Against False Arrogance of Economic Knowledge

Yves here. I’m using the original headline from INET even though “false arrogance” seems like rhetorical overkill. After all, arrogance and hubris are closely related phenomena (my online thesaurus list “arrogance” as the first synonym for “hubris”). But in Greek tragedies, the victims of hubris were all legitimately accomplished, yet let their successes go to their heads. Thus the use of “false arrogance” presumably means that economists’ high opinion of themselves is not warranted.

By Amit Bhaduri, Professor Emeritus, Jawaharlal Nehru University and Visting Professor, Council for Social Development. Originally published at the New Economic Perspectives website

The problem of any branch of knowledge is to systematize a set of particular observations in a more coherent form, called hypothesis or ‘theory.’ Two problems must be resolved by those attempting to develop theory: (1) finding agreement on what has been observed; (2) finding agreement on how to systematize those observations.

In economics, there would be more agreement on the second point than on the first. Many would agree that using the short-hand rules of mathematics is a convenient way of systematizing and communicating knowledge — provided we have agreement on the first problem, namely what observations are being systematized. Social sciences face this problem in the absence of controlled experiments in a changing, non-repetitive world. This problem may be more acute for economics than for other branches of social science, because economists like to believe that they are dealing with quantitative facts, and can use standard statistical methods. However, what are quantitative facts in a changing world? If one is dealing with questions of general interest that arise in macroeconomics, one has to first agree on ‘robust’  so-called ‘stylized’ facts  based on observation: for example, we can agree that business cycles occur; that total output grows as a long term trend; that unemployment and financial crisis are recurring problems, and so on.

In the view of the economic world now dominant in major universities in the United States — with its ripple effect around the world — is these are transient states, aberrations from a perfectly functioning equilibrium system.  The function of theory, in this view, is to systematize the perfectly functioning world as a deterministic system with the aid of mathematics. One cannot but be reminded of the great French mathematician Laplace, who claimed with chilling arrogance, two centuries after Newton, that one could completely predict the future and the past on the basis of scientific laws of motion — if only one knew completely the present state of all particles. When emperor Napoleon asked how God fitted into this view, Laplace is said to have replied that he did not need that particular hypothesis. Replace ‘God’ by ‘uncertainty’, and you are pretty close to knowing what mainstream macro-economists in well-known universities are doing with their own variety of temporal and inter-temporal optimization techniques, and their assumption of a representative all knowing, all-seeing rational agent.

Some find this extreme and out-dated scientific determinism difficult to stomach, but are afraid to move too far away, mostly for career reasons. They change assumptions at the margin, but leave the main structure mostly unchallenged. The tragedy of the vast, growing industry of ‘scientific’ knowledge in economics is that students and young researchers are not exposed to alternative views of how problems may be posed and tackled.

This exclusion of alternative views is not merely a question of vested interest and the ideological view that we live in the best of all possible worlds where optimum equilibria rule, except during transient moments. It stems, also, from a misplaced notion of the aesthetics of good theory: Good theory is assumed to be a closed axiomatic system. Its axioms can, at best, be challenged empirically — e.g. testing the axiom of individual rationality by setting up experimental devices — but such challenges hardly add up to any workable alternative way of doing macro-economics.

There is however an alternative way, or, rather, there are alternative ways. We must learn to accept that when undeniable facts stare us in the face and shake up our political universe — e.g. growing unemployment is a problem, and money and finance have roles beyond medium of payment in an uncertain world shaken by financial crises — they are not transient problems; they are a part of the system we are meant to study. It is no good saying my axiomatic system does not have room for them. Instead, the alternative way is to take each problem and devise the best ways in which we are able to handle them analytically. Physicist Feynman (economist Dow (1995) made a similar distinction) had made a distinction between the Greek way of doing mathematics axiomatically, and the Babylonian way, which used separate known results (theorems) without necessarily knowing the link among them. We must accept this Babylonian approach to deal with macro-economic problems, without pretending that it must follow from some grand axiom.

Awareness of history must enter economic theory by showing that concepts such as cost, profit, wage, rent, and even commercial rationality have anthropological dimensions specific to social systems. The humility to accept that economic propositions cannot be universal would save us from self-defeating arrogance.    

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72 comments

  1. fresno dan

    I can’t tell you how much I agree with the article.
    For example, what CRITERIA are used that something is a “good” job. Before you even start to debate the “facts” at least set up the criteria by which you will evaluate them. It seems evident to me (pension, “good” – what is “good” health care) but apparently, one of the “pre-eminent” economists, at least according to another economist, thinks part time jobs are just as good as retail….

    http://cepr.net/blogs/beat-the-press/paul-krugman-gets-retail-wrong-they-are-not-very-good-jobs?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+beat_the_press+%28Beat+the+Press%29

    1. Cujo359

      It works for me as an executive summary, but almost every paragraph would probably require a similarly-sized essay to explain it. I agree with its judgment that too many economists view the world as being governed by some sort of universal economic law (or “laws”), when in reality those laws work in very limited circumstances. Whether it’s possible there could be such laws some day, I don’t have an opinion one way or another, and nothing in this article sheds much light on that issue.

    2. Benedict@Large

      It’s my experience that the overwhelming number of economists don’t know squat about employment/ unemployment, including why and employer hires and why people look for and accept jobs. I assume this is because all of these things are rare event in the personal lives of economists, who spend little time looking for or between jobs. An economist is either employed, or he/she is not an economist, and so once they gain experience with the above, they are no longer in a position where they can speak about it among others still in the field.

    3. jrs

      pension + black lung = good job? I mean if we’re saying coal mining is a “good job” now … noone who can do better wants it though, that’s what a “good job” it is. Compensation matters but so do working conditions, and by the way externalities matter, and “coal mining” as a good job certainly doesn’t account for that and the whole community being a cancer cluster etc.

      1. Moneta

        The thing is that there are an awful lot of bad jobs that need to be done and will never go away.

    4. Dead Dog

      As an economist, now semi retired (author, handyman, carer…), I can speak of my own experiences.

      I think one aspect of my degree course was a lack of normative studies and not enough, ‘well that is the mainstream theory, now this is what we observe in practice’ (and why eg control fraud, captured political interests)

      We were also mispoken to about how private banks create money, taxes fund government spending and so on.

      My choice to study economics was regretted years later, yet it gave me a lift up career-wise.

      It now seems sad that the profession has become mis-trusted and denigrated. We don’t all think alike.

      1. Moneta

        When I studied economics, I realized how absurd a lot of it was so I answered according to what the prof wanted to see.

        However, I’m under the impression that my education in a Cdn university was way less dogmatic than in the US.

        Externalities were discussed, as was the dubious quality of GDP growth. I had a book on the history of the Cdn financial system. It explained very well how we went from gold standard to current system.. and how the leading countries used devaluations (France, UK, US) to their advantage.

        The problem with objective economists is that they realize that there exists something called the law of unintended consequences. Once you realize there are too many variables to control, you become a leaf in the wind. And no one likes ambivalent people. They want leaders who KNOW the answers. So leaders who appear to have answers are chosen.

        1. Eric Anderson

          Well said. I always appreciated having my undergraduate economic theory class delivered by an active duty Marine Corp Major. A hardened realist with a talent for illuminating theory.

    5. sgt_doom

      No offense to Dean Baker, but what doesn’t Krugman NOT get wrong? His public disagreement with Real Economist, Steve Keen, would have been hilarious had it not been so pathetic in demonstrating either what a sheer idiot he is, or professional liar, whatever the case may be. (Krugman was claiming that banks do not create credit as Krugman has no understanding of that rather simple fractional reserve banking system. I once wrote to Krugman to correct him on his supply-and-demand theory as to the cause of that incredible spiking upwards of oil/energy costs around 2008, even though the Baltic Exchange Index ad pretty much collapsed, with an incredible number of oil tankers floating off the coasts of Singapore and Malaysia, in an inactive state – – attempting to explain to him about Goldman Sachs and Morgan Stanley, et al., speculating up the prices on ICE via commodity futures speculation or wash sales, and he didn’t get that either!)

      But this reminds me of a local (Seattle) witless talk show (KIRO radio station: the John and Curley Show) where the two snarky hosts, as ignorant as can be, go on and on about their love of globalization, scoffing at those who don’t understand that offshoring manufacturing (they ignored all the other categories) jobs to China and elsewhere was most clever, and “freed up America to manufacture high-end goods” — evidently ignorant of the fact as to where most chip fabs are located, and that 70% to 100% of many auto parts and aircraft parts are manufactured overseas, shipped back to America only for assembling purposes.

      That ultra-boondoggle, the F-35, is manufactured across 9 foreign countries plus America — wonder why it’s such a cluster screw-up, huh?

      1. John Zelnicker

        @sgt_doom – Good points on Krugman. However, that “rather simple fractional reserve system” is not how banks create credit and deposits. Banks don’t depend on having reserves on hand in order to make loans (create credit). Banks acquire the necessary reserves after the loans have been made.

  2. JustAnObserver

    In Greek tragedy wasn’t hubris always followed by nemesis as the Gods took their revenge on the upstart humans ?

    1. witters

      A further aside: I don’t see all Greek tragedies as turning on hubris. Where is the hubris, say, of Oedipus? He is the King, there is a plague, the people call on him for help, he helps. And the plague is vanquished (mind you, he and his family – the ones still living – are in a mess. But that – Sophocles seems to be saying – is Life).

      1. RBHoughton

        The important thing according to the Greek scholar Michael Scott is to recognize that Greek theater and Greek democracy are joined at the hip. The former educated the electorate in the difficult choices they would have to make as managers of their own political existence. We have political theater today but no-one considers it instruction in one’s civic duty.

      2. PhilM

        Hubris simply translates as “overweening pride”; it was an example of a tragic flaw. But the essence of the tragedy is not hubris, or even hamartia (“the flaw”) and its punishment per se; that is a Judeo-Christian preoccupation. Rather it is the working out of an unresolvable conflict between two equally valid but irreconcilable moral demands, each one sanctioned by the gods, leading to the destruction of a person who is heroic in stature, and has taken some action, great or small, justified or unjustified, that has set the conflict in motion. In the case of Oedipus, he must find the culprit because he is the king; but if he finds the culprit, he will destroy a man who is successful and responsible–himself–and whose fall will seem like a terrible fate for someone who lives, at least consciously, quite blamelessly.

  3. JTMcPhee

    “We” here can say it to each other, over and over, in different and ever-better-documented ways, that almost all economics and the “findings” it generates, and almost all economists and their credentials, are BS, MS, Ph.D (bullish!t, more sh!t, piled higher and deeper). But how to reach a larger, and large enough, set of people who actually have votes that count and can “call bullsh!t” and demand and get an end to the “policies” that are built on and gather “legitimacy” from the “findings” of all those faux ‘economists?” Who after all do have those (feedback-loop-granted) “credentials,” and so many sous-chefs to keep pumping out the mega-gallons of Bernays sauce to make the sh!t sandwiches seem au courant, de rigeur, and somehow palatable?

    1. washunate

      Agreed, I think that’s the issue. Debating whether or not economics is a science plays right into the prevailing power structure. Rather, the question is why do we accept the artificial devolution of political economy into economics and politics? There are lots of quantitative (and qualitative) “facts” in the world about economics; it can be a scientific discipline like any other. The important civic debate is the political part: what values should guide our interpretation and implementation of those economic understandings?

      1. Left in Wisconsin

        why do we accept the artificial devolution of political economy into economics and politics?

        This is the right question if we change “why to we accept” to “how is it that we now have” – that is, if we ask an empirical, historical question and not a metaphysical or psychological question. In an academic sense, I would say the answer has to do with a long battle within economics that was decisively won in the 50s or 60s by one “school” to the extent that they could ostracize and ignore alternative “schools” without much effective criticism, and an implicit “bargain” with sociology and political science to craft an academic division of labor. And then, inertia and serious pushback against any and all challengers.

        In the non-academic world, the answer has to do with a certain confluence of interest between neoclassical economics and existing social and economic power.

        1. washunate

          I’m certainly a fan of empirical questions. But don’t underestimate the metaphysical angle, either!

          There’s a certain point of view I’ve noticed over the years wanting to blame convenient villains (economists, MBAs, corporate executives, etc.) and that’s true in so far as it goes. But those aren’t the people directly making and implementing public policy. What interests me is how these bad guys are held out as an excuse to justify Democratic politicians employing rhetoric and pushing policies inconsistent with the values of a good portion of the public. That I think is a psychological issue: not just the emittance of BS, but why we collectively accept actions justified with BS.

          1. PhilM

            Well, I don’t think we do collectively accept those actions, except as the result of compulsion by the state. We collectively, according to polls, reject national institutions by huge margins; many more people believe in extraterrestrial visitations than approve of the US Congress.

            Zombified democracies stagger along for centuries after their souls have departed. Just because nobody can do anything about it, doesn’t mean we don’t all smell the rot.

            There’s another point, which is, government is by and for people who either have wealth or risk their lives for the state. Everyone else was, is, and will be a political cipher: nothing to offer, nothing to add, no political or civil rights except those few basic human rights that keep them pacified. Just as nobles in the ancien regime were legally and morally required to care for their poor, and to provide them a living and a job if they needed one, so the people who run government today are required to do those things, more or less, by the ethic of welfare state. However, they are not required to permit those without wealth to acquire power: because that would mean the end of their wealth, and the likely destruction of the government which, after all, they pay for.

            So there is really no reason any more, either moral or political, to give the vote to people without wealth, particularly since they are no longer going to be useful in a total war. That’s how they got the vote to begin with: since people who are trained to fight can, ultimately, fight back, you have to give them the vote. Now that we have nukes and a volunteer army, and total war is an impossibility, it’s really more than enough to give the poor a few basic necessities and enough entertainment to keep them happy and quiet. That takes us back to why the founders did not like standing armies, by the way, because the reasoning in this paragraph has been the reasoning of tyrants since the dawn of civilization.

            Too late now, though; the centuries of universal suffrage may be seen by future historians as having been practicable only because the poor were kept away from the polls by force, persuasion, ignorance, or apathy.

    2. Ulysses

      “But how to reach a larger, and large enough, set of people who actually have votes that count and can “call bullsh!t” and demand and get an end to the “policies” that are built on and gather “legitimacy” from the “findings” of all those faux ‘economists?”

      I think one method, to move in that direction, is to make a very small number of very specific demands. Single payer healthcare, and a living wage. We demand them!! Why don’t we have them??!!

      When the “economists” tie themselves up into illogical pretzels, trying to “explain” why we can’t have these nice things, they destroy their credibility– to the point where their dogma is revealed as false and inhuman. Then, we can shake off their dead hand and begin to build a new society on more rational and humane principles.

      1. dontknowitall

        I understand and share your frustration with a brand of economics being used as a cudgel to tell us we cannot have nice things even as each individual US state’s GDP is the equivalent to that of (at least) a medium EU nation which individually can afford far better health insurance schemes than we do. It should be the economists’ job to smooth the way, to find ways so that we can have nice things not just leave it at can’t.

        I disagree with washunate that to engage with economists who are failing is a waste of time that plays into the hands of the prevailing power structure. Neoliberal economists should be hearing from us that they are not scientists no matter how much math they dress their pet theories with. The greatest glory of a science is the predictive powers of its foundational theories and in that regard neoliberal economics fails spectacularly. It is not by any definition a science and they should hear it as often as possible. Of course they know this in their bones but their theories give their funders significant political cover as they seek more undeserved goods for themselves. It is our job to remind everyone who will hear that neoliberal theories are fiction not science.

      2. steelhead23

        Why don’t we have universal health care? Sadly, I think the answer is quite simple – the elasticity of demand for health is infinite as the alternative is death. Hence, Genentech can and does charge $20,000 for a round of rituxan, which is very effective on non-Hodgkins lymphoma. Is it worth it? Of course it is – lymphoma is deadly.

        My point is that while the social benefit of universal health care is high, so is the opportunity cost to the healthcare industry. And since the industry is free to bribe politicians (sans a quid pro quo of course) we are unlikely to ever get it. As discussed above, economics divorced from politics is useless.

        1. a different chris

          wow pretty awesome that Europe/Great Britain and Japan don’t have politicians…. just teasing you, how though did those countries manage to get around your problem is the question//

          1. AbateMagicThinking but Not money

            The British learned from the washout of the first world war that the usual politicians could not be trusted to produce a country fit for heroes as was promised, so they voted for socialism.

            As for the Japanese, my memory is that the US set their health system up! Dang!

            1. AbateMagicThinking but Not money

              The British polititician who lost out big time in that election that brought the Labour Party’s version of socialism into power, was Winston Churchill – after the end of World War Two.
              It goes to show that you might need one kind of leader in existential-wartime, and another for peacetime. However, nowadays how do you know whether the there is an existential struggle or not?

  4. Katharine

    Yes, hubris was the tragic flaw. Treating it as a mere synonym for arrogance is a fine example of why to avoid thesaurusi. A good dictionary with synonymies is more reliable.

    1. sgt_doom

      Speaking of hubris, there’s a recently published book by a “professor of national security” (good luck with that one!!!), Tom Nichols, titled: The Death of Expertise, and it’s a real hoot!

      Not because the author got anything right, he got almost everything completely wrong, and simply for that reason!

      At one point in this garbage book by Nichols, he is repeating an exchange between a political appointee whom he believes to be an “expert” and a grad student concerning Reagan’s spaced-based missile defense {SDI or Star Wars — in this case I believe it was the space-based platform} of which much of it turned out to be a hoax meant to mislead the Soviets – – and historically we know the grad student was correct, and Jastrow, if I recall his name correctly, was most incorrect – – but you would never know it from this author! ! !

      (If you observe any American space-based missile platforms, please be sure to let me know!)

  5. CD

    Besides acknowledging that economic theory is bound to time and society, it would also be good to give some fresh thought to familiar economic concepts we take as Bible-given.

    Let’s re-examine the ideas of interest [can we do without it], growth [can we have a no-growth economy], and differential pay [need we pay a much higher salary for “higher” work],

    I would go on to look at profit [should there be profit in all economic activities, such as health care, education, and others], oligopolies [is it good to have very large corporations], and competition [should we promote competition is all aspects of life].

    Some of these have been questioned in these pages, such as the question of oligopoly. I encourage raising more and continued questioning, as we’ve done here.

    1. JTMcPhee

      It tends to draw fire when I mention it, but “Sharia or Islamic banking and finance” is supposed to be done without any interest. And the system (now under assault by Western interest-holders, by physical violence and subversion of many types, and co-optation via corruption) kind of relies on actual trust and risk-sharing. Here’s some details for anyone “interested:” http://www.islamic-banking.com/islamic_banking_principle.aspx

      So there is a model to look toward, though there will be all kinds of nationalist and kleptocratic resistance, http://www.wnd.com/2015/07/major-u-s-city-poised-to-implement-islamic-law/. Though of course because Muslims have money, our banksters are adapting and even bringing semi-pseudo-Sharia banking and finance inside Western borders, https://www.usatoday.com/story/money/business/2014/10/11/shariah-compliant-islamic-financing-usa-europe/16828599/ .

      Once again, “we” need to look at what “we” means — hardly a collective with any mass or teeth, mostly just an aspirational conversation tic.

      1. Larry Motuz

        Thank you for your first reference, JTMcPhee, from the Institute of Islamic Banking. It makes a great deal of sense that lenders bear risk along with borrowers when we are talking about financing entrepreneurship. In this view, the lender has an interest in rather than gets interest from. [I very much suspect that the former meaning became detached from the latter very early on in human history, which is why the latter was condemned as ‘usury’, a result itself of an imbalance of power leading to coercive lending.]

        I wonder, however, about ‘consumer lending’ where there is clearly no entrepreneurial risk.

        Do you have a useful reference about how this ‘consumer lending’ occurs without ‘interest’ in the Islamic world?

          1. Larry Motuz

            Thank you very much! When I looked at

            Alternatively the bank would enter into a partnership with a person wanting to buy a house. The bank would buy 70% of the house, the individual 30%.

            I thought that this may look like a traditional mortgage when compared to Western mortgages, but, unlike Western mortgages, the Islamic banks are, indeed, sharing the risk of downturns in housing prices and are much more likely to do DUE DILIGENCE because of their 70 per cent share.

            Of course, one would need to know more about the nuts and bolts, so to speak, but prima facie there appears to be much to commend their approach.

  6. fresno dan

    https://www.theguardian.com/global-development-professionals-network/2017/apr/06/kate-raworth-doughnut-economics-new-economics

    In 1955, the economist Simon Kuznets thought he had found such a law of motion, one that determined the path of income inequality in a growing economy. The scant data that he could gather together seemed to suggest that, as a nation’s GDP grows, inequality first rises, then levels off, and ultimately starts to fall. Despite Kuznets’ explicit warnings that his work was 5% empirical, 95% speculation and “some of it possibly tainted by wishful thinking”, his findings were soon touted as an economic law of motion, immortalized as “the Kuznets Curve”– resembling an upside-down U on the page – and has been taught to every economics student for the past half century.

    As for the curve’s message? When it comes to inequality, it has to get worse before it can get better, and more growth will make it better. And so the Kuznets Curve became a perfect justification for trickle-down economics and for enduring austerity today in the pursuit of making everyone better off some day.

    Forty years later, in the 1990s, economists Gene Grossman and Alan Krueger thought they too had found an economic law of motion, this time about pollution. And it appeared to follow the very same trajectory as Kuznets’ curve on inequality: first rising then falling as the economy grows. Despite the familiar caveats that the data were incomplete, and available for local air and water pollutants only, their findings were quickly labeled the “Environmental Kuznets Curve”. And the message? When it comes to pollution, it has to get worse before it can get better and – guess what – more growth will make it better. Like a well-trained child, growth will apparently clean up after itself.

    Except it doesn’t.
    ===================================================================
    More fuel to the fire

    1. MyLessThanPrimeBeef

      They both seem typical of the human search for knowledge, with or without resorting to the Scientific Method.

      Typical in that

      1. we fail to recognize our knowledge is always partial and limited
      1A. Sometimes with the added arrogance of saying we know it’s partial and limited
      (Some can’t afford that added arrogance, because they have been exposed already, like, say, fortune tellers)

      And yet
      2. we use that knowledge as if it’s complete and applicable everywhere.

  7. Michael Hudson

    The Greek concept of hubris was not merely arrogance, but involved an INJURY to others. (I discuss this in J is for Junk Economics.) The main examples were creditors and land monopolizers — and kings. Nemesis not only fight hubris, but specifically supported the weak and poor who were the main injured parties. The iconography is quite similar to Sumerian Nanshe of Lagash.
    So the concept of hubris is linked to affluenza: irresponsibility of wealth, injuring society at large.

    1. HopeLB

      My Lord! The best economist on the planet is commenting! Our Economist God! (As someone here aptly characterized you a few weeks ago when Yves ran your discussion of Jubilees.)
      I’ll come right out with it, I’m a Michael Hudson super fan/groupie and after Yves published one of your articles, which of course, I had already read being a big fan/internet tube tracker, I suggested we concerned citizens, get a Michael Hudson fan club going and somehow convince you to take your stellar, economics distilling/demystifying self on the road along with other exemplary economists and some musicians and comedians. Like that stadium event you did in Europe or that Irish Econ Conference, but this would be for the education of the vast citizenry, hence the addition of a bit of music/comedy to entice. A touring TED/Coachella or South by Southwest but for the Economic Edification of the 99%. (You wouldn’t neccessarily have to deliver all of your addresses in person. Some could be taped.)
      You would be bigger than Bernie if the millenials became familiar with your work, but more importantly, you and other like minded economists, could arm people with the deeper understanding that is essential to overturning the prevailing paradigm.

      Thank You For Your Works!
      Hope

      ps I looked into getting Economic Rock Star as a website but it is taken.

      1. Sue Madden

        ++++++++++++++++++++++

        As a scientist I`ve always been horrified by the sway such a band of charlatans, as i quickly realised modern mainstream economists to be, have over our collective minds and lives. After the GFC and its immediate aftermath I realised I needed to try and understand what the “discipline” is all about. I started reading some French authorities who seemed to make logical sense (Frederic Lordon, Paul Jorion and a variety of others). By elimination I eventually found Steve Keen who made a lot of sense but has too specialised a focus to be read in isolation I also find him strangely politically naive at times. Then I found Michael Hudson – breathtaking, simply amazing – huge, wide knowledge, including cultural and political, a brilliant analyst and most importantly a great communicator – able to render such a complex subject accessible to lay people like me and countless others who now realise we are in such dire straits that none of us can afford to be economically illiterate anymore. An immense thank you to MH and NC (commentariat as well as Yves and Lambert) for all your vital contributions and work

    2. clinical wasteman

      Yes, ‘injury’ as in injustice! Of course that may entail physical damage, but the recent tendency to reduce ‘injury’ to that narrow sense alone misses most of the point.
      Thanks for the connection to ‘hubris’, concerning which I was Classically clueless until a few minutes ago. If hubris corresponds to injury in the proper sense, perhaps ‘arrogance’ should be paired with ‘insult’, i.e. the gratuitous gloating (= self-aggrandizement of the unjust) and gleeful blaming of the injured that at least in living memory seems almost always to be packaged with the injustice?

  8. fresno dan

    https://www.bloomberg.com/view/articles/2017-04-18/california-tries-to-refill-its-biggest-reservoir

    None of these practices is new, although their use has expanded over the years. What does seem to be new, as Bettina Boxall of the Los Angeles Times reported this week, is that some California farmers are now experimenting with flooding fields that have grapevines and almond trees growing on them. And in general, people in California are paying a lot more attention to groundwater than they used to.

    In 2014, the California Legislature approved a package of groundwater-management laws — long after most other Western states had done so — that are now slowwwwwly beginning to take effect. Local groundwater-management agencies are being formed that will have to come up with plans to reach groundwater sustainability within 20 years.

    ========================================================
    You can look at this optimistically or pessimistically. With the population growing year, after year, after year, it doesn’t take high intelligence that water demand will exceed water supply. And yet CA government choose to deal with this freight train coming down the tracks in…..2014.

    1. Arizona Slim

      And, once again, the elephant in the room is not addressed. Population growth.

      Too many people in this world already. We need to question the pro-natalist bias in our culture.

    2. Wisdom Seeker

      > With the population growing year, after year, after year, it doesn’t take high intelligence that water demand will exceed water supply.

      Supply is not fixed. A lot of the current “supply” (rainfall) isn’t being retained, stored, or used intelligently. So there’s still quite a bit of room for population growth, particularly in the northern, wetter parts of the state. Even without artificial restrictions on usage.

      On the other had, I agree with the point that humanity should not have as its primary goal the maximization of population on a single finite sphere. And thus economics should not have as its primary goal the maximization of “growth”.

  9. flora

    “The problem of any branch of knowledge is to systematize a set of particular observations in a more coherent form, called hypothesis or ‘theory.’ Two problems must be resolved by those attempting to develop theory: (1) finding agreement on what has been observed; (2) finding agreement on how to systematize those observations.”

    How will modern economists agree to agree on anything real now that post-modernist thought and critique has entered the economics field?

    “But Foucault had belatedly spotted that post-modernism and “neo-liberal” free-market economics, which had developed entirely independently of each other over the previous half-century, pointed in much the same direction. ”
    http://www.economist.com/node/8401159

    Thanks for this post.

    1. flora

      adding: The economists who use a post-modernist approach( all is uncertain and events are transient and therefore immaterial to the core theory) to defend a scientific determinist* core theory are engaging in double-think. I’m not an economist so maybe there’s a there there I cannot see.

      *
      “Popper insisted that the term “scientific” can only be applied to statements that are falsifiable. Popper’s book The Open Universe: An Argument For Indeterminism defines scientific determinism as the claim that …any event can be rationally predicted, with any desired degree of precision, if we are given a sufficiently precise description of past events, together with all the laws of nature, a notion that Popper asserted was both falsifiable and adequately falsified by modern scientific knowledge.

      “In his book, A Brief History of Time, Hawking claims that predictability is required for ‘scientific determinism’ (start of chapter 4). He defines ‘scientific determinism”” as meaning: ‘something that will happen in the future can be predicted.’ ”

      http://psychology.wikia.com/wiki/Scientific_determinism

  10. fresno dan

    https://www.bloomberg.com/view/articles/2017-04-18/why-social-networks-are-becoming-too-viral

    By measures that register actual human engagement – rather than fake accounts and bot activity — Facebook does not seem to be growing at all. In 2016, its users generated about 25 percent less original content than in 2015. The time users spend on Facebook dropped from 24 hours in mid-2015 to 18.9 hours in February, Comscore reported.

    ========================================
    One can only hope.
    I am only on Facebook because a friend and co-worker signed me up (without my knowledge or consent, but I think most people looked upon it like getting a greeting card) back in the day when the Facebook fad was at its peak. And I was interested in it as a social and economic phenomenon.

    My own anecdotal experience is that the most ardent users (multi daily postings) have declined by 95%. The occasional 2 or 3 times weekly posters are down to once monthly, and so on.
    And the response to postings seems to have had even greater declines. Even good friends who I used to TRY and keep up with postings, I scarcely ever bother now – and when I do open one, people who used to get near 100 “looks” have 2 or 3 – maybe once in a while for something real (somebody died, instead this is a picture of a meal I eated) , maybe 5.

    Woolworths used to be a juggernaut – so was Sears. Who remembers “My Space” ???

    1. Arizona Slim

      The Presidential election of 2016 did it for me.

      I saw too many people turning into Trump Fraidy Cats before the election (“Vote for Hillary because Trump! He’s so awful!”) or Vote Shamers (“You’re voting third party? Shame on you!”).

      After the election, Facebook seemed like a psych ward. Too many sobbing, crying, and raving loons for my taste.

      Cutting back on Facebook is part of my larger goal of spending less time on social media and more time in social reality.

      1. Cujo359

        I had a similar experience on Twitter, which is why I stopped going there. Too depressing.

  11. Kalen

    Bravo, another critical issue absent from MSM or even worse purposefully being confused.

    It would help a lot if people take time to understand the money in itself that permeates every aspect of life since it is a central feature of any financial system under any economic system ancient or contemporary.

    Here is an simple essay that explains without financial jargon what money is in itself as a social construct and whom in reality it serves:

    https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-of-money/

    1. Disturbed Voter

      Economics isn’t economical, it is political-economics. Politics first, economics second. Politics is the art, not the science, of sharing out the wealth, power and fame in a society in an organized way. If your politics is corrupt, then your economics will be corrupt also.

      Blame Pythagoras. From Pythagoras and Croesus, we got the idea that value was a number, and that everything had a value, and that a market (aka city state) is where the hidden hand determined the relationship between prices, goods and services. The actual “cost” per capita, of running a subsistence agrarian society hasn’t changed since the days of Babylon. We simply have more technical bookkeeping (and accounting). A shekel was the weight of 180 grains of dried barley seed. The Babylonians didn’t have a primitive society … they had monarchy, theocracy, militarism … and receipts. A thing might be valued in so many shekels of silver, but the receipt accomplished what a coin would have, because it was honored. Clay money instead of paper money. You got your receipt for your socialist food dole, went to the temple granary to pick it up (this was long before Rome), visited the temple prostitutes (way better than Roman games), then went home. And as has been pointed out, this was a clay fiat … and honesty was just as vanishing then as now. And yes, it was a debt system, not a credit system. The US and the world has moved from a credit system to a debt system in the last 100 years. The Great Whore, Babylon … is still awaiting her destiny.

      “Daniel reads the words MENE, MENE, TEKEL, PARSIN and interprets them for the king: MENE, God has numbered the days of your kingdom and brought it to an end; TEKEL, you have been weighed and found wanting; and PERES, the kingdom is divided and given to the Medes and Persians.”

  12. Paul Greenwood

    Having once held a 1776 edition of Wealth of Nations in my hand I recall Smith was a Moral Philosopher and that Economics was a branch of Moral Philosophy choosing between Goods and Bads and seeing Utility Functions as Demand Curves.

    Then I recall Keynes, the Mathematician, writing beautiful prose in The General Theory. Somewhere the Reduced Form Equation boys started to play with Stochastic Variables to make the R2 fit Deterministic equations replaced Moral choices and an obsession with Beta proceeded to ignore Alpha.

    Economics is something of an academic joke. Steve Keen has introduced some life into a dead subject with his Hyman MInsky analysis since so much of Economic Theory as propounded is simply a Java Box running inside the main system

      1. Newtownian

        I agree about these two mates and rejoice in their sanity. One thing that is evident unlike colleagues is both have respect for science and genuine scientific method and even an emerging understanding of hard science though they still dont seem to have connected with the ecological economics pariahs fully which is a pity.

        Related to this one of Yves other bloggers had an interesting take on this here http://www.nakedcapitalism.com/2014/07/philip-pilkington-beware-scholastics-thoughts-economics-curriculum-reform-movement.html

        Essentially Pilkington’s thesis boils down to mainstream Economics being bogged down in pre-Scientific state arguing about analogies of Angels on the Head of Pin.

        Some great indicators of this are its use of excellent mathematics to obscure crummy theory and the attempt to claim ‘Nobel Prize’ status (Actually “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” as if Nobel had a central interest in Economics) unlike most other disciplines which are happy to have their own equivalents without basking in Nobel glory – as for example the Turing Prize recently awarded to Tim Berner Lees for his invention of the world wide web which is triggering a revolution in economics in the real world we are barely at the start of https://en.wikipedia.org/wiki/Turing_Award.

        This is all very sad because among the dross of modern Economics there are pearls too which outsiders dont properly appreciate because of siloing. I’m thinking here for example of Bayesian based utility and decision theory stemming back to of all people Daniel Ellsberg, or Daniel Kahneman who showed how the central tenet of rationality is nonsense https://en.wikipedia.org/wiki/Daniel_Kahneman, and even old Mervyn King whose book explains brilliantly what a mad and rubbery concept money is and hence why we are in such as mess.

  13. Cujo359

    We must learn to accept that when undeniable facts stare us in the face and shake up our political universe — e.g. growing unemployment is a problem, and money and finance have roles beyond medium of payment in an uncertain world shaken by financial crises — they are not transient problems; they are a part of the system we are meant to study.

    I think studying some of these things might be better left to psychologists. I emphasized the phrase about unemployment as a case in point – it could be argued that we have the unemployment we have right now thanks to telling ourselves, collectively, that we can’t employ people. Anyone who chooses to look around and observe can find things we could be paying people to do, like fixing our streets and bridges, educating our young, exploring space and advancing science, providing medical care to the significant portion of our population who don’t have access, but we are told that this would be bad for some reason, and many of us seem to believe this.

    I don’t know if that confirms the author’s ideas or not, but as several of us have observed now in these comments, our economic problems have less to do with the dismal science (or lack of it) and more to do with what people are inclined to believe is true, regardless of the facts.

    1. Justicia

      Actually, economics is more like a branch of medieval scholasticism. It’s about forcing reality to fit dogma by imposing methodological and epistemological gag rules on its practitioners so that they’re blinded to substance by form — and the non-expert public is bamboozled into mute acquiescence. Econned, as Yves would say.

  14. Spring Texan

    Yes, I’m baffled that we hear all this about oh jobs are going away becuz robots and maybe UBI and on and on when there are SO MANY UNFILLED JOBS staring us in the face where filling them would be of enormous benefit to all. Are they looking around at ALL?

    Thanks, Cujo349

    1. Cujo359

      As you can see, I’m baffled, too. UBI might be a good idea, and various forms of technology have certainly eliminated jobs over the years, but when so much work remains to be done, I don’t see how you can argue that we’ve reached an age where most of us are truly unemployable.

      FTM, what is employment? Put most simply, it is one person or entity who has money paying someone to perform some task(s), possibly to a minimum acceptable quality. There are many forms of work we do that no one wants to pay us to do. My work at an amateur theatre falls into that category, as does the work of the people in the food bank/soup kitchen next door. Maybe our concept of what constitutes useful work needs to change, too.

      1. Cujo359

        Let me revise that to say “most of us who are now unemployed are truly unemployable”.

        1. JEHR

          The place to start paying decent wages is for all kinds of housework, daycare and elder care. All are undervalued and underpaid while that latter two are essential for a healthy community. None of these should be consigned to robots as only human contact can do the job well.

          1. washunate

            But the irony of basic income is that’s one of the things it does. A huge portion of “housework, daycare, and elder care” is better done informally, outside of the GDP-measured formal economy of employers and jobs and wages and benefits, especially given how crappy the formal jobs tend to be in those sectors. Income supports that lack formal work requirements by definition create more time for people to do things in the informal economy.

            1. Left in Wisconsin

              But wouldn’t it be better to pay parents and caregivers for caring? First of all, it’s work and deserves to be remunerated like work. Second, keeping care work in the informal economy only “works” if people have other income with which to satisfy their needs and wants. There is no possibility that any basic income grant will provide a single parent with the funds to allow them to work taking care of their children, which is the socially optimal situation in almost all cases.

              1. washunate

                I think it’s good to have that discourse. But personally, no, I don’t think it’s good to pay people directly to do informal work. I personally think we are too obsessed with money (in terms of currency units). It might be interesting to have empirical data on how people feel about doing work because it’s the right thing to do versus being paid to do it. I would also point out the administrative difficulty. How would we possibly administer a fair and effective system of managing hours, pay rates, etc.?

                Why can’t we pay a single mom enough money to live on? Are we too poor? Or is that an argument about political feasibility?

  15. craazyman

    pretty funny. that’s been standard econ cirricuulum at the University of Magonia for, oh, let’s see, 1, 2 3 4 5 6 7 8 9. Nine! Nine years!

    Pretty funny. Is this still April 1st? I guess not. Oh well, a day late, a dollar short (no pun intended) is better than a year late and a grand short, or a century late and a million short. There’s a pattern there! it goes back to the Testament of Amram, Manuscript B. The Dead Sea Scrolls. That’s what we teach in econo 101 during the “money” unit. Money, at the Universtiy of Magonia, is an idea that mediates the boundary wtihin a society between cooperation and conflict.. That’s not a theory, it’s a reality. Everybody has heard this before in the peanut gallery so I won’t reapeat myself.

    They should send a delegation from Harvard to the Universtiy of Magonia for a seminar in money and economics. hahahaha. That’s pretty funny even to think about. Believe me. They’d learn a few things but they might get ontological shock and end up like MIT mathematical economist Ed Bucks who spent two months in the New Hampshire woods looking at deer through binoculars in search of a theory of economics that could survive a collision with nature AND be deterministic and mathematically rigorous. He pretty much had a nervous breakdown and ended up back at MIT sucking up grant money like a baby at his mamas tits. Many are called, but few are chosen. LOL

    1. wilroncanada

      Magonia? Isn’t that the university that was threatening to move to San Seriffe, because they got a big donation from President Pica?

  16. Sound of the Suburbs

    I am sure Michael Hudson has made this point as well.

    “Classical and neo-classical economics, as dominant today, has used the deductive methodology: Untested axioms and unrealistic assumptions are the basis for the formulation of theoretical dream worlds that are used to present particular ‘results’. As discussed in Werner (2005), this methodology is particularly suited to deriving and justifying preconceived ideas and conclusions, through a process of working backwards from the desired ‘conclusions’, to establish the kind of model that can deliver them, and then formulating the kind of framework that could justify this model by choosing suitable assumptions and ‘axioms’. In other words, the deductive methodology is uniquely suited for manipulation by being based on axioms and assumptions that can be picked at will in order to obtain pre-determined desired outcomes and justify favoured policy recommendations. It can be said that the deductive methodology is useful for producing arguments that may give a scientific appearance, but are merely presenting a pre-determined opinion.” Professor Werner

    Mankind first started to produce a surplus with early agriculture.

    It wasn’t long before the elites learnt how to read the skies, the sun and the stars, to predict the coming seasons to the amazed masses and collect tribute.

    They soon made the most of the opportunity and extracted themselves from any hard work to concentrate on “spiritual matters” (any hocus-pocus they could come up with to elevate them from the masses) and to turn the initially small tributes, into extracting all the surplus created by the hard work of the rest.

    The elites became the representatives of the gods and they were responsible for the bounty of the earth and the harvests. As long as all the surplus was handed over, all would be well.

    Later they came up with money.

    We pay you to do the work and you give it back to us when you buy things, you live a bare subsistence existence and we take the rest (profit). The money scam is the basis of capitalism.

    Later they came up with neo-classical economics.

    2017 – World’s eight richest people have same wealth as poorest 50%

    They are still extracting the surplus produced by the hard work of others.

    The mechanisms for extracting the surplus move with the times.

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