Macron et le respect

20 June, 2018 at 13:05 | Posted in Varia | Leave a comment

 

Fort avec les faibles, faible avec les forts.

macr

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Politische Korrektheit — Nein, danke!

20 June, 2018 at 09:51 | Posted in Politics & Society | Leave a comment

poliIch bin, und zwar von ganzem Herzen, Schriftstellerin, Reisejournalistin, Literaturver-anstalterin und Weltreisende – und in allen diesen meinen Inkarnationen nagt die Political Correctness zunehmend an meinen Fundamenten. Nicht zuletzt an meinen Idealen: Aufklärung. Gleichberechtigung. Empathie und eine Mitmenschlichkeit, die blind ist für Kategorien wie Ethnie, Gender, Herkunft. War PC nicht einst, vor ihrer Hysterisierung, für ebendiese Ideale angetreten? Mittlerweile aber sind die Kollateralschäden mannigfaltig, uns Schreibende treffen sie hart, denn Sprache ist das Medium unseres Denkens und unserer Kommunikation. Ich habe von schmerzlichen Verlusten zu berichten …

Eine Vorabrezension des Jugendbuches American Heart über ein dystopisches Amerika, in dem Muslime verfolgt werden, löst einen Shitstorm aus, weil die weiße Protagonistin einer Muslimin hilft und die Autorin sich somit eine Art kulturell übergriffige Anmaßung zuschulden kommen lässt. Ich ringe um Verständnis und verliere. Die Doktrin der “kulturellen Aneignung” scheint darauf abzuzielen, eine neue Rassensegregation zu errichten: Empathie soll sich anscheinend künftig auf Angehörige der eigenen Ethnie/Geschlechtsgruppe/ Altersgruppe/Steuerklasse beschränken. Dachte ich noch hoffnungslos oldschool, das Ziel von Antirassismus und Feminismus sei es, in meinem Gegenüber den Menschen zu sehen, nicht Ethnie oder Geschlecht, soll ich nun nichts anderes mehr sehen. Im Hintergrund kommt die Entwicklung der Menschheit zu einem bremsenquietschenden Halt: Da das Lernen von anderen Kulturen nunmehr als cultural appropriation tabu ist, wird es recht tribalistisch fad werden auf diesem Planeten. Sich die Stagnation mit guter Lektüre vertreiben zu können, ist unwahrscheinlich – beruht doch Literatur auf Empathie für Protagonisten, die anders sind als man selbst.

Tina Uebel/Die Zeit

Why the euro cannot be saved

17 June, 2018 at 13:20 | Posted in Economics | 4 Comments

The euro may be approaching another crisis. Italy, the eurozone’s third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, Germany, impedes the necessary reforms and insists on policies that exacerbate the inherent problems, using rhetoric seemingly intended to inflame passions.

euroItaly has been performing poorly since the euro’s launch. Its real (inflation-adjusted) GDP in 2016 was the same as it was in 2001. But the eurozone as a whole has not been doing well, either … If one country does poorly, blame the country; if many countries are doing poorly, blame the system … The euro was a system almost designed to fail. It took away governments’ main adjustment mechanisms (interest and exchange rates); and, rather than creating new institutions to help countries cope with the diverse situations in which they find themselves, it imposed new strictures – often based on discredited economic and political theories – on deficits, debt, and even structural policies.

The euro was supposed to bring shared prosperity, which would enhance solidarity and advance the goal of European integration. In fact, it has done just the opposite, slowing growth and sowing discord …

The central problem in a currency area is how to correct exchange-rate misalignments like the one now affecting Italy. Germany’s answer is to put the burden on the weak countries already suffering from high unemployment and low growth rates. We know where this leads: more pain, more suffering, more unemployment, and even slower growth …

Across the eurozone, political leaders are moving into a state of paralysis: citizens want to remain in the EU, but also want an end to austerity and the return of prosperity. They are told they can’t have both. Ever hopeful of a change of heart in northern Europe, troubled governments stay the course, and the suffering of their people increases …

Germany and other countries in northern Europe can save the euro by showing more humanity and more flexibility. But, having watched the first acts of this play so many times, I am not counting on them to change the plot.

Joseph Stiglitz

The euro has taken away the possibility for national governments to manage their economies in a meaningful way — and in Italy, just as in Greece a couple of years ago, the people have had to pay the true costs of its concomitant misguided austerity policies.

The unfolding of the repeated economic crises in euroland during the last decade has shown beyond any doubts that the euro is not only an economic project but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.

austerity22But do the peoples of Europe really want to deprive themselves of economic autonomy, enforce lower wages and slash social welfare at the slightest sign of economic distress? Is increasing income inequality and a federal überstate really the stuff that our dreams are made of? I doubt it.

History ought to act as a deterrent. During the 1930s our economies didn’t come out of the depression until the folly of that time — the gold standard — was thrown on the dustbin of history. The euro will hopefully soon join it.

Economists have a tendency to get enthralled by their theories and model and forget that behind the figures and abstractions there is a real world with real people. Real people that have to pay dearly for fundamentally flawed doctrines and recommendations.

The Bells of Dawn

17 June, 2018 at 12:06 | Posted in Varia | Leave a comment


Dmitri Hvorostovsky — Дми́трий Хворосто́вский
1962 – 2017
RIP

Noah Smith’s unicorn defence​ of economics

17 June, 2018 at 10:08 | Posted in Economics | Leave a comment

Unlike the old neoclassical theories, game theory concerns strategic interaction between different people. It can encompass things like wage bargaining, fraud and lots of other things that neoclassical equilibrium glosses over or leaves out.  And in game theory, free markets full of rational actors can easily, even regularly, lead to inefficient outcomes that require government intervention.

Noah Smith/Bloomberg

unicorn“Free markets full of rational actors.” Sounds great does it not? The problem? In the real world,​ there is no such thing! Defending mainstream economics against its critics with game theoretical unicorns actually only confirms how justified the critic is.

Half a century ago there was​​ widespread hopes game theory would provide a unified theory of social science. Today it has become obvious those hopes did not materialize. This ought to come as no surprise. Reductionist and atomistic models of social interaction — such as those mainstream economics and game theory are founded on — will never deliver sustainable building blocks for a realist and relevant social science. That is also the reason why game theory never will be anything but a footnote in the history of social science.

Heavy use of formalism and mathematics easily foster the view that a theory is scientific. But although game theory may produce ‘absolute truths’ in imaginary model worlds, in the real world the game theoretic models are nothing but fables. Fables much reminiscent of the models used in logic, but also like them, delivering very little of value for social sciences trying to explain and understand real-life phenomena. The games that game theory portrays are model constructs, models without significant predictive capacity simply because they do not describe an always much more complex and uncertain reality.

canopenrAlthough some economists — obviously including Noah Smith — consider it useful to apply game theory and use game theoretical definitions, axioms, and theorems and (try to) test if real-world phenomena ‘satisfy’ the axioms and the inferences made from them, that view is without a ​warrant. When confronted with the real world we can (hopefully) judge if game theory really tells us if things are as postulated. The final court of appeal for models is the real world, and as long as no convincing justification is put forward for how the inferential bridging de facto is made, model building is little more than hand-waving that give us a rather​ little warrant for making inductive inferences from the model world to the real world.

The real challenge in social science is to accept uncertainty and still try to explain why different kinds of transactions and social interactions take place. Simply conjuring problems away by assuming patently unreal things and treating uncertainty as if it was possible to reduce to stochastic risk, is like playing tennis with the net down. That is not the kind of game that scientists working on constructing a relevant and realist science want to play.​

How to be a great economist

17 June, 2018 at 09:00 | Posted in Economics | Leave a comment

The master-economist must possess a rare combination of gifts …​ He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.

John Maynard Keynes

Economics students today are complaining more and more about the way economics is taught. The lack of fundamental diversity — not just path-dependent elaborations of the mainstream canon — and narrowing of the curriculum, dissatisfy econ students all over the world. The frustrating lack of real-world relevance has led many of them to demand the discipline to start developing a more open and pluralistic theoretical and methodological attitude.

There are many things about the way economics is taught today that worry yours truly. Today’s students are force-fed with mainstream neoclassical theories and models. That lack of pluralism is cause for serious concern.

However, I find the most salient deficiency in ‘modern’ economics education in the total absence of courses in the history of economic thought and economic methodology. That is deeply worrying since a science that doesn’t self-reflect and asks important methodological and science-theoretical questions about the own activity, is a science in dire straits.

Methodology is about how we do economics, how we evaluate theories, models and arguments. To know and think about methodology is important for every economist. Without methodological awareness it’s really impossible to understand what you are doing and why you’re doing it. Dismissing methodology is dismissing a necessary and vital part of science.

For someone who has spent forty years in economics academia, it’s hopeful to see all these young economics students that want to see a real change in economics and the way it’s taught. Never give up. Never give in.

Layers of Light

16 June, 2018 at 21:28 | Posted in Varia | Leave a comment

Nils Landgren (trombone) & Esbjörn Svensson (piano).

It breaks my heart every time I play this music and I am reminded Esbjörn is no longer with us.

Thank goodness your music lives on, Esbjörn.

Pachelbel

16 June, 2018 at 21:09 | Posted in Economics, Varia | 2 Comments

 

Statistics and econometrics are not very helpful for understanding economies

16 June, 2018 at 20:32 | Posted in Statistics & Econometrics | Leave a comment

leamer1 zoomedA statistician may have done the programming, but when you press a button on a computer keyboard and ask the computer to find some good patterns, better get clear a sad fact: computers do not think. They do exactly what the programmer told them to do and nothing more. They look for the patterns that we tell them to look for, those and nothing more. When we turn to the computer for advice, we are only talking to ourselves …

Mathematical analysis works great to decide which horse wins, if we are completely confident which horses are in the race, but it breaks down when we are not sure. In experimental settings, the set of alternative models can often be well agreed on, but with nonexperimental economics data, the set of models is subject to enormous disagreements. You disagree with your model made yesterday, and I disagree with your model today. Mathematics does not help much resolve our internal intellectual disagreements.

Ed Leamer

Indeed. As social researchers, we should never equate science with mathematics and statistical calculation. All science entail human judgement, and using mathematical and statistical models don’t relieve us of that necessity. They are no substitutes for thinking and doing real science. Or as a great German philosopher once famously wrote:

There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.

Econometric inconsistencies

16 June, 2018 at 10:17 | Posted in Statistics & Econometrics | 1 Comment

In plain terms, it is evident that if what is really the same factor is appearing in several places under various disguises, a free choice of regression coefficients can lead to strange results. It becomes like those puzzles for children where you write down your age, multiply, add this and that, subtract something else, and eventually end up with the number of the Beast in Revelation.

deb6e811f2b49ceda8cc2a2981e309f39e3629d8ae801a7088bf80467303077bProf. Tinbergen explains that, generally speaking, he assumes that the correlations under investigation are linear … One would have liked to be told emphatically what is involved in the assumption of linearity. It means that the quantitative effect of any causal factor on the phenomenon under investigation is directly proportional to the factor’s own magnitude … But it is a very drastic and usually improbable postulate to suppose that all economic forces are of this character, producing independent changes in the phenomenon under investigation which are directly proportional to the changes in themselves ; indeed, it is ridiculous. Yet this is what Prof. Tinbergen is throughout assuming …

J M Keynes

Keynes’ comprehensive critique of econometrics and the assumptions it is built around — completeness, measurability, independence, homogeneity, and linearity — is still valid today.

Most work in econometrics is made on the assumption that the researcher has a theoretical model that is ‘true.’ But — to think that we are being able to construct a model where all relevant variables are included and correctly specify the functional relationships that exist between them, is not only a belief without support, it is a belief impossible to support.

The theories we work with when building our econometric regression models are insufficient. No matter what we study, there are always some variables missing, and we don’t know the correct way to functionally specify the relationships between the variables.

Every econometric model constructed is misspecified. There is always an endless list of possible variables to include, and endless possible ways to specify the relationships between them. So every applied econometrician comes up with his own specification and ‘parameter’ estimates. The econometric Holy Grail of consistent and stable parameter-values is nothing but a dream.

A rigorous application of econometric methods in economics really presupposes that the phenomena of our real world economies are ruled by stable causal relations between variables.  Parameter-values estimated in specific spatio-temporal contexts are presupposed to be exportable to totally different contexts. To warrant this assumption one, however, has to convincingly establish that the targeted acting causes are stable and invariant so that they maintain their parametric status after the bridging. The endemic lack of predictive success of the econometric project indicates that this hope of finding fixed parameters is a hope for which there really is no other ground than hope itself.

The theoretical conditions that have to be fulfilled for econometrics to really work are nowhere even closely met in reality. Making outlandish statistical assumptions do not provide a solid ground for doing relevant social science and economics. Although econometrics has become the most used quantitative methods in economics today, it’s still a fact that the inferences made from them are as a rule invalid.

Econometrics is basically a deductive method. Given the assumptions, it delivers deductive inferences. The problem, of course, is that we will never completely know when the assumptions are right. Conclusions can only be as certain as their premises — and that also applies to econometrics.

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