Trump’s robber baron presidency

18 November, 2017 at 10:49 | Posted in Politics & Society | Leave a comment

 

In Trump’s world, ​the rich in the US obviously are not rich enough. So he has set out to lower the corporate tax rate to 20 percent and abolish the estate tax.

Trump’s vision for the US​ is an unregulated and immensely unequal​ country. The working and middle classes are, of course, überjoyed …

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Why Krugman and Stiglitz are no real alternatives to mainstream economics

17 November, 2017 at 20:38 | Posted in Economics | 7 Comments

verso_978-1-781683026_never_let_a_serious_crisis__pb_edition__large_300_cmyk-dc185356d27351d710223aefe6ffad0cLittle in the discipline has changed in the wake of the crisis. Mirowski thinks that this is at least in part a result of the impotence of the loyal opposition — those economists such as Joseph Stiglitz or Paul Krugman who attempt to oppose the more viciously neoliberal articulations of economic theory from within the camp of neoclassical economics. Though Krugman and Stiglitz have attacked concepts like the efficient markets hypothesis … Mirowski argues that their attempt to do so while retaining the basic theoretical architecture of neoclassicism has rendered them doubly ineffective.

First, their adoption of the battery of assumptions that accompany most neoclassical theorizing — about representative agents, treating information like any other commodity, and so on — make it nearly impossible to conclusively rebut arguments like the efficient markets hypothesis. Instead, they end up tinkering with it, introducing a nuance here or a qualification there … Stiglitz’s and Krugman’s arguments, while receiving circulation through the popular press, utterly fail to transform the discipline.

Paul Heideman

Despite all their radical rhetoric, Krugman and Stiglitz are — where it really counts — nothing but die-hard mainstream neoclassical economists. Just like Milton Friedman, Robert Lucas or Greg Mankiw.

The only economic analysis that Krugman and Stiglitz  — like other mainstream economists — accept is the one that takes place within the analytic-formalistic modelling strategy that makes up the core of mainstream economics. All models and theories that do not live up to the precepts of the mainstream methodological canon are pruned. You’re free to take your models — not using (mathematical) models at all is considered totally unthinkable —  and apply them to whatever you want — as long as you do it within the mainstream approach and its modelling strategy. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. ‘If it isn’t modelled, it isn’t economics.’

straight-jacketThat isn’t pluralism.

That’s a methodological reductionist straightjacket.

So, even though we have seen a proliferation of models, it has almost exclusively taken place as a kind of axiomatic variation within the standard ‘urmodel’, which is always used as a self-evident bench-mark.

Krugman and Stiglitz want to purvey the view that the proliferation of economic models during the last twenty-thirty years is a sign of great diversity and abundance of new ideas.

But, again, it’s not, really, that simple.

Although mainstream economists like to portray mainstream economics as an open and pluralistic ‘let a hundred flowers bloom,’ in reality it is rather ‘plus ça change, plus c’est la même chose.’

Applying closed analytical-formalist-mathematical-deductivist-axiomatic models, built on atomistic-reductionist assumptions to a world assumed to consist of atomistic-isolated entities, is a sure recipe for failure when the real world is known to be an open system where complex and relational structures and agents interact. Validly deducing things in models of that kind doesn’t much help us understanding or explaining what is taking place in the real world we happen to live in. Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modelling exercises pursued by mainstream economists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Just telling us that the plethora of mathematical models that make up modern economics  “expand the range of the discipline’s insights” is nothing short of hand waving.

No matter how many thousands of technical working papers or models mainstream economists come up with, as long as they are just ‘wildly inconsistent’ axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and possible explanations of real economies.

Linearity — a dangerous assumption

16 November, 2017 at 14:44 | Posted in Statistics & Econometrics | Leave a comment

 

Den goda viljan

16 November, 2017 at 14:39 | Posted in Varia | 4 Comments

 

Getting the rabbit into the neoclassical hat

15 November, 2017 at 21:30 | Posted in Economics | Leave a comment

In public, including in the training of economists, Neoclassical economics usually reads its models backwards. This gives the illusion that they show the behaviour of individual economic units determining sets of equilibrium values for markets and for whole economies. It hides the fact that these models have been constructed not by investigating the behaviour of individual agents, but rather by analysing the requirements of achieving a certain macro state, that is, a market or general equilibrium. It is the behaviour found to be logically consistent with these hypothetical macro states that is prescribed for the individual agents, rather than the other way around.fullThis macro-led analysis, this derivation of the micro from a macro assumption, is and always has been the standard analytical procedure of theory construction for the Neoclassical narrative. Sometimes, for pedagogical reasons, authors call attention to how the “individualist” rabbit really gets into the Neoclassical hat. For example, consider the following passage from a once widely used introduction to economics.
“For the purpose of our theory, we want the preference ranking to have certain properties, which give it a particular, useful structure. We build these properties up by making a number of assumptions, first about the preference-indifference relation itself, and then about some aspects of the preference ranking to which it gives rise” (Gravell and Rees 1981, p. 56, emphasis added).
In other words, it is not the behaviour of the individual agents that determines the model’s overall structure, nor even the structure of the preference ranking. Instead it is the macro requirement for a particular structure which dictates the behaviour attributed to the individual agents. The “purpose” of this “particular, useful structure” is to rationalize the macro “conclusion” assumed at the beginning of the exercise. The resulting model shows micro phenomena determining macro phenomena, whereas, in fact, it is the starting point of the macro structure that has determined the behaviour of the model’s micro elements. Likewise, “rationality” becomes something defined to meet the exigencies of a desired conclusion.

Yes, indeed, ‘rationality’ in mainstream neoclassical economics is defined and used​ in rather suspect ways. Take, for example, the rational expectations assumption. Rational expectations in the mainstream economists’ world imply​ that relevant distributions have to be time independent. This amounts to assuming that an economy is like a closed system with known stochastic probability distributions for all different events. In reality, ​it is straining one’s beliefs to try to represent economies as outcomes of stochastic processes. An existing economy is a single realization tout court, and hardly conceivable as one realization out of an ensemble of economy-worlds ​since an economy can hardly be conceived as being completely replicated over time. It is — to say the least — very difficult to see any similarity between these modelling assumptions and the expectations of real persons. In the world of the rational expectations hypothesis, ​we are never disappointed in any other way than as when we lose at the roulette wheels. But real life is not an urn or a roulette wheel. And that’s also the reason why allowing for cases where agents make ‘predictable errors’ in mainstream macro​ models doesn’t take us any closer to a relevant and realist depiction of actual economic decisions and behaviours. If we really want to have anything of interest to say on real economies, financial crisis and the decisions and choices real people make we have to replace the rational expectations hypothesis with more relevant and realistic assumptions concerning economic agents and their expectations than childish roulette and urn analogies.

‘Rigorous’ and ‘precise’ mainstream neoclassical models cannot be considered anything else than unsubstantiated conjectures as long as they aren’t supported by evidence from outside the theory or model. To my knowledge no in any way decisive empirical evidence has been presented.

No matter how precise and rigorous the analysis, and no matter how hard one tries to cast the argument in modern mathematical form, they do not push economic science forwards one single millimetre​ if they do not stand the acid test of relevance to the target. No matter how clear, precise, rigorous or certain the inferences delivered inside these models are, they do not say anything about real-world​ economies.

Volker Schlöndorff on Dustin Hoffman and Hollywood pigs

14 November, 2017 at 16:13 | Posted in Politics & Society | Leave a comment

harvey-weinstein-5Vielleicht werden die Ereignisse rund um Harvey Weinstein über Hollywood hinaus einmal als eine Zeitenwende im Verhältnis der Geschlechter gesehen werden. Doch es darf nicht sein, dass von dieser ‘Säuberungsaktion’ Menschen erfasst werden, die gar nicht in diese Kategorie gehören …

Arme Dustin, ich wunsche dir, dass du, dein Ruf und deine tollen Filme nicht in den Abgrund hineingezogen werden. In den schwarzen Strudel, verursacht von den wahren Verbrechern in Hollywood, diesen pigs.

Volker Schlöndorff/Die Zeit

On Econs and Humans

13 November, 2017 at 18:10 | Posted in Economics | 3 Comments

nudgeMany years ago, Thaler was hosting dinner for some guests (other then-young economists) and put out a large bowl of cashew nuts to nibble on with the first bottle of wine. Within a few minutes it became clear that the bowl of nuts was going to be consumed in its entirety, and that the guests might lack sufficient appetite to enjoy all the food that was to follow. Leaping into action, Thaler grabbed the bowl of nuts, and (while sneaking a few more nuts for himself removed the bowl to the kitchen, where it was put out of sight.

When he returned, the guests thanked him for removing the nuts. The conversation immediately turned to the theoretical question of how they could possibly be happy about the fact that there was no longer a bowl of nuts in front of them … In economics (and in ordinary life), a basic principle is that you can never be made worse off by having more options, because you can always turn them down. Before Thaler removed the nuts the group had the choice of whether to eat the nuts or not – now they didn’t. In the land of Econs, it is against the law to be happy about this!

Die Mauer​ ist weg!

13 November, 2017 at 17:39 | Posted in Politics & Society | Comments Off on Die Mauer​ ist weg!

In November​ 1989 the Berin Wall came down — and changed European history forever.

För en skola bortom elevers kontingenta fakticitet

13 November, 2017 at 15:05 | Posted in Education & School | 3 Comments

rolandzSkolpedagogiska reformimpulser borde så småningom sluta att förlita sig på sjuttiotalets motiv, innebörder och semantik. Annars går det som när en orkester orubbligt fortsätter att spela de gamla välkända melodierna utan att bry sig om att publiken för länge sedan har lämnat salen. Det är på tiden att spela något nytt, man borde våga en ny början. Farväl till sjuttiotalet!

Thomas Ziehe, ”Adjö till sjuttiotalet”, KRUT 2/1998

År efter år kommer larmrapporter om hur illa det står till i svensk skola. PISA och andra studier visar otvetydigt att svenska skolelever presterar sämre och sämre. Och vi som arbetar inom universitetsvärlden märker av att våra studneter i allt större utsträckning saknar nödiga förkunskaper för att kunna bedriva seriösa studier.

År efter år ser vi hur viljan att bli lärare minskar. I början på 1980-talet fanns det nästan åtta sökande per plats på lågstadielärarutbildningen. Idag är det en sökande per plats på grundlärarutbildningen. Detta är en samhällskatastrof som vi borde tala om. I en värld där allt hänger på kunskap är det på sikt avgörande för svensk ekonomi att åter göra läraryrket attraktivt.

År efter år ser vi hur lärarlönerna urholkas. OECD har i fler av sina rapporter menat sig kunna visa att framgångsrika skolnationer tenderar att prioritera höga lärarlöner. Lärarlönerna som andel av BNP per capita är i Sverige väsentligt lägre än i de länder som ligger i topp i PISA-studierna.

År efter år ser vi hur ojämlikheten ökar på många områden. Inte minst vad avser inkomster och förmögenhet. Skillnader i livsbetingelser för olika grupper vad avser klass, etnicitet och genus är oacceptabelt stora.

År efter år kan vi konstatera att i skolans värld har uppenbarligen familjebakgrunden fortfarande stor betydelse för elevers prestationer. Självklart kan det inte uppfattas som annat än ett kapitalt misslyckande för en skola med kompensatoriska aspirationer.

tilsam

År efter år kan vi notera att tvärtemot alla reform-pedagogiska utfästelser så är det främst barn ur hem utan studietraditioner som förlorat i den omläggning i synen på skolan som skett under det senaste halvseklet. I dag – med skolpengar, fria skolval och friskolor – har utvecklingen tvärtemot alla kompensatoriska utfästelser bara ytterligare stärkt de högutbildade föräldrarnas möjligheter att styra de egna barnens skolgång och framtid. Det är svårt att se vilka som med dagens skola ska kunna göra den ”klassresa” så många i min generation har gjort.

Allt detta känner vi väl till. Men jag tror att det också finns andra — och kanske än viktigare — djupgående strukturella orsaker bakom den svenska skolans kräftgång de senaste decennierna.

Continue Reading För en skola bortom elevers kontingenta fakticitet…

How to learn a new language — drink alcohol!

12 November, 2017 at 19:09 | Posted in Varia | 3 Comments

Being more or less conversant in seven languages, yours truly knows from own experience that learning a new language isn’t easy. It sure takes time and effort but is worth every minute. And as science has shown — it improves your cognitive and sensory abilities. Now, speaking a foreign language is often intimidating. But as science — again — has shown: drinking alcohol helps …

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