Wednesday, November 2, 2016

The Biggest Disjuncture Ever Between Public Opinion And Professional Economists?

I just heard on Anderson Cooper that the issue on which the public most trusts Trump over Clinton is on who would manage the economy better.  This is in spite of the fact that he would have made more money if he had just put his inheritance in index funds rather than doing what he has done, that he has declared numerous bankruptcies, been sued numerous times for violating contracts and fraudulent dealings, and has refused to  release tax returns that apparently contain all kinds of border line or over the border misbehaviors, along with a lot of other stuff not making him look the good businessman people think he is.

OTOH, if one defines "professional economists" as those with PhDs in economics (I grant that this can be debated, but I am going with it for now), then it appears that we have never seen such a lopsided ratio of these people supporting one of the major candidates over the other, with the balance  just the opposite of the public. If one looks at former Chairs of the CEA or Secretaries of the Treasury who worked for Republican presidents, not one has come out for Trump.  Now, most of them have not come out for Clinton, which is a contrast with former GOP National Security Advisers and Secretaries of State, quite a few of whom have come out for her.  But it remains that this is an unprecedented situation.

More to the point is to actually go looking for PhD economists who are supporting Trump.  Now I suspect that there are more than have been publicly identified.  But in terms of publicly released petitions or publicly released statements, the number is abysmally low, on the order of five or six to  the best I can determine, and, frankly, they are by and large not a group to write home about. The one who has gotten the most attention and was by all reports the main author of the main economic policy statement put out by the Trump campaign, is Peter Navarro of UC-Irvine (I confess to not having heard of him prior to his recent appearance as a Trump economic adviser).  Most economists have viewed that policy statement as barely coherent and full of falsehoods and contradictions.  I do not usually play credentials games, but Navarro has had very few publications in refereed journals in recent years, and his work has not been heavily cited.  Of the five or six others, only two do I know anything about. One is John Lott, the favorite economist of the NRA, who once had a sock puppet by himself praising himself called "Mary Rosh," has been frequently accused of using fraudulent or misleading data in his papers, and has been unable to hold an academic job, even in conservative departments, despite his extensive and heavily cited publication record (with many of those citations being in papers criticizing his work). Lott is currently at a think tank he founded whose funding sources are not known to me.  The other is probably the most respectable in my eyes, Svetozar Pejovich, now emeritus at Texas A&M.  The most well-known of his  papers have been about property rights in the former Yugoslavia.  These have been respectable, but he has not done much recently, and probably the only reason I know his work is that comparative economics is one of my fields of  research.  The bottom line is that this is both a very skimpy and unimpressive list.

Of course his supposed top economic advisers are not fully professional economists.  While Lawrence Kudlow has intoned on economic issues for many years on TV and elsewhere, his academic education ends with an undergraduate degree in history, and his economic forecasting record has been so bad that one can expect to make money by assuming that what will happen economically will be just the opposite from what he forecasts. Another is Stephen Moore, who does have a masters degree in economics, but his forecasting record  is not much better than Kudlow's (we are still waiting for that hyperinflation both forecast so vigorously).  He currently carries the title "economist" at the Heritage Foundation, so maybe I should count him as a "professional economists" too.The rest of his supposed board is basically a lot of hedge fund traders, maybe mostly rich people, but not professional economists.

So, there we have it.  I do think that sometimes when conventional views of professional economists disagree with public opinion, that the latter may be closer to the truth than the former. But I must say that this particular situation seems to be the largest such disjuncture that I know of, and on this one, I am with the vast majority of professional economists against apparently widespread public opinion.  I can only hope that this strongly held public opinion does not result in us having to suffer through policies pushed by the pretty pathetic set of professional economists Trump has backing him.

Barkley Rosser


Ken Houghton said...

Spam above.

I thought Cokehead--er, Kudlow--got an advanced degree from WooWoo. (Not in Econ, certainly, but International Relations or somesuch.)

AXEC / E.K-H said...

Scientific suicide in the revolving door
Comment on Barkley Rosser on ‘The Biggest Disjuncture Ever Between Public Opinion And Professional Economists?’

The founding fathers called themselves Political Economists. Now, take Adam Smith and Isaac Newton as reference points. How much knowledge did science produce and how much did political economics produce in roughly 200 years? The plain fact is that neither orthodox nor heterodox economists have produced much, if anything, of scientific value.

Jevons renamed Political Economy to Economics. But economists never institutionalized the proper separation of politics and science and never really got out of politics. There is still political economics (= agenda pushing) and theoretical economics (= science) and the former dominates the latter. Where there should be a Chinese Wall is a fast rotating revolving door.

It does not matter whether an economist’s agenda is more rightist or more leftist. Agenda pushing AS SUCH is incompatible with science. Barkley Rosser could know this from John Stuart Mill: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

Scientific ethics forbids economists to dabble in politics. This is the one thing. The other thing is that economists have NOTHING of scientific value to add to the discussion and the political process.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum, 1991)

Now, it is obvious that economists do NOT have the true theory. There are the four main approaches Walrasianism, Keynesianism, Marxianism, Austrianism and ALL are provable false. Because of this, economic policy advice has NO sound scientific foundation. Just the contrary, logically/materially inconsistent economic theory is the ultimate cause of unemployment, depression, deflation and stagnation. Economists are the loose canons of politics.

Those economists who participated actively in the 2016 election campaign contributed to the general bananatization of state and science. It is time now to throw ALL political economists out of the scientific community.

Egmont Kakarot-Handtke

ProGrowthLiberal said...

Ken - my understanding is that Kudlow was a history major who then went to Princeton but he left without finishing his masters degree in politics. All one has to do to realize how little he knows about economics is to read what he has written - especially for the National Review. Beyond amateurish. said...

Sure, Egmont, we all know that you are the only "scientific economist" on the planet. If you are not going to point out that Trump's proposals are seriously incoherent and full of contradictions and lies, and you do not allow any of the horribly unscientific "professional economists" do it, who will? You?

Owen Paine said...

The academy is the great Satan of unamericanism

Any of ivy towns human products is stamped
Directly and visibly on their double dome
An egg head advocate for trump
On the glass tit
would create wild Eye orbiting
mental dissonance

These dear souls we call trumps troopers
abhor dissonance of any sort
Cognitive ....pre Cognitive ..... Spinal

J. Edgar Mihelic said...

Brings to mind Swift, right?

When a true genius appears in the world you may know him by this sign that the dunces are all in confederacy against him?

Or whatever the opposite of that is.

AXEC / E.K-H said...

How economists murdered the economy and got away with it
Comment on Barkley Rosser on ‘The Biggest Disjuncture Ever Between Public Opinion And Professional Economists?’

I am not going to defend Mr. Trump’s economic policy announcements nor his choice of advisers. I have argued above that economists have no mandate to dabble in politics because (i) this violates the principle of separation of politics and science, and (ii), economists have no true economic theory and are therefore a serious hazard for economic policy in general.

The short proof goes as follows. The 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 and is defined by these three OBJECTIVE axioms:

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.

The investment good sector comes in with the second step. So, what we have with A1/A3 is the pure consumption economy as the most elementary economic configuration.

From these elementary, objective, transparent and intuitively convincing premises follows the BASIC version of the employment equation which is shown on Wikimedia.* This equation says inter alia: An increase of the overall factor cost ratio rhoF=W/PR leads to higher employment. The complete employment equation is a bit longer and contains in addition profit distribution, public deficit spending, and import/export. All these details are not needed at the moment.

The factor cost ratio rhoF as defined above embodies the price mechanism which works very different from what is usually assumed. As a matter of fact, overall employment (in the world economy or a closed national economy) INCREASES if the average wage rate W INCREASES relative to average price P and productivity R and vice versa.

This follows in an unbroken chain of transparent logical steps from A1/A3. The employment equation consists alone of measurable variables and is readily testable.

However, what professional economists assert since time immemorial is this: “We economists have all learned, and many of us teach, that the remedy for excess supply in any market is a reduction in price. If this is prevented by combinations in restraint of trade or by government regulations, then those impediments to competition should be removed. Applied to economy-wide unemployment, this doctrine places the blame on trade unions and governments, not on any failure of competitive markets.” (Tobin, 1997)

This is the worst piece of standard economic analysis and prescription of all times.

The advice to lower wages is based on a logically defective theory and leads to ever more unemployment/depression/deflation according to the correct employment equation.*

Professional economists with impeccable credentials have caused enormous social devastations since the Great Depression. At the very least they should now stop giving the impression that they have any valid scientific ideas to save their fellow citizens from mass unemployment and stagnation.

Mr. Trump and his non-professional aides may be economically dangerous for the USA. But, how much damage they will presumably do will not be worse than what professional economists have already done.

The idea that professional economists can save the world is patently absurd. It is just the opposite.

Egmont Kakarot-Handtke

* Wikimedia

MaxSpeak said...

Actually if one factors in the money he has lost of other people, Drumpf's returns are much lower. said...


Egmont, I have done this elsewhere and previously, but now that you have exposed what an empty vessel you are here,I shall simply point it out without going through the details too devastatingly.

So, your wonderful "axioms" are simply empty tautological accounting identities familiar to the vast majority of economists. That this set of so-called "axioms" is the foundation of an alternative to all previous economics from all the forms of Marxism and everything in-between to various forms of Austrian laissez-faire libertarianism, well, it would be a joke to even remotely suggest that this is a joke.

Let me note that some of your subsidiary discussions are well-informed and even marginally scholarly. If you stuck with those people might take you seriously. But you have once again exposed to public view how empty and ridiculous your fundamental weltenschauung is, and I feel sorry for you, Egmont, really.

AXEC / E.K-H said...

Economics: the simple logic of failure
Comment on Barkley Rosser on ‘The Biggest Disjuncture Ever Between Public Opinion And Professional Economists?’

Let us proceed in manageable logical steps.

(i) Economics is a science and the whole world is in no uncertain terms told so each year: “Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel”.

(ii) If economics is a science then professional economists are supposed to be scientists.

(iii) If professional economists are scientists then Barkley Rosser is supposed to be a scientist.

What do scientists do? Scientists continuously augment the corpus of scientific knowledge. They do this by establishing the material and formal consistency of theories. A theory is the mental representation of reality. A scientific theory is the best representation of reality that is humanly possible.

How do scientists augment the corpus of scientific knowledge? By critical discussion: “And a critical discussion is well-conducted if it is entirely devoted to one aim: to find a flaw in the claim that a certain theory presents a solution to a certain problem.” (Popper, 1994)

In the previous post the proof has been given that the central piece of standard economics ― the labor market theory ― is false. The proof consists in the logically transparent derivation of a testable systemic employment equation. This equation shows (1) that the market economy is inherently unstable, (2) that the standard employment theory is false, (3) that economic policy guidance which follows from standard theory worsens the situation, i.e. leads to more unemployment, deflation, depression, stagnation.

A scientific discussion would be well conducted if Barkley Rosser could either logically or empirically refute the systemic employment equation. Yet, nothing of the sort ever happens. From this follows:

(iv) Barkley Rosser has no idea of what science is all about. As an incompetent scientist he argues ad hominem and utters irrelevant opinions. Because he does not understand what science is and how genuine scientists work he is a cargo cult scientist.

(v) Because Barkley Rosser is the representative professional economist, what applies to him can be generalized for the rest of the profession.

(vi) Because economists are not scientists economics is not a science.

(vii) This is corroborated by the fact that economics consists of four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― which are (a) mutually contradictory, and (b), axiomatically false in each individual case.

(viii) Economic policy guidance of professional economists has no sound scientific foundation since more than 200 years.

(ix) Because they are a menace to their fellow citizens, professional economists have not only to be barred from politics but, more importantly, to be expelled from the scientific community. In addition, the title of the Economics Nobel has to be changed to “Bank of Sweden Consolation Prize for Scientific Failure in Memory of Alfred Nobel”.

Egmont Kakarot-Handtke said...

You know, Egmont, maybe you are right that "economics is not a science." But if that is the case, your effort to provide a supposed alternative foundation for it to become one is an utter and pathetic failure. Sorry.

AXEC / E.K-H said...

Barkley Rosser

Time for you to retire, see ‘The future of economics: why you will probably not be admitted to it, and why this is a good thing’

Egmont Kakarot-Handtke

AXEC / E.K-H said...

Barkley Rosser

Breaking from Zero Hedge Nov 6, originally Forbes*

― Economics is broken and there is no internal incentive to fix it.

― Five reasons to smash the ivory towers.

― We are experiencing deep economic problems and it is the fault of the economics discipline.

― Their macro theories suck.

― What we lack is sound theory to guide our actions.

― In our hour of greatest need, societies around the world are left to grope in the dark without a theory.

Here is your lucky escape, societies.**

Egmont Kakarot-Handtke

* Zero Hedge

** New Paradigm, cross-references