<div dir="ltr"><div><div>Key words: "one form of knowledge." <br></div>It's a pity that philosophy --not an established, authoritative corpus of philosophical works, but philosophy as a discipline of the mind, yes, nurtured by exposure to and engagement with exemplars-- that such philosophy has ceased to be the mother of all sciences. Thanks, Riaz.<br>
<br></div>mc<br></div><div class="gmail_extra"><br><br><div class="gmail_quote">On Thu, Apr 18, 2013 at 6:28 AM, Riaz K Tayob <span dir="ltr"><<a href="mailto:riaz.tayob@gmail.com" target="_blank">riaz.tayob@gmail.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<div text="#000000" bgcolor="#FFFFFF">
Michael and David<br>
<br>
This is tangential, but goes to the important economics edifices of
many public policy arguments.<br>
<br>
From one of many Third Worldist perspectives, there is often
deception in dealing with the rich countries. And it is well known
that domination is easier to manage with 'ideology'. Free trade and
neoclassical economics shapes much of the discourse causing much
trouble and problems. So this is tangential but related.<br>
<br>
If anyone is familiar with effectively the family business of the
doyens of economics (Paul Samuelson, Kenneth Arrow and nowadays
Larry Summers), they would know the significant influence they have
had in the profession and on public policy discourse. The interview
between the Chief Economist of the Financial Times (not a radical by
any means!) with Larry Summers <a href="http://ineteconomics.org/video/bretton-woods/larry-summers-and-martin-wolf-new-economic-thinking" target="_blank">which
can be found here</a> is instructive (it really is worth the
time!). As some would have it, the Queen of the Social Sciences, by
his own admission is not very helpful in real life. In other words,
modern scholastics. <br>
<br>
In Europe they are going for austerity (pro-cyclical) whereas John
Dewey's American pragmatism rules more in the US with spending
(Bernanke is pushing Congress, but there is little traction) with
marked differences between the performance of these regions. So even
Bernanke is more taking reality more into account, rather than
relying on failed models which cannot account for crisis adequately
nor deal with reality very well (but banks are still allowed to use
them for capital adequacy calculations!). <br>
<br>
On the paper, it was one of many of the planks used to argue for
austerity, as David points out. But it was very influential. The
reasons for eccentric formulae for averages and exclusion of New
Zealand data will need to be backed up. So let us see where this
goes. Why is it that we accept self-interest as the guiding force in
neoliberal economics, but exclude economists from this equation?
After all, they would sell their ideas to the highest bidder - and
neoliberal ideas pay. In fact it is quite consistent. Even the
oracle Alan Greenspan said to Congress that he found a flaw in his
theory. If he read outside of his Randian economists he might have
known, but there is confirmation bias here too. The Oracle was a
charlatan.<br>
<br>
So I think first principles distinctions between schools of
economics is very important to be differentiated. Mainstream
economics says it is a science based on its physics based methods.
That is correct. But its problem is concordance with reality. When
the <a href="http://www.britac.ac.uk/news/newsrelease-economy.cfm" target="_blank">Queen
asked the London School of Economics</a> why they did not see the
crisis coming they said, <i>"So where was the problem? Everyone
seemed to be doing their own job properly on its own merit. And
according to standard measures of success, they were often doing
it well. The failure was to see how collectively this added up to
a series of interconnected imbalances over which no single
authority had jurisdiction. This, combined with the psychology of
herding and the mantra of financial and policy gurus, lead to a
dangerous recipe. Individual risks may rightly have been viewed as
small, but the risk to the system as a whole was vast."</i>
Translation: there is no systemic understanding. <br>
<br>
The problem for scientifically valid observations, as David argues
for and to which I agree, is that a science that starts of from
unrealistic assumptions and deduces what logically should happen
without ex post validation is only one form of knowledge. There are
other forms of knowledge on the economy, like the American
Institutionalists, that are simply marginalized and ignored,
primarily because they do not serve the interests of the large
powerful corporations in the US. <br>
<br>
So do please engage in these matters as neoliberal type economic
views still hold political sway, but are increasingly becoming
untenable because of the social costs and suffering they impose. The
difference with crises in the South (Mexico, the Tequila crisis, as
if they were drinking too much; Argentina; SEA Asia - spawned crony
capitalism) and the North is how it is dealt with. In the South it
is internal factors, but for the North the tenor of the major
finance houses is now systemic problems. <br>
<br>
One would have thought Americans would have taken their cue from
Enron, WorldCom, Tyco, etc *this is not anti-Americanism, btw -
happy to be guided on these formulations! On or offlist!). Or now
from the fraud on foreclosures and lack of regulatory ability to
prosecute known crimes. It is a terrible situation for the 99% and
we hope that the more sensible forces prevail in America otherwise
the situation for us Africans downstream will be terrible.<span class="HOEnZb"><font color="#888888"><br>
<br>
Riaz</font></span><div><div class="h5"><br>
<br>
<br>
<div>On 2013/04/18 03:55 AM, michael
gurstein wrote:<br>
</div>
<blockquote type="cite">
<pre>David,
My reference was overall to Economists' work as Economists (but I see where
there was probably an ambiguity in what I wrote... and yes, evidence based
policy is certainly a good idea if the evidence is accurate, appropriate,
unbiased i.e. not ideologically driven etc.etc. But there should always be a
caution and a modesty concerning linking policy particularly to theory in an
area as inexact as Economics and that's where the hubris comes in...
M
-----Original Message-----
From: David Conrad [<a href="mailto:drc@virtualized.org" target="_blank">mailto:drc@virtualized.org</a>]
Sent: Wednesday, April 17, 2013 5:02 PM
To: michael gurstein
Cc: <a href="mailto:governance@lists.igcaucus.org" target="_blank">governance@lists.igcaucus.org</a>
Subject: Re: [governance] [Dewayne-Net] REINHART AND ROGOFF: 'Full Stop,' We
Made A Microsoft Excel Blunder In Our Debt Study, And It Makes A Difference
Michael,
On Apr 17, 2013, at 4:03 PM, michael gurstein <a href="mailto:gurstein@gmail.com" target="_blank"><gurstein@gmail.com></a> wrote:
</pre>
<blockquote type="cite">
<pre>Economists of course, are split on the "scientific" validity of their
work especially as it interfaces with the real/policy world
</pre>
</blockquote>
<pre>Well, no. As far as I can tell Economists, by and large, weren't split: the
vast majority considered the correlations R&R drew tenuous at best. It was
politicians, policy makers, and pundits that used the R&R paper as a
justification for positions they already held to the exclusion of evidence
and arguments to the contrary (see
<a href="http://en.wikipedia.org/wiki/Confirmation_bias" target="_blank">http://en.wikipedia.org/wiki/Confirmation_bias</a>).
</pre>
<blockquote type="cite">
<pre>and the above should
if nothing else, suggest modesty and caution before we go around
flaunting and drawing policy directions from the supposed "scientific"
validity of this or that set of observations or conclusions.
</pre>
</blockquote>
<pre>Actually, I'd argue basing policy direction on _scientifically valid_
observations and conclusions (which wasn't done for policies based on the
R&R paper) is far better than alternatives such as anecdotes, appeals to
emotion, over generalizations, accusations of hubris, etc.
Regards,
-drc
</pre>
</blockquote>
<br>
</div></div></div>
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