# Fiscal multiplier studies—it’s far worse than I thought

I was stunned to see a recent paper on fiscal multipliers use a 90% confidence interval, which seemed far too lenient.  After all, economics and many other sciences suffer from problems such as data mining, publication bias, and inability to replicate findings.  I’d like to see the standard statistical significance cut-off point raised from 95% to something stronger, maybe 98%.  When I did this recent post I wondered if I was making some elementary error, as econometrics is not my strong suit.

It turns out the problem is even worse than I assumed.  Indeed Ryan Murphy recently published a study of fiscal multiplier research (in Econ Journal Watch), and found that many studies use 68%!!

In recent decades, vector autoregression, especially structural vector autoregression, has been used to study the size of the government spending multiplier (Blanchard and Perotti 2002; Fatás and Mihov 2001; Mountford and Uhlig 2009). Such methods are used in a significant proportion of empirical research designed to estimate the multiplier (see Ramey 2011a). Despite being published in respected journals and cited by prominent members of the profession, much of this literature does not use the conventional standard of statistical significance that economists are accustomed to in empirical research.

Results in the literature on the fiscal multiplier are typically communicated using a graph of the estimated impulse-response functions. For instance, the effect of government spending on output may be reported by reproducing a graph of an impulse-response function of a one-unit (generally, one percentage point or one standard error) change in government spending. The graph would show the percent change in output over time following the change in government spending. To report statistical significance, authors of these studies may then draw confidence bands around the impulse response function. Ostensibly, if zero lies outside the confidence band, it is statistically distinguishable from zero. But very frequently in this literature the confidence bands correspond to only one standard error. In other words, instead of representing what corresponds to rejecting the null hypothesis at a 90% level or 95% level, the confidence bands correspond to rejecting the null hypothesis at a 68% level. By conventional standards, this confidence band is insufficient for hypothesis testing. Not every useful empirical study must achieve significance at the 95% level to be considered meaningful, of course, but a pattern of studies which do not use and reach the conventional benchmark is a cause for attention and perhaps concern. Statistical significance is not the only standard by which we should judge empirical research (Ziliak and McCloskey 2008). It is, however, a useful standard, and still an important one. Here I examine papers in the fiscal multiplier literature which apply vector autoregression methods. Sixteen of the thirty-one papers identified use narrow, one-standard-error confidence bands to the exclusion of confidence bands corresponding to the conventional standard of 90% or 95% confidence. This practice will often not be clear to the reader of a paper unless its text is read rather carefully.

I can’t even fathom what people are thinking when they use 68%.  It seems like something you’d see in The Onion, and yet apparently this stuff gets published.  Can someone help me here, what am I missing?

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147 Responses to “Fiscal multiplier studies—it’s far worse than I thought”

1. Britonomist
25. March 2016 at 06:32

Scott, none of those links will work for us because they are referencing your local machine (file:///).

Regarding confidence bands, since I can’t see the paper I will just comment that, just because someone draws a slim confidence band in an IPF graph doesn’t mean the underlying result didn’t have proper significance testing, I hope Murphy checked the regression tables (may be in the appendices) – rather than using the graphs alone.

2. Ben J
25. March 2016 at 06:33

Scott,

I hadn’t realised that VAR impulse response confidence intervals in academic papers were commonly 1 standard deviation – that is woeful.

As a side note, the link you posted in your P.S. won’t work – it’s a file path to a location on your computer, not an address to a location on the web your readers can access. If you have permission to share the paper, I recommend uploading the file to a file-sharing service like Dropbox, or asking the authors if they have a web link to the file themselves.

3. H_WASSHOI (Maekawa Miku-nyan lover)
25. March 2016 at 06:34

Local file link! ∑(ﾟ□ﾟ;)

4. Jay Hattler
25. March 2016 at 07:04

Thank you for pointing this out, Scott. Amazing. It really is true that economists are here to make the astrologers look good.

Jay

5. Ryan Murphy
25. March 2016 at 07:20

Britonomist- what counts in the literature is not always clear, which is still another mark against it. Some papers report “on impact” or whether the confidence band is outside zero over some period of time. What “the” multiplier should be is the integral of the increase in output divided by the integral in the increase in government spending, but very few people do that. What I did was to just stack the deck in their favor, but even then to achieve “statistical significance” they have to use the confidence band associated with 68%.

6. Alexander Hamilton
25. March 2016 at 07:51

@Britonomist Huh? If the underlying work was statistically significant at a conventional significance level and the wider bands didn’t include zero either then why would they include the narrower bands at all?

7. Major.Freedom
25. March 2016 at 08:17

Many years ago I asked my PhD advisor why the method calls for 95% confidence interval (p-value is the term we typically used, which is 0.05 maximum), as opposed to say 94% or 93%, or 90%.

The truth is that every choice is arbitrary from a scientific point of view. Each choice is nevertheless given a very precise, scientific description such as “oh come on, that’s a preposterous value” or “whew, that’s a much more reasonable value”.

While the best arguments against econometrics are more challenging to grasp than the steps needed in the econometrics method itself, this 68% C.I. report just highlights the fundamental nonsense of the entire econometrics program.

Human knowledge and hence actions and hence economics cannot be modelled using the empiricist method, which itself assumes constancy in relations. There are no constants. Even the empiricist method must presume a lack of constancy in the knowledge and hence actions of the empiricist researchers themselves.

Sumner might not like hearing this, but it was Milton Friedman and the Chicago School that are primarily responsible for bringing about the method of econometrics into the mainstream.

Prior to Friedman, mainstream economics was a more verbal, logic driven science, lead by economists such as Lionel Robbins, whose textbook was standard fare for over 30 years.

8. Postkey
25. March 2016 at 08:24

These are Prof. R. Werner’s findings for Japan.

“ . . . whereby the coefficient for ∆g is expected to be close to –1. In other words, given the amount of credit creation produced by the banking system and the central bank, an autonomous increase in government expenditure g must result in an equal reduction in private demand. If the government issues bonds to fund fiscal expenditure, private sector investors (such as life insurance companies) that purchase the bonds must withdraw purchasing power elsewhere from the economy. The same applies (more visibly) to tax-financed government spending. With unchanged credit creation, every yen in additional government spending reduces private sector activity by one yen. “
http://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

9. Student
25. March 2016 at 08:37

Dont fall prey to the seductive certainty of significance or the willful rejection of evidence due to uncertainty…

Writing off a study because it reports larger p-values (or smaller CIs) is stupid, especially in macro. Focus on the effect sizes not the p-values as macro lives in the world of small sample sizes and imprecision.

Remember, the CI doesn’t tell you the probability that your finding is different from 0, it tells you how precise your estimate is. Surprise surprise, estimates of fiscal multipliers are imprecise.

Remember that Fisher intended p-values to be just one piece of information in a non-numerical process that blends data and background knowledge to lead to scientific conclusions.

10. Student
25. March 2016 at 08:40

Why isn’t everyone a Bayesian at this point? While it doesnt solve the problem here necessarily, it facilitates clearer thinking about evidence and uncertainty.

11. Ray Lopez
25. March 2016 at 08:55

@Student – how is Bayesian any different from a frequentist perspective? As you probably know, it’s not, as every Bayesian problem can be decomposed into a series of steps that can be calculated by a frequency analysis. The word Bayesian will only impress the gullible like Sumner.

@Sumner – as I told you, your fellow monetarist Blanchard uses a mere 60% confidence * * to show IS-LM works. Seems there’s a lot you don’t know, and are constantly ‘amazed’ by. Like a rube who has never been to the big city and stands slack jawed at every ordinary city sight.

RL

* * Olivier Blanchard “Macroeconomics”, 2nd edition., p. 96, 5-6, ‘Does the IS-LM Model Actually Capture What Happens in the Economy?’ Shows that for data 1960 to 1990, that a 1 % increase in Fed funds rate shows, over 4-8 quarters, a decrease in sales, decrease in output, decrease in employment, increase in unemployment rate up to 6 quarters (then a decrease after 8 to the original level). However, the “confidence band” is only 60% probability, not the usual 95% confidence. The quoted text is: “The true value of the effect [referencing various graphs in response to a Fed funds rate increase] lies within the two dotted lines with 60% probability. For this reason, the space between the two dashed lines is called a confidence band”. (Technically, it’s not quite right to call this 60% probability, but that’s a small quibble). Why 60% and not 95%? Obviously there would be no effect at 95% confidence.

The source for Blanchard: Lawrence Chambers, Martin Eichenbaum, and Charles Evans, “The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds”, Review of Economics and Statistics, Feb. 1996, 78-1.

12. Student
25. March 2016 at 09:00

Ray your a lost cause. It’s a fundementally different way of understanding evidence that facilitates clearer thinking about what you are observing. That’s why a Bayesian such as me has no problem with reporting a macro finding when a 95% CI includes 0. Because macro is imprecise. If 98% significance levels were the standard in macro, there would be a lot of empty journals because the field is an imprecise one. Understand that.

13. Giuseppe C
25. March 2016 at 10:45

http://moneyweek.com/bernard-connolly-the-eu-is-an-explicitly-anti-democratic-crony-capitalist-state/

Pardon me if I go off topic, Scott, but I’d like to point out this interview with Bernard Connolly to you. What do you think about it? I mean the part from “Now, the problem about the British economy, and of many other economies in the world, is that because of the mistakes that have been made over the last 20 years I would say” to the end. Ignore the first half, if you are not interested in European integration and Brexit.

14. E. Harding
25. March 2016 at 10:56

Freedom, you have a PhD? If so, I would totally have to re-evaluate my opinion of you.

15. Major.Freedom
25. March 2016 at 11:37

E Harding: Yes, but it should not matter, and I really REALLY don’t want it to matter, to the judgment of quality, and hence in the content of the responses to, any argument I make here. It should be a non-factor. I guess I should not have said it, I just was thinking too much of that conversation and how much of an effect it had on me. I was expecting a good reason, considering how popular and widely the belief was held, but I got an effective “I have no idea”. It was an eye opening experience. He was a tenured professor, published in the top journals, and so it was not just a case of happening to ask the wrong Prof.

Forget it E Harding. I want my arguments to be accepted and rejected on merit, nothing more.

16. Major.Freedom
25. March 2016 at 11:39

Student’s comment inadvertantly explained the reason why econometrics is used. It allows for excuses and justifications for research programs. If precision were demanded, as in logic and mathematics, the faculties would indeed be a lot smaller. But that would be a good thing, because right now it is a waste of resources, labor and time.

The only good econometrics journal is an empty one.

17. Major.Freedom
25. March 2016 at 11:43

Don’t fall prey to Student’s pleas to support his livelihood by accepting not only uncertainty, but self-contradictory nonsense, in his quest to secure a living for himself. Without the nonsense believed as credible, he will have to incur a lot more costs acquiring actually useful skills. He doesn’t want that, hence the attacks on all criticisms of econometrics, no matter if the criticisms are against a 68% C.I.

Sorry Student, you’re the victim of your own bad life choices.

18. Gary Anderson
25. March 2016 at 11:51

Isn’t the most famous econometric estimate David Li’s Gaussian Copula, adopted by Basel 2, that said it is unlikely that all mortgages would go bad at the same time?

That really is the only one that matters. If you leave out what happened in Japan in the decade prior to Li’s formula, you left out the most important reality, that all mortgages could go bad at the same time.

Flawed models allow mispriced risk and Bank of America says the Fed does that all the time.

19. Student
25. March 2016 at 12:36

Not surprised an Austrian would say something like that given evidence is not a requirement. In Bayesian terms, someone like major freedom derives a posterior estimate with 100% of the weight on their prior. Must be nice.

Gary, something with a 1% likelihood will still occur… about 1% of the time. Unlikely things do happen.

20. Britonomist
25. March 2016 at 12:57

@Ryan Murphy

“Britonomist- what counts in the literature is not always clear, which is still another mark against it. Some papers report “on impact” or whether the confidence band is outside zero over some period of time. What “the” multiplier should be is the integral of the increase in output divided by the integral in the increase in government spending, but very few people do that. What I did was to just stack the deck in their favor, but even then to achieve “statistical significance” they have to use the confidence band associated with 68%.”

It’s hard to follow what you’re saying here. What I do know is that, as someone who used VARs in his own master’s thesis, there is no way I could have gotten away with regression results without any statistically significant coefficients (@ 95% confidence). Is there a particular paper you’re referencing that you can show me?

@Ray

“your fellow monetarist Blanchard uses a mere 60% confidence”

No. he. didn’t. Stop repeating this myth, see my latest comment to you in the other thread. The actual regression tables used show high (>95%) significance, the ‘60%’ value was just used to describe how the IRF graph looked.

21. Britonomist
25. March 2016 at 13:18

@Alexander Hamilton

Because why should confidence bands exclusively be used for significance testing? Suppose you’re reporting the effect of A on B. In the regression table you show results of significance testing, including p values or whatever, showing which of the coefficients are at least at 95% confidence.

But another reason you might use confidence bands is simply to describe something. If you’re drawing a graph, why can’t someone show a 60% confidence band if he wants to? Is it not at all informative to draw a 60% band? I would argue that he probably *should* include a 95% confidence band *as well*, but is he obliged to – *as long as proper significance testing was done elsewhere*.

22. ssumner
25. March 2016 at 13:26

Student, I’m fine with Bayesian reasoning, but this sort of confidence interval doesn’t move me away from my prior belief that the multiplier is roughly zero.

Keep in mind that these imprecise results are exactly what you’d expect in a world where some countries have monetary offset and others do not. So should I change my prior?

Ray, You said:

“your fellow monetarist Blanchard”

Face palm.

23. Student
25. March 2016 at 13:57

Fair enough. I was just trying to make the point that in a field with small sample sizes and lack of the ability to readily repeat trials, imprecision is a fact of life and effect sizes become more important than statistical significance, particularly at arbitrary cutoff points like like p=0.05 or less.

As an example. Imagine testing two drugs to delay the onset of dimentia. For whatever reason drug A has a very small trial like 30 people. The mean delayed onset is 4 years but the 98% CI contains 0. Imagine drug B has a huge trial of 100,000 people. As a result it has the power to detect an effect of 2 weeks delayed onset. Which one of these seems more worthy of publication in a medical journal?

24. Ryan Murphy
25. March 2016 at 14:00

Britonomist-

In the appendix table in the paper I note the papers that use the more conventional confidence bands, many of them get statistical significance. If I were in your position, I would have done is one of two things. If I were feeling very positivist that morning, I would have said that under the proper application of this methodology to the data available, no result could be found. If I was feeling more Bayesian, I would have said that the result is a statistically insignificant point estimate of X. Because this is what you do when you don’t get results in micro. You don’t bury it in the paper that the confidence you are using corresponds to something way more narrow than what is done so normally.

Besides, the other methods for addressing the question, namely narrative method from Ramey or the Angrist-Pischke style quasi experiments, do not need to fake statistical significance. They have their own problems, but take my paper as a point in their favor. Unless you are a strong, strong believer in the Sims kool-aid that VAR is the only way you can deal with things in macro, just shift your priors accordingly.

25. Derivs
25. March 2016 at 14:11

“my prior belief that the multiplier is roughly zero.”

My sense is negative. Amazed to see any economist suggest 0. I got yelled at pretty good (online yelling) by one “prominent leftist” economist when I said what you just said.

26. Benjamin Cole
25. March 2016 at 15:53

Call me a Luddite, but in macroeconomics if empirical observations cannot be plotted on the old X-Y graph and be strongly suggestive….then you probably have a debatable picture. From there you get econometic dueling, and everybody falls back on their biases, citing those econometric studies which support their views.

Perhaps economics is a science. But remember how difficult it is to measure economic activity, especially in a world of increasing cash or underground economies, and in which leisure is not considered part of GDP nor environmental quality.

Then construct elaborate models based upon observations in carefully selected nations and/or time periods.

27. Benjamin Cole
25. March 2016 at 16:00

Add on: In country A the air is horribly polluted and people work 60 hours a week for a per capita GDP of \$10,000.

In country B the air is clean and people work 40 hours a week for a GDP per capita of \$9,000.

Now, let us construct a macroeconomic model that proves the policies of country A are working and resulting in higher GDP per capita.

28. Derivs
25. March 2016 at 16:19

“then you probably have a debatable picture. From there you get econometic dueling, and everybody falls back on their biases, citing those econometric studies which support their views..”

I agree, s speaking professionally what’s wrong with just saying “not sure, inconclusive” as opposed to “let’s borrow an extra few trillion because I have a bias”.

“Isn’t the most famous econometric estimate David Li’s Gaussian Copula”

David just wrote a model, he never gave an estimate, how it was misused/misunderstood (or why it was used at all)… is another issue. No shortage of people were on record for warning it was a very poor model. Playing with correlations is about as dangerous as one can get in finance.

29. Ray Lopez
25. March 2016 at 16:32

@Britonomist – your reply after your comment “Ray, I don’t have that book.” in http://www.themoneyillusion.com/?p=31574#comments when I wrote and explained to you Blanchard’s cite is “not a “multivariate model’ involving R^2 but what I said” does not prove your case. The figures to examine are Fig. 2. Throwing up your hands and just saying “it’s complicated” does not equate to anything. In VAR analysis, they typically use (student would know better than you) one standard deviation (63% confidence) not two (95%) which makes it more likely to find a ’cause and effect’ than two.

@student- we agree to disagree, however, unlike Britonomist you do seem to have some logic in your posts. Feel free to comment on how VAR error bands are computed (refer to Ben J’s comment in this thread on exactly this topic–what are your views about this?)

30. Gary Anderson
25. March 2016 at 21:08

Derives said: “David just wrote a model, he never gave an estimate, how it was misused/misunderstood (or why it was used at all)… is another issue. No shortage of people were on record for warning it was a very poor model. Playing with correlations is about as dangerous as one can get in finance.”

Thanks Derives. It was a conspiracy. The central banks wanted to make the banks bigger, the rich richer and the middle class destitute. It worked.

31. Benjamin Cole
26. March 2016 at 01:17

Derivs–

My biases are that tax cuts in combination with QE are the way to go. Spending cuts too, if you can get ’em.

Michael Woodford agrees, in an oblique fashion.

We are QE-supply siders!

Two of the largest structural impediments today are the \$1 trillion “national security” budget (DoD, DHS, VA, black budget and debt service) and local property zoning.

Now there is a couple topics that are not PC…

32. Ray Lopez
26. March 2016 at 02:41

@Britonomist, at everybody: the authors cited by Blanchard to show economic variables respond to Fed policy shocks, namely Lawrence Christiano, Martin Eichenbaum, Charles Evan, “The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds”, Review of Economics and Statistics, February 1996, 78-1, are using ONE STANDARD DEVIATION as the band for a variety of variables examined using Vector Auto-Regression (VAR) analysis. The cited authors explicitly say so on p.19 of their paper (“Solid lines represent our point estimates, while dashed lines denote plus and minus one standard deviation bands”).

Sorry for not reading the paper. And btw one std. dev. seems to be the ‘norm’ when using VAR software packages (from a variety of sources online).

Case closed. It’s not two standard deviations, it’s not 95% confidence. It’s one std. dev (~68%).

My apologies for not reading the source paper, but my intuition was correct.

PS–just came back from the beach after hosting a party with about 50 of my closest family and friends. I’m a Big Man here in the Philippines, and it’s refreshing to see life outside the narrow lens that passes for reality on this blog, namely examining the effects of monetarism when Ben S. Bernanke informs us in his FAVAR paper (using, ironically, VAR analysis and probably using 1 sigma as the cutoff) that Fed policy shocks influence between 3.2% to 13.2% (out of 100%) of the change in a variety of variables (including NGDP) from the period of 1959 to 2001. In short, as I told Major Freedom, money is nearly neutral according to Bernanke himself.

PPS–to Sumner: I stand corrected, I thought Blanchard was a monetarist but you know your colleagues better than me.

33. Fiscal multiplier studies – it’s far worse than I thought | Scott Sumner via /r/economy | Chet Wang
26. March 2016 at 03:14

[…] Fiscal multiplier studies—it’s far worse than I thought […]

34. Ray Lopez
26. March 2016 at 06:57

@myself – btw, my “ps” about std. dev. being 1 sigma for most VAR s/w packages, which would carry over to the “plus and minus one standard deviation bands”, has nothing to do with the issue at hand. The issue is: in response to a policy shock, the Christiano et al authors cited by Blanchard show a number of curves where a 1% increase in the fed funds rates do something to retail sales (-, decrease), to output (-), to employment / unemployment (-,+) and to the price level (-) over time 0 to 8 quarters. Blanchard p. 97 from Christiano et al shows their graphs, with a solid line and two dashed lines on either side defining a space called the “confidence band”, where (Blanchard) “the true value of the effect lies within the two dotted lines with 60% probability”. Christiano et al say their confidence band is one standard deviation, which is usually 68%, however, fn. 8 says about these confidence bands (involving VAR): “These were computed using the Monte Carlo method described in Doan (1990) example 10.1, using 500 draws from the estimated asymptotic distribution of the VAR coefficients and the covariance matrix of the innovations, Ut in (2) [a standard VAR equation]. The point estimates and standard errors of our coefficients are the average and standard deviation across draws of the simulated impulse responses.” Somehow, this comes to 60% probability not the usual 1 std. dev. of 68% (says Blanchard).

So, to summarize: (1) do you think the Christiano paper proves the Fed funds rate has the effect cited on the variables above, given that the confidence band is only 60%, meaning 40% of the time the true value will be outside this band?, (2) do you think a VAR simulation “using 500 draws from the estimated asymptotic distribution of the VAR coefficients and the covariance matrix of the innovations, Ut in (2) [a standard VAR equation]. The point estimates and standard errors of our coefficients are the average and standard deviation across draws of the simulated impulse responses” proves anything definitive? Would you bet your life on it? A \$16.8T economy on it? This sort of thing reminds me of the programs I write in C#. While I have confidence in my coding ability, I would not bet either my life nor significant money that they are 99.9% accurate. Yet Blanchard wants his readers to believe this paper proves the IS-LM (monetarist) model. At least Blanchard cites a model to support his textbook. Our host doesn’t even have a model to cite, just a vague word picture using very flexible words.

35. ssumner
26. March 2016 at 07:06

Student, I certainly agree that the seemingly more important drug is worthy of further research, and perhaps publication.

Ben, You said:

“Call me a Luddite, but in macroeconomics if empirical observations cannot be plotted on the old X-Y graph and be strongly suggestive….then you probably have a debatable picture. From there you get econometic dueling, and everybody falls back on their biases, citing those econometric studies which support their views.”

I think that’s often true. KISS.

36. Britonomist
26. March 2016 at 07:51

“Blanchard p. 97 from Christiano et al shows their graphs, with a solid line and two dashed lines on either side defining a space called the “confidence band”, where (Blanchard) “the true value of the effect lies within the two dotted lines with 60% probability”.”

Yes I know, they *draw* a 60% confidence band on their graph, so what? That doesn’t mean they also didn’t provide significance testing at a 95% level elsewhere, if you look at the regression tables rather than just the graphs, you’ll see that many of the results are significantly different from zero at 95% confidence or even higher.

Just because they drew graphs a certain way doesn’t actually mean they didn’t do significance testing on their results, that’s the whole point, why can’t you understand this!?

37. Gary Anderson
26. March 2016 at 07:55

I am amazed that economists fail to see obvious conspiracies. Here are just a few.

1. Central banks adopted both Li’s flawed Copula and off balance sheet banking at Basel 2 just to make some money. They repealed laws making derivatives just gambling and Glass-Steagall.

2. Oded Yinon told how to do regime change over 30 years ago. So, that is the conspiracy, regime change, that rules American foreign policy today. The war on terror has always, always, been either fake or for show. The real policy is regime change.

3. Economists should consider that gun violence is down from the 1990’s, yet suddenly under Obama, who wants gun control, mass shootings are way up over anything that has happened before. That is a hoaxing and/or false flag conspiracy using crisis actors and fake blood often. It makes no sense, statistically, for gun violence to be dropping like it has when these mass shootings are now through the roof.

4. JFK was assassinated by the globalists. They still rule the United States.

Will Rogers, famous columnist for the then patriotic New York Times said this about the bankers:

“You can’t break a man that don’t borrow; he may not have anything, but Boy! he can look the World in the face and say, “I don’t owe you Birds a nickel.” You will say, (if everyone stops borrowing) what will all the Bankers do? I don’t care what they do. Let ’em go to work, if there is any job any of them could earn a living at. Banking and After-Dinner Speaking are two of the most Non-essential industries we have in this country. I am ready to reform if they are.” WA #14, March 18, 1923

And:

“The whole financial structure of Wall Street seems to have fallen on the mere fact that the Federal Reserve Bank raised the amount of interest from 5 to 6 per cent. Any business that can’t survive a 1 per cent raise must be skating on mighty thin ice… But let Wall Street have a nightmare and the whole country has to help get them back in bed again.” DT #950, Aug. 12, 1929

and:

“See where Congress passed a two Billion dollar bill to relieve bankers’ mistakes. You can always count on us helping those who have lost part of their fortune, but our whole history records nary a case where the loan was for the man who had absolutely nothing.” DT #1715, Jan. 22, 1932

and:

“Our whole Depression was brought on by gambling, not in the stock market alone but in expanding and borrowing and going in debt, all just to make some money quick.” Radio, May 5, 1935

38. Major-Freedom
26. March 2016 at 08:26

Student:

What you call “evidence” is in actuality a unique set of data that is the result of complex processes which cannot be replicated nor tested, and more importantly cannot reveal the constants you’re looking for in the method you choose to use.

Austrians are not anti-evidence, they are pro-logic. Your method is logically contradictory. It is why you and your cohorts have never, after decades of research and many millions of dollars spent in the research programs, found any constants such as the fine structure constant, or Planck’s constant, or the gravitational constant, or the many hundreds of other constants that are found on the back of physics and chemistry textbooks.

The method you use for economics invariably encompasses human knowledge. To assume the existence of constancies is to betray the very requirement of knowledge being non-constant in the very empiricist method itself.

You’re engaging in nonsense. That is why you jealously protect it instead of providing a detailed explanation for why the method you use is appropriate. The fact of course is that you just accepted it, and now you are economically dependent on it. Of course you will attack all critiques of the very foundation of your worldview. Your livelihood in the short term depends on a continuation of the ignorance.

39. James elizondo
26. March 2016 at 08:54

Wasn’t there a related problem with many research papers were found abusing p values? Seems that problems with statistics/research papers dont just apply to spending multiples

40. EB
26. March 2016 at 13:35

Breaking news. Minutes of meeting between Professor Krugman and Prime Minister Abe (and other Japanese officials) last Tuesday

http://www.zerohedge.com/news/2016-03-26/japans-finance-minister-accidentally-reveals-how-it-all-ends-war

https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/Meeting-minutes-Krugman.pdf

41. Ray Lopez
26. March 2016 at 16:50

@Britonomist: “Just because they drew graphs a certain way doesn’t actually mean they didn’t do significance testing on their results, that’s the whole point, why can’t you understand this!?”

Because it makes no sense for the Christiano et al authors to do this, unless they are playing a joke on their readers.

Example (I had this in mind before but did not post it since it would make my posts even wordier than they are, but you force me to):

An econometrics study wishes to show X and Y are linked, cause-and-effect, with R^2 = ~1. The study, using VAR or otherwise, shows Y = X and the two variables are distributed along this line with very little variance to a high degree of confidence. In fact, to notice any difference between the dotted line Y=X (a math formulae) and the data points in the scatter plot, you have to use a 30× Hastings triplet magnifier, and you have to enlarge the output to an industrial vector graphics printer that prints the chart in 2 meter wide paper. Even then, you need a good pair of eyes and different color ink between the math line and the data points. Several people claim that even with the Hastings magnifier, they cannot make out any big difference (while most people agree however there is a very subtle difference, akin to observing the Martian canals or the Galilean moons of Jupiter with the naked eye). In fact, it becomes a sort of parlor game to see if you can detect the data points from the dotted math line Y=X, that’s how tightly clustered the data points are. In addition, the authors find these data points are clustered about an interval that’s very tiny, to three sigma, 99.7% probability of being found in that tiny interval.

Now, after doing all of this hard work, and showing such a tight fit between the leading and lagging variables X, Y,, the authors decide to publish their results. Instead of printing a very narrow “confidence band”, and saying it’s three sigma (99.7%), inexplicably they print one as wide as your arm, and then state that the true value of the effect lies within the two dotted lines with 60% probability. That’s the case you are making. Now technically it’s true: the data is indeed within 60% probability in such a wide confidence band, but you are losing information by publishing such an absurd step backwards. If you can show a narrow confidence band, you will do so, to bolster your argument.

In short: I win. Again.

42. Britonomist
26. March 2016 at 18:32

@Ray, a 95% confidence band will be *wider* not narrower than a 60% confidence band.. come one dude.

43. Don Geddis
26. March 2016 at 18:51

@Ray Lopez: “In short … money is nearly neutral according to Bernanke himself.

Nope, sorry pet turtle, that is not what Bernanke said, or meant. (Nor is it true.) You are obviously incapable of correctly summarizing the paper. Hush now, grownups are talking.

Blanchard wants his readers to believe this paper proves the IS-LM (monetarist) model.

IS-LM is not a monetarist model. Wrong again, Ray.

44. Christian List
26. March 2016 at 18:58

Which one of these seems more worthy of publication in a medical journal?

I don’t read too much medical journals anymore but back in the days when I did they usually prefered the studies with 100,000 people. Even when they showed that there was close to zero effect.

It even makes some sense because it’s helpful to know when a drug (or therapy) is pretty much useless.

45. Alex
27. March 2016 at 03:30

Scott,

VAR models are linear in shocks, so the impulse response function (IRF) to a 2 s.d. shock is just twice as large as the IRF to a 1 s.d. shock. Significance level is not given by the size of the shock you use to compute the IRF.

Alex.

46. Ben J
27. March 2016 at 04:11

Alex,

Scott is talking about the significance of the IRF, not the size of the shock used to compute the IRF.

The IRFs are estimated from the data, and so those estimates have statistical uncertainty. This means the IRFs have standard errors, and we can use these in the usual hypothesis testing processes (or more commonly, to visually display a confidence band around the IRF).

47. Alex
27. March 2016 at 05:37

Ben J

In this post the whole argument relies on the size of the shock

Quote from Scott´s quote:

“But very frequently in this literature the confidence bands correspond to only one standard error. In other words, instead of representing what corresponds to rejecting the null hypothesis at a 90% level or 95% level, the confidence bands correspond to rejecting the null hypothesis at a 68% level.”

My point is that if you use a 1 s.d. shock and you get a 0.5 – 1 confidence interval then if you use a 2 s.d. shock you will get a 1 – 2 confidence interval.

48. Mark
27. March 2016 at 06:38

Major.Freedom: “What you call “evidence” is in actuality a unique set of data that is the result of complex processes which cannot be replicated nor tested, and more importantly cannot reveal the constants you’re looking for in the method you choose to use.”

Let me ask you Major, are you philosophically opposed to all experimental science? Or only as applied to economics?

That’s essentially your position, I hope you realize. All data sets are unique and resulting from complex processes; this does not mean that they cannot be useful for inferring which factors are influenced by which other factors. Batch effects are an annoyance, but are not the end of the world, and you’re not the first person to discover them. In theory, no experiment can ever be replicated, some minor circumstance is always slightly different. And yet, scientists keep doing science and discovering new and useful things despite your “logical” critique of empirical methods.

Maybe econometrics can’t be as precise as chemistry or even biology, but it’s a matter of scale, not of essence. There’s no more reason quantitative analysis should be categorically rejected for economics than for biochemistry via your argument.

49. ssumner
27. March 2016 at 07:02

James, You are probably right, but this seems a particularly egregious case. 68%!!

Alex, I don’t follow, what exactly are you trying to say? I never said significance level was given by the size of the shock. I don’t even know what that means.

50. Doug M
27. March 2016 at 08:22

The 95% confidence interval is used to make the determination whether you can reject the null hypothesis. i.e. it is used to ask the question whether the fiscal multiplier is 0, or something different from 0. Once you have done that 95% confidence intervals go away. Now the question is, what is the best estimate assuming that we can reject the null hypothesis.

It sounds like these investigators have simply assumed that the fiscal multiplier is real, and not bothered with the preliminaries.

51. Alex
27. March 2016 at 09:37

Scott,

My bad. I misunderstood Murphy´s point. I interpreted him as saying that since shocks used to compute de IRF are 1 s.d. then the confidence bands were 68% intervals. I checked the original paper and a couple of the empirical papers cited and I realized I was wrong. Sorry if caused any confusion.

Alex.

52. Art Deco
27. March 2016 at 10:42

I am amazed that economists fail to see obvious conspiracies.

They fail to see them because they are not there. For starters, John Kennedy was assassinated by a punk with delusions of grandeur named Lee Harvey Oswald. Period.

53. Major.Freedom
27. March 2016 at 11:23

Mark,

“…are you philosophically opposed to all experimental science? Or only as applied to economics?”

Opposed as applied to economics.

“All data sets are unique and resulting from complex processes; this does not mean that they cannot be useful for inferring which factors are influenced by which other factors.”

Actually chemistry and physics experiments can be controlled to the point of isolating single variable cause and effect, and the method works because unconscious matter seems to indeed behave according to constant causal factors. This is a tacit presumption in the method of empiricism. It is typically not made explicit by any of its practitioners. It is almost always taken for granted.

With knowledge however, even that tacit presumption must be rejected. Knowledge and hence actions is not constant. People themselves change in a priori unpredictable ways. This unpredictability is of course accepted by all empiricists, since their own knowledge is at stake. They accept that they cannot know what they will know, before they will know it. That is why they engage in the testing at all. But that testing method only works for that which does not change. It cannot possibly work for their own knowledge.

“Batch effects are an annoyance, but are not the end of the world, and you’re not the first person to discover them. In theory, no experiment can ever be replicated, some minor circumstance is always slightly different. And yet, scientists keep doing science and discovering new and useful things despite your “logical” critique of empirical methods.”

That is because they are able to control the factors that you are falsely claiming are unique. They are not unique. The factors being tested are the same experiment to experiment. This is what replication means.

“Maybe econometrics can’t be as precise as chemistry or even biology, but it’s a matter of scale, not of essence.”

It is not a question of accuracy or scale or precision. Assumptions of constancy is fundamentally inapplicable to knowledge. Empiricism is structured as not constant as applied to knowledge.

This is why empiricism works for matter and not knowledge.

54. Mark
27. March 2016 at 12:22

“Actually chemistry and physics experiments can be controlled to the point of isolating single variable cause and effect, and the method works because unconscious matter seems to indeed behave according to constant causal factors. This is a tacit presumption in the method of empiricism. It is typically not made explicit by any of its practitioners. It is almost always taken for granted.”
I will reiterate, in those fields as well, the probability that an effect observed is not just due to noise has a confidence interval and a p-value just as in economics. The 95% CI may span a range of .0001, but again, it still amounts to concluding that the effect is ‘real’ because the interval is really really small.

“It is not a question of accuracy or scale or precision. Assumptions of constancy is fundamentally inapplicable to knowledge. Empiricism is structured as not constant as applied to knowledge.”
So, observational studies are inherently invalid in your mind? Ecologists’ findings about observational patterns of animals or epidemiological studies are inherently invalid?

Your reasoning amounts to someone noting that a complicating factor renders findings less certain, and while a sensible person would find it sufficient to caution readers about the uncertain of their conclusions, you seem to think they should just burn them. Knowledge, btw, is only inferred empirically. Otherwise it’s not knowledge, it’s speculation.

55. Art Deco
27. March 2016 at 12:46

Your reasoning amounts to someone noting that a complicating factor renders findings less certain, and while a sensible person would find it sufficient to caution readers about the uncertain of their conclusions, you seem to think they should just burn them.

The disposition helps if you want to defuse arguments contra whatever crank monetary regime’s been dreamed up o’er at the von Mises Institute.

56. Major.Freedom
27. March 2016 at 13:20

Mark, you’re missing the main point.

Experiments that accommodate the “probability” of an effect being observed after a particular input or stimulus or cause, are still assuming a constancy. It’s just that the particular constants in question cannot be observed as exact values.

The assumption however is still a structure of constancy. Even quantum mechanics experiments, such as the double slit experiment, are assumed as revealing a constancy in nature, namely, the same diffraction pattern result is caused by the same energy and geometry inputs. An experimental result today that “confirms” or “falsifies” an experimental result completed or theory proposed yesterday, is a belief that the nature of the relations between the variables remains unchanged over time.

It is not that observational studies are inherently invalid, provided the subject matter behaves according to constant causal operative factors.

Atoms, molecules, objects, weather patterns, ocean currents, etc, all these subject matters are non-acting, non-knowing subject matters. They are not conscious entities. Yes, there are complicating factors at play, but the absolute principle of constancy remains. The belief that IF the causes can be isolated and the “complicating factors” are controlled, THEN the results will be observed as predicted. This is the constancy assumption I argue is not applicable to knowledge.

In economics, it is not the case that a “complicating factor renders findings less certain.” It is that the constancy assumption does not even apply. There are no “complicating factors” in economics. There are no complicating factors because there is no constancy at play the observations of which are being upset by any complicating factors.

Knowledge is not inferred empirically. It is a self-reflective activity. You understand yourself as a knowing entity. The activity of “inferring” already presupposes and requires understanding of oneself as a knowing entity.

It is false to claim that anything not empirical is speculative. That is just the claim made in empiricism, which of course is not only false, but self-contradictorily so. Your claim that all knowledge is either empirical or speculative is itself a non-empirical claim.

57. Major.Freedom
27. March 2016 at 13:23

Art Deco,

You adhere to monetary crank ideology. Fiat money has been in the minds of monetary cranks for almost a thousand years. Austrian econ by the way is value-free. It does not “advocate” for any particular money. You are confusing libertarianism for Austrianism.

58. ssumner
27. March 2016 at 14:19

Doug, I agree.

Alex, No problem.

59. Don Geddis
27. March 2016 at 18:00

@Major.Freedom: Your attempts at epistemology are childlike. You clearly are unfamiliar with sciences like physics, chemistry, and biology, because you ascribe a certainty to their experiments that they themselves don’t even claim.

And meanwhile you make claims about economics such as “there is no constancy at play” that are clearly false. Science is merely using thinking and empirical data to form explanatory theories to understand and predict the future. The idea that economics data offers zero guidance to the future is absurd. But it doesn’t actually matter what you think of it. The proof is in the pudding. People who ignore you and do economics research anyway, are able to predict the future far, far better than you are.

P.S. Forget about economics. What about psychology, AI, or even sales & marketing? Your idea that it is impossible to predict tendencies of large groups of humans is refuted by overwhelming evidence of plenty of people who can do just that.

60. Tom Brown
27. March 2016 at 20:46

@Art Deco

“They fail to see them because they are not there.”

I actually almost completely agree with that. There certainly ARE a few conspiracies though: the plot to assassinate Lincoln and Archduke Ferdinand come to mind, as well as 9/11 (not the “Truther” version, just the one involving the hijackers). I’d estimate that somebody eventually spills the beans on every one of them, successful or not, and it becomes common knowledge.

But there is one very true diabolical conspiracy that’s currently ongoing and highly successful: the NSA, the Trilateral Commission, the Illuminati, the Bilderberg Group and the Masons are of course dusting every single voting ballot (even absentee ones) and every polling station with trillions upon trillions of microscopic mind control microchips to enslave hapless voters for Obama’s Satanic army. So those in the know, realize that voting is absolutely out of the question! Best to stay locked up in your end-times bunker during all elections from now on and not set foot outside the week of any election. I make sure to let everyone who worries about conspiracies in on this secret, so they can take the proper precautions!

61. Tom Brown
27. March 2016 at 20:53

… you can substitute “Bush’s” or “Koch brother’s” for “Obama’s” depending on the political alignment of the fruitcak… er, I mean, would be hapless victim you’re kindly letting in on the secret.

62. Major.Freedom
27. March 2016 at 21:04

Don Geddis,

You don’t even understand epistemology to a high enough detail to even make any judgments of the quality of anything I write on the subject.

I do not “ascribe a certainty to their experiments that they themselves don’t even claim.”

They don’t need to explicitly claim the constancy assumption I am arguing is tacit in the empiricist method itself.

Yes, I do make claims about economics such as “there is no constancy at play” that are clearly true. They are not false as you claimed. You’re wrong. Even the empiricist method PRESUMES non-constancy in knowledge. That is how people learn. If you do not understand this, then it is because you don’t understand empiricism.

You claim science is “merely using thinking and empirical data to form explanatory theories to understand and predict the future.”

This is a crude way of proving my point. Yes, in chemistry and physics the structure of the method is to test theories of the form “If A then B.” This is obviously a method of prediction. But it goes deeper, which you do not seem to grasp: In order to even make a prediction “If A then B”, it is required that there is a constancy in the relation between A and B. If there is no constancy, there cannot be a prediction based on A. The assumption is that A and B are related in such a way that when A occurs, B always occurs. The assumption in physics and chemistry is not that B will occur only from the year 2015 to the year 2018, after which the nature of the universe fundamentally changes such that B no longer follows A.

The idea that economics data offers zero guidance to the future is not absurd as you claim. The proof of this is on my side, not yours. Econometricians who do “economics research” (read: nonsense) are not able to predict the better than I am. They CANNOT predict the future using mathematical models. If they could, then they would all be multi-billionaires. But they’re not. They’re all sitting in basement offices doodling on paper and writing garbage code all day long trying to find what does not exist.

Forget about economics? My argument only applies to economics, to human knowledge and actions.

I never claimed nobody can ever anticipate what “large groups of humans” will want in the future. This is an art, not a science. Entrepreneurs, not scientists, can do it. This is why you never see PhD econometricians making billions in the market, whereas you see college drop outs and engineers doing so.

If what you believed were true, the richest people in the world would all be econometricians.

63. Student
28. March 2016 at 05:09

MF,

Because econometricians can’t predict the stock market, the entire field is useless. Please… And for the record, the Bayesian framework is wonderful because it is based on logic and reason applied to evidence (data). Your disdain for evidence is alarming.

Lastly, you are confusing Bayesians with Frequentists. Bayesians do not treat parameters as constants as Frequentists do. Rather, just the opposite. Bayesians treat the evidence (data) as fixed and the parameters as random variables that can be estimated with uncertainty.

64. Student
28. March 2016 at 05:18

J

Bayesian probability is one interpretation of the concept of probability. In contrast to interpreting probability as frequency or propensity of some phenomenon, Bayesian probability is a quantity that is assigned to represent a state of knowledge, or a state of belief.

From Wiki because it’s a rather excellent description…

The Bayesian interpretation of probability can be seen as an extension of propositional logic that enables reasoning with hypotheses, i.e., the propositions whose truth or falsity is uncertain. In the Bayesian view, a probability is assigned to a hypothesis, whereas under frequentist inference, a hypothesis is typically tested without being assigned a probability.

Bayesian probability belongs to the category of evidential probabilities; to evaluate the probability of a hypothesis, the Bayesian probabilist specifies some prior probability, which is then updated to a posterior probability in the light of new, relevant data (evidence). The Bayesian interpretation provides a standard set of procedures and formulae to perform this calculation.

65. Student
28. March 2016 at 05:19

Sorry about the J and order there… iPhone nonsense.

66. eli
28. March 2016 at 05:59

Scott, why aren’t you alarmed that the studies stick to normal distributions for hypothesis testing? This only works if the errors are normally distributed. It doesn’t matter if it’s 68% or 98%, if you impose the wrong distribution. Right?

67. Michael Rulle
28. March 2016 at 06:51

Scott

I am surprised you are surprised. Econometric studies, when the very difficult task of incorporating “multiple comparison” tests are largely ignored or grossly misapplied, produce a lot of nonsense regardless of p-values.

Arnold Kling was all over this topic back in 2008 when the \$800 billion “stimulus” bill was the rage. In particular he made Allan Blinder seem the fool with his 3 decimal point accuracy on the size of the multiplier.

68. Anand
28. March 2016 at 08:27

Scott,
Without going into details of the confidence intervals, what would you say to Deirdre Mccloskey, who has inveighed against the fetishization of confidence intervals in the past? See (http://www.deirdremccloskey.com/articles/stats/preface_ziliak.php for an example). A test is just that, and is only a part of a bigger argument.

69. Carl
28. March 2016 at 08:48

Major Freedom:
As this blog post argues, the practice of econometrics is flawed but that’s not an argument to throw out empiricism in economics. Even physics does not assume constancy of relationships. If it did, there would be no Theory of Relativity, no Quantum Theory. But we don’t throw out empiricism in the study of physics as a result of variability of results under varying conditions.

70. Ray Lopez
28. March 2016 at 09:40

@Britonomist – “@Ray, a 95% confidence band will be *wider* not narrower than a 60% confidence band.. come one dude.”

True enough, I confused confidence band with confidence interval. However, this actually makes my case vis-a-vis the Christiano paper. If, as in the Christiano paper, the 60% confidence band is as wide as shown, that simply means that 40% of the time the true effect will be outside this wide band, and essentially there’s no correlation between monetary shocks and economic variables.

71. Ray Lopez
28. March 2016 at 10:07

@myself – the issue is confusing in that there’s no clear definition of these terms, see: http://www.graphpad.com/support/faqid/1506/ (The distinction between confidence intervals, prediction intervals and tolerance intervals, no mention of ‘confidence band’ but it’s probably one or more of these terms) but it’s clear a “confidence band” (whether a confidence interval or a prediction interval) of only 60% that is very wide, as in the Christiano paper, is not very convincing.

72. Art Deco
28. March 2016 at 10:18

As this blog post argues, the practice of econometrics is flawed but that’s not an argument to throw out empiricism in economics.

I think what he’s trying to tell you is that his dissertation was not accepted.

73. TravisV
28. March 2016 at 12:11

Megan McArdle: “Listen to the Victims of the Free Market”

http://www.bloombergview.com/articles/2016-03-28/listen-to-the-victims-of-the-free-market

Noah Smith: “Decline of the U.S. Middle Class”

http://www.bloombergview.com/articles/2016-03-28/americans-struggle-to-see-themselves-as-middle-class

74. Art Deco
28. March 2016 at 13:10

The difficulty with McArdle’s column is that it incorporates the notion (common a generation ago among people sympathetic to certain strands of economic history and sociology) that the workforce faces progressive ‘de-skilling’ in aggregate. Another question she does not explore would be abrupt changes in the value of one’s human capital late in life and why it’s so difficult to recover from that.

She does not suggest that improved conduits to vocational (re) training might be an answer, making use of the extant community college network and the occupational wing of baccalaureate granting state colleges. She does not suggest getting rid of distribution requirements and replacing the extant degree architecture. She does not explore the reluctance employers have for hiring older workers. She does not explore the socio-cultural aspect of current disputes, in which self-appointed status allocators declare some sorts of people anointed and some benighted, and how that dovetails into the immigration discussion. For another column, I guess.

75. Major.Freedom
28. March 2016 at 15:07

Student:

“Because econometricians can’t predict the stock market, the entire field is useless. Please… And for the record, the Bayesian framework is wonderful because it is based on logic and reason applied to evidence (data). Your disdain for evidence is alarming.”

Student, you are still missing the point. I do not “disdain” evidence…provided the meaning of the term is appropriate for the subject matter at hand.

What you call “evidence”, again for the third time, is a term that assumes a constancy in relations. That is what the terms “confirmation” and “falsification” imply when used to address and interpret the evidence. A theory is argued as having evidence when the theoretical relations between relations is observed in the same way, the constant way, it was observed before. That is why “confirmation” is used in the first place, as opposed tomsomething like “Well B followed A in the past, but that was the past when the relations where different than they are today. Now B does not follow A, as the laws of the universe might have changed. Nothing logically follows from a theoretical relation between A and B being observed one way in the past, and a different way today. We don’t say the theory is either “confirmed” nor “falsified” in the present. We just observe the various relations over time, and nothing else follows.

Bayesian logic does not affect the above. Bayesian logic in fact also assumes a constancy. The logic is improved when certain relations are continually, meaning repeatedly, meaning constantly, either observed or not observed over time. Mentioning Beyesian logic shows you really haven’t grasped the point.

You claim Bayesians do not treat parameters as constants as Frequentists do. That is false. The very structure and mesning of “updating one’s priors” is also based on the assumption that falsfifications should carry less weight ans confirmations shoukd carry more. It is also based on constancy!

—————————-

Carl,

“…the practice of econometrics is flawed but that’s not an argument to throw out empiricism in economics.”

But it is not merely because empiricism is flawed that it should be thrown out. It is because the assumptions it makes does not even apply to the subject matter at hand. Thr assumptions contradict the reality of the subject matter. And make no mistake, I will reiterate, this reality of the subject matter is not merely my assertion that I am using to reject empiricism in economics. It is a reality assumed and accepted in the very empiricist method itself. Empiricism not only assumes, but logically requires, a categorical non-constancy in the empiricist’s own knowledge! That is why they engage in the process. To learn what they did not know before. This of course changes their knowledge, and when people learn new things, they act differently. Knowledge affects what we do.

You claim “Even physics does not assume constancy of relationships. If it did, there would be no Theory of Relativity, no Quantum Theory.”.

That is false. Quantum physics especially assumes constancy. Look at any quantum mechanics textbooks. There are constants everywhere. Planck’s constant, the speed of light constant, etc. And not only that, but even where we would expect the least amount of constancy, in the location and velocity of a particle, the relationship inherent in the patterns that are observed are assumed as constant. The repeatable diffraction patterns are assumed as “evidence” of the constancy in how electrons and particles behave when subjected to the double slit experiment.

The meaning of “constancy” is not merely numerical constants and pinpoint precision. It is better understood as the structure of causation in general. Quantum mechanics experimental results of If A then B are repeated and are given credibility based on this repeatability. That repeatability is based on the assumption of constancy in nature.

Which I argue and show is not the case with human knowledge and actions! We are continually evolving. Our knowledge is continually changing. There is no constancy in our knowledge. It is a single unique path that is forward looking and leaves no “evidence” of constancies.

Yes we should throw out methods, any methods, the structures of which contradict the reality of the subject matter.

Econometrics is a fool’s quest. Always has been, always will be.

If you don’t like this, fine, but at least engage the argument and show you understand the criticism!

76. Major.Freedom
28. March 2016 at 15:13

Art Deco:

My dissertation was not on epistemology. I had to bite the bullet and write 3 essays all of which assumed the constancy I am critiquing as “evidence”. I could not write what I really wanted, as my faculty were all mainstream profs unfortunately. Nice try though, I chuckled at your attempt to belittle things.

77. Art Deco
28. March 2016 at 16:54

Nice try though, I chuckled at your attempt to belittle things.

I’m chuckling at your gassy word salads.

78. Major.Freedom
28. March 2016 at 17:54

Art:

It is some years now since I realized how many false opinions I had accepted as true from childhood onwards, and that, whatever I had since built on such shaky foundations, could only be highly doubtful. Hence I saw that at some stage in my life the whole structure would have to be utterly demolished, and that I should have to begin again from the bottom up if I wished to construct something lasting and unshakeable in the sciences. But this seemed to be a massive task, and so I postponed it until I had reached the age when one is as fit as one will ever be to master the various disciplines. Hence I have delayed so long that now I should be at fault if I used up in deliberating the time that is left for acting. The moment has come, and so today I have discharged my mind from all its cares, and have carved out a space of untroubled leisure. I have withdrawn into conclusion and shall at last be able to devote myself seriously and without encumbrance to the task of destroying all my former opinions.

– Descartes, Meditations.

Perhaps a plan in your future?

79. TravisV
28. March 2016 at 18:12

Tim Duy has a new post:

David Beckworth replied on Twitter, linking to a recent post of his entitled “Connecting the Dots: the Demand Side of Oil’s Decline”

80. Art Deco
28. March 2016 at 18:55

Perhaps a plan in your future?

I shall not be alive a decade hence, and intend not to waste one moment of any time I have left yapping about ‘socialist money’.

81. MichaelM
28. March 2016 at 20:16

Major Freedom, how many years have you been at this?

82. ssumner
29. March 2016 at 07:22

Eli, I agree that the normality assumption is often inaccurate. But I think it’s much less of a problem that overemphasizing significance, whether it be 0.68, 0.90 or 0.95.

Michael, I was aware of the general problem, but not the use of 0.68.

Anand, I completely agree with McCloskey on methodology.

Ray, You said:

“the issue is confusing”

Gee, why would Ray be confused?

Travis, Thanks for the links.

83. Carl
29. March 2016 at 08:17

Major Freedom:
Per the correspondence principle of Quantum Mechanics, we can predict the behavior of larger systems but not particles. I submit that your praxeology is, paradoxically, a misguided attempt to apply the correspondence principle to human behavior.
Praxeology assumes you can deduce human behavior from first principles. But, you can’t assume it from any particular individual’s human behavior. If you started with Salah Abdeslam you’d end up assuming that all train stations and airports outside of ISIS territory will be blown up, women enslaved and non-Salafi men slaughtered. If you started with Mark Zuckerberg, you’d assume that everyone will start a social media company and the world will end up with millions of different ways of liking cat videos.

So, who do you ground your deductions on? You deal in aggregates to come up with “reasonable” first principles about human behavior. You can’t base your assumptions on the mind of an outlier because it will lead you to absurd conclusions. And, if you’re using aggregates, then you’re dealing in macro. And, praxeology swears off macro.

And, if you’re going to throw out empiricism because the empiricist is changed by the experiment he takes part in, you have to throw out praxeology as well. Praxeology purports that first principles about human behavior are knowable. But if people learn from experience, how do you fix the time, place and persons on which to base your first principles of human behavior?

84. Ray Lopez
29. March 2016 at 14:58

Sumner: Ray, You said:

“the issue is confusing”

Gee, why would Ray be confused?

The sole, temporary, mistake I made was to forget that the confidence interval gets bigger, not smaller, the closer to 100% you go. Hence a confidence interval (or band, similar) that’s 60% is narrower than one that’s 95%. However, my comments are still sound: I’m saying even at 60% the Christiano et al paper shows an overly broad confidence band that doesn’t prove IS-LM works, and, 40% of the time, the data is outside even this wide confidence band.

85. Major.Freedom
29. March 2016 at 21:32

Art Deco:

“I shall not be alive a decade hence, and intend not to waste one moment of any time I have left yapping about ‘socialist money’.”

Isn’t it amazing that what methodological individualists like myself would consider to be your normal, regular, non-aggressive personal preference on what you want to talk about, is to you a sermon from the mount, as if you’re Maximus or MLK?

Um, yawn?

——————-

MichaelM:

“Major Freedom, how many years have you been at this?”

Probably about the same amount of time as everyone else my age and with my years of experience has “been at”…uh…something.

How many years have you “been at it”?

Also, what are you even asking really? Is this supposed to be a rhetorical question that covers up a lack of any ability to properly respond?

————————-

Carl:

“Per the correspondence principle of Quantum Mechanics, we can predict the behavior of larger systems but not particles. I submit that your praxeology is, paradoxically, a misguided attempt to apply the correspondence principle to human behavior.”

But it isn’t the application of any correspondence principle to human behavior. It is a field of study akin to formal logic and mathematics. It is knowledge from self-reflective analysis.

“Praxeology assumes you can deduce human behavior from first principles. But, you can’t assume it from any particular individual’s human behavior.”

No, praxeology does not assume one can “deduce human behavior from first principles”. It deals with the logical structure of all action as such. It does not deduce what your behavior will be. It deduces what you are, as an actor. What you are, as an actor, is logically structured. Your activity is goal seeking, in other words it is ends seeking. In the world around you, the physical matter that is the Earth, space, dust, and stars, the human mind cannot grasp any ultimate end to the universe. Ends are a praxeologival category. This is a necessary, logical category of your actions.

Even your attempt to “correct” me here, entail every single one of the logical categories of ALL action as such. Your end is to prove me wrong. You utilize means to achieve that end, namely, your body, your computer or handheld device, or other scarce means that are not in infinite supply. You intend to gain from it, or else you would do it. And, the end result will be that you will experience either an actual gain or loss. You also acted to engage in a debate with me here during the time you spent typing, as opposed to doing something else. You incurred opportunity costs in doing so. Since that is what you did, presumably under no threats or duress from any aggressors, you typed what you typed as it was your highest ranked activity to do out of all other possible activities.

All of the above are the logical categories of your actions. You cannot possibly make them undone, because any and all attempts to do so would themselves be actions as well, which are logically constrained in the exact same way. That is what action is in this world. You can never test this the way you test which restaurant is most popular during 2015, for all tests are similarly structured.

Every empirical test conducted by any human, would have the same logical categories: Means, ends, goals, costs, profits, losses, etc.

It would be totalky absurd to test what we know a priori to all a fions as such. It would be like believing an entity that understands itself as an actor needs to test whether or not they are an actor. It would be like trying to use math to disprove math, or using logic to logically disprove logic.

Some things in life are not merely hypotheses. Some things in life are necessary truths. This is of course unfashionable today, because we are living in the aftermath of totalitarian governments of the 20th century, which were based on a form of psychological absolutism as well (although of a radically different sort). The concepts of absolutes, apodicticity, universal truths, etc, these are today typically responded to with alarmism or at least skepticism. But praxeology is extremely humble in the socio-political sense. It is why you always find praxeologists in the libertarian spectrum. Praxeologists do not arrogate themselves as knowing Geist or the laws of the whole universe, or the secret keys to historical development and necessity, which characterizes the totalitarian movements last century.

Now this is not to say praxeologists are fully and completely humble. In certain very limited respects, they are radically ambitious in their certainty. What they are certain of is what I briefly explained above, about means, ends, costs, profits, losses, etc. These logical categories they are absolutely certain are true, because it is impossible for them to not be present in any attempt at a refutation of them.

Absolute truths are subtle, almost hidden, but not quite so, and they can be found in what is common between contradictory thoughts. You take two complete opposite concepts, and you will find an absolute truth in what is common between them. They are at first very difficult to discern because the start of it is two opposites right off the bat.

To know the absolute truths in your actions, you self-reflection on what is common between what would be a proof of it, and what would be a refutation of it. Well, the commonality between proofs and refutations is the very logical categories of actions as such.

Praxeology actually is the solution to the mind body dichotomy problem, or as it is also known, the subject-object dichotomy, or the idealist-materialist dichotomy. Your thoughts are actions, and action is the bridge between the “internal” and “external” world. What is absolutely true for your actions, is an absolute truth of the universe. It is impossible to undue this, as again, any “undoing” would itself be an action.

There is literally no way, absolutely no way, that you or me or anyone else can even in principle disprove it. To believe that the method of hypothesis testing material objects that do not act, is the appropriate method for us as actors, that we have to test whether or not it is true that our own actions are ends seeking and require means to accomplish those ends, and that we will forgo opportunities by choosing to test as opposed to sitting on the couch or anything else, is upon deep reflection and understanding, a form of madness and psychopathy.

86. Egmont Kakarot-Handtke
30. March 2016 at 05:13

The futility of testing economics blather
Comment on Scott Sumner on ‘Fiscal multiplier studies far worse than I thought’

Economics is what Feynman called a cargo cult science, that is, the outer form looks like science, but it is not science, and it does not work. Science is well-defined by material and formal consistency (Klant, 1994, p. 31). Somehow economists messed up both formal theory building and empirical testing.

The crucial point is that there is no use at all to discus statistical problems when the theory to be tested is defective to begin with. Roughly speaking, it is pointless to discus what confidence level is appropriate for testing the hypothesis that seven angels can dance on a pinpoint.

The actual situation in economics is that Walrasianism, Keynesianism, Marxianism, and Austrianism are provably false (for IS-LM in particular see 2014). Therefore, you can test until you are blue in the face without the slightest chance of arriving at a meaningful result.

All this in turn means than economic policy advice or what economists tell about the market economy has no sound foundation whatsoever. “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991, p. 30)

It is pretty obvious that neither orthodox nor heterodox economists have developed the true economic theory. The ultimate cause is that economists are scientifically incompetent.*

Let us take Walrasianism as example here: “The program is organized around the following hard core propositions:
HC1. There exist economic agents.
HC2. Agents have preferences over outcomes.
HC3. Agents independently optimize subject to constraints.
HC4. Choices are made in interrelated markets.
HC5. Agents have full relevant knowledge.
HC6. Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 109)

It is pretty obvious that HC2 and HC6 are nonentities like angels, unicorns, or the Easter Bunny. If the foundational propositions, a.k.a. axioms, are false the whole theoretical superstructure is false, and because of this, the whole of Neoclassics is false since more than 140 years.

It is known since the ancient Greeks: “When the premises are certain, true, and primary, and the conclusion formally follows from them, this is demonstration, and produces scientific knowledge of a thing.” (Aristotle)

Now, there is NO such thing as a ‘certain, true, and primary’ proposition about human behavior. Economics is NOT a so-called social science like psychology/sociology and NOT a natural science like physics but a system science. Because there is no such thing as a behavioral axiom, HC3 above as well as Praxeology is an abysmal methodological blunder.

Therefore, methodologically correct economics starts with the SYSTEMIC behavior of the monetary economy. There are objective systemic laws, for instance the Profit Law (2015). Systemic laws contain NO nonentities but only measurable variables and are readily testable.

There is no place for Walrasianism, Keynesianism, Marxianism, Austrianism and their retarded proponents in science.

Egmont Kakarot-Handtke

References
Kakarot-Handtke, E. (2014). Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It. SSRN Working Paper Series, 2392856: 1–19. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2392856.
Kakarot-Handtke, E. (2015). Major Defects of the Market Economy. SSRN Working Paper Series, 2624350: 1–40. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2624350
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
Weintraub, E. R. (1985). General Equilibrium Analysis. Cambridge, London, New York, NY, etc.: Cambridge University Press.

* See ‘Why economics is a failed science: the 25 best explanations/ excuses’
http://axecorg.blogspot.de/2016/03/why-economics-is-failed-science-25-best.html

87. I love tard fights
30. March 2016 at 13:02

@Major.Freedom,

Wow, hard to refute Egmont Kakarot-Handtke’s comment there, isn’t it? Are you convinced?

88. Ryan Murphy
30. March 2016 at 14:11

Regarding normality, I don’t think the methodology actually relies on it, generally speaking. You just run the monte carlo and pick out the points at a given percentile. This is part of the justification for using 68; the argument is that things can get weird and unreliable in the tails.

I have a working paper that runs a var, finds where 68 is, and then imposes normality to get 90, 95, and 99, but to my knowledge others haven’t done something similar before.

89. Tom Brown
30. March 2016 at 14:22

Egmont, what are you thoughts on praxeology? (see above)

90. Ray Lopez
30. March 2016 at 17:19

@Egmont Kakarot-Handtke – found a flaw with your model: “At any given level of employment L , the wage income Y W that is generated in the consolidated business sector follows by multiplication with the (average) wage rate W” – you cannot do that, since there is no such thing as an “average wage rate” in any real economy. Google “leets” and the “Cambridge Capital Controversy”. So, essentially your refusal to consider the IS-LM model as a model is rebutted by your own model, which is equally flawed. “All models are wrong”.

91. ssumner
30. March 2016 at 17:54

Ryan, Thanks for that info.

92. Egmont Kakarot-Handtke
31. March 2016 at 01:41

Ray Lopez

It is not such a good idea to project one’s own incompetence onto others. The average wage rate is well defined and can be straightforwardly derived by aggregation of the differentiated wage structure.

See Fig. 3 in ‘The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2511741

and Fig. 1 in ‘Geometrical Exposition of Structural Axiomatic Economics (II): Qualitative and Temporal Aggregation’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1926310

For the future: whenever you detect a logical flaw its always in your low-attention-span goldfish brain.

Egmont Kakarot-Handtke

93. Egmont Kakarot-Handtke
31. March 2016 at 02:23

Tom Brown

As I said above: there is NO such thing as a behavioral axiom. This applies to the maximization axiom HC3 of Walrasianism, on which the whole of marginalism rests, and this applies to the action axiom of Praxeology (see Wikipedia https://en.wikipedia.org/wiki/Praxeology)).

In other words, the axiomatic foundations of both Walrasianism and Austrianism are methodologically defective. In still other words, both approaches are pseudo-scientific garbage.

For the correct formalization of intentional behavior see ‘Essentials of Constructive Heterodoxy: Behavior’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2600523

and ‘The Propensity Function as General Formalization of Economic Man/Woman’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1942202

Major.Freedom advertises Praxeology as follows: “Praxeology actually is the solution to the mind body dichotomy problem, or as it is also known, the subject-object dichotomy, or the idealist-materialist dichotomy.”

Funny thing, the Austrians have solved the old mind-body chestnut but cannot until this very day tell the differences between profit and income. From all ridiculous economic blatherers Austrians are the worst.

Egmont Kakarot-Handtke

94. Ray Lopez
31. March 2016 at 06:56

@Egmont Kakarot-Handtke – seems everybody is wrong except you. Time to reexamine your priors. And you did not discuss either “leets” (which go to your AD claims) nor the Cambridge Capital Controversy (id).

95. Egmont Kakarot-Handtke
31. March 2016 at 09:30

Ray Lopez

Did it never occur to you that there must be something fundamentally wrong with economics? To talk about blatant NONENTITIES like utility, equilibrium, rational expectations and so on is the ONLY way economists have found in more than 200 years to capture REALITY?

Here are some more nonentities: expected utility, rationality/ bounded rationality/animal spirits, constrained optimization, well-behaved production functions, supply/demand functions, simultaneous adaptation, total income=value of output, I=S, real-number quantities/prices, ergodicity. Every theory/model that contains one of these nonentities goes directly into the waste basket.

On the other hand, economists do not know what profit is. In contradistinction to the nonentity utility, monetary profit is a very real and measurable magnitude. Everybody can touch it in the cash box or see it on the bank account with the accuracy of two decimal places. The fact of the matter is that economists have not figured out to this day what the overall profit of an economy is and what its determinants are. As the Palgrave Dictionary sums up: “A satisfactory theory of profits is still elusive.”

The very characteristic of scientific thinking is to deal with entities, preferably with measurable entities like profit, and NOT with blatant nonentities like utility/maximization/equilibrium.

Because of this, it is not necessary to lose more than the word nonentity-low-IQ-blather about the Cambridge Capital Controversy.

To recall: propositions that contain nonentities are not testable in principle. And this is why economic debates get lost in nirvana with a probability of 100 percent. The CCC is a case in point.

Make no mistake, economists are quite satisfied with inconclusive outcomes. Inconclusiveness is the very survival strategy of the scientific incompetent.

Egmont Kakarot-Handtke

96. Carl
31. March 2016 at 11:44

Major Freedom:

“To believe that the method of hypothesis testing material objects that do not act, is the appropriate method for us as actors, that we have to test whether or not it is true that our own actions are ends seeking and require means to accomplish those ends, and that we will forgo opportunities by choosing to test as opposed to sitting on the couch or anything else, is upon deep reflection and understanding, a form of madness and psychopathy.”

In pre-history, a mammoth hunter would have begun to wonder when lots of other mammoth hunters started trying to steal his mammoth meat, whether there were too many mammoth hunters or too few mammoths for him to be able to compete. He might ask his neighboring friendly mammoth hunter clan what they had seen and what they predicted, to help him figure out his next move. Today, we have much better mammoth industry reporting with estimations of mammoth herd sizes, number of hunters, expected mammoth meat prices, quarterly mammoth industry reports, expected cost of spears etc. And, they may give me a confidence interval.

Why can’t I think of the friendly mammoth clan members as a group of primitive econometricians? Why is it wrong for their modern equivalents to give the hunter a confidence interval when giving their answer? Why is either group indulging in madness? Is our mammoth hunter the one indulging in madness by asking for a prediction, especially a prediction that uses numbers in it?

97. Tom Brown
31. March 2016 at 12:37

Egmont, in your behavioral paper, expression (4), you have a product (capital pi) running from t=1 to t, and the argument of the product taking t as its argument. Perhaps a dummy argument would make more sense there: tau = 1 to t, and the argument using tau as it’s argument.

98. Tom Brown
31. March 2016 at 12:52

Carl, imagine that we replaced a neuron in your body with a synthetic equivalent. For example a cochlear implant to replace the hair cells in your inner ear. Assume the quality is such that you cannot tell (yes better than current models, but assume technical progress takes place). Sound is still transduced into a series of nerve impulses and you hear sounds just like you did before. Now in principal we could do that with every nerve cell in your brain, one at a time, and you’d never know the difference: you’d still be you after each one is replaced, only now when we’re finished you’re a completely deterministic machine that can be studied like any other material object. Sounds good right! Except I didn’t take into account the magic neuron that causes mind-body duality! Ah ha!! Only conscious beings have such a magic neuron… so only humans on Earth (that we know of) have this magical property. So all your science is useless!

Don’t like my reductionist example? Then how about this experiment in aggregation: “jamitons” in traffic on a roundabout. The foolish researches have made some mathematical models that they think can describe the formation of traveling wave like “jamitons” but they forgot about the magic neurons in all the drivers’ brains, which prevents their behavior (as conscious beings possessing free will) from being aggregated in any way. All those fools can do is record the history of what the drivers do… all their mathematical modeling will come to naught… especially after their so-called report becomes widely read and all future drivers are aware of it (it will change their brains, including the magic neuron in each skull) with “knowledge.” Now do you see? ;^)

99. Tom Brown
31. March 2016 at 13:22

Scott, what do you think our a-prior assumption for the value of a “fiscal multiplier” should usually be? Zero? And are any of these what you normally think of as a “fiscal multiplier?”
https://en.wikipedia.org/wiki/Fiscal_multiplier

100. Egmont Kakarot-Handtke
1. April 2016 at 00:09

Scott Sumner

With regard to multipliers the fact of the matter is that already Keynes’s simple investment multiplier has been defective.

Keynes defined the formal foundations of the General Theory as follows: “Income = value of output = consumption + investment. Saving = income – consumption. Therefore saving = investment.” (1973, p. 63)

This elementary two-liner is conceptually and logically defective because Keynes never came to grips with profit and therefore “discarded the draft chapter dealing with it.” (Tómasson et al., 2010, p. 12).

The three main points of the axiomatically correct approach are:
• All I=S models are are false since Hicks (2011; 2014) (proof see post ‘Toward the true economic axioms’ http://axecorg.blogspot.de/2016/03/toward-true-economic-axioms.html).
• The correct profit equation for the investment economy reads Qm=Yd+I-Sm (2014, p. 8, eq. (18)). Legend: Qm monetary profit, Yd distributed profit, I investment expenditures, Sm monetary saving. Sm establishes the connection to the money/credit market.
• The correct employment equation/Phillips curve is given here https://commons.wikimedia.org/wiki/File:AXEC62.png. For details see the post ‘Have data, lack theory’ http://axecorg.blogspot.de/2016/02/have-data-lack-theory.html

It is no surprise at all that testing the fiscal multiplier, which in turn is based on IS-LM, yields no results. When the theory is wrong testing is pointless and econometric shoptalk is a waste of time. Better test the structural axiomatic employment multiplier first.

Egmont Kakarot-Handtke

References
Kakarot-Handtke, E. (2011). Why Post Keynesianism is Not Yet a Science. SSRN Working Paper Series, 1966438: 1–20. URL http://ssrn.com/abstract=1966438
Kakarot-Handtke, E. (2014). The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment. SSRN Working Paper Series, 2489792: 1–13. URL
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2489792
Keynes, J. M. (1973). The General Theory of Employment Interest and Money. London, Basingstoke: Macmillan.
Tómasson, G., and Bezemer, D. J. (2010). What is the Source of Profit and Interest? A Classical Conundrum Reconsidered. MPRA Paper, 20557: 1–34.
URL http://mpra.ub.uni-muenchen.de/20557/.

101. Major.Freedom
1. April 2016 at 14:25

Egmont Kakarot-Handtke:

One good piece of advice I hope you really think about more than the cavalier and sloppy way you have dealt with the arguments you’re addressing, and take to heart, is to always subject your own pronouncements to the standards you impose on other people’s thoughts, ideas, arguments, and claims.

In other words, in short, to test your own theories by way of self-reflective analysis. At the very least, your own pronouncements about epistemology and economics cannot include the very content that you believe is false or wrong. Agreed?

One of the most common blunders I see critics of praxeology make is to commit the very alleged faults that are being criticized. Your post is no different, but it also has the additional problem of not showing any indication of understanding of the subject matter.

For example, you claimed:

“Now, there is NO such thing as a ‘certain, true, and primary’ proposition about human behavior. Economics is NOT a so-called social science like psychology/sociology and NOT a natural science like physics but a system science. Because there is no such thing as a behavioral axiom, HC3 above as well as Praxeology is an abysmal methodological blunder.”

Now for someone like me who always checks his own work, and subjects his own claims to the very standard with which those claims project, that comment you made is easily identified as a textbook example of a zelf-contradiction. The very claim that there is NO such thing as any “certain, true proposition about human behavior” is a self-contradiction. For you are making a claim to “certain, true” nature of what humans can know. What you are saying is in effect “The human mind is necessarily and absolutely one which cannot allow or enable us to know any absolute certainties of ourselves.”

In other words, you are making an absolutist certain claim about human knowledge, and yet ostensibly that is the very claim you are denying and calling false.

To say that humans are categorically unfit to know of any certain and true propositions about human behavior, is to claim a certain and true propositions about the ability of the human mind, namely, that it is this way and no other way, that is, it can only ever know of hypotheses and falsifiable test results, etc.

You are eliciting self-contradictory gobbledygook, with the oh so typical and expected proselytizing of “your theory is not science.”

Well, I will point out to you that what you are doing is not any science of human knowledge or action. You are engaging in anti-science of human action, because the science of human action is a priori, not a posteriori.

The axiom of action, which grounds our actual understanding of economic categories and principles, has not, contrary to your claims, been “proven false.”. It is IMPOSSIBLE for it to be proven false, because PROVING ANYTHING is itself a human action. All disproofs, valid or the self-contradictory kind you have obviously fallen prey to, are actions. They all carry the same logical categories. Gains, losses, costs, means, ends.

Are you denying that in your criticism of praxeology above, that you did not utilize means? That you did not intend to achieve the goal of showing praxeology is not science? That there were no opportunity costs in you doing what you did above? That even in principle there cannot be any gains or losses experienced by you in what you did?

Egmont, if you want to engage the subject matter you criticize, you have to at least understand it. Smothering this blog with ignorance and self-righteous indignation, projecting your flaws on others, is proof that you don’t understand praxeology. You’re a fraud.

102. Major.Freedom
1. April 2016 at 14:27

Carl:

Is any of what you said about mammoths, supposed to address the self-reflective analysis required to understand the logical difference between empirical knowledge and knowledge of actions?

103. Scott Sumner
1. April 2016 at 17:53

Tom, When there is monetary offset I’d say zero. In other cases it would depend on many factors, but perhaps slightly positive (less than 1.0)

104. Carl
1. April 2016 at 18:17

Major Freedom:
No.
I guess I fail to grasp the utility of praxeology.
Perhaps my loss.

105. Egmont Kakarot-Handtke
2. April 2016 at 05:34

Major.Freedom

(i) I did not ask you for a “good piece of advice”, so do not pester me with it.

(ii) My pivotal point is that there is NO such thing as a BEHAVIORAL AXIOM in economics because axioms have to be ‘certain, true, and primary’. This is definitively not the case with the maximization axiom HC3 of Neoclassics and the action axiom of Praxeology.

Strictly speaking, a ‘behavioral axiom’ is an oxymoron. This has been known to scientists of all ages “The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition … is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.” (Brown, 2011, p. 211)

From the general proposition that human action is original or, alternatively, target-oriented with any number of possible targets NOTHING specific follows. So, after the first step one is already at the end of the road.

This in turn explains why Praxeology is a failed approach: “Now, at any rate, we have an explanation for why the assumptions of economic theory about individual action have not been improved, corrected, sharpened, specified, or conditioned in ways that would improve the predictive power of the theory. None of these things have been done by economists because they cannot be done. The intentional nature of the fundamental explanatory variables of economic theory prohibits such improvement.” (Rosenberg, 1992, p. 149)

For cogent methodological reasons: (1) economic theory cannot be built upon a behavioral assumption like the maximization axiom or the action axiom or any other, for that matter, and (2), as a matter of principle, NO way leads from the explanation of individual human behavior to the explanation of how the monetary economy works. Because of this, ALL subjective-behavioral approaches are bound to fail.

(iii) You say about the action axiom “It is IMPOSSIBLE for it to be proven false.” Obviously, you did not realize that this is NOT a strong point but, just the contrary, the very antithesis of science: “But a method that can explain everything that might happen explains nothing.” (Popper, 1960, p. 154)

To recall, when the ancient Greek thinkers, who invented science, heard a man saying “I can explain everything, Zeus did it, and you cannot prove me wrong” they showed him the way to the temple and threw him out of the academy.

(iv) This thread is about testing. As long as Austrians cannot produce a testable proposition about the overall profit of the monetary economy they have nothing worthwhile to say. Who does not understand profit understands nothing. Folk psychology is not economics.

(v) I do not engage in criticizing Praxeology or Austrianism. I understand that there must be something like an economics for the scientifically retarded and I am quite content that you faithfully stick to it.

(vi) If you wish to prove the structural-axiomatic approach wrong it suffices to empirically refute the Profit Law. All else is obsolete Austrian blather.

Egmont Kakarot-Handtke

References
Brown, K. (2011). Reflections on Relativity. Raleigh, NC: Lulu.com.
Popper, K. R. (1960). The Poverty of Historicism. London, Henley: Routledge and Kegan Paul.
Rosenberg, A. (1992). Economics – Mathematical Politics or Science of Diminishing Returns? Chicago, IL: University of Chicago Press.

106. Major.Freedom
2. April 2016 at 07:14

Egmont Kakarot-Handtke:
1/2

I guess we can add inability to think critically to your existing dubious repertoire.

No, you do not need to ask me for helpful advice before such advice becomes helpful to you. It is not something you need to ask for before someone offers to give it. I can see from your comments about praxeology and Austrianism that IF you want to understand it, which I am going to assume might be too far of a stretch for you, THEN you absolutely need the above advice. You cannot understand praxeology without it.

You repeat your claim that “There is no such thing as a behavioral axiom in economics”.

Again, praxeology does not consist of any claims that there are BEHAVIORAL axioms, in the sense of concrete choices that are made instead of,and at the cost of, all other choices. It is not, in other words, a theory of predicting what people will do in the range of all possible things they could do.

On the contrary, and this is where you display ignorance of the theory, the axiom of ACTION is different from mere “behavior”. To present the argument that there are no behavioral axioms as if it constituted a challenge to praxeology and the action axiom, is to present a straw man.

The basis for our knowledge that action, not mere behavior, to be an axiom, is the self-reflective understanding of the fact that any and all refutations of the action axiom, would themselves be actions. All of them. Do you understand what that means? It means to argue they don’t exist, is necessarily to commit a performative contradiction because you are acting when doing so, and not only that, but you yourself present your “behavior” as such as an action, and the meaning of your behavior is that it is an action. You are trying to present your behavior as a GOAL, of trying, and failing miserably, to refute the axiom of action, which you completely misunderstand to be an axiom of behavior.

You claim:

“My pivotal point is that there is NO such thing as a BEHAVIORAL AXIOM in economics because axioms have to be ‘certain, true, and primary’. This is definitively not the case with the maximization axiom HC3 of Neoclassics and the action axiom of Praxeology.”

Your point is irrelevant to praxeology. Praxeology does not presume to explain mere behaviors, motions, of objects that move this way or that. It is strictly a theory of human action.

The strange thing here is that you just wrote in that behavior is distinct from action. That a behavioral axiom is not an action axiom. Well congratulations! You just wrote a triviality that does not even address the validity of praxeology.

But as said it is strange for you to say that, because in your very next paragraph you claim this, well actually you merely quoted it from someone else:

“Strictly speaking, a ‘behavioral axiom’ is an oxymoron. This has been known to scientists of all ages “The bifurcation of motion into two fundamentally different types, one for natural motions of non-living objects and another for acts of human volition … is obviously related to the issue of free will, and demonstrates the strong tendency of scientists in all ages to exempt human behavior from the natural laws of physics, and to regard motions resulting from human actions as original, in the sense that they need not be attributed to other motions.”

If you believe that the dispute between free will and materialism somehow has any bearing on praxeology, then you are mistaken. It is irrelevant whether our actions are fully deterministic or if they are uncaused. Praxeology deals with how we logically understand our actions with HUMAN minds. Now from the point of view of a God, or some superhuman intelligence, our behaviors might very well be perfectly predictable and fully determined by past causal factors. But we are not God, and we are not superhuman. We are human. The way OUR minds are structured is that we cannot help but logically regard our behaviors as if they were teleological. So whether we do or do not have the capacity to select goals among competing goals, the logical categories apply, necessarily so, even in your own blatherings.

For look at what you are claiming. If your behavior and my behavior is as you suggest completely deterministic, then the concepts of “truth” and “false” lose their conceptual meaning. You could not really be thinking I am wrong objectively, but rather your saying so is but the deterministic consequence of past causal factors that “forced” you to say what you said.

And the same with me. Everything I say could not be coherently regarded as “wrong”.

But as those of us who have engaged in the difficult, subtle and sophisticated process of self-reflection, which I guess we can then say hasn’t yet occurred with you for deterministic reasons (fascism anyone?), we can understand that extreme determinism is the oxymoron.

You are just prejudiced against rationalism. You falsely believe that the smashing success of science in the sphere of isolated matter, of atoms and molecules, must necessarily apply to human actions and knowledge. What you call a “bifurcation” is a necessary category of human intelligence, which has been known since pre-scientific age. And ironically, it is fully depended on in empiricism, positivism, all forms and methods of modern science. You’re just unable to grasp it at this time because you lack the proper training and education.

To wit, the main proposition of empiricism is that ALL of our knowledge consists of empirical propositions and analytic propositions. Empirical propositions are hypotheses, and they must in principle be subject to falsification through experience, i.e. observation, or testing. Analytic propositions are definitional, and they refer to propositions such as “all bachelors are unmarried men.” And it is doubted whether analytic knowledge is true knowledge.

OK? So far so good?

Now ask yourself this: What then is the status of THAT proposition of positivism? What kind of a proposition is “All propositions are either empirical and hence hypothetical, or analytic and hence definitional”?

If positivism is right, then that proposition itself is either analytic or empirical.

So let us assume or a moment it is analytical. OK, then it is merely a definition. You define knowledge your way, everyone else defines knowledge another way, and nobody is right or wrong about reality a such. Clearly that cannot be the kind of knowledge you are claiming on this blog. You are not going through all this effort to insist on a definition.

So then that leaves it being empirical. OK, but then it would have to be regarded as a mere hypothesis. It must be in principle falsifiable. It could in principle be false, and you would have to be willing to hear exactly how and why it could be false. You would have to accept the possibility that it could be false. Clearly you are not doing that, quite the opposite, so that means you are presenting positivism here as being:

Neither empirical nor analytical.

THAT is where the fundamental contradiction resides in actual everyday uses of positivism.

No scientist, and not you, have ever “tested” all the various possible propositions for whether they are empirical or analytical. But that is what you or someone would have to have done before you could even presume to know about the argument what you are arguing on this blog.

Since your belief in positivism has not ITSELF been derived at through testing of all propositions and submitting those studies to journals, what this means is that your belief in positivism is neither empirical nor analytical, which is to say, you did not arrive at your beliefs using the very method you say is the only way.

So there is a problem in what you believe. Ostensibly you believe in propositions that themselves do not even pass the test you are claiming is the only valid test.

The proposition “All knowledge is either empirical or analytical” is itself neither an empirical nor analytical proposition. You contradict yourself in so many ways but you’re too prejudiced and bigoted to even notice.

Extreme determinism always buries itself in contradictions and confusion. You are just another victim in the long line.

107. Major.Freedom
2. April 2016 at 07:15

Egmont Kakarot-Handtke :
2/2

You next claim:

“From the general proposition that human action is original or, alternatively, target-oriented with any number of possible targets NOTHING specific follows. So, after the first step one is already at the end of the road.”

Totally false. What you fail to notice is that THAT knowledge is itself a very specific knowledge about you as a human actor. It is not necessary that it provides you with specifics of what people will do. Praxeology only tells us the form, not the content. Whatever it is you do do, the logical categories of means, ends, costs, profits, losses, and all the economic propositions that logically follows from them, such as the law of marginal utility, the law of demand (which is so misunderstood you will not find understanding of it in any mainstream textbook), the quantity theory of money (another misunderstood and straw manned theory), the law of opportunity costs, all of this will necessarily apply to ALL actions no matter what they are.

Economics, true economics, was never and is not supposed to be a predictive science based on constancies in causal relations. That is your abortive attempt to use the method of physics and chemistry to emergent phenomena such as human knowledge. Positivism applied to human knowledge is self-contradictory, for positivism presumes non-constancy in the positivist researcher’s own knowledge.

This in turn explains why Praxeology is a failed approach”

Wait what? That does not follow at all. That is a non sequitur.
You have very sloppy thinking.

“Now, at any rate, we have an explanation for why the assumptions of economic theory about individual action have not been improved, corrected, sharpened, specified, or conditioned in ways that would improve the predictive power of the theory. None of these things have been done by economists because they cannot be done. The intentional nature of the fundamental explanatory variables of economic theory prohibits such improvement.”

This is rather amusing. You just provided a quote that is consistent with what I am saying and inconsistent with what you are saying.

“For cogent methodological reasons: (1) economic theory cannot be built upon a behavioral assumption like the maximization axiom or the action axiom or any other, for that matter, and (2), as a matter of principle, NO way leads from the explanation of individual human behavior to the explanation of how the monetary economy works. Because of this, ALL subjective-behavioral approaches are bound to fail.”

This quote is now just a bare assertion without any justification. I hope you realize by now that that statement made by the author, is itself an action? That the author is trying to dispute the action axiom by way of an action, and cannot conceivably even in principle be regarded as anything else let it not mean what it ostenisbly means?

If all behavior is deterministic, then neither the author nor you can claim to be making a truth claim about anything. To claim a truth, is to transcend determinism.

“You say about the action axiom “It is IMPOSSIBLE for it to be proven false.” Obviously, you did not realize that this is NOT a strong point but, just the contrary, the very antithesis of science: “But a method that can explain everything that might happen explains nothing.” (Popper, 1960, p. 154)”

No, it is not the antithesis of science per se, but is merely the antithesis of the self-contradictory theory of Popper, as explained above in the analysis of “All knowledge is empirical or analytic.”

You are not proving anything or disproving anything by merely quoting statements of disagreement from other people. Popper’s theory has already been shown to be self-refuting. His theory of how science should be does not follow its own standard. It is based entirely on a non-empirical, non-analytic proposition.

At any rate, the argument that a certain proposition cannot be proved false without self-contradiction, is not an argument akin to the non-falsifiable proposition that God exists. The argument that God does not exist, does not constitute a self-contradiction. On the other hand the argument that action does not ground our knowledge, does constitute a self-contradiction because that argument is itself an action. It is action that explains your empirical interaction in the world.

“To recall, when the ancient Greek thinkers, who invented science, heard a man saying “I can explain everything, Zeus did it, and you cannot prove me wrong” they showed him the way to the temple and threw him out of the academy.”

Praxeology does not explain everything. Ironically you yourself are committing the very flawed approach you referred to here. YOU are presuming that positivism, or extreme monism, is the sole, exclusive, ultimate, unique path to knowledge. YOU are saying “I can explain everything, from atoms to my own knowledge and everything else, and you cannot prove my method as wrong.”

Notice how you will not even grant the possibility you’re wrong, which is itself a violation of positivist principles. Notice how your approach here is no different from a religious fanatic who believes he can in principle understand everything through narrowing one’s approach to testing hypotheses that must in principle be falsifiable.

Hey, did you know that the method of falsification and confirmation, is totally dependent on the theory that the causal relations between variables does not change over time? To even claim that a theory proposed in the past, tested in the past, is in the present falsified or confirmed, is to assume that the laws of the past are identical to the laws of the present. THAT assumption is also neither empirical nor analytical. It is outside the scope of positivism. Yet you believe in it. Why? I will tell you. It is because action must logically presuppose constancy in the nature with which we live. Your interaction with your environment, the way you are able to accomplish your goals, would not be possible if the laws constantly shifted on you. This incidentally is why you react with passions and emotions at the prospect of other actors in the world around you. There is no constancy in human knowledge, and your mind is not yet equipped to deal with that fact, so your natural reaction is to behave the way our distant ancestors behaved, and you devolve to passions and emotions to help you survive. Your mind is not mature enough.

“This thread is about testing. As long as Austrians cannot produce a testable proposition about the overall profit of the monetary economy they have nothing worthwhile to say.”

Is that a testable proposition right there? That all knowledge is hypothetical and must be testable? Of course it isn’t! But you don’t care because you don’t understand Austrianism.

“Who does not understand profit understands nothing. Folk psychology is not economics.”

Are these propositions hypothetical? Have you tested them? Where is your reference to a study that tested these propositions?

“I do not engage in criticizing Praxeology or Austrianism.

Yes you do, but I’ll admit you do such a bad job of it that it might not be reasonable to even call it “engaging” of the theory. Maybe a pigeon playing chess.

“I understand that there must be something like an economics for the scientifically retarded and I am quite content that you faithfully stick to it.”

Aw, you sound mad.

“If you wish to prove the structural-axiomatic approach wrong it suffices to empirically refute the Profit Law. All else is obsolete Austrian blather.”

And what of that claim? Is it empirical and thus a hypothesis only? That it could in principle be falsified?

Of course not! Reason and logic? What do they mean? We’re pigeons playing chess, pooping on the board and flying away.

108. Egmont Kakarot-Handtke
2. April 2016 at 12:11

Major.Freedom

You say: “It [Praxeology] is strictly a theory of human action.” It is obviously beyond your horizon that human action is the realm of the so-called social sciences (psychology, sociology, anthropology, political science, history, etc.). Economics is about the behavior of the monetary economy. So, economics is a system science (2014). The so-called social sciences have been accurately characterized by Feynman as cargo cult sciences (see Wikipedia). Praxeology is a case in point.

So there is no need at all to clarify the finer points of Praxeology just as there is not need to quarrel about whether geo-centrism worked with 20 or 25 epicycles because geo-centrism has been buried long ago and everybody — except flat-earthers and Austrians — understands by now that epicycles are nonentities like angels and the Easter Bunny.

You say: “But we are not God, and we are not superhuman. We are human.” Trivially true, but not much follows from brain-dead tautologies.

Folk psychology and the “subtle and sophisticated process of self-reflection” is not economics. Praxeology is scientific garbage and more is not to say about it.

Science is well-defined as formal and empirical consistency (Klant, 1994, p. 31). No genuine scientist ever had a problem with this definition. Curiously, those who are known not to have produced one tiny piece of science can exactly explain why the scientific method does not work.

Here is the collection of the most ridiculous excuses: “Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the ‘laws’ of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses. (Solow, 1998, pp. x-xi)

The obvious explanation is missing: scientific incompetence of economists. The first thing to understand is that there are no ‘laws of behavior’ but that there are objective and testable systemic laws.

After more than 200 years economists can still not tell the difference between profit and income. Economics is at the level of medieval physics before the concept of potential and kinetic energy was properly understood. Austrians, too, cannot explain how the economy works but they have any number of excuses of why they have achieved nothing of scientific value.

You say: “We’re pigeons playing chess, pooping on the board and flying away.” Again trivially true, dear Austrians, but now take your poop and play somewhere else. As Shaw put it “People who say it cannot be done should not interrupt those who are doing it.”

Egmont Kakarot-Handtke

References
Kakarot-Handtke, E. (2014). Objective Principles of Economics. SSRN Working Paper Series, 2418851: 1–19. URL http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2418851
Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.
Solow, R. M. (1998). Foreword, volume William Breit and Roger L. Ranson: The Academic Scribblers. Princeton, NJ: Princeton University Press, 3rd edition.

109. Major.Freedom
2. April 2016 at 16:10

Egmont Kakarot-Handtke:

“You say: “It [Praxeology] is strictly a theory of human action.” It is obviously beyond your horizon that human action is the realm of the so-called social sciences (psychology, sociology, anthropology, political science, history, etc.).”

First, that statement I made does not in any way imply or suggest that what you said is “beyond my horizon.” To argue that praxeology is strictly a theory of human action, does not necessarily imply that human action is absent in the fields you listed.

Second, to say that human action is the “realm” of psychology, sociology, anthropology, political science and history, may very well be true, but praxeology is the science of human action itself. Sociology and anthropology and history are fields of study that can be enhanced, indeed given a meaning, by way of the science of human action.

Praxeology is a science presupposes a distinction between theory and history. In positivism, there is no such distinction.

“Economics is about the behavior of the monetary economy.”

No, economics is the study of not just monetary matters. Economics can help us understand monetary matters, AND other matters such as production, employment, and other non-monetary phenomena. The name of the field of study of monetary matters is called “monetarism”, or “monetary economics”. Economics is not only about money.

“So, economics is a system science (2014).”

Not in praxeology. In praxeology, economics is the study of individual action, and is sufficient to explain all inter-subjective phenomena, since all action is individual action. You act as an individual, as do I. It should go without saying that praxeology is based on methodological individualism. It does not imagine that aggregates and collectives have existences on their own apart from the existence of individuals and their separate interests.

“The so-called social sciences have been accurately characterized by Feynman as cargo cult sciences (see Wikipedia). Praxeology is a case in point.”

This is not a refutation or even a challenge. It is a quote of an assertion of someone. Feynman was not an economist. He was a physicist. He was not well trained enough to make such judgments about ecomomics.

“So there is no need at all to clarify the finer points of Praxeology just as there is not need to quarrel about whether geo-centrism worked with 20 or 25 epicycles because geo-centrism has been buried long ago and everybody — except flat-earthers and Austrians — understands by now that epicycles are nonentities like angels and the Easter Bunny.”

This is just you admitting you lack not only any ability to justify via argument the selective self-serving quotes of influential people, but it is also an admission that you don’t understand praxeology. All your “So’s” and “Therefore’s” are not actually substantive arguments. They are superficial posturings masquerading as arguments. Quoting a disparaging remark about economics, and then saying “therefore”.

You obviously believe that your beliefs require no justification, no rational basis, no support, nothing except cherry picked quotes that constitute a fallacy of authority.

The more you post comments, the more clear it becomes how vacuous your understanding really is.

” You say: “But we are not God, and we are not superhuman. We are human.” Trivially true, but not much follows from brain-dead tautologies.”

That is not a substantive counter-argument. Moreover, there is much that “follows” from the arguments above. For one thing, they are the starting point for understanding how your beliefs are self-contradictory. It is common for superficial thinkers to interpret certain statements as trivial or simple. It takes a much more sophisticated mindset to know how to dig deeper, which you clearly lack.

“Folk psychology and the “subtle and sophisticated process of self-reflection” is not economics. Praxeology is scientific garbage and more is not to say about it.”

You have no argument. You just have fake, pseudo-intellectual vitriol that is obviously a compensation for the fact that you lack the requisite knowledge.

“Science is well-defined as formal and empirical consistency (Klant, 1994, p. 31).”

No, POSITIVISM is well-defined as formal and empirical consistency.

You have not even bothered to address the responses made to your claims. I am engaging every single one of your claims, and you are just posting quotes that serve your prejudices.

“No genuine scientist ever had a problem with this definition.”

That is just you arguing from definition. No “genuine” scientist is just again a fallacy of authority, and now a fallacy of ad populum.

“Curiously, those who are known not to have produced one tiny piece of science can exactly explain why the scientific method does not work.”

This is pure ignorance. I never claimed and no other praxeologists has ever claimed that “the scientific method does not work.” Of course it works…for certain phenomena.

What praxeology consist of is among other things the proof that the method of empiricism, or positivism, does not work for knowledge and actions. That is not a claim the scientific method does not work.

Praxeologists have in fact produced many pieces of science. You are just too prejudiced and ignorant to recognize logic, mathematics, epistemology, and philosophy in general as sciences. Science is the study of reality. Science is not merely empiricism. Empiricism is but one narrowly defined method under the umbrella of science.

What is typical of bigoted empiricists is to pretend they are the sole exclusive voices of science, that their method is the sole exclusive method of true science, and that all other methods are not science. There is no difference between you and a religious fanatic who believes his God is the one true God while other Gods are imaginations.

You are not even bothering to engage the responses to the claims you are making. You do not have a scientific mind. You have a closed mind, and you have clearly accepted without question the beliefs you know have. You clearly do not question what you think, you take it for granted.

“Here is the collection of the most ridiculous excuses: “Economics is a strange sort of discipline. The booby traps I mentioned often make it sound as it is all just a matter of opinion. That is not so. Economics is not a Science with a capital S. It lacks the experimental method as a way of testing hypotheses. . . . There are always differences of opinion at the cutting edge of a science, . . . . But they last longer in economics . . . and there are reasons for that. As already mentioned, rival theories cannot be put to an experimental test. All there is to observe is history, and history does not conduct experiments: too many things are always happening at once. The inferences that can be made from history are always uncertain, always disputable, . . . You can’t even count on a long and undisturbed run of history, because the ‘laws’ of behavior change and evolve. Excuses, excuses. But the point is not to provide excuses.”

You do not have any original thoughts do you? All you can do is quote seelctviely to serve your own prejudices.

“The obvious explanation is missing: scientific incompetence of economists. The first thing to understand is that there are no ‘laws of behavior’ but that there are objective and testable systemic laws.”

There are the laws of action. Any attempt to dispute them would themselves be actions.

The claim that there are objective and testable laws is itself a claim that is not derived by way of testing.

You are incompetent in the realm of critical thinking.

“After more than 200 years economists can still not tell the difference between profit and income.”

False. There are economists who have shown the difference. Your ignorance on that does not mean these explanations do not exist.

“Economics is at the level of medieval physics before the concept of potential and kinetic energy was properly understood.”

You are at the level of a primitive tribesman before self-reflective rationalism was understood.

“Austrians, too, cannot explain how the economy works but they have any number of excuses of why they have achieved nothing of scientific value.”

But they have achieved much in the way of scientific value. Your definition of science just fails to account for it. Austrians are much more informed and intelligent than you in ecomomics.

“You say: “We’re pigeons playing chess, pooping on the board and flying away.” Again trivially true, dear Austrians, but now take your poop and play somewhere else. As Shaw put it “People who say it cannot be done should not interrupt those who are doing it.”

Your posts are absolute drivel. You’re a poseur.

Wait, is that it? Is that your response to the arguments I made above?

You have not answered the arguments about empirical and analytical statements. You have not engaged in a debate at all.

Your posts are weak and pathetic excuses for arguments. You’ve got nothing.

110. Major.Freedom
2. April 2016 at 16:20

Egmont:

What kind of a statement is this:

“All knowledge of reality is either empirical or analytic.”

Try to fill the wind and echoes in your head with logico-deductive propositions this time.

111. Tom Brown
2. April 2016 at 19:20

Egmont Karaoke-Hanky,

I think perhaps you should re-read this bit above one more time:

“The axiom of action, which grounds our actual understanding of economic categories and principles, has not, contrary to your claims, been “proven false.”. It is IMPOSSIBLE for it to be proven false, because PROVING ANYTHING is itself a human action.”

Do you see now? Go back and read it again once more to be sure. OK? Try one more time. The act of attempting to disprove the axiom of action, itself IS human action! So by definition, if you don’t agree with the axiom of action, then you are wrong and a fool. I’m surprised you haven’t got this yet.

Let’s take a simple example. Say a bunch of humans are severely retarded, to the point that an average lab rat is vastly more self aware and intelligent than they are. Even the dumbest of lab rats (out of a sample of a billion lab rats) is vastly superior. Now if you were an empirical scientist studying material things, such as these lab rats, then you could proceed as normal using the usual methods of empirical science, just like your post-positivist hero, Karl Popper would recommend: proposing falsifiable hypotheses of rat-behavior, then testing your hypotheses against empirical data, rejecting those which are falsified, and gaining an incremental bit more confidence in those that are not falsified… until such time as they are falsified. You can even do this for aggregated rat behavior.

But with these sub-rat intelligent humans (let’s call them sub-humans, shall we?), they do not merely engage in behavior, they engage in human action, so your post-positivist Popperian empirical science (which is just a tiny slice of the full scope of valid science) will be useless with them. Sure, put them in a maze, or time when they poop or pee themselves after eating or drinking, and develop all the statistics about them you want: it’s all useless, because they are HUMAN and thus their actions are human actions. You are a human just like they are. Get it now???

Now you might ask, how do we KNOW they are humans? Well, in that case, we can resort to your post-positivist Popperian empirical science, and we can sequence their DNA to make sure. But if they indeed ARE human, then their actions are human actions, and all empirical science is useless in regards to their human actions. Also, their human actions cannot be aggregated in any way.

You could go on collecting data on such genetically verified populations of imbecile humans for billions of years… nay, even a googolplex years, nay even a googolplex raised to the googolplex years, and you might develop what you THINK are valid hypotheses about their behavior (like precisely how long it take them to get through your scaled up rat mazes, or when they will poop or pee themselves +/- some confidence interval), and you will still be wrong. That’s because you are wrong by definition if you reject praxeology and the action axiom.

The SCIENCE of praxeology allows you to examine the work of a googolpex raised to the googolplex years of empirical science on these sub-humans, and immediately toss all of it into the garbage heap where it belongs, because it’s nothing but a HISTORY of the action of these humans, and thus by definition cannot be studied using empirical methods, and you’d be 100% correct about that by definition if you’re a praxeologist.

So praxeological science, properly practiced, allows the praxeologist to criticize anything to do with human action and always be correct 100% of the time without fail (provided their chain of deductive logic from within the framework of praxeology is without error). Do you see what an incredibly valuable contribution to science and understanding praxeology thus makes?

But instead you cling to your notions of empiricism, like a crazed cultist of some fundamentalist religion, even in cases where self reflective rational science can (by definition) only shed light.

I hope for your sake you will understand this someday.

112. Major.Freedom
3. April 2016 at 08:48

Tom Brown:

I think the mental blockage is due to the faith-based belief that propositions which are not falsifiable by experience are necessarily not knowledge of reality. Or at least they could be but there is no means for us to know otherwise. This belief is of course not a falsifiable proposition, as it is not manifested through experience.

But why would this be an issue? Why would the argument “It is impossible to disprove the action axiom as any attempt at a disproof would itself be an action” be so problematic? It is not, as folks like Egmont believe, due to the similarity to the ontological argument for God’s existence; it is not that it looks indistinguishable from the argument “It is impossible to disprove the existence of God because any disproof presupposes the existence of God.”

It is actually deeper. It is because both positivists and praxeologists BOTH ground their beliefs on a non-falsifiable foundation, and the fact that praxeologists are open about it, embarrasses the positivists. It is akin to Republicans and Democrats both agreeing to the foundation of using state coercion to exploit people for their own gain, and one person from one side makes an explicit mention of believing in just that. It embarrasses the other side because they sense deep own they base their beliefs on the same foundation that for whatever reason discomforts them.

The most vocal attacks against praxeologists comes from the positivists because praxeologists are explicit in the non-falsifiable foundation of all human knowledge which the positivists pragmatically agree with but verbally disagree with.

The historical events have made positivism the biggest defense against theocratic tyranny. Any method that obviously resembles the ontological argument are vehemently attacked out of habit.

Positivism no less than praxeology is based on a non-falsifiable foundation however. The structure of positivism is itself non-falsifiable. The constancy in relations is a presumption that is non-falsifiable, for falsifiability itself presupposes constancy in relations. You cannot “empirically test” this constancy, because IF the laws of nature were assumed for argument’s sake to be non-constant, then falsification and confirmation would no longer mean what the positivists thought it meant in the constancy world. Positivism would become a science of merely historical observations of events. There would be no laws, no constants, no theories, no equations, nothing that we know as physics and chemistry “knowledge” would exist.

Positivism in other words is itself non-falsifiable. It is it own worst enemy!

Some positivists I have debated epistemology over the years with have been honest enough to admit they understand and accept the above critique of positivism and defense of praxeology. But out of those, most have tried to save positivism from its dirty non-falsifiable foundation by pleading for an exception. That in this one case, believing in a non-falsifiable proposition is OK, as long as you only believe in one, namely, the one that grounds positivism. Everything else has to be falsifiable.

Needless to say such debates have left me convinced my understanding of positivism and praxeology is correct, and that all the rhetoric and vitriol from the likes of bigots like Egmont, are to be dismissed as evasions and concessions.

113. Egmont Kakarot-Handtke
3. April 2016 at 09:02

The zombie wars are over

Economics is a failed science. In more detail this means that the four majors sects — Walrasianism, Keynesianism, Marxianism, Austrianism — have not produced much of scientific value, if anything, in more than 200 years.

Economists have not risen above supply-demand-equilibrium and have still not realized that this is poor science. Schumpeter already came close to a thumb-down but then made this concession: “The primitive apparatus of the theory of supply and demand is scientific. But the scientific achievement is so modest, and common sense and scientific knowledge are logically such close neighbors in this case, that any assertion about the precise point at which the one turned into the other must of necessity remain arbitrary.” (Schumpeter, 1994, p. 9), see also (2013)

Lacking sound scientific foundations (= Episteme), economic debate up to the present consists in an inconclusive exchange of opinions (= Doxa) between the four sects. In other words, economics hitherto took place at the proto-scientific level, yet: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991, p. 30)

Economists obviously lack the true theory; Walrasianism, Keynesianism, Marxianism, Austrianism are provably false. So, what is needed is a termination of the senseless cross-talk among the four zombie approaches, because “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean. (Ingrao et al., 1990, p. 362)

At the moment, economists produce mindlessly inconsistent models according to accustomed templates: “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point” (Krugman). No pennydrop, no realization that maximization and equilibrium are NONENTITIES.

In methodological terms, a paradigm shift means to completely replace the obsolete axiom sets of the four failed approaches with an entirely new one. To make this concrete, here is the axiom set of Walrasianism:
HC1. There exist economic agents.
HC2. Agents have preferences over outcomes.
HC3. Agents independently optimize subject to constraints.
HC4. Choices are made in interrelated markets.
HC5. Agents have full relevant knowledge.
HC6. Observable economic outcomes are coordinated, so they must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 109)

HC1 is just another expression for methodological individualism. Except for HC6, which is a petitio principii, all axioms are subjective-behavioral, which is to say, much too swampy.

Because the subjective-behavioral approaches have been a detour from the very start (as more than 140 years of blather since Jevons/Walras/Menger prove) they have now to be replaced by the objective-structural approach.

The most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm and is given by these three objective structural axioms:
A1. Yw=WL wage income Yw is equal to wage rate W times working hours L,
A2. O=RL output O is equal to productivity R times working hours L,
A3. C=PX consumption expenditure C is equal to price P times quantity bought/sold X.

From this minimal set, which is composed of measurable real and nominal variables, follow propositions which are testable. The nonentities of methodological individualism are gone.

Methodologically correct economics starts with the SYSTEMIC axioms of the monetary economy. This yields objective systemic laws, expressed, for example, as profit equation or employment equation. Systemic laws are readily testable and this is the ONLY way to settle questions according to scientific standards.

Useful input to the continuing discussion of the new paradigm is not to be expected from Walrasianism, Keynesianism, Marxianism, and Austrianism. So, let these scientific zombies go: “What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work …” (McCauley, 2006, p. 17)

Egmont Kakarot-Handtke

References
Ingrao, B., and Israel, G. (1990). The Invisible Hand. Economic Equilibrium in the History of Science. Cambridge, MA, London: MIT Press.
Kakarot-Handtke, E. (2013). How to Get Rid of Supply-Demand-Equilibrium. SSRN Working Paper Series, 2263172: 1–24. URL http://papers.ssrn.com/sol3/
papers.cfm?abstract_id=2263172.
McCauley, J. L. (2006). Response to “Worrying Trends in EconoPhysics”. EconoPhysics Forum, 0601001: 1–26. URL http://www.unifr.ch/econophysics/paper/show/id/doc_0601001.
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.
Stigum, B. P. (1991). Toward a Formal Science of Economics: The Axiomatic Method in Economics and Econometrics. Cambridge, MA: MIT Press.
Weintraub, E. R. (1985). General Equilibrium Analysis. Cambridge, London, New York, NY, etc.: Cambridge University Press.

114. Major.Freedom
3. April 2016 at 11:01

Egmont, you’ve lost the debate.

Your latest post AGAIN does not even engage the subject matter you are ostensibly critiquing, nor does it show any improvement in understanding of the subject matter.

It consists solely of disparate claims and assettions, some of which have already been explained to you are false.

Austrianism has again not been “proven false.”. It CANNOT be PROVED false because, again, all proofs consist in the very same logical categories revealed by praxeologival inquiry.

Your posts here on this blog are all ACTIONS. Your goal has been to disprove goal seeking. Your means have consisted of pleas that means are not implicated. Your understanding of profit and loss has consisted of you pretending you are neither profiting nor losing from writing what you are writing while still suggesting victory.

In short, your posts here have been akin to “I am not here.”

The hilarious part of your latest post is that after quoting authors as your own beliefs that there are no certain, true primary axioms of human behavior, what do you do? Instead of providing an attempt at a proof of this, you actually quote another person proposing to introduce…wait for it…a set of certain, true, primary axioms of human behavior!

115. Major.Freedom
3. April 2016 at 11:03

Egmont:

What kind of a statement is this:

“All knowledge of reality is either empirical or analytic.”

The more you dodge and evade, the more certain you leave the theories you are critiquing.

How about actually engaging in a debate rather than posting other people’s quotes as your own?

Any original thoughts? Any critical thinking? You’re like that pony tailed guy in Good Will Hunting.

116. Egmont Kakarot-Handtke
3. April 2016 at 12:30

Major.Freedom

(i) von Mises says: “The ultimate source from which entrepreneurial profit and losses are derived is the uncertainty of the future constellation of demand and supply.” (2007, p. 293)

This is vacuous Austrian waffle.

Profit is ultimately determined by the Profit Law which states for the investment economy Qm=Yd+I-Sm. Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure.

This equation is testable with the accuracy of two decimal places.

(ii) von Mises says: “Economics is not about goods and services, it is about the action of living men.” (2007, p. 357)

This is how Austrians missed the subject matter of economics altogether and got lost in the woods of psychologism, mind-reading, second guessing other peoples’ actions, and silly gossiping and storytelling. Because of this: Austrianism = yellow press economics.

Correct definition: “Economics is the science which studies how the monetary economy works.”

(iii) von Mises says: “In the imaginary construction of a stationary economy the total sum of all entrepreneurs’ profit equals the total sum of all entrepreneurs’ losses. (2007, p. 294)

Provably false. In the stationary economy holds Qm=Yd.*

Egmont Kakarot-Handtke

References
von Mises, L. (2007). Human Action. A Treatise on Economics, volume II. Indianapolis, IN: Liberty Fund. (1949).

* The proofs are to be found in my papers on SSRN
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1210665

117. Major.Freedom
3. April 2016 at 14:50

Egmont,

What kind of a statement is this:

“All knowledge of reality is either empirical or analytic.”

118. Major.Freedom
3. April 2016 at 15:30

Egmont:

What are you trying to accomplish by your continual evasions? If it is anything other than attracting contempt, then you’ll continually fail.

Unlike you I need not evade anything you say, because unlike you I am an honest debater who is not afraid to make his own arguments to supports his own convictions.

You have little to no substantive analysis.

“von Mises says: “The ultimate source from which entrepreneurial profit and losses are derived is the uncertainty of the future constellation of demand and supply.”

“This is vacuous Austrian waffle.”

“Profit is ultimately determined by the Profit Law which states for the investment economy Qm=Yd+I-Sm. Legend: Qm monetary profit, Yd distributed profit, Sm monetary saving, I investment expenditure.”

Egmont, that comment shows you have no clue what you are talking about. An accounting identity, as any economist worth their salt knows, is not an equation that explains a causation. Profit is not “caused” or “determined” by investment, saving, and distributed profit.

This “profit law” you are writing here is an amateurish attempt to explain a phenomena that you clearly lack the foundation to even begin to understand.

What Mises was talking about in that quote cannot be understood except as a distinction from the mental tool called “evenly rotating economy”. This is a hypothetical economic world where there is no uncertainty. In other words, the very world you believe can be one day achieved by testing theories against historical data whereby humans will be able to predict future demands. In that world, where you know exactly what all the demands for all goods and services will be, Mises’ argument is that in such a world, the demands for the various means of producing those goods will rise to the point where the only difference is that of time preference, meaning, entrepreneurial profit, the risk taking profit, or “risk premiums”, will disappear.

With that mental tool, we then look to the real world where there is uncertainty. We know that the profits earned are earned by way of taking on risk. Risk is rewarded with profit. Here, investors do not raise the demand for the various means of producing goods will not rise up to the point where all that is left is time preferemce, because they do not know what those demands will be, as they are uncertain.

All Mises is saying is that entrepreneurial profit, not profit per se as in your childish equation above, exists because of uncertainty.

This should not be controversial. Short term western government debt, which has the lowest default risk and lowest uncertainty risk, tend to have the lowest yields. Why? Because investors know, or rather they behave as if they know, the future with a high degree of certainty. The entrepreneurial component of profit is all but absent in 90 day Treasury bills.

“This equation is testable with the accuracy of two decimal places.”

You mean an accounting identity is observed to be an identity when observed? Did you learn economics at the back of a fish and chips restaurant?

Did you know that the GDP equation, Y = G + I + C + (X-M), can be “predicted” to 14 million decimal places, provided that people trade goods at prices to within that accuracy?

Testable? It is not a testable theory. It is an identity. There are no independent variables in your equation. There are 4 measurable quantities, and the quantities are DEFINED as the sums or relationships with the other variables. Distributed profit? What is that? Did you just make that up?

What is the foundation of your belief that observing a correlation today between any variables, that you believed in the past would be observed today, is a “confirmation” of that theory?

Why don’t you say that the relations that may or may not have been observed in the past, and the relations that may or may have not been observed today, to be simply two separate observations after which nothing else follows?

In order to even say that two successive observations falsify or confirm each other, you must be making an assumption, which is NOT in the falsificationist method itself. That assumption is a priori to positivism. It is a priori to your “testing”. It is non-falsifiable. It is what’s called a synthetic a priori proposition. You are just assuming, without ever testing that assumption, that there is a regularity in the sequence and concatenation of events.

So I ask again, what kind of statement is this:

“All our knowledge is either empirical or analytic.”

Speak now or admit defeat.

“von Mises says: “Economics is not about goods and services, it is about the action of living men.”

Oh my God, are you seriously going to argue semantics now? What a waste of time!

“This is how Austrians missed the subject matter of economics altogether and got lost in the woods of psychologism, mind-reading, second guessing other peoples’ actions, and silly gossiping and storytelling. Because of this: Austrianism = yellow press economics.”

Not a substantive counter-argument. That is…I don’t even know what that is. I think it is you pooping on the chessboard again.

“Correct definition: “Economics is the science which studies how the monetary economy works.”

Lol, “correct definition.” All definitions are subjective my obtuse little friend.

Your definition of ecomomics, in the actual field of economics of which you are uninformed, is merely called monetarism, or monetary economics. It isn’t ecomomics per se.

“von Mises says: “In the imaginary construction of a stationary economy the total sum of all entrepreneurs’ profit equals the total sum of all entrepreneurs’ losses.”

“Provably false. In the stationary economy holds Qm=Yd.”

You have not proven it false. It is applicable to an imaginary world. It is a deliberate hypothetical. Non-existant worlds cannot be proved false without ratiocination, without an actual argument. Which you have not provided.

You lost the debate. But I can’t help it if you want to keep digging your hole deeper and deeper. I can only show you the way out. You have to make the effort to get out.

119. Don Geddis
3. April 2016 at 18:19

MF: “I am an honest debater

LOL. You might be a lot of things, but that isn’t one of them.

You’re closer to a tape recorder. Offering the same irrelevant and false lecture, day after day, for years. Completely unaffected by any education or knowledge from this blog or the comments, in all that time.

Of course, I realize, in your worldview, that a consistent daily pattern lasting across years, offers no guarantee that the pattern will persist into the future. Perhaps tomorrow you may change. One can always hope, I suppose. I wouldn’t bet on it, though.

120. Egmont Kakarot-Handtke
4. April 2016 at 01:22

Major.Freedom

(i) You ask “What are you trying to accomplish by your continual evasions?” For someone who has an irrefutable theory of human action this is a stupid question. It is well known: “… observed acts of behavior allow an indefinite number of interpretations regarding the plans from which they are assumed to have sprung.” (Morgenstern, 1941, p. 381)

So you certainly can interpret my behavior until you are blue in the face. Obviously, you are missing the subject matter: economics is NOT about economists but about the economy.

Economists try to figure out the objective systemic laws of the monetary economy. Speculation about other people’s behavior/actions and ad hominem argumentation is a moronic pursuit. Austrians are no economists.*

(ii) You ask “Did you know that the GDP equation, Y = G + I + C + (X-M), can be “predicted” to 14 million decimal places, provided that people trade goods at prices to within that accuracy?”

Did you know that the GDP equation is false? For the proof see (2012). Austrians have not figured out this until this day but swallowed the underlying logical defect hook, line and sinker. The GDP equation is an intelligence test for economists and Austrians flunked it.

(iii) You say: “All Mises is saying is that entrepreneurial profit, not profit per se as in your childish equation above, exists because of uncertainty.”

Uncertainty is a psychological state and it does not produce profit just like wishful thinking or greed does not produce profit. Mises’ explanation is at the level of voodoo thinking. For the correct explanation of profit see (2011).

(iv) Imagine for a moment an aircraft flying from, say, New York to Paris. Now we can ask why? One way to answer the question is to speculate about the motives and reasons of the passengers, the pilot, the crew, the flight controllers, and the managers and stockholders of the airline. The other way to look at the flight is to think about the laws of aerodynamics, thermodynamics and so forth.

The first way of explanation is the Austrian way and it yields the same trivial psychologistic crap over and over again. Notice: Whatever the subjective motives and actions of passengers are they do — as a matter of principle — NOT explain the phenomenon of flight.

The second way is the scientific method. Thinking people, this excludes Austrians, know that there is no such thing as an irrefutable law of human action that could explain flying.

So, just as flying is explained by the objective laws of physics, the economy is explained by the objective laws of economics.

Needless to say that Austrians never got that point: “Mises’ contribution was very simple and at the same time extremely profound. He pointed out that the whole economy is the result of what individuals do.” (Foreword, von Mises, 2007, p. v)

This is as extremely profound as ‘the sun goes up’.

You already two times declared that you have won the debate. Do you realize that this has been the selling proposition of the ancient Sophists, which Plato criticized? Plato made it clear that a SCIENTIFIC debate is about episteme=knowledge and NOT about doxa=opinion and to twit an audience, or what Popper called ‘the bad taste of a finicky scholasticism’.

(v) I agree that the action axiom is as irrefutable just as ‘Zeus threw the thunderbolt because he was angry’. What I say is that with your behavior/action approach you will never come up with something helpful like the lightning conductor. And that is rather bad, because you have won the debate but Zeus hit you with the thunderbolt. Rest in peace, Austrians.

Egmont Kakarot-Handtke

References
Kakarot-Handtke, E. (2011). The Emergence of Profit and Interest in the Monetary Circuit. SSRN Working Paper Series, 1973952: 1–22. URL http://ssrn.com/abstract=1973952.
Kakarot-Handtke, E. (2012). The Common Error of Common Sense: An Essential Rectification of the Accounting Approach. SSRN Working Paper Series, 2124415:
1–23. URL http://ssrn.com/abstract=2124415.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL http://www.jstor.org/stable/1824735.
von Mises, L. (2007). Human Action. A Treatise on Economics, volume I. Indianapolis, IN: Liberty Fund. (1949).

* See ‘Hayek was not an economist’
http://axecorg.blogspot.de/2016/03/hayek-was-not-economist.html

121. Major.Freedom
4. April 2016 at 03:39

Don Geddis:

“LOL. You might be a lot of things, but that isn’t one of them.”

Actually it is thanks. For you to say otherwise means you are claiming to not only mind read, but to have proven an example where I lied. How in the world can you prove me to have lied on thisblog even in principle?

Could it be that the reason you are saying this is simply for you to display your antagonism, nothing more?

“You’re closer to a tape recorder.”

According to your philosophical worldview we’re all nothing but mechanical tape recorders, chump. Saying what we say for fully deterministic reasons.

“Offering the same irrelevant and false lecture, day after day, for years.”

You have not shown anything I have said to have ever been false. All you got is pathetic death threats.

“Completely unaffected by any education or knowledge from this blog or the comments, in all that time.”

Oh you mean the claims that I have repeatedly shown to be falsehoods, I have not accepted as truths? You’re right, I am “unaffected” in the way you define it. But that’s not my fault, that’s your fault. To not have true, convincing statements with which to convince is something you have to deal with and change yourself.

You’re a broken record

“Of course, I realize, in your worldview, that a consistent daily pattern lasting across years, offers no guarantee that the pattern will persist into the future. Perhaps tomorrow you may change. One can always hope, I suppose. I wouldn’t bet on it, though.”

Cool story bro. Did you have anything substantive to contribute here? Or is all you have again nothing but vitriol and personal attacks? You’ve got nothing that would even warrant the name of a substantive argument.

122. Don Geddis
4. April 2016 at 10:54

Major.Freedom: “you are claiming … to have proven an example where I lied.

Nope, sorry, wrong again. That’s not what “honest debate” means. What you regularly engage in is not quite lying, it is intellectual dishonesty.

123. Major.Freedom
4. April 2016 at 16:56

Don Geddis:

In other words lying. Call it dishonesty. That is just another word for lying.

Again, you have never shown your accusations to be accurate.

It is possible, perhaps likely, that you lying about this.

My guess for why you are making this claim is that can’t refute me intellectually.

You’ve got nothing.

124. Don Geddis
4. April 2016 at 21:04

Major.Freedom: “Call it [intellectual] dishonesty. That is just another word for lying.

No, it’s not. And I even did your homework for you, and gave you the links to see the difference. I guess you can lead a horse to water, but…

can’t refute me intellectually.

I also “can’t refute” a rock. Or a tape recorder. (Which is why I don’t bother to try.) Don’t lose much sleep over rocks, tape recorders, or you, though.

125. Egmont Kakarot-Handtke
4. April 2016 at 23:24

Don Geddis

(i) Any discussion about the character of interlocutors leads away from the point at issue: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false. (Schumpeter, 1994, p. 11)

The question at issue is whether Austrianism is true or false and not whether Major.Freedom is a tape recorder or a broken record.

(ii) Refutation is necessary, but insufficient. Effective refutation consists of developing the new paradigm: “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory. (Blaug, 1998, p. 703)

And, by the way, it is not only Austrianism that is obsolete. Walrasianism, Keynesianism, and Marxianism has to be left behind the curve, too. From the huge heap of scientific garbage called economics Austrianism is only an insignificant part. It goes down the drain with the whole of methodological individualism.

Egmont Kakarot-Handtke

References
Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University Press, 5th edition.
Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.

126. Major.Freedom
5. April 2016 at 19:18

Don Geddis:

“No, it’s not. And I even did your homework for you, and gave you the links to see the difference.”

Lol, there is no difference. Lying is to consciously utter something one knows is not true, but presents it as true or at least intends to convince the listener that it is true.

Assuming you agree with that definition of lying, please explain in your own words how being intellectually dishonest is NOT the above.

Merely posting wikipedia links does not constitute an argument.

“can’t refute me intellectually.”

“I also “can’t refute” a rock. Or a tape recorder. (Which is why I don’t bother to try.) Don’t lose much sleep over rocks, tape recorders, or you, though.”

But rocks and tape recorders do not make arguments. I do. You cannot refute the arguments I am making.

Don’t blame me for your inabilities.

127. Major.Freedom
5. April 2016 at 19:36

Egmont:

“The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory. (Blaug, 1998, p. 703)”

This is the same Blaug whose sum total analysis and referenced discussion of Mises’ work consisted of the following comment:

“His writings on the foundations of economic science are so cranky and idiosyncratic that one can only wonder that they have been taken seriously by anyone.” – The Methodology of Ecomomics.

Your response to Don is rather hypocritical, because your own statements above about Austrianism are very much like the pathetic churlishness that you point out in Don’s responses. Granted you at least provide citations (even though you don’t add any of your own comments that show you understand the subject matter.

Blaug simply ends his chapter on Austrianism with that quote. He too did not bother to provide one argument to substantiate his outrage.

I’ve found in my experience that the high demands of argumentative rigor required in Mises’ a priorism are just too onerous a task for most of the critics.

“And, by the way, it is not only Austrianism that is obsolete.”

But it isn’t obsolete. You casually state that it is as if you have provided not only an understsnding of it, which is likely something too difficult for you, but also how you have shown how it is. What, does usefulness simply mean how many dollars are thrown at it by the state at the expense of the taxpayers? Oh yes, I’ll admit Austrianism is virtually worthless to states. For it teaches states are the cause of the business cycle, and of low living standards.

“Walrasianism, Keynesianism, and Marxianism has to be left behind the curve, too.”

What curve?

“Fom the huge heap of scientific garbage called economics Austrianism is only an insignificant part. It goes down the drain with the whole of methodological individualism.”

You have not shown any understanding of Austrianism, nor have you actually provided any argumentative rebuttal.

Your ecomomics are garbage. In fact, I don’t think we should even call it economics. The profit law? This is not even economics.

You still have not answered:

What kind of a statement is this:

“All knowledge of reality is either empirical or analytic.”?

128. Major.Freedom
5. April 2016 at 20:27

Egmont:

“You ask “What are you trying to accomplish by your continual evasions?” For someone who has an irrefutable theory of human action this is a stupid question.”

No it isn’t. It is not a stupid question regardless of whether or not I think the action axiom is irrefutable.

Your continual evasions is your choice. If YOU do not think the action axiom is irrefutable, then make your case. Try to refute it.

The truth is that you know you cannot refute it, and instead of admitting it, you blame me for your failure.

“It is well known: “… observed acts of behavior allow an indefinite number of interpretations regarding the plans from which they are assumed to have sprung.” (Morgenstern, 1941, p. 381)”

Thismis outside the scope of praxeology! You keep proving you have no idea what it is even about.

Again, praxeology does not presume to explain the specific motivations of people to do what they did. Praxeology does not answer the question “Why did Caesar cross the Rubicon?”. It instead explains the logical categories that applied to his actions.

What explain the motivations for why people do what they do, the incentives and beliefs and what have you, is in Austrianism called Thymology. Do yourself a favor and Google it.

Thymology is a historical analysis, that deals with studying and understanding the personal motivations people had when they acted at the time.

Praxeology on the other hand studies action as such.

” So you certainly can interpret my behavior until you are blue in the face. Obviously, you are missing the subject matter: economics is NOT about economists but about the economy.”

You’re changing your story. First you said ecomomics is about money only, now you are saying economics is about the economy.

Nevertheless, despite your inability to even define economics, what you are doing is engaging in a semantic game of uselessness. Define economics any way you want. Definitions are a subjective choice. Nobody is forced to define economics in the idiosyncratic way you do.

I will keep defining defining economics as the study of individual action. I will define monetary ecomomics the way you define economics.

You translate the terms to understand, just like how people of different languages translate their words into the other’s language. To insist everyone speaks pigeon, as you are doing, is not only silly, but borderline offensive.

“Economists try to figure out the objective systemic laws of the monetary economy.”

No, that is what monetarists do.

Objective laws of money? One would be searching for the laws of human action. Money does not do anything on its own. Money on its own only has physical and chemical laws. Money used in human trade are subject to the laws of human action.

“Speculation about other people’s behavior/actions and ad hominem argumentation is a moronic pursuit. Austrians are no economists.”

False on both counts. First, speculation is an intellectual activity. It is not “moronic”. Second, Austrians are economists, since they study economic phenomena for a living.

“You ask “Did you know that the GDP equation, Y = G + I + C + (X-M), can be “predicted” to 14 million decimal places, provided that people trade goods at prices to within that accuracy?”

“Did you know that the GDP equation is false? For the proof see (2012).”

See the year 2012 for how an ACCOUNTING IDENTITY, in which the variables are DEFINED in terms of one another, is “false”?

No, a definition cannot be “false.”

“Austrians have not figured out this until this day but swallowed the underlying logical defect hook, line and sinker. The GDP equation is an intelligence test for economists and Austrians flunked it.”

No, they passed it. You flunked it. You don’t even understand the GDP equation either.

There is no LOGICAL defect in the accounting identity, and I challenge you to show where it is. But I won’t hold my breath, since you’ve utterly failed to substantiate anything I challenged you to substantiate, and you have failed to answer any of the questions I’ve asked.

“All Mises is saying is that entrepreneurial profit, not profit per se as in your childish equation above, exists because of uncertainty.”

“Uncertainty is a psychological state and it does not produce profit just like wishful thinking or greed does not produce profit. Mises’ explanation is at the level of voodoo thinking.”

Austrians have not claimed that Uncertainty itself CAUSES profit to exist as if it were automatic. Again you show your ignorance!

Yes, Uncertainty is a “psychological state”, but to argue that entrepreneurial profit exists because there is Uncertainty, does not constitute an argument that the uncertainty can be abstracted into an isolated concept, stripped from the subjective valuations and actions of humans, and then treated as a motive force of its own.

What you are doing is falling prey to the fallacy of hypostatization, that is, to take an idea or concept, and to treat it as if it had substance, from which the laws of cause and effect arise.

The argument that it is uncertainty which explains the existence of entrepreneurial profit, must be constrained to individual action, which is goal seeking behavior.

It is due to uncertainty that investors do not bid up the prices of the means of production so high so as to yield a purely time preference driven rate of return. They do not bid up the prices to yield such a rate because they do not know the future demands with certainty. The entrepreneurial profit rate(s) is(are) the rates that result from Uncertainty in human action. The uncertainty itself doesn’t constitute a substance with cause and effect. Uncertainty within the confines of human action, those actions are what explain the entrepreneurial profit.

“For the correct explanation of profit see (2011).”

No that is an amateurish explanation that betrays sound economic principles.

“Imagine for a moment an aircraft flying from, say, New York to Paris. Now we can ask why? One way to answer the question is to speculate about the motives and reasons of the passengers, the pilot, the crew, the flight controllers, and the managers and stockholders of the airline. The other way to look at the flight is to think about the laws of aerodynamics, thermodynamics and so forth.”

You of course completely ignored the path the plane took, the height it flew, the destination, or when the flight took place.

Thermodynamics cannot explain why Paris was the destination as opposed to Tokyo.

Aerodynamics cannot explain why the plane took off at 6am on Tuesday rather than 10pm the next day.

Physics cannot explain why the controls to the plane were changed the way they were changed, such that the engines had the various levels of thrust they had over the course of the flight.

But this is all neither here nor there. Praxeology only deals with the necessary logically deduced truths of the human actions.

It cannot be rationally denied that the human actors participating in the flight had ends, of which the flight and their bodies were the means. That they all incurred opportunity costs by taking the flight as opposed to doing something else at that time. That they each either profited from the action or incurred losses.

“The first way of explanation is the Austrian way and it yields the same trivial psychologistic crap over and over again. Notice: Whatever the subjective motives and actions of passengers are they do — as a matter of principle — NOT explain the phenomenon of flight.”

This is not a rebuttal to any Austrian argument.

“The second way is the scientific method. Thinking people, this excludes Austrians, know that there is no such thing as an irrefutable law of human action that could explain flying.”

That is also not a rebuttal. That is just a semantic game. “True” scientists think this way. “Bad” people think that way.

“So, just as flying is explained by the objective laws of physics, the economy is explained by the objective laws of economics.”

This crap is worse than Ayn Rand’s.

“Needless to say that Austrians never got that point: “Mises’ contribution was very simple and at the same time extremely profound. He pointed out that the whole economy is the result of what individuals do.”

“This is as extremely profound as ‘the sun goes up’.”

No, the Sun MAY not rise in the future. It is not logically contradictory to imagine the Sun not rising up.

It is absolutely crystal clear that you are totally and utterly clueless about Austrianism. Top to bottom.

“You already two times declared that you have won the debate.”

Well yes, the same way that a loser at the track who keeps running after the race is over, believing he either won or could still win, is told the race is over and that he lost.

“Do you realize that this has been the selling proposition of the ancient Sophists, which Plato criticized? Plato made it clear that a SCIENTIFIC debate is about episteme=knowledge and NOT about doxa=opinion and to twit an audience, or what Popper called ‘the bad taste of a finicky scholasticism’.”

Wait, you mean declaring your opponent defeated is a faux pas?

“Rest in peace, Austrians.”

Oh, OK. Lol!

“I agree that the action axiom is as irrefutable just as ‘Zeus threw the thunderbolt because he was angry’.”

No, not “just as.” Zeus throwing a thunderbolt is an empirical claim. It is not logically contradictory to ARGUE Zeus does not exist and did not throw any lightening bolt. It IS logically contradictory to ARGUE that one has successfully disproved the action axiom, since all disproofs are themselves actions.

You need more education.

“What I say is that with your behavior/action approach you will never come up with something helpful like the lightning conductor. And that is rather bad, because you have won the debate but Zeus hit you with the thunderbolt.”

What you say here also contradicts what you said earlier. To claim that a particular method will NEVER achieve a particular goal, is to present that claim as a priori to falsifiable theorizing. You can’t even keep to your own professed standards.

Actual falsificationism does!not permit apodictic conclusions of the type “Never” or “Always”. That betrays the structure of positivism. In positivism, ALL true knowledge of reality is and remains hypothetical, where any theory is capable of being falsified at some point, however remote.

For you to use the rheotric ” never” shows you are a hypocrite in addition to being ignorant of Austrianism.

Egmont, I will declare for a third time that you lost the debate. You can keep posting comments every day, and I will have no problems whatsoever responding. Just be warned, nobody has yet outlasted me. Why? Because it is not tiring for me to speak with consistent principles that do not contradict each other. It is tiring for you to wrestle with the many contradictions in your premises.

References: Me.

129. Egmont Kakarot-Handtke
6. April 2016 at 02:43

Major.Freedom

(i) Physicists long ago proved that, given the laws of physics, a perpetual motion machine is impossible. This did not stop some people to submit patent applications for perpetual motion machines until this very day.

It is the same thing with Austrians and other pseudo-scientific economists. “In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened. (Morgenstern, 1941, pp. 369-370)

Austrians are ignoring/violating scientific standards.

(ii) Austrianism subscribes to methodological individualism which claims: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories.” (Arrow, 1994, p. 1)

Methodological individualism is (i) unacceptable for cogent methodological reasons, and (ii), has failed for everyone to see. General equilibrium theory in all variants (RBC, DSGE, etc) is indefensible and the same holds for Austrianism as fellow traveler of methodological individualism.

(iii) The major claim of Austrianism is that it solved the mind-body problem. Clearly, Austrians are in the wrong movie. Philosophy/ psychology/ metaphysics is NOT economics. The first problem to solve for an economist is the profit-income problem and NOT the mind-body problem.

(iv) No way leads from the subjective action axiom to the objective Profit Law. It is irrelevant whether the action axiom is irrefutable or not. Austrians do not know what profit is and by consequence they have no idea how the economy works. The profit theory is the pivot to all of economics.

(v) The profit theory must be testable. This brings us back to the starting point of this thread. Vacuous theories like Austrianism are not testable and therefore not of interest for the point at issue.

(vi) You say “I will declare for a third time that you lost the debate.” Did it ever occur to you to you, that as a party to the debate you have nothing to declare?

(vii) Austrianism is a zombie approach since more than 140 years just like Walrasianism and everything else that subscribes to methodological individualism.

(viii) Economics needs a paradigm shift.

Egmont Kakarot-Handtke

References
Arrow, K. J. (1994). Methodological Individualism and Social Knowledge. American Economic Review, Papers and Proceedings, 84(2): 1–9. URL http://www.jstor.org/stable/2117792.
Morgenstern, O. (1941). Professor Hicks on Value and Capital. Journal of Political Economy, 49(3): 361–393. URL http://www.jstor.org/stable/1824735.

130. Don Geddis
6. April 2016 at 18:21

@Major.Freedom: “Assuming you agree with that definition of lying, please explain in your own words how being intellectually dishonest is NOT the above.

Ah, you poor soul. I see that you once again defined “lying”, but you didn’t even make a first attempt to define “intellectual dishonesty”. Any web search — or maybe even dictionary — could provide you with a definition (from which it is easy to see the distinction from “lying”). Heck, I even provided you two links myself, which you could just click on!

Another hint: your refusal to admit that you made even this simple vocabulary error, is not lying. But it is an example of being intellectually dishonest.

131. Don Geddis
6. April 2016 at 18:22

@Egmont Kakarot-Handtke: “The question at issue is whether Austrianism is true or false and not whether Major.Freedom is a tape recorder or a broken record.

I completely agree with you that the truth or falsity of Austrianism has (almost) nothing to do with Major.Freedom’s character. But because of Major.Freedom’s proven character over years on this blog, it is abundantly clear that attempting to debate the subject with Major.Freedom directly, will also shed no light on the truth or falsity of Austrianism. Because he is not (despite his claims) an honest debater. Of course, as you observed, I was making no progress (and attempted none) on the question of Austrianism itself. I apologize if I misled you as to my purpose.

132. Major.Freedom
6. April 2016 at 18:42

Egmont:

You still have not answered:

What kind of a statement is this:

“All knowledge of reality is either empirical or analytic”?

——————————————-

“Physicists long ago proved that, given the laws of physics, a perpetual motion machine is impossible. This did not stop some people to submit patent applications for perpetual motion machines until this very day.”

Economists long ago proved that, given the laws of human action, the method of positivism is impossible. This did not stop some people, namely yourself, to submit writings based on that impossibility as if it were possible.

“It is the same thing with Austrians and other pseudo-scientific economists.”

No, you are conflating positivism and science. You write pseudo-scientific, but you are actually saying anti-positivist.

“In economics we should strive to proceed, wherever we can, exactly according to the standards of the other, more advanced, sciences, where it is not possible, once an issue has been decided, to continue to write about it as if nothing had happened. (Morgenstern, 1941, pp. 369-370)”

This opinion you quoted is a value judgment of Morgenstern. You are presenting his writings as an argument. You are presenting his argument as a purposeful activity where he attempted to accomplish a goal, which incurred opportunity costs because by writing what he did when he wrote it. He utilized scarce means, his own and paper and body. He either profited or lost from his activity. What he did was an action.

Prove that wrong.

“Austrians are ignoring/violating scientific standards.”

No, economists, and you, are ignoring/violating logical standards when utilizing positivism.

“Methodological individualism is (i) unacceptable for cogent methodological reasons, and (ii), has failed for everyone to see. General equilibrium theory in all variants (RBC, DSGE, etc) is indefensible and the same holds for Austrianism as fellow traveler of methodological individualism.”

That is not a substantive argument. What “cogent” reasons are you pretending to understand here? Where is the substantive argument that it has “failed” for reasons you are also pretending to understand?

Your statements are nothing but bare assertions. There is no critical analysis present in your posts. You post quotes that serve your agenda, then you add nothing of value after those quotes. Merely telling me that methodological individualism is “unacceptable” or that it “fails” has absolutely nothing of value to offer. There is no good reason why anyone should change their mind when reading such amateur comments.

“The major claim of Austrianism is that it solved the mind-body problem. Clearly, Austrians are in the wrong movie. Philosophy/ psychology/ metaphysics is NOT economics. The first problem to solve for an economist is the profit-income problem and NOT the mind-body problem.”

No, the first problem of economics is the problem of how we even understand what profit and income mean.

You are again merely arguing semantics. If you believe the main problem is about monetary profits and incomes, then the only problem you are addressing is monetary economics, not economics as such.

The concepts of profit and income are categories of human action. Pieces of paper with pictures of dead Presidents on them, moving between two physical locations, cannot be understood as income, without the praxeologically derived categories of human action.

You are not well versed enough in epistemology to make any claims about the primary problem of economics.

You cannot solve the problem of economics by divorcing a small subsection of overall human activity, namely money making, from its foundations and pretending that there are physical laws that determine the flow of money and of prices. Spending and prices are determined by subjective human ends and valuations. They are not determined by amateur hour equations such as the “profit law”.

“No way leads from the subjective action axiom to the objective Profit Law.”

That is because the profit law is not a law. It is an accounting identity, where each variable only has meaning as defined by the other variables. It is an inert tautology, as opposed to an active tautology.

“It is irrelevant whether the action axiom is irrefutable or not.”

No that is actually crucially important. For that is what the decisive criteria is for true synthetic a priori propositions, instead of the internally contradictory synthetic a priori propositions that you yourself assume in the positivist method as applied to economic phenomena.

“Austrians do not know what profit is and by consequence they have no idea how the economy works. The profit theory is the pivot to all of economics.”

No, you have no idea what profit is and as a result you have created an imaginary conception in your mind of a “law.”

Profits are not inevitable. To say there is such a thing as a profit law shows you have fundamentally misunderstood and misdiagnosed the “problem” of profits.

Profit is not solely monetary. People can and do and have profited in non-monetary ways. Profit is possible under bartering for example. Profit is also possible with no trading of tangible goods. What Austrians recognize and call “psychic” profit is a real world phenomena whereby individuals satisfy their subjective wants and experience utility, without any consumption of commodities or retail services, such as the psychic profit experienced by watching one’s favorite team win the championship.

Another example: Since you lack the ability to engage in the highly difficult method of a priorism, you scoff at it so as to…experience a psychic profit. You are writing what you are writing as a means to achieve an end. You are engaging in an action.

“The profit theory must be testable. This brings us back to the starting point of this thread. Vacuous theories like Austrianism are not testable and therefore not of interest for the point at issue.”

What is of “interest” is a subjective value judgment, namely your own. I see you have difficulty separating your own personal preferences, with objective laws.

Of course you will find discomfort in praxeology and a priorism. Of course. Of course. The required epistemology is incompatible with your self-image and your view of humanity. You do not view other human beings as ends in themselves. You view your own ends as objective laws of nature, whereas everyone else’s ends are either with you entirely, or against you until one of yours is annihilated.

The profit theory you say must be testable. What of the MEANING of profit? That is not testable, for in order to even test any profit theory, you have to already know and understand what profit is. How could you possibly test what you don’t even understand?

What you call “testing” is itself structured on the a priori assumption that what is true must be true today and in the future, or else it isn’t a truth. That is again you smuggling in the non-empirical assumption of constancy in nature.

I ask again, what kind of a statement is this:

“All knowledge is either empirical or analytic.”

That is the fundamental proposition of positivism, or what you sloppily call “science.”

“You say “I will declare for a third time that you lost the debate.” Did it ever occur to you to you, that as a party to the debate you have nothing to declare?”

How can what is non-existant, “occur” to me?

I already made a declaration of your arguments being totally and completely refute, quite easily actually. I declare a fourth time: You lost the debate.

“Austrianism is a zombie approach since more than 140 years just like Walrasianism and everything else that subscribes to methodological individualism.”

Your approach is a zombie approach.

“Economics needs a paradigm shift.”

You mean more people ought to approach economics in a fundamentally different way?

Well sure, but the mainstream is already saturated with the method you believe is proper namely positivism. Or what you sloppily call “science”. To say that ecomomics needs a paradigm shift, implies that it needs to get away from your method.

133. Major.Freedom
6. April 2016 at 18:47

Don Geddis:

I always chuckle at your awkward attempts to patronize. “Oh you poor soul.”

“I see that you once again defined “lying”, but you didn’t even make a first attempt to define “intellectual dishonesty”.”

What a hilarious request! If you are ASKING me to define a term, then given there is no such thing as an objectively incorrect definition, then I will provide for you a definition of intellectual dishonesty as a form of lying.

It is perfectly clear that you have nothing except the useless quest of tilting at semantics windmills. To quibble over definitions is a fool’s quest.

What should matter are what those words are referring to.

You accused me of lying, or what you call intellectual dishonesty, without ever showing where or how.

You got nothing of substance either.

134. Major.Freedom
6. April 2016 at 18:52

Don Geddis:

“I completely agree with you that the truth or falsity of Austrianism has (almost) nothing to do with Major.Freedom’s character. But because of Major.Freedom’s proven character over years on this blog”

You mean the “character” of exposing your ignorance? You have not even attempted to substantiate any of your claims. Why? Because that is not important it you. What is important to you is merely writing those words and experiencing what you cannot get through staying on topic and debating the topic.

Your moral failure as a man is putting your passions over reason.

“Because he is not (despite his claims) an honest debater.”

No, deposit your claims you have not shown where I have been “dishonest.”

Not agreeing with you and pointing out where you make mistakes does not imply I am being dishonest.

135. Egmont Kakarot-Handtke
6. April 2016 at 23:17

Don Geddis

Science was there before economics was there. Economists either conform to scientific standards or they are out of science: they are in NO position to redefine scientific criteria.

Because economics — as represented by the four failed sects Walrasians, Keynesians, Marxians, Austrians — has never risen above the level of a proto-science it has become popular among economists to question the standards, to lower them or, as Blaug aptly put it, ‘to play tennis with the net down’. When this is pointed out, economists make the salto backward: ‘Economics is not a Science with a capital S’ (Solow).

The scientific method is well-defined: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)

Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-the-art testing.

Economics fails on both counts: the axiomatic foundations are provably false and testing is regularly inconclusive. So, economics has happily established itself in the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes).

The swamp between the hard rocks of true and false is the natural habitat of blathering frogs, of which there are four species, which are clearly identifiable by their respective axiom sets. The funniest species are the Austrians which are in the possession of an irrefutable magic axiom but never managed to produce a testable proposition. So, there is NO WAY to get an Austrian frog ever out of the swamp. And of this they are very proud.

No problem with this, of course. What has to be made crystal clear is that Austrians have never produced anything of scientific value. For the proof re-read Major.Freedom’s posts. With this stuff the poor souls in scientific hell are tortured.

Time to become constructive now: let’s proceed with the paradigm shift.

Egmont Kakarot-Handtke

136. Don Geddis
7. April 2016 at 08:33

Major.Freedom: “If you are ASKING me to define a term

I wasn’t asking you to make up some new definition, from within your own tiny little brain. The term “intellectual (dis)honesty” is already well-defined in English. I was asking you to do the work of discovering what this term already means, and how you had made a mistake of misusing it.

I will provide for you a definition of intellectual dishonesty as a form of lying.

That is in conflict with the already existing and wide-spread consensus understanding of the term. Using public words but claiming different, private, definitions, is — ironically — a n example of intellectual dishonesty!

It is perfectly clear that you have nothing except…

You are correct, that when engaging with someone who is not an honest debater, content is no longer relevant, and all that is left is the amusement of poking the hornet’s nest with a stick, to watch them all buzz about in fury.

You accused me of lying, or what you call intellectual dishonesty,…

Different things, alas. Good try, though.

…without ever showing where or how.

You’re doing it right in this very thread! Misusing common words, and then refusing to admit any hint of error, is in fact a wonderful example of your intellectual dishonesty!

137. Major.Freedom
7. April 2016 at 16:47

Egmont:

“Science was there before economics was there. Economists either conform to scientific standards or they are out of science: they are in NO position to redefine scientific criteria.”

Actually that is incorrect. The way you define science, was actually invented by the Vienna School in the 1920s. Then, somewhat later on, Karl Popper invented an amended definition of that definition of science, which is what you now believe as “the scientific method”.

Ecomomics was already it’s own field of inquiry, a science, by the time Adam Smith wrote Wealth of Nations in 1776.

In other words, economic science predates “Popperism.”

“Because economics — as represented by the four failed sects Walrasians, Keynesians, Marxians, Austrians..”

You have not shown how Austrianism “fails”…

” — has never risen above the level of a proto-science it has become popular among economists to question the standards, to lower them or, as Blaug aptly put it, ‘to play tennis with the net down’. When this is pointed out, economists make the salto backward: ‘Economics is not a Science with a capital S’ (Solow).”

You cite Blaug but his criticism of Austrianism was totally absent of substantive argument.

The a priorism that underlies economic science, actually underlies the natural sciences. Popper’s theory was an abortive attempt at defining science. It only works with non-acting phenomena because the best scientific method for non-acting phenomena, is not violated by it. It is not s foundation for scientific progress.

The only way, indeed the only reason how, science can progress at all is due to the apodictic certainty of actual knowledge of reality. Popperism does not actually allow for scientific progress. It treats all statements permanently as hypothetical. You betray the very principles of the definition of science you profess. The way you are arguing certain theories as being disproven, refuted, failed, etc, is a rank contradiction of what positivism even allows for.

The most you could ever say about Austrianism, using positivism, is that heretofore Austrianism has been falsified, but it could always be confirmed in the future because of our inability as humans to know with certainty absolute truths of empirical reality.

You keep citing other people’s claims as your own, without you yourself ever displaying any understanding of Austrianism, and without you ever actually providing any substantive argument for WHY the principles of praxeology are untenable.

“The scientific method is well-defined: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.”

But you refuse to engage in a continuous discussion about the structure and propositions of Austrianism.

And no, what you are referring to is only your definition of “science”. Your definition is not objective. It also self-contradicts when applied to knowledge and actions.

“Logical consistency is secured by applying the axiomatic-deductive method and empirical consistency is secured by applying state-of-the-art testing.”

The methof of empirical testing assumes the non-empirical proposition of constant causal relations in the concatenation an sequence of events. To say any theory has been falsified or confirmed presumes this constancy. That constancy does not exist for knowledge and actions.

“Economics fails on both counts: the axiomatic foundations are provably false and testing is regularly inconclusive.”

YOU HAVE NEVER PROVEN FALSE THE AXIOM OF ACTION.

You claim the axioms are probably false, but again, you fail to grasp the fact that ANY proof, ANY disproof, is ITSELF an action. In other words, it cannot be proven false because it is true. It is true so it cannot be proven false.

True rality can never be disproven.

The reality of your posts here that claim without proof or evidence or even testing that the axioms can proven false, is that it is itself a manifestation of the axiom of action. In order for your words to even constitute an argument, it has to be regarded as an action.

“So, economics has happily established itself in the swamp between true and false where ‘nothing is clear and everything is possible’ (Keynes)”

Keynes believed it was absolutely clear that government budget deficits are necessary or else capitalism will choke on its own savings excesses. He was certain of this. So he was inconsistent on this score.

As are you.

“The swamp between the hard rocks of true and false is the natural habitat of blathering frogs, of which there are four species, which are clearly identifiable by their respective axiom sets. The funniest species are the Austrians which are in the possession of an irrefutable magic axiom but never managed to produce a testable proposition.”

What kind of a proposition is this:

“All knowledge of reality is either empirical or analytic”?

That Austrianism does not presume to make the mistake of believing action is subject to testing, that is by design. You say they have never produced a testable proposition as if that is inherently a flaw. But you have never shown this to be a flaw. You just have a definition of science, and anything that does not fit that definition, is not a science by definition. That is it. Your entire “argument” here is one giant semantics red herring. All you have is a definition, yet definitions are not knowledge of empirical reality according to your own professed standard.

I define science as including praxeology, and math, and formal logic.

You can define science as only positivism, and within that sphere, as only Popperism.

But scientific progress took place prior to the 1920s so positivism does not have a monopoly over science. You are wrong.

Mathematics has never enabled anyone to produce a single testable proposition. According to your “logic”, mathematics must be abolished and forgotten. It does not produce testable theories. Mathematics is an a priori science. Praxeology is an a priori science.

“So, there is NO WAY to get an Austrian frog ever out of the swamp. And of this they are very proud.”

Proud of what again? Being able to easily withstand the spitballs you call a critique?

“No problem with this, of course. What has to be made crystal clear is that Austrians have never produced anything of scientific value.”

According to your definition of science.

According to not your definition of science, Austrianism has contributed more than you ever will.

“For the proof re-read Major.Freedom’s posts. With this stuff the poor souls in scientific hell are tortured.”

This is not a substantive rebuttal either. No, the statements I wrote cannot be refuted by you merely referring to them.

“Time to become constructive now: let’s proceed with the paradigm shift.”

You are not constructing or contributing anything of value.

138. Major.Freedom
7. April 2016 at 17:05

Don Geddis:

“Major.Freedom: “If you are ASKING me to define a term””

“I wasn’t asking you to make up some new definition”

All definitions are made up.

There is no definition that enters our mind from without. We create definitions. This is the “analytic” part of knowledge that empiricism regards as not really knowledge.

“from within your own tiny little brain.”

But your definitions are from your tiny little brain.

All you’re saying is that you don’t approve of my definition. Well, I do not approve of yours. Mine is the commonly used definition, not that this matters in any way whatsoever to my argument.

“The term “intellectual (dis)honesty” is already well-defined in English. I was asking you to do the work of discovering what this term already means, and how you had made a mistake of misusing it.”

But I did not misuse it even if we agree to the common definition.

“I will provide for you a definition of intellectual dishonesty as a form of lying.”

“That is in conflict with the already existing and wide-spread consensus understanding of the term. Using public words but claiming different, private, definitions, is — ironically — a n example of intellectual dishonesty!”

No it isn’t. Not if I am willing to provide you with my definition as what I actually use as a definition in whatever post.

Intellectual dishonesty as commonly defined, is indeed a form of lying. It is not lying about facts, it is knowingly communicating in such a way so as to intentionally portray one’s statements as something different than what one actually believes.

I believe every singke thing I say, 100%. If you want an example of intellectual dishonesty, then this blog’s author is one. Sumner admitted to being intellectually dishonest when he first started blogging. He says he doesn’t do it anymore, but according to his own philosophy, he could very still be intellectually dishonest, it is just that fewer people are “letting him get away with it.” He gives the silent treatment to those who don’t let him get away with falsehoods.

“It is perfectly clear that you have nothing except…”

“You are correct, that when engaging with someone who is not an honest debater, content is no longer relevant, and all that is left is the amusement of poking the hornet’s nest with a stick, to watch them all buzz about in fury.”

Don’t blame me for your failures. I did not force you to not engage in any substantive argument. I did not force you to play this silly game of semantics as a substitute for a total lack of any ability to engage the theory Egmont is critiquing.

You are failing, and that has nothing to do with me.

And you have not shown me to be dishonest. You keep making this claim.

To call someone dishonest is to accuse them of claiming something as true that they don’t actually believe to be true.

In other words, it requires you to know what is in my mind.

Over the Internet.

I have a recommendation for you: If you want to make me look bad, as a substitute for making my arguments look bad, then do please understand that I will not even consider this a debate of substance, but a stupid game of watching you make a fool of yourself.

“You accused me of lying, or what you call intellectual dishonesty,…”

“Different things, alas. Good try, though.”

No, one is a form of the other, as commonly defined.

“…without ever showing where or how.”

“You’re doing it right in this very thread! Misusing common words, and then refusing to admit any hint of error, is in fact a wonderful example of your intellectual dishonesty!”

You have not shown me to be misusing any terms, how can I possibly admit to what you have not shown me to have done?!?!

139. Don Geddis
7. April 2016 at 18:58

MF: “Intellectual dishonesty as commonly defined … is knowingly communicating in such a way so as to intentionally portray one’s statements as something different than what one actually believes.

Nope, wrong again. Instead of just trying to imagine what you think the term might mean, could you try just once to explore the real world out there, do some research, and discover what the commonly understood meaning of the phrase is?

Your guesses continue to be pathetically wrong. Instead of just asserting your beliefs, can you provide any evidence? References? Links?

Remember: we don’t care what you imagine the term means, and we don’t care if you think you have some kind of “better” definition. The question instead is: what is the commonly understood definition of the the phrase “intellectual dishonesty” that everybody else uses? This isn’t about you at all. This about common usage of other people.

140. Egmont Kakarot-Handtke
7. April 2016 at 22:24

Farewell to Major.Freedom

Science was there before economics was there, that is, Newton was there before Adam Smith was there. Newton is famous for his ‘hypotheses non fingo’, which means, I do not waffle but prove.

“But he [A. Smith] had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.” (Schumpeter)

While physics has evolved exponentially, economics is stuck at the proto-scientific level of storytelling. The key narrative is supply-demand-equilibrium and it has been false already in Smith’s days. After 200 years, compare the entirely vacuous General Equilibrium Theory with General Relativity Theory — is there any doubt that economics is a failed science?

Seems, that the irrefutable magic action axiom somehow did not work.

Economists are confused confusers and Austrians are the worst of them. See ‘Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist’
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1210665#reg

Egmont Kakarot-Handtke

141. Major.Freedom
8. April 2016 at 17:59

Egmont:

http://rationalwiki.org/wiki/Scientism

You are a victim of this bigotry.

————————–

“Science was there before economics was there, that is, Newton was there before Adam Smith was there. Newton is famous for his ‘hypotheses non fingo’, which means, I do not waffle but prove.”

I guess we can add poor reading comprehension to your list of dubious qualities.

When you used the term “science” on this blog, you used in a particular way, which I referred to many times, namely positivism.

Newton was not a positivist. He understood that human knowledge can indeed learn of absolute truths of reality. While he did not use the same terms, it can be argued that Newton did not reject a priorism.

For you to cite Newton as an example of a scientist who engaged in a “scientific method” that predates economics, is you inadvertantly (due to ignorance, wow, what a surprise) agreeing with the validity of the very method I am teaching you about here!

See your bigotry is so engrained that you don’t even have any idea of the actual methods used by a particular individual. To you, simply understanding Newton to be a “scientist” triggers to you that scientistic bigotry that misleads you into believing that his method is the method YOU are advocating here (and also misunderstanding).

Newton was, by the way, a devout theist. His method was precisely the kind of method that you would mock today. Newton wrote:

“When I wrote my treatise about our Systeme I had an eye upon such Principles as might work with considering men for the beliefe of a Deity and nothing can rejoyce me more then to find it useful for that purpose.”

If people today did what Newton did, you would call them “anti-scientific”.

“But he [A. Smith] had no such ambitions; in fact he disliked whatever went beyond plain common sense. He never moved above the heads of even the dullest readers. He led them on gently, encouraging them by trivialities and homely observations, making them feel comfortable all along.”

Adam Smith’s theory was a retrogression in economic thought. His direct predecessors were superior. His popularity was a historical curiosity, with many complex events involved, which I won’t get I to here because you don’t even understand the subject matter started here.

“While physics has evolved exponentially, economics is stuck at the proto-scientific level of storytelling.”

The “economics” you are referring to is the very economics that tried and failed to mimic physics. That is not the fault of economic science. It is the fault of scientistic bigots.

“The key narrative is supply-demand-equilibrium and it has been false already in Smith’s days.”

The concept of “equilibrium”, if you actually understood Austrianism, is not and never was an explanation of the real world. It was always merely a mental tool used to distinguish the world from that concept, so as to better understand it. To know what the world is not, helps us narrow it down to what it is.

You are so sloppy in your analysis that you lump basic crude mainstream theoretical constructs such as equilibrium, and straw man every other theory except the ludicrous one you’re peddling here.

“After 200 years, compare the entirely vacuous General Equilibrium Theory with General Relativity Theory — is there any doubt that economics is a failed science?”

You are a failed student of economics.

“Seems, that the irrefutable magic action axiom somehow did not work.”

Did not work at what? You just acted when you made that claim. All claims you will ever make will be actions, because claiming is an action.

It is hilarious watching you stumble and fumble in trying to disprove A is A.

“Economists are confused confusers and Austrians are the worst of them. See ‘Confused Confusers: How to Stop Thinking Like an Economist and Start Thinking Like a Scientist’”

You still have not answered the question. I’ve asked more than 5 times now:

What kind of a proposition is this, oh evader of everything difficult?:

“All knowledge is either empirical or analytic”?

Stumble and fumble away some more! It is enjoyable. Yet another internet anti-Austrian left in the dust.

142. Major.Freedom
8. April 2016 at 18:13

Don Geddis:

“Nope, wrong again.”

Wait, where did you show me to be wrong a first time? Saying wrong again as if you did is inaccurate.

“Instead of just trying to imagine what you think the term might mean, could you try just once to explore the real world out there, do some research, and discover what the commonly understood meaning of the phrase is?”

But I am not trying to imagine what the term might mean. The meaning I am referring to is the commonly used meaning. I don’t know where you got your definition, but even if your definition is idiosyncratic, that has no bearing on the truth or falsehood of the content of your arguments.

Why do you continue to engage in semantics as if it will ever resolve your intellectual issues? Some philosophers have made careers out of playing semantics. We call that school of thought hermeneutics, or rhetoric. To them, all propositions are ungrounded, and that there is no such thing as any inter-subjective common ground that objectively constrains true propositions.

Of course they, like you, did not practise what they preached. Their propositions were and remain presented as apodictic truths.

“Your guesses continue to be pathetically wrong.”

You have not shown them to be wrong.

“Instead of just asserting your beliefs, can you provide any evidence? References? Links?”

Ah there it is. You are only able to repeat what others write. You have no thoughts of your own. Your mind consists mostly of various claims others have made, and which statements (also from others) should be juxtaposed against them and which should not, all so as to promote certain theories and ideas and discounting other theories and ideas, with really no rational grounds in your own understanding of what you are doing, but it nevertheless provides you with utility. A very dangerous and irresponsible way to live, but ALSO a series of actions nonetheless. See, praxeology explains the logical categories of everyone’s arguments, including the arguments of people like you who ostensibly disagree and reject them, contradictorily of course. You’re like a whoopie cushion. There should a seeming consistency and stability in what you could be saying, but it is coming out as a series of obnoxious unpleasantries designed to create unpleasant experiences of others.

“Remember: we don’t care what you imagine the term means, and we don’t care if you think you have some kind of “better” definition. The question instead is: what is the commonly understood definition of the the phrase “intellectual dishonesty” that everybody else uses? This isn’t about you at all. This about common usage of other people.”

The common definition is that it is a form of lying.

143. Major.Freedom
8. April 2016 at 18:25

Egmont:

The reason why positivism is the preferred method of states:

https://www.lifesitenews.com/opinion/why-do-progressives-use-force-to-redefine-society-nietzsche-knew

144. Don Geddis
8. April 2016 at 20:55

MF: “The meaning I am referring to is the commonly used meaning. … The common definition is that it is a form of lying.

No, it isn’t. But since you refuse to provide any supporting evidence or references, we’re forced to remain stuck in a childish game of: “yes it is”, “no it isn’t”, ad infinitum. Since you’re not an honest debater, it is impossible to make progress, even on a matter as trivial as the common definition of a well-known term.

I don’t know where you got your definition

Is that because you are stupid? Because I just did the most obvious Google search, and even provided you two direct links in a comment above. All you need to do is click on them.

In return, of course, you haven’t bothered to do even that courtesy for me. You keep repeating your (false) claim about what the term means, but never take even the first step to justify (evidence, references) that your claimed definition is the commonly used one.

Hey! Here’s another kind of intellectual dishonesty: I suspect you have the kind of mental sickness that requires you to have the last word. Will you be able to avoid temptation, and not respond, now that you have been beaten? Seems unlikely.

145. Major.Freedom
9. April 2016 at 06:35

Don Geddis:

“No, it isn’t.”

Yes, it is.

But since you refuse to provide any supporting evidence or references, we’re forced to remain stuck in a childish game of: “yes it is”, “no it isn’t”, ad infinitum.”

No, we’re not.

“Since you’re not an honest debater”

You have not shown me to be dishonest, because a. It would require mind reading, which you cannot do, and b. I believe what I say as the truth. The most you could say I simply that I am mistaken, or incorrect, or believe something as true that is not actually true. Which you have not done there either.

To accue someone of intellectual dishonesty is to accuse them of deceit, willful misleading, or in short, to present arguments as true, but secretly believing them to be untrue.

The reason why I define, and why most people define, intellectual dishonesty as a form of lying, is that intellectual dishonesty is the very same class of deceitful argumentation. There is a good reason why most people use “you’re lying” and “you’re being dishonest” interchangeably.

“it is impossible to make progress, even on a matter as trivial as the common definition of a well-known term.”

Well when all you do is engage in semantics, of arguing over definitions, of course you will never make any progress. Definitions are ultimately personal choices and are never wrong. There is no rational grounds to settle disagreements over definitions.

“I don’t know where you got your definition”

“Is that because you are stupid? Because I just did the most obvious Google search, and even provided you two direct links in a comment above. All you need to do is click on them.”

But your links are consistent with what I said. That is why I asked where you got your definition.

“In return, of course, you haven’t bothered to do even that courtesy for me.”

You deserve no courtesy from me. You lost any chance of that when you called for me to be killed.

“You keep repeating your (false) claim about what the term means, but never take even the first step to justify (evidence, references) that your claimed definition is the commonly used one.”

You had not shown how the definition I use is “false”, because definition cannot be PROVED false. They are not claims about objective reality.

You can define intellectual dishonesty and lying any way you want. You will be neither right not wrong to do so.

“Hey! Here’s another kind of intellectual dishonesty: I suspect you have the kind of mental sickness that requires you to have the last word. Will you be able to avoid temptation, and not respond, now that you have been beaten? Seems unlikely.”

Are you talking to yourself, or me? Probably you. Haha

146. Egmont Kakarot-Handtke
10. April 2016 at 13:35

From microfoundations to macrofoundations
Takeaway points for Scott Sumner

• Economics is a failed science. It consists actually of political and theoretical economics. Political economics is scientifically worthless.

• Psychology, sociology, behaviorism, political science, geopolitics, history, anthropology, evolutionary theory, institutionalism, law, ethics, philosophy are NOT economics. The valid results of these independent disciplines are taken into economics by way of multidisciplinary cooperation if needed.

• Economics is NOT about human nature/behavior/action but about the evolution of the economic system as a whole.

• Partial analysis is of extremely limited value and in most cases runs directly into the fallacy of composition. Microfoundations have therefore to be replaced by macrofoundations.

• Macrofounded economics determines first of all the objective Profit Law because it is the key to all of economics. Who does not understand what profit is has no idea how the actual economy works. Objective economic laws are free of nonentities and enable conclusive testing.

• Walrasianism, Keynesianism, Marxianism, Austrianism — all four got profit wrong. These approaches are scientifically worthless.

• Economics has nothing to offer to other disciplines — in particular not to sociology and political science — because it has produced not much, if anything, of scientific value since Adam Smith. The representative economist cannot even tell the essential difference between income and profit.

• The ongoing paradigm shift consists in the replacement of the subjective-behavioral axioms of methodological individualism by objective-structural axioms, i.e. by macrofoundations.*

• People who have not realized in the old age that maximization-and-equilibrium is scientific garbage will not be admitted to the new age because of proven scientific incompetence.

• Scientific imperialism will put an end to economics as cargo cult science: “So we really ought to look into theories that don’t work, and science that isn’t science.” (Feynman)

Egmont Kakarot-Handtke

* See ‘Objective Principles of Economics’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2418851

and ‘Major Defects of the Market Economy’
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2624350

147. Gary Anderson
21. April 2016 at 10:52

Wow. Praxeology assumes free will. But what if there is no free will? praxeology excludes the concept of divine revelation. But what if divine revelation exists?

You can’t be a libertarian and a true Christian at the same time.