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The Ongoing Collapse of Economics

GrahamCaswell
Posts: 1
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9/20/2016 1:59:00 PM
Posted: 2 months ago
The Chief Economist of the World Bank, Paul Romer, says that much of macroeconomics has become a religion, whose "pseudoscience" is infecting all social disciplines (that"s the Chief Economist of the World Bank). In a NYT article titled "How Did Economists Get It So Wrong?" Paul Krugman questions the very assumptions that underlie conventional macroeconomic theory. Willem Buiter, the Chief Economist of Citigroup, calls most modern macroeconomics "useless". Former Bank of England economist Charles Goodhart argues that economists need to start paying attention to money again. Olivier Blanchard, former Chief Economist of the IMF, calls the dominant strand of macroeconomic thinking "insular" and "imperialistic". And on and on it goes, with the recurring theme that macroeconomic theory has become orthodoxy, not science.

Wherever macroeconomics is going, it"s clear that the old order is collapsing. The theoretical orthodoxy that has guided the highest level of economic management for many decades is crumbling. Either economics is an objective science or it"s not. And if economics is not an objective science, then we quickly need an economics that is. Countless livelihoods and lives will be deeply affected by the revolution we are witnessing in theoretical macroeconomics. It may be dry, it may be boring, it may be theoretical, and it may seem incomprehensible.

But it"s hard to think of any discussion that"s more important.

Full referenced article available at: http://www.grahamcaswell.com...
sdavio
Posts: 1,798
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9/20/2016 2:27:49 PM
Posted: 2 months ago
At 9/20/2016 1:59:00 PM, GrahamCaswell wrote:

Are we supposed to be convinced just by you citing this wacko bunch of commys?
"Logic is the money of the mind." - Karl Marx
sdavio
Posts: 1,798
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9/20/2016 2:49:16 PM
Posted: 2 months ago
At 9/20/2016 1:59:00 PM, GrahamCaswell wrote:

How often do you go into a store and offer to pay more than the asked price for an item? Or purposely buy an inferior product even though it's more expensive?

All these things are part of the "religious cult" of the supply / demand curve, but I don't see any economics-debunkers changing their behavior in that regard any time soon. Nobody thinks the basic mathematical truths of economics are a "delusion" when it benefits them to use them.
"Logic is the money of the mind." - Karl Marx
ColeTrain
Posts: 4,320
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9/20/2016 5:49:42 PM
Posted: 2 months ago
At 9/20/2016 1:59:00 PM, GrahamCaswell wrote:

I think the key issue with this is how many people disagree with facts that have been objectively laid out. For example, it is economically concrete that a minimum wage hike has tradeoffs -- but it's also true that most of the effects would be detrimental to low-skilled employees. The argument, then is not economic -- it's political. There are political reasons to raise the minimum wage -- in hopes more money for workers will increase productivity and improve quality of life. However, economics falls to the wayside as far as how to go about combatting those larger, social issues. Economics is not necessarily falling apart; it will always stand in objectivity. Political and social influences on economic policy, though, will be what causes disparity in opinion.
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TimGabz
Posts: 8
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9/21/2016 7:51:55 AM
Posted: 2 months ago
I questioned why, when there exist government safeguards and economic models created by brilliant people the world economy crashed in 2008 and why it remains in recession.

Many people buy the quick and easy, partly true, "capitalist greed" or "government over reach" that is repeatedly churned out by political parties in the blame game. The author believed that there are problems with understanding of social behaviour that exacerbates the situation.

The ongoing contentious debate over economic models and economic systems demonstrates that there is a considerable failing to adequately meet on intellectual common ground. This negatively affects the creation and implementation of both policies and economic models.

Group behaviour and the nature of group identities were examined here under different economic scenarios in Africa. They were linked to known outcomes and this has raised observations that are contrary to popular belief and they detract from the current economic use of group behaviour. This work has found that there are significant problems with both the terms "Group" and "Behaviour" that indicates a weakness in many models when the socio economic situations move outside their parameters as demonstrated by current events.

I have shown that it is essential to:
a) define the identity of the group and
b) their behaviour under different stresses,
c) their triggers and
d) their role in the economy.

Economics is the most effective means of measuring of social behaviour. Rational decisions are measured financially and can be ranked. Human behaviour is not stable but reacts fairly predictable in large groups but the element of irrational behaviour remains a problem to economists. Only under duress, do people make more rational and predictable choices even when the range of choices is changed. A happy person is less rational than a stressed one.

Economics is the best tool to examine and explain issues but historically has failed to keep current or adequately predictive. One significant problem it faces that Politics is about immediate emotional needs first and foremost and is often out of step with available economic tools.

Group Psychologies evolve at different rates depending on crisis or boon. Economists are primarily academically motivated, set apart from the people they study or affect. As such there is a reliance on the use of academic models. Some are based on idealised older models where there are new models that have arisen from observations. The new models often are improvements on the older models because the world has changed. Importantly their models have evolved to keep pace with the evolution of civilisation. We can understand that a current model is likely to be dated and be less effective in the long term.

Sociology and Psychology are often subordinated to ideology even though Psychology is the dynamic factor that drives the change and alters the foundations to economic models. Psychology covers the issue of "Why choices are made".

The study of many 1000"s of individuals has always impractical. It was necessary to incorporate their combined effects on various levels of group segregation to generate flexible models that can work with basic levels of needs.

People are all different, they all act in different ways and in different intensities as a response to given stimuli. We can expect a more moderated similarity in groups of people. At some point, subjected to a strong stress, they may well switch identities.
When the predicted reaction of a small group is insufficiently accurate due to these differences the economists get to working with larger samples. Measuring large volumes of individuals was impractical so economists have taken to using large groups to identify trends. They use overall trends for to the measured reaction of the majority. This is fairly effective for projecting how small groups would work in the short term. The effectiveness would lessen as time progresses when individuals, playing a part of the group dynamics, change their priorities and allegiances due to circumstance and the migration of their beliefs.

What inputs that currently create a short term change may, in addition, initiate further change to long term attitudes resulting in a long term shift in different direction.
The ongoing, often viperous, debate between socialism // capitalism // and communism along with other socio economic and theocratic philosophies are polarizations of ideals backed by groups of people of similar in primary ideals all who subordinate their other freedoms to achieve these ideals. These are psychologically doomed to split as morals and ideals evolve or adapt to new challenges. The need to understand the delamination is the need to understand the Psychological dynamics of people and groups. This is made more difficult as groups are only firm in the short term but appear fluid in the long term.

Passions are economic catalysts capable of generating new social structures in the very short term while discarding the old social structures. Rarely passions are able to establish viable long term structures for the future of a group causing an unstable society until viable structures are formed.

Ideology is the picture we paint in our minds, with outside influence, as to how we think things should be. Not necessarily based on logic, experience or sound leadership.

Cold rationality tends to occur under duress but not in times of boom and bust.
A Delamination model explains the understanding of why groups split and social dynamics alter to undermine existing economic models. Firmer economic models may be constructed by anticipating the rising of new structures through understanding the psychology and what the underlying dynamics will lead to.
Babazonke
TimGabz
Posts: 8
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9/21/2016 8:04:02 AM
Posted: 2 months ago
Look at consequences of a run on Stock or Banks and they still don't include the changing nature of societies under stress or release. They don't take account of the bonding and debonding of societies with their relationships.

Keynesian economics has fairly rational lines but when they cherry pick the debt piles up and then there is a point they can't borrow when they need to. The effect on multipliers is catastrophic, but the construction industry is a massive participant in the Social Structure and Economy and always burns!!
Babazonke
NestorTheZizek
Posts: 28
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9/27/2016 9:31:40 AM
Posted: 2 months ago
The only economics maintaining any semblance of unity is the centre-right New Labour/Tory group who continue pushing their neoliberalism