Instability – not stability – is what defines our economies

24 september, 2012 kl. 12:58 | Publicerat i Economics | 1 kommentar

With an almost religious conviction many neoclassical economists seem to still think of modern market economies as being in a blissful state of stable equilibrium. How that is even conceivable today – in the fifth year of the latest economic and financial crises that started back in 2008 – is really beyond my wildest imagination.

And it was also beyond the imagination of  Dan Kervick, who last week wrote an interesting article – Shamanistc Economics – lambasting neoclassical economists for this unfounded theoretical assumption.

Canadian neoclassical economist Nick Rowe was not pleased and wrote a more than usual pompous and condescending comment, telling Kervick that ”before writing about this stuff” he really did ought to think about the difference between ”a system with multiple equilibria … where befiefs about intrinsically irrelevant events can change which equilibrium is the outcome” and a ”dynamic system with a unique equilibrium time path, where beliefs about that future equilibrium path are part of what determines the current outcome.”

Kervick was non-plussed. His answer is a good read:

You guys in economics are supposed to be empirical scienctists, not philosophers. You are supposed to develop the a priori elements of your science only so that you can produce empirically testable models of the real world, and then bring those models to bear on the world we actually live in. You are also supposed to help develop techniques that are relevant to decision-making and govenment policy in having predictable outcomes. You need to map the terrain of the actual world in detail, so you can help others navigate through it. To the extent you want to give policy advice that deserves to be taken seriously, your focus needs to be on contingent reality, not a priori possibility.

My criticism is that an awful lot of the policy advice we are getting lately is from theorists who are lost in the clouds of a priori models, and who don’t have a clear understanding of the structure of the actual economic order we live in, based on the functioning of actual, highly contingent and specific economic and political institutions.

If you are trying to navigate your way through a mountain range, you don’t ask a geologist; you ask a guide who has explored the mountain range in detail. If the guide has geological knowledge that can definitely help, but the geological knowledge itself is not sufficient to guide people through the terrain. If you want to fix a broken airplane engine, you don’t ask a theoretical thermodynamicist, you ask an engineer. The engineer’s knowledge of thermodynamics can help, but the thermodynamical knowledge itself is not sufficient to know how to fix an airplane engine.

It is not enough for you to desciibe logically coherent possible worlds with possible sets of beliefs about possible equilibria and possible time paths to those equilibria, where possible statements, and possible ections have possible effects as a result. You need to show we live in such a world – and this is a task for which you don’t seem to have much patience. When challenged on the score of institutional facts, you have repeatedly retreated back into the contruction of other models and thought experiments.

Almost a century and a half after Léon Walras founded general equilibrium theory, economists still have not been able to show that markets lead economies to equilibria.

We do know that – under very restrictive assumptions – equilibria do exist, are unique and are Pareto-efficient.

But after reading Franklin M. Fisher‘s masterly article The stability of general equilibrium – what do we know and why is it important? one has to ask oneself – what good does that do?

As long as we cannot show, except under exceedingly special assumptions, that there are convincing reasons to suppose there are forces which lead economies to equilibria – the value of general equilibrium theory is nil. As long as we can not really demonstrate that there are forces operating – under reasonable, relevant and at least mildly realistic conditions – at moving markets to equilibria, there can not really be any sustainable reason for anyone to pay any interest or attention to this theory.

A stability that can only be proved by assuming ”Santa Claus” conditions is of no avail. Most people do not believe in Santa Claus anymore. And for good reasons. Santa Claus is for kids, and general equilibrium economists ought to grow up, leaving their Santa Claus economics in the dustbin of history.

Continuing to model a world full of agents behaving as economists – ”often wrong, but never uncertain” – and still not being able to show that the system under reasonable assumptions converges to equilibrium (or simply assume the problem away), is a gross misallocation of intellectual resources and time.

How to really reorient economics

23 september, 2012 kl. 18:23 | Publicerat i Theory of Science & Methodology | 3 kommentarer

A couple of economic methodology colleagues have been kind enough to share their questioning views on my review of Mary Morgan’s book The World in the Model. What they especially seem to react to is the following claim I made in that review:

Even if epistemology is important and interesting in itself, it ought never be anything but secondary in science, since the primary questions asked have too be ontological. First after having asked questions about ontology can we start thinking about what and how we can know anything about the world. If we do that, I think it is more or less necessary also to be more critical of the reasoning by  modelling that has come to be considered the only and right way to reason in mainstream economics for more tham 50 years now.

Tony Lawson provides a really good plaidoyer for the importance of ontological under-labouring of science in general, and economics in particular, in this video:  
 

Modern Monetary Theory

23 september, 2012 kl. 16:06 | Publicerat i Economics | 2 kommentarer

 

OECD Education at a Glance – ingen rolig läsning för svenska lärare

23 september, 2012 kl. 15:20 | Publicerat i Education & School | 1 kommentar

Årets upplaga av OECD:s Education at a Glance är ingen rolig läsning för svenska lärare.

Svenska lärare tjänar i snitt 42 000 kronor mindre om året än OECD-genomsnittet.

Under perioden 2000-2010 ökade lärarlönerna i Sverige i snitt med 8% och i OECD med 22%.

Som diagrammmet nedan visar var utvecklingen när det gäller lön efter 15 års yrkesverksamhet inte heller mycket att hänga i julgranen:
 

Keynes transcended?

22 september, 2012 kl. 11:12 | Publicerat i Varia | 1 kommentar

Jan Garbarek

22 september, 2012 kl. 10:01 | Publicerat i Varia | Kommentarer inaktiverade för Jan Garbarek

For the benefit of those who still haven’t found their way to Jan Garbarek – here’s a couple of his masterpieces!
 

 

 

The World in the Model – How the Model Became the Message in Economics

21 september, 2012 kl. 17:29 | Publicerat i Economics, Theory of Science & Methodology | 1 kommentar

In her new book – The World in the Model Mary Morgan gives a historical account of how the model became the messsage in economics. On the question of how the models provide a method of enquiry where they can function both as ”objects to enquire into” and as ”objects to enquire with”, Morgan argues that model reasoning involves a kind of xperiment. She writes:

It may help to clarify my account of modelling as a double method of enquiry in economics if we compare it with two of the other reasoning styles … the method of mathematical postulation and proof and the method of laboratory experiment.

If we portray mathematical modelling as a version of the method of mathematical postulation and proof … models can indeed be truth-makers about that restricted and mathematical small world … But whether they can come to valid conclusions about the behaviour of their actual economic universe is a much more difficult problem …

If we make the alternative comparison with laboratory experiments … the important question of whether the results of the experiment on the model can be transferred to the world that the model represents can be considered an inference problem …

Of course, model experiments in economics are usually pen-and-paper, calculator, or computer, experiments on a model world or an analogical world … not laboratory experiments on the real world …

The experiments made on models are different from the experiments made in the laboratory … because model experiments are less powerful as an epistemic genre. It does make a difference to the power and scope of inference that the model experiment is carried out on a pen-and-paper represenation, that is on the world in the model, not on the world itself.

Now, I think it is but fair to say that field experiments, model experiments and laboratory experiments, are basically facing the same problems in terms of generalizability and external validity. They all have the same basic problem – they are built on rather artificial conditions and have difficulties with the trade-off between internal and external validity. The more artificial conditions, the more internal validity, but also less external validity. The more we rig experiments/field studies/models to avoid confounding, the less the conditions are reminicent of the real target system.

The nodal issue is how economists using different isolation strategies in different nomological machines attempt to learn about causal relationships. By contrast with Morgan, I would more explicitly and forcefully argue that  the generalizability of all these research strategies – because the probability is high that causal mechanisms are different in different contexts and the lack of homogeneity/stability/invariance – doesn’t give us warranted export licenses to the real target system.

If we mainly conceive of laboratory experiments, field studies and model experiments as heuristic tools, the dividing line is difficult to perceive. But if we see them as activities that ultimately aspire to say something about the real target system, then the problem of external validity is central. Let me elaborate a little on this point:

Assume that you have examined how the performance of A is affected by B (treatment). How can we extrapolate/generalize to new samples outside the original population? How do we know that any replication attempt succeeds? How do we know when these replicated experimental results can be said to justify inferences made in samples from the original population? If, for example, P(A|B) is the conditional density function for the original sample, and we are interested in doing a extrapolative prediction of E [P(A|B)], how can we know that the new sample’s density function is identical with the original? Unless we can give some really good argument for this being the case, inferences built on P(A|B) is not really saying anything on that of the target system’s P*(A|B).

As I see it is, this is the heart of the matter. External validity/extrapolation/generalization is founded on the assumption that we could make inferences based on P(A|B) that is exportable to other populations for which P*(A|B) applies. Sure, if one can convincingly show that P and P* are similar enough, the problems are perhaps surmountable. But arbitrarily just introducing functional specification restrictions of the type invariance/stability/homogeneity, is, at least for an epistemological realist far from satisfactory. And often it is – unfortunately – exactly this that I see when I take part of neoclassical economists’ models/laboratory experiments/field studies.

By this I do not mean to say that empirical methods per se are so problematic that they can never be used. On the contrary, I am basically – though not without reservations – in favour of the increased use of laboratory experiments and field studies within economics. Not least as an alternative to completely barren ”bridge-less” axiomatic-deductive theory models. My criticism is more about aspiration levels and what we believe that we can achieve with our mediational epistemological tools and methods in the social sciences.

Many laboratory experimentalists claim that it is easy to replicate experiments under different conditions and therefore a fortiori easy to test the robustness of experimental results. But is it really that easy? If in the example given above, we run a test and find that our predictions were not correct – what can we conclude? That B works in X but not in Y? That B worked in the field study conducted in year Z but not in year W? Population selection is almost never simple. Had the problem of external validity only been about inference from sample to population, this would be no critical problem. But the really interesting inferences are those we try to make from specific laboratory experiments/fields to specific real world situations/institutions/structures that we are interested in understanding or (causally) to explain. And then the population problem is more difficult to tackle.

Nowadays many economists are in for randomized experiments. But just as most other methods used within neoclassical economics, randomization is basically a deductive method – or as Morgan calls it, ”a deductive mode of manipulation”. Given the assumptions (such as manipulability, transitivity, separability, additivity, linearity etc) these methods deliver deductive inferences. The problem, of course, is that we will never completely know when the assumptions are right. Real target systems are seldom epistemically isomorphic to our axiomatic-deductive models/systems, and even if they were, we still have to argue for the external validity of the conclusions reached from within these epistemically convenient models/systems. Causal evidence generated by randomization procedures may be valid in  laboratory models, but what we usually are interested in, is causal evidence in the real target system we happen to live in.

Ideally controlled laboratory experiments (still the benchmark even for natural and quasi experiments) tell us with certainty what causes what effects – but only given the right “closures”. Making appropriate extrapolations from (ideal, accidental, natural or quasi) experiments to different settings, populations or target systems, is not easy. It works there is no evidence for it will work here. Causes deduced in a laboratory experiment still have to show that they come with an export-warrant to the target population/system. The causal background assumptions made have to be justified, and without licenses to export, the value of “rigorous” and “precise” methods is despairingly small.

Most neoclassical economists want to have deductively automated answers to fundamental causal questions. But to apply “thin” methods we have to have “thick” background knowledge of what’s going on in the real world, and not in (ideally controlled randomized) laboratory experiments or ”models experiment”. Conclusions can only be as certain as their premises – and that also goes for methods based on laboratory experiments.

Morgan’s new book – and especially those carefully selected case studies presented – is an important contribution to the history of economics in general, and more specifically to our understanding of how mainstream economics has become a totally model-based discipline. 

However, I haven’t – as you may have surmised – read it without objections.

In her description of how economists have used – and are using – these ”reasoning tools” that we call models, Morgan puts to much emphasis – at least for my taste – on modelling as an epistemic genre of ”reasoning to gain knowlege about the economic world”. Even if epistemology is important and interesting in itself, it ought never be anything but secondary in science, since the primary questions asked have too be ontological. First after having asked questions about ontology can we start thinking about what and how we can know anything about the world. If we do that, I think it is more or less necessary also to be more critical of the reasoning by  modelling that has come to be considered the only and right way to reason in mainstream economics for more tham 50 years now.

In a way it is rather symptomatic of the whole book that  when Morgan gets in the the all-important question of external validity in isolationist closed economic models, she most often halts at posing the question as ”if those elements can be treated in isolation” and noting that this aspect of models is ”much more difficult to charcterize than the way economists use models to investigate their ideas and theories”. Absolutely! But this doesn’t make model reasonings as ”objects to enquire” into activities that from a scientific point of view are on a par with the much more important question if these models really have export-certificates or not. I think many readers of the book would have found it even more interesting to read if they would get more of  argued and critical evaluations of the activities, and not just more or less analytical descriptions.

So, by all means, read Morgan’s book. It’s in many ways a superb book. As a detailed and well-informed case studies-based history it is definitely a proof of great scholarship. I’m sure it will be a classic in the history of modern economics – but – to get more on the question if the economists’ models really give truthful and valid explanations on things happening in the real world, also do read two other modern classics – Tony Lawson’s Economics and Reality (1997) and Nancy Cartwright’s Hunting Causes and Using Them  (2009).

New Keynesian macroeconomics and involuntary unemployment

21 september, 2012 kl. 08:56 | Publicerat i Economics | 2 kommentarer

People calling themselves ”New Keynesians” – a gross misnomer – ought to be rather embarrassed by the fact that the kind of microfounded dynamic stochastic general equilibrium models they use, cannot incorporate such a basic fact of reality as involuntary unemployment!

Of course, working with representative agent models, this should come as no surprise. If one representative agent is employed, all representative agents are. The kind of unemployment that occurs is voluntary, since it is only adjustments of the hours of work that these optimizing agents make to maximize their utility.

What did Keynes himself had to say on the issue? In General Theory (1937, chapter 2), he writes:

The classical school [maintains that] while the demand for labour at the existing money-wage may be satisfied before everyone willing to work at this wage is employed, this situation is due to an open or tacit agreement amongst workers not to work for less, and that if labour as a whole would agree to a reduction of money-wages more employment would be forthcoming. If this is the case, such unemployment, though apparently involuntary, is not strictly so, and ought to be included under the above category of ‘voluntary’ unemployment due to the effects of collective bargaining, etc …

The classical theory … is best regarded as a theory of distribution in conditions of full employment. So long as the classical postulates hold good, unemployment, which is in the above sense involuntary, cannot occur. Apparent unemployment must, therefore, be the result either of temporary loss of work of the ‘between jobs’ type or of intermittent demand for highly specialised resources or of the effect of a trade union ‘closed shop’ on the employment of free labour. Thus writers in the classical tradition, overlooking the special assumption underlying their theory, have been driven inevitably to the conclusion, perfectly logical on their assumption, that apparent unemployment (apart from the admitted exceptions) must be due at bottom to a refusal by the unemployed factors to accept a reward which corresponds to their marginal productivity …

Obviously, however, if the classical theory is only applicable to the case of full employment, it is fallacious to apply it to the problems of involuntary unemployment – if there be such a thing (and who will deny it?). The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight – as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. Something similar is required to-day in economics. We need to throw over the second postulate of the classical doctrine and to work out the behaviour of a system in which involuntary unemployment in the strict sense is possible.

The final court of appeal for macroeconomic models is the real world, and as long as no convincing justification is put forward for how the inferential bridging de facto is made, macroeconomic modelbuilding is little more than “hand waving” that give us rather little warrant for making inductive inferences from models to real world target systems. If substantive questions about the real world are being posed, it is the formalistic-mathematical representations utilized to analyze them that have to match reality, not the other way around.

Vinstfrågan redux

21 september, 2012 kl. 08:42 | Publicerat i Politics & Society | Kommentarer inaktiverade för Vinstfrågan redux

 

Reality Check on Mitt Romney

21 september, 2012 kl. 08:10 | Publicerat i Economics, Politics & Society | 2 kommentarer

 

The man who gave the 1% a face

20 september, 2012 kl. 17:19 | Publicerat i Politics & Society | Kommentarer inaktiverade för The man who gave the 1% a face

 

Sometimes a graph says more than a thousand words

20 september, 2012 kl. 16:37 | Publicerat i Economics | 1 kommentar

If you thought that inequality was no problem, I think you should take a look at this graph:
 

The vertical axis shows how much a one percent rise in the income of your father affects your expected income (the higher the number, the lower is the expected social mobility). On the horizontal axis is the Gini coefficient, which is a measure of inequality (the higher the number, the higher is the inequality).

Sometimes a graph says more than a thousand words …

Vår tids löntagarfondsstrid

20 september, 2012 kl. 15:42 | Publicerat i Politics & Society | 3 kommentarer

Maria Ludvigsson skriver idag på SvD:s ledarsida att ”vinstfrågan är vår tids löntagarfondsstrid”.

Så rätt, så rätt – och Sara Granér ger i sin teckning ett perspektivrikt svar på varför.

Bond-buying won’t save the euro-zone

19 september, 2012 kl. 18:19 | Publicerat i Economics | Kommentarer inaktiverade för Bond-buying won’t save the euro-zone

The president of Germany’s Bundesbank – Jens Weidmann – yesterday quoted Goethe’s Faust to make his point on the new bond-buying policy of the European Central Bank. According to Weidmann, the play highlighted “the core problem of today’s paper money-based monetary policy” and the “potentially dangerous correlation of paper money creation, state financing and inflation”.

Financial Times reports:

In early scenes from Goethe’s tragedy, Mephistopheles persuades the heavily indebted Holy Roman Emperor to print paper money – notionally backed by gold that had not yet been mined – to solve an economic crisis, with initially happy results until more and more money is printed and rampant inflation ensues.

While he did not make the comparison from Faust Part Two explicit, for Mr Weidmann there are clearly parallels with the performance of the ECB in trying to save the euro.

Mr Weidmann has said the ECB plan, dubbed outright monetary transactions, or OMT, is “tantamount to financing governments by printing banknotes”.

In Tuesday’s speech in Frankfurt, Goethe’s birthplace,he said: “The state in Faust Part Two is able at first to rid itself of its debts while consumer demand grows strongly and fuels a strong recovery. But this later develops into inflation and the monetary system is destroyed by rapid currency depreciation.”

Mr Weidmann did not directly address ECB policy. But monetary policy independence and policy makers who target price stability were, he said, “necessary, but not sufficient, conditions” to maintain people’s trust in a currency.

The ECB declined to suggest any literary precedents that might be used to make the case in favour of OMT.

Mr Weidmann did not highlight another cautionary tale from the play for economists. Faust in the final earthbound scene comes up with a plan for universal prosperity and happiness … and promptly dies.

The euro-zone is today facing the same kind of financial and economic problems that have trapped Japan for almost three decades. To even for a second believe that the new bond-buying policy of ECB would take the euro countries out of the deep recession that a single currency and concomitant austerity policies have placed these countries in, is a belief without any other foundation than hope itself.

Bond-buying may be good, but it’s certainly not good enough to keep the defenseless uncompetitive periphery countries of the euro-zone from falling deeper in to the pit, since the painful adjustment costs in face of the intermittent asymmetric disturbances that hit the euro-zone will not be much effected.

Lars E. O. Svensson, showed in a recent article – ”The Possible Unemployment Cost of Average Inflation below a Credible Target” – that the Swedish Riksbank during the years 1998-2011 had been pursuing a policy that in reality made inflation on average 0.6 percentage units lower than the goal set by the Riksbank. The Phillips Curve he estimated showed that unemployment as a result of this overly ”austere” inflation level had been almost 1% higher than if one had stuck to the set inflation goal of 2%. Not to mention what would have happened to unemployment if the inflation goal had been 3-4% …

What Svensson is saying, without so many words, is that the Swedish Fed for no reason at all has made people unemployed. As a consequence of a faulty monetary policy the unemployment is considerably higher than it would have been if the Swedish Fed had done its job adequately.

And the same goes for the ECB and the euro-zone.

The recovery of the euro-zone – with or without a bond-buying ECB – is still not in sight. As long as ECB is bound to its inflation objective – ”below, but close to, 2%” – there can’t be any real hope for solving the economic and financial quagmire that this gobsmackingly stupid price stability goal has put half of Europe in.

Added: And, of course, we shouldn’t forget that the ECB is conditioning its purchasing of government bonds on budget cuts in the peripheral countries. Cuts that will only make it even harder to get out of the euro pit. It’s really a perverse policy since it basically asks these countries to sink even deeper into the austerity pit before  the ECB will try to help them out of it with fresh cash. Unbelievable! And so wrong, so wrong.

Greg Mankiw’s stochastic mumbo jumbo on rising inequality

19 september, 2012 kl. 09:18 | Publicerat i Economics, Politics & Society | 5 kommentarer


Harvard economist and George Bush advisor Greg Mankiw is having problems with explaining the rising inequality we have seen for the last 30 years in both the US and elsewhere in Western societies. He writes:

Even if the income gains are in the top 1 percent, why does that imply that the right story is not about education?

If indeed a year of schooling guaranteed you precisely a 10 percent increase in earnings, then there is no way increasing education by a few years could move you from the middle class to the top 1 percent.

But it may be better to think of the return to education as stochastic. Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role.

To me this is nothing but really one big evasive attempt at trying to explain away a very disturbing structural shift that has taken place in our societies. And change that has very little to do with stochastic returns to education. Those were in place also 30 or 40 years ago. At that time they meant that perhaps a CEO earned 10-12 times what ”ordinary” people earns. Today it means that they perhaps earn 100-200 times  what ”ordinary” people earns.

A question of education? No way! It is a question of  income and wealth increasingly being concentrated in the hands of a very small and privileged elite, greed and a lost sense of a common project of building a sustainable society.

 

Mitt Romney – the ugly truth on video

18 september, 2012 kl. 10:57 | Publicerat i Politics & Society | 3 kommentarer

This is really, really, ugly and upsetting:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what.

These are people who pay no income tax.

So now you know that, all you elderly, students and unemployed.
Romney has just made it very easy for half of the Americans to vote.

Why RBC models can’t be taken seriously as a guide to policy

18 september, 2012 kl. 09:53 | Publicerat i Economics | 2 kommentarer

James Tobin explained why already thirty years ago:

They try to explain business cycles solely as problems of information, such as asymmetries and imperfections in the information agents have. Those assumptions are just as arbitrary as the institutional rigidities and inertia they find objectionable in other theories of business fluctuations … I try to point out how incapable the new equilibrium business cycles models are of explaining the most obvious observed facts of cyclical fluctuations … I don’t think that models so far from realistic description should be taken seriously as a guide to policy … I don’t think that there is a way to write down any model which at one hand respects the possible diversity of agents in taste, circumstances, and so on, and at the other hand also grounds behavior rigorously in utility maximization and which has any substantive content to it.

Arjo Klamer, The New Classical Mcroeconomics: Conversations with the New Classical Economists and their  Opponents,Wheatsheaf Books, 1984

Rigorous models lacking relevance is not to be taken seriously. I would rather be vaguely right, than precisely wrong – as Keynes once put it.

Annie Lööf och Centerpartiet fortsätter rasa

17 september, 2012 kl. 15:28 | Publicerat i Politics & Society | 2 kommentarer

 
 
 
 
 
 
I Aftonbladet kan vi idag läsa om Centerpartiet och Annie Lööfs fortsatta ras mot botten:

Förhoppningarna på Annie Lööf var skyhöga.

Men efter ett år som ­partiledare är krisen för Centerpartiet djupare än någonsin.

I den senaste mätningen från Aftonbladet/United Minds backar de till 3,3 procent.

På söndag har Annie Lööf varit partiledare i ett år. Bemärkelsedagen hade kunnat firas med ljusare siffror. Parti­kamraternas förhoppningar om en ”Lööf-effekt” har grusats. I den senaste mätningen från Aftonbladet/United Minds tappar Centerpartiet drygt en tredjedel av sitt väljarstöd. Det innebär att de för andra gången sedan i juni hamnar under riksdagsspärren.

Förvånande? Egentligen inte, om man betänker vad denna vår egen Margaret Thatcher står för. Även om Annie Lööf inte är ensam ansvarig för centerns kräftgång, är det svårt att inte tolka siffrorna som att väljarna ger underkänt till Stureplansmaffian och dess fullföljande av Maud Olofssons omdaning av centerpartiet till ett nyliberalt högerparti.

Annie Lööf-effekten har uteblivit. Och det med rätta. Ska centerna ha en chans att sitta kvar i riksdagen är det hög tid att man vänder skutan tillbaka mot centerns ursprung som ett landsbygds- och miljöparti. Nyliberal dumdryghet med idoler och förebilder som Ayn Rand och Margaret Thatcher ger inga röster i 2000-talets Sverige.

Keynes on the psychology of finance

17 september, 2012 kl. 14:45 | Publicerat i Economics | 1 kommentar

To-day, in many parts of the world, it is the serious embarrassment of the banks which is the cause of our gravest concern …

[The banks] stand between the real borrower and the real lender. They have given their guarantee to the real lender; and this guarantee is only good if the money value of the asset belonging to the real borrower is worth the money which has been advanced on it.

It is for this reason that a decline in money values so severe as that which we are now experiencing threatens the solidity of the whole financial structure. Banks and bankers are by nature blind. They have not seen what was coming. Some of them … employ so-called ”economists” who tell us even to-day that our troubles are due to the fact that the prices of some commodities and some services have not yet fallen enough, regardless of what should be the obvious fact that their cure, if it could be realised, would be a menace to the solvency of their institution. A ”sound” banker, alas! is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.

But to-day they are beginning at last to take notice. In many countries bankers are becoming unpleasantly aware of the fact that, when their customers’ margins have run off, they are themselves ”on margin” …

The present signs suggest that the bankers of the world are bent on suicide. At every stage they have been unwilling to adopt a sufficiently drastic remedy. And by now matters have been allowed to go so far that it has become extraordinarily difficult to find any way out.

It is necessarily part of the business of a banker to maintain appearances and to profess a conventional respectability which is more than human. Lifelong practices of this kind make them the most romantic and the least realistic of men. It is so much their stock-in-trade that their position should not be questioned, that they do not even question it themselves until it is too late. Like the honest citizens they are, they feel a proper indignation at the perils of the wicked world in which they live,—when the perils mature; but they do not foresee them. A Bankers’ Conspiracy! The idea is absurd! I only wish there were one! So, if they are saved, it will be, I expect, in their own despite.

John Maynard Keynes, Essays in Persuasion, 1931

Popper till kaffet – lysande artikel i SvD

17 september, 2012 kl. 09:49 | Publicerat i Economics, Politics & Society | 4 kommentarer

Det är inte var dag man får Karl Popper till morgonkaffet. Men idag skedde det. I Svenska Dagbladet Näringsliv skriver Per Lindvall om europrojektet som ett systemskifte som fått vad Popper benämnde ”oavsiktliga konsekvenser”:

Införandet av euron är ett exempel på ett av vår tids systemskiften. Euroekonomierna skulle , som det heter, konvergera. I stället har de divergerat och de ekonomiska och sociala spänningarna inom unionen är på bristningsgränsen.

Även andra storskaliga ekonomiska experiment har tappat färgen. Det handlar om idén att marknaden – den osynliga handen – är överlägsen när det gäller att allokera kapital dit det ger bäst långsiktig avkastning, och att avreglera och konkurrensutsätta verksamhet är det saliggörande medlet för att skapa ekonomisk effektivitet och kreativ förnyelse.

Idén om att konkurrens driver utvecklingen framåt håller på att överges till förmån för insikten om att symbios, ömsesidigt beroende och samarbete i många fall är en minst lika framgångsrik strategi i såväl naturen som i samhällsutvecklingen.

Med ekonomijournalister som Per Lindvall och Andreas Cervenka har SvD etablerat sig som en av ytterst få tidningar i Sverige som bedriver ekonomisk journalistik värd namnet. Alla vi som sedan länge tröttnat på övriga mediers tyckmyckentrutade nonsens bockar och bugar!

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