Since a couple of recent posts have burdened you with my own musings on the intellectual fraud masquerading as economics (the neoclassical tradition that dominates economic theory and policy), I thought of completing a trifecta with a paper by Stuart Holland and Teresa Carla Oliveira which argues that economics will not evolve unless it recovers some of Smith and Hume’s already post-modern methodology. Click below:
NEW VERSION: Who misplaced postmodernism – Holland-Oliveira
I enjoy a good laugh at stupidity when exists harmlessly, and have on occasion employed this trait to a personal share of this abundant commodity. Take for example a phenomena I refer to as “Digit Tracers” This simple experiment can be done in almost any situation. Simply splay the fingers of both hands, then positioning them one before the other before about a foot and a half before the eyes begin rapidly moving them to and fro rapidly, as fast as you are able.
Now assuming the exact number of fingers on the human hand was unknown, how many fingers would you assume to tally on both hands by observation? Estimate the number if necessary and subtract the actual number of fingers from the total. Now ask the questions, what the effective numerical difference (if any) represents?
Is the ratio relevant to number theory? Can it be applied to a diverse array of modeling apparatus for effective use as a general natural theory of dynamic structure? (?????many additional question/related problems)
After many years I still can’t explicitly answer any of these questions, but I still chuckle when I think about it.
Amazing article… thank you.
Think of coming to Paris soon ?
1st March, giving a talk at the OECD…
Economic forecasts no better than a random walk?
http://www.abc.net.au/news/2013-02-04/economic-forecasts-no-better-than-a-random-walk/4499098
Please correct links… above…
Could someone answer this simple question? Why are right wingers always the a-holes and the humanists always on the left? What’s the problem? Is it explained by the theory of evolution or some creationist nonsense of the right?
http://www.spiegel.de/international/europe/steinbrueck-shows-leniency-on-his-european-tour-a-882016.html
I don’t have an answer, but I do recall a group of us asking that question repeatedly in Britain when Thatcher ascended to the throne. One colleague made another observation — namely, that there are very few serious intellects on the Right. Hayek stands out as a great exception.
I can also offer a rebuttal of your hypothesis — which is that there are plenty of a-holes on the far left, in Europe at least. In Britain, they can be found in the Socialist Workers Party; in Greece, the KKE (and Pasok). Our perceptions are shaped by the times we live in, and the predominant discourses and problems to be addressed. It is possible that your question has temporal constraints, because it has to be in a specific context and is not a universal truth.
Dean – I haven’t read Yanis’s link yet so I will reply to your comment only. Please explain to me how giving the Greek government more time to increase its debt is a good thing for the Greek taxpayer. As a Greek taxpayer myself, the last thing I want is the government given more time to increase its debt.
Also, I do not want to give an entity that is attacking me any wiggle room, personally I’m with Merkel, she is pi**ed off at the Greek government and the blatantly self destructive way they have gone about cutting their budget and so am I.
Richard:
The “give Greece more time” does not excite me at all. We all know that there will be a further haircut this time on Germany’s bill.
The Greek debt to day (after two PSIs) is at the same level as pre-PSI. The whole world knows that the PSI nonsense was a charade to give Germany more time. More time to what?
I am not interested in more time. I am interested in a final and conclusive haircut of at least 150 Billion euros so that we can put the debt sustainability to rest.
Xenos:
I guess you have a point there. A-holeness is neither an exclusive right nor a sole product of the right.
Nevertheless it tends to gravitate around right wing supporters and its odious smell makes it easy to detect among the predominately neoliberal followers.
Dean – 150 billion? Yeah, sounds realistic.
I think we all know this is going to have to come and some point, the figures put out by the Eurogroup, as we have discussed before, bear no relationship with reality. The problem is for a 150 billion Euro haircut, the creditors are going to want their pound (or tonne in the case of Greek citizens) of flesh which is why we see the Greek government on its kamikaze course.
The international banks know that there is no way the Greek government is going to be able to get its finances in order which is why they are allowing (if not) recommending the exact measures the government is carrying out.
The measures are not intended to put the Greek government’s finances on an even keel. It would take a complete idiot not to notice the fact that GDP is decreasing meaning the debt to GDP is increasing, it would take a complete idiot not to notice that as GDP shrinks so does tax revenue, it would take a complete idiot not to notice that unpaid taxes are going through the roof (tax debts are increasing at over a billion Euros a month for 2011 until November and I think we all know this rate is going to increase).
Which leads us to why?
Why, if these measures are obviously destroying the Greek government’s balance sheet are they continuing on the same course?
Well the government reasons are obvious. If it keeps them and their friends in power a year or two longer then it is worth doing.
But why are the banks allowing it to happen, why are investors continuing to let the Greek government debt increase?
To state the obvious they are not doing it to lose money.
Let me outline the master plan. The Greek government is passing simply massive tax increases. The purpose of this is to pass their debt onto the private sector. How are they doing this?
Through income tax increases are more sinisterly, through taxes which are not connected to income, OAEE, Property Taxes, Fuel Duty, VAT, Electricity, Gas, Heating Oil etc etc. They like the fixed taxes because they are less effected by GDP/Income drops.
So what do we have happening?
The Greek government predicting that tax revenues will be X. The Greek government is failing to collect because people don’t have the money but lo and behold, they don’t have the revenue but they have the unpaid taxes as assets on their books.
So even though the government is not collecting taxes, their assets are increasing regardless.
Which brings us on to the end game.
There is going to come a point when the Greek government says the unpaid tax situation is going to “destroy” the country, that the situation is a “catastrophe” and because the situation is so “grave” they are going to say “we must start collecting these unpaid taxes extra judicially, the “country” simply does not have time to go through the legal system” And then you are going to see the government taking peoples houses, land, boats, cars etc on a wholesale basis
And if it is not the government doing then it will be the banks. The government will pass laws which allow banks to seize assets extra judicially and it will be the banks on a wholesale repossession mission.
And this is how the Greek governments creditors are going to get their money. Only when they have repossessed enough private assets to offset the 150 billion haircut or however much it will be will, only then will the haircut happen.
So to summarize. The Greek government is building up its “assets” in the form of unpaid taxes. And this is how they will transfer their debts onto the private sector and this is how the creditors will get their money while granting the government a haircut.
I hope I am wrong, but seeing what I am seeing it is the only possible explanation.
The solution? The Greek government must default (immediately) and equally importantly stay in the Eurozone. The Greek government will only be kept honest if they remain in the Eurozone, ie when they do not have the power to print their own money.
But let me tell you what will happen. It will go as far as the seizures and things will get bad and out of the blue will come a 150 billion Euro haircut and Greeks will be told that the haircut can only come if Yanis Varoufakis’s plan is implemented.
In short the whole crisis is created to make Yanis’s plan palatable.
I know Yanis’s plan is not malicious, I believe he has the best intentions but I also believe he is naive in the extreme if he thinks you can give a monopolistic power to a small group of people and not expect them to abuse it.
I am sure Yanis will be amongst the first to attack large corporations with government perks, why he believes the type of people running these entities are different if the entity is called “government” or a “government agency” I do not know.
Richard:
I don’t presume to have the strength to read everything that you write.
As far as bankruptcy is concerned, Greece will bankrupt again every time there is a haircut. PSI1 resulted in bankruptcy, so did PSI2 and so will OSI+ and beyond. That part you need not to worry about. There will be many controlled bankruptcies until the Greek debt becomes sustainable.
So if bankruptcy is your solution, then we are saying the same thing. My OSI demand will produce temporary bankruptcy conditions for Greece. That’s unavoidable.
Dean – “As far as bankruptcy is concerned, Greece will bankrupt again every time there is a haircut.”- This is not correct. Bankruptcy occurs every time the government cant pay its bills. Haircuts are a footnote. Also in a true bankruptcy the debt load decreases massively and the government can arguably lend at better rates than it does now. In short Greeks are experiencing all the down sides of a bankruptcy with none of the upside.