Nils Frahm — Some

31 Jul, 2020 at 21:06 | Posted in Varia | 1 Comment

 

Som så ofta de senaste åren är det den eminente Eric Schüldt som får mig att hitta nya ljudintryck.

I dessa tider, när ljudrummet dränks i den kommersiella radions tyckmyckentrutade ordbajseri och pubertalflamsande tjafs, har man nästan gett upp om att få lyssna på riktig musik i radion.

radioMen det finns ljus i mörkret.

I programmet Text och musik med Eric Schüldt — som sänds på söndagsförmiddagarna i P2 mellan klockan 11 och 12 — kan man lyssna på seriös musik och en programledare som har något att säga och inte bara låter foderluckan glappa. Att få höra någon med intelligens och känsla tala om saker som vi alla går och bär på djupt inom oss — men nästan aldrig vågar prata om — är en lisa för själen.

I en tid — många kallar den ‘modern’ — då alla förväntar sig omedelbar behovstillfredsställelse här och nu, njuter jag av att få gå och längta efter nästa söndags musikupplevelse och betraktelser över tillvarons mystik.

Tack Eric!

The limited value of economic theory

31 Jul, 2020 at 11:08 | Posted in Economics | 2 Comments

225px-allais_pn_maurice-24x30-2001bSubmission to observed or experimental data is the golden rule which dominates any scientific discipline. Any theory whatever, if it is not verified by empirical evidence, has no scientific value and should be rejected.

Maurice Allais

Formalistic deductive ‘Glasperlenspiel’ can be very impressive and seductive. But in the realm of science, it ought to be considered of little or no value to simply make claims about a model and lose sight of reality.

In mainstream economics, empirical evidence still only plays a minor role and models largely function as a substitute for empirical evidence.

To have valid evidence is not enough. What economics needs is sound evidence. The premises of a valid argument do not have to be true, but a sound argument, on the other hand, is not only valid but builds on premises that are true. Aiming only for validity, without soundness, is setting the economics aspiration level too low for developing a realist and relevant science.

The dangers of calling your pet cat a dog

31 Jul, 2020 at 00:12 | Posted in Statistics & Econometrics | Comments Off on The dangers of calling your pet cat a dog

The assumption of additivity and linearity means that the outcome variable is, in reality, linearly related to any predictors … and that if you have several predictors then their combined effect is best described by adding their effects together …

catdogThis assumption is the most important because if it is not true then even if all other assumptions are met, your model is invalid because you have described it incorrectly. It’s a bit like calling your pet cat a dog: you can try to get it to go in a kennel, or to fetch sticks, or to sit when you tell it to, but don’t be surprised when its behaviour isn’t what you expect because even though you’ve called it a dog, it is in fact a cat. Similarly, if you have described your statistical model inaccurately it won’t behave itself and there’s no point in interpreting its parameter estimates or worrying about significance tests of confidence intervals: the model is wrong.

Andy Field

Econometrics fails miserably over and over again — and not only because of the additivity and linearity assumption

Another reason why it does, is that the error term in the regression models used is thought of as representing the effect of the variables that were omitted from the models. The error term is somehow thought to be a ‘cover-all’ term representing omitted content in the model and necessary to include to ‘save’ the assumed deterministic relation between the other random variables included in the model. Error terms are usually assumed to be orthogonal (uncorrelated) to the explanatory variables. But since they are unobservable, they are also impossible to empirically test. And without justification of the orthogonality assumption, there is, as a rule, nothing to ensure identifiability.

Nowadays it has almost become a self-evident truism among economists that you cannot expect people to take your arguments seriously unless they are based on or backed up by advanced econometric modelling​. So legions of mathematical-statistical theorems are proved — and heaps of fiction are being produced, masquerading as science. The rigour​ of the econometric modelling and the far-reaching assumptions they are built on is frequently not supported by data.

Man’s best friend (personal)

28 Jul, 2020 at 18:52 | Posted in Varia | Comments Off on Man’s best friend (personal)

The youngest member of the Meyer-Syll family — Hedda.
And yes — Ibsen is one of yours truly’s favorite dramatists …

IMG_0150

Why economics is an impossible science

28 Jul, 2020 at 10:32 | Posted in Economics | 14 Comments

In a word, Economics is an Impossible Science because by its own definition the determining conditions of the economy are not economic: they are “exogenous.” Supposedly a science of things, it is by definition without substance, being rather a mode of behavior: the application of scarce means to alternative ends so as to achieve the greatest possible satisfaction—neither means, ends, nor satisfaction substantially specified.stun Exogenous, however, is the culture, all those meanings, values, institutions, and structures, from gender roles, race relations, food preferences, and ethnicities, to technical inventions, legal regulations, political parties, etc., etc. The effect is a never-ending series of new theoretical breakthroughs, each an Economics du jour worthy of a Nobel prize, consisting of the discovery that some relevant little bit of the culture has something to do with it. Only to be soon superseded and forgotten since the continuous development and transformation of the culture, hence of the economy, leaves the Science in its wake. An impossible Science, by its own premises.

Marshall Sahlins

The increasing mathematization of economics has made mainstream economists more or less obsessed with formal, deductive-axiomatic models. Confronted with the critique that they do not solve real problems, they often react as Saint-Exupéry’s Great Geographer, who, in response to the questions posed by The Little Prince, says that he is too occupied with his scientific work to be able to say anything about reality. Confronting economic theory’s lack of relevance and ability to tackle real problems, one retreats into the wonderful world of economic models. One goes into the “shack of tools” — as my old mentor Erik Dahmén used to say — and stays there. While the economic problems in the world around us steadily increase, one is rather happily playing along with the latest toys in the mathematical toolbox.

Modern mainstream economics is sure very rigorous — but if it’s rigorously wrong, who cares?

Instead of making formal logical argumentation based on deductive-axiomatic models the message, we are better served by economists who more than anything else try to contribute to solving real problems. The motto of John Maynard Keynes is as valid as ever:

It is better to be vaguely right than precisely wrong

Dann sind wir Helden

27 Jul, 2020 at 23:34 | Posted in Varia | Comments Off on Dann sind wir Helden

 

Ich glaub’ das zu träumen / die Mauer / Im Rücken war kalt / Die Schüsse reissen die Luft / Doch wir küssen / Als ob nichts geschieht / Und die Scham fiel auf ihre Seite / Oh, wir können sie schlagen / Für alle Zeiten / Dann sind wir Helden / Nur diesen Tag

The Good, the Bad and the Ugly

27 Jul, 2020 at 20:02 | Posted in Varia | 2 Comments

 

Ennio Morricone (1928-2020) in memoriam.

Halcyon days

27 Jul, 2020 at 14:26 | Posted in Varia | 2 Comments

 
hasslö
 
Spending most of my time nowadays — in the shadow of the pandemic — at my summer residence in the Karlskrona archipelago, yours truly has plenty of time enjoying nature’s wonders. Pure energy for the soul.

Economics — the new astrology

27 Jul, 2020 at 08:48 | Posted in Economics | Comments Off on Economics — the new astrology

 

John Weeks (1941-2020)

27 Jul, 2020 at 00:12 | Posted in Economics | 2 Comments

 
jw
 
A great economist has passed away.
R.I.P.

It’s said that a star falls from heaven each time someone dies

26 Jul, 2020 at 15:19 | Posted in Varia | 2 Comments


Lisbetwp-1590939903265382057111.jpgIn loving memory of my mother Lisbeth Lissmark Pålsson (1937-1989).
Nils Ferlin was her favorite poet.
Those whom the gods love die young.

Clearly through nights’ coldness straying
with winds’ music frozen anew
dogs in the dark I heard baying,
as dogs around corpses can do,

widows I heard wailing wildly
and children sobbing for bread –
Stars do not care even mildly
if someone is born or is dead.

Piketty and the need for validating assumptions

26 Jul, 2020 at 13:32 | Posted in Economics | 3 Comments

validateAssumptions_cropped-401x321Say we have a diehard neoclassical model (assuming the production function is homogeneous of degree one and unlimited substitutability) such as the standard Cobb-Douglas production function (with A a given productivity parameter, and k  the ratio of capital stock to labor, K/L) y = Akα , with a constant investment λ out of output y and a constant depreciation rate δ of the “capital per worker” k, where the rate of accumulation of k, Δk = λyδk, equals Δk = λAkαδk. In steady-state (*) we have λAk*α = δk*, giving λ/δ = k*/y* and k* = (λA/δ)1/(1-α)Putting this value of k* into the production function, gives us the steady-state output per worker level y* = Ak*α= A1/(1-α)(λ/δ))α/(1-α)Assuming we have an exogenous Harrod-neutral technological progress that increases y with a growth rate g (assuming a zero labor growth rate and with y and k a fortiori now being refined as y/A and k/A respectively, giving the production function as y = kα) we get dk/dt = λy – (g + δ)k, which in the Cobb-Douglas case gives dk/dt = λkα– (g + δ)k, with steady-state value k* = (λ/(g + δ))1/(1-αand capital-output ratio k*/y* = k*/k*α = λ/(g + δ). If using Piketty’s preferred model with output and capital given net of depreciation, we have to change the final expression into k*/y* = k*/k*α = λ/(g + λδ). Now what Piketty does in Capital in the twenty-first century is to predict that g will fall and that this will increase the capital-output ratio. Let’s say we have δ = 0.03, λ = 0.1 and g = 0.03 initially. This gives a capital-output ratio of around 3. If g falls to 0.01 it rises to around 7.7. We reach analogous results if we use a basic CES production function with an elasticity of substitution σ > 1. With σ = 1.5, the capital share rises from 0.2 to 0.36 if the wealth-income ratio goes from 2.5 to 5, which according to Piketty is what actually has happened in rich countries during the last forty years.

Being able to show that you can get these results using one or another of the available standard neoclassical growth models and Piketty’s two crucial assumptions — β = K/Y and σ > 1 — is of course, from a realist point of view, of rather limited value. As usual — the really interesting thing is how in accord with reality are the assumptions you make and the numerical values you put into the model specification.

Professor Piketty chose a theoretical framework that simultaneously allowed him to produce catchy numerical predictions, in tune with his empirical findings, while soaring like an eagle above the ‘messy’ debates of political economists shunned by their own profession’s mainstream and condemned diligently to inquire, in pristine isolation, into capitalism’s radical indeterminacy. The fact that, to do this, he had to adopt axioms that are both grossly unrealistic and logically incoherent must have seemed to him a small price to pay.

Yanis Varoufakis

My friend the forest

26 Jul, 2020 at 10:00 | Posted in Economics | Comments Off on My friend the forest

 

This one is for you, Jan Milch. A friend non plus ultra.

Wayfaring stranger

26 Jul, 2020 at 09:48 | Posted in Varia | Comments Off on Wayfaring stranger

 

La ‘cancel culture’ aux Etats-Unis

25 Jul, 2020 at 19:24 | Posted in Politics & Society | 2 Comments

ccAux Etats-Unis, la nouvelle gauche, née des mouvements #metoo et Black Lives Matter, serait à l’origine d’un phénomène qui inquiète de nombreux intellectuels américains, la « cancel culture », autrement dit une tendance à vouloir faire taire des voix jugées dissonantes, dangereuses ou haineuses. Né sur les réseaux sociaux, ce phénomène se traduit par des mobilisations qui ont fini par provoquer des démissions, renvois, annulations de conférence, etc. Cinq des auteurs de la tribune que nous publions (Mark Lilla, Thomas Chatterton Williams, George Packer, David Greenberg et Robert Worth) sont des intellectuels engagés dans la défense de la liberté d’expression. Avec les 150 personnalités qui se sont jointes à leur appel, ils estiment qu’une frange de la gauche radicale américaine pratiquerait ainsi une forme de censure. Publié sur le site du mensuel américain Harper’s, ce texte devrait l’être également en Allemagne, en Espagne et au Japon.

Stéphanie Le Bars/Le Monde

Il est vraiment temps de réclamer moins de dogmatisme — et plus de débat —
dans la gauche radicale, qui a une tendance de pourchasser ceux qui ne pensent pas comme elle. Pour yours truly la ‘cancel culture’ est une nouvelle censure inacceptable!

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