infrastructure policy (commons), military-strategic policy (trade routes), institutional policy (methods of economic cooperation), normative policy( methods of social cooperation ), human capital policy (education, reproduction, and health care).

4) The use of each lever of policy includes the seen and unseen, the measured and unmeasured, the illustrated(advocacy) and the ignored (deception). Each lever benefits different constituencies by externality. Each ‘faction’ within the discipline of economics and politics advocates action roughly along this spectrum from the shortest (socialist, to the left leaning, to the classical liberal, to the conservative) in favor of its externality, and the change in capital it is biased in favor of. And we can measure this by the papers and books put out by this group advocating which policies (I have been monitoring this for over twenty years, and I have simply not had the time and focus to pay the 50k it would take to have the research completed in a depth that I felt comfortable. But the data does exist and others have done done work in the area with the general consensus being just what I have said: selection bias.

Now let’s go onto your criticisms, albeit in a different order.

(1) —“Keynesian economics attempts to explain “Why are there recessions?” “Why is there unemployment?” Answer: aggregate demand, animal spirits. It has remedies for reducing unemployment, avoiding recessions and stimulating growth. This is fiscal policy.

Curt’s description that Keynesianism is to paraphrase “increasing consumption to offset the losses caused by misallocation of resources” is not remotely accurate.”—

Well let’s test this criticism. Because I’m pretty certain I’m right.

(a) in every group there are innovations in positive solution and negative criticism (leaders) those who apply and advocate them, and ordinary laborers (researchers and teachers). So do we categories groups by their similarities or by their differences? (Smith, Buchanan, Cowen,Schumpeter vs Gary Becker, Coase, and Friedman vs Stiglitz, Delong, and Krugman vs Mises/Rothbard/Lachman). What cognitive and moral biases, and cultural and class biases do these groups demonstrate?

(b) Why would you want to interfere with unemployment, and why would you want to interfere with recessions, unless it is to increase consumption? Well there is no answer other than consumption(Demand). (This is where i find your criticism ‘ridiculous’ since it is not logically refutable as far as I know.)

(c) Now look at the record of Keynesians and their tax policies compared to chicago and austrians: Keynesians offer the search for pareto optimums of taxation. Yet what do Austrians and Freshwaters do: they search for nash equilibriums. What is the difference between the jewish austrian school(zero commons) and the christian austrian school(limited commons) even today – and how does that differ from the freshwater school(insured commons). And how does that differ from the keynesian school (maximized commons). And then how do we test the changes in capital (property-in-toto) and the voluntary changes and involuntary changes in capital? Well, we list what the group cherry-picks. In other words, what do people measure? And what externalities do they include or ignore?

Well, as far as I know, only the fascists even attempted to account for all capital. The jewish austrians favor the creditor, the christian austrians tries to balance it in law, and the chicago school favors the creditor only in as much as it is offset by attempts to equilibrate against shocks caused by asymmetries of information and the stickiness of prices, contracts, and networks of sustainable specialization and trade.

And so far, I can’t find any fault with my hypothesis.

(2) —“”The mengerian school attempted to construct a DESCRIPTIVE social and political science from economic evidence.”

All of the “schools” of economics do both positive (i.e. “descriptive”) and normative economics. There’s nothing “mengerian” about positive economics.”—

(a) Are we identifying schools by their similarities or by their differences? (And is even having to ask that question “ridiculous”?)

(b) What time preference do they favor by what levers they favor and what externalities they values as discount or premium??

(c) Which schools test the MORALITY of policy actions by the volition of the individual (Nash Equilibrium) and which schools test the MORALITY of policy actions by the aggregate change (Pareto optimum)?

(d) if you take the top 10-20 members of any of the schools and research their ethnic, cultural, class and religious histories, how do their biases differ? And do those biases reflect their gender, class, ethnic group evolutionary strategies?

(e) Which schools account for (either directly or indirectly) the cost of policy in intellectual, resource, institutional, cultural, normative, familial, and genetic capital? In other words, which groups ignore which changes to what capital?

(3) —“”Saltwater School (new york), attempting to maximize consumption by policy” Keynesians are not trying to “maximise consumption”, they are trying to maximise GDP. And secondly, this is not the defining feature of Keynesianism. Macroeconomics is about producing good rates of growth and avoiding recessions. Even Austrians in practice agree with this, though they don’t like the GDP metric. What separates macroeconomists isn’t their goals, it’s how they believe it’s best to achieve these goals.”—

Now, i’m sorry, but this falls into the “ridiculous” camp again. And how do we maximize GDP(income statement)? And why would you maximize GDP vs capital (balance sheet), and how do you insure that you are in fact achieving what you’re measuring? (I know the answer you know. Where has the productivity gone? It’s gone. Where has it gone?)

You see, this is the difference between talking about ‘ideals’ and ‘reals’, and between ‘reals’ and ‘actions’. And this is what Mises discovered but failed himself to understand. That subjective testing of rational action is the only test of MORAL action (reciprocity). And that any other action is redistributive. And that there is a very great difference between the insurance of the polity against asymmetry and shocks that preserves ability to plan and thereby preserves reciprocity (Chicago) and attempts to maximize the income statement (gdp) at the expense of capital (the balance sheet). Which is what most large companies do all the time to obscure their financial positions. My favorite being that they consume market potential in order to increase current revenue. Or they maximize revenue at the cost of research and development necessary to maintain market share and market potential. (And they maximize rents for that matter). Which is precisely what governments do with the capital that they do not measure. (Immigration being the current method of long term theft.)

CLOSING

OK. So now please try to refute the theory as presented.

Thanks again for the good criticism. Usually what I find is … a waste of my time. And this gave me the opportunity to educate.

Cheers