tag:blogger.com,1999:blog-4900303239154048192.post7189094372652337125..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: LOLFF on TEDUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4900303239154048192.post-55452956528394063172018-03-26T13:10:31.680-04:002018-03-26T13:10:31.680-04:00I am not certain you are actually disagreeing with...I am not certain you are actually disagreeing with the Sandwicman here, Egmont, although I know you like to be as disagreeable with pretty much everybody as much as posaible.rosserjb@jmu.eduhttps://www.blogger.com/profile/09300046915843554101noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-89481305049781611922018-03-26T07:02:09.930-04:002018-03-26T07:02:09.930-04:00End of the Lump of Labor sitcom
Comment on Sandwic...End of the Lump of Labor sitcom<br />Comment on Sandwichman on ‘LOLFF on TED’<br /><br />Economists are storytellers, they do not answer any economic questions and put them to rest but merely recycle silly narratives ad infinitum. A classical example is the Lump of Labor Fallacy.<br /><br />The story starts as follows: “It was a British economist, David Schloss, who gave it this name in 1892. He was puzzled to come across a dock worker who had begun to use a machine to make washers, the small metal discs that fasten on the end of screws. And this dock worker felt guilty for being more productive. …”<br /><br />This, of course, is the kindergarten version of the theory of employment, and this blather is neither worth to be discussed nor debunked. That economists are not ashamed of recycling this proto-scientific garbage tells one all about the average IQ of economists.<br /><br />The elementary version of the axiomatically correct (objective, systemic, behavior-free, macrofounded#1, #2) Employment Law is shown on Wikimedia.#3<br /><br />From this equation follows:<br />(i) An increase of the expenditure ratio rhoE leads to higher employment L (the Greek letter rho stands for ratio). An expenditure ratio rhoE greater than 1 indicates a budget deficit = credit expansion, a ratio rhoE less than 1 indicates credit contraction.<br />(ii) Increasing investment expenditures I exert a positive influence on employment.<br />(iii) An increase of the factor cost ratio rhoF=W/PR leads to higher employment.<br /><br />The complete employment equation contains in addition profit distribution, the public sector, and foreign trade.<br /><br />Item (i) and (ii) cover Keynes’ familiar arguments about aggregate demand. The factor cost ratio rhoF as defined in (iii) embodies the macroeconomic price mechanism. The fact of the matter is that overall employment INCREASES if the AVERAGE wage rate W INCREASES relative to average price P and productivity R. This is the OPPOSITE of what microfounded economics teaches.<br /><br />With regard to an increase of average productivity then follows (under the initial condition of I given and rhoE=1) that overall employment L DECLINES. In order to prevent this and to keep employment at the given level, the factor cost ratio rhoF=W/PR has to be kept constant. So, either the average wage rate W has to rise in lockstep with productivity or the average price P has to fall.<br /><br />This follows straightforwardly from the macroeconomic Employment Law. Of course, nothing at all ever follows from the recycling of the pseudo-psychological crap of the dock worker who felt guilty for being more productive.<br /><br />False theory leads to false policy guidance. With their defective employment theory and their endless pseudo-psychological sitcom blather, economists bear the full responsibility for the social devastation of mass unemployment.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 The macrofoundations approach starts with three systemic axioms: (A0) The objectively given and most elementary configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm. (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X. For a start it holds X=O.<br /><br />#2 For details of the big picture see cross-references Employment<br />http://axecorg.blogspot.de/2015/08/employmentphillips-curve-cross.html<br /><br />#3 Wikimedia, Employment Law<br />https://commons.wikimedia.org/wiki/File:AXEC62.pngAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.com