ECONOMICS AND ALL THAT!

Arming You to Fight Mainstream Economic Theory by Reconstructing It Into What It’s Properly About

INTRODUCTION

The world’s a mess. That's partly because economic theory with it's dicta and 'laws' is a fantasyland often used to argue or aver that we live in the best of all possible worlds short of heaven itself, one wherein everyone who is rational has always been able to maximize his or her well-being, and, of course, we should pay no attention to irrational people who complain that this doesn’t seem to be true, for irrational people wouldn’t be in the bad situations they’re in if they’d acted rationally.

The theory is well-disguised as 'scientific'. It isn't. It's jargonistic balderdash. It only serves useful ideological functions. As it is, It is not about the economic activity of people or their economic behavior at all.. And it hides who has control over whether, how and if we provide for ourselves, and why those in control have the power they do. [Clue: This has to do with 'he-who-has-the-gold-makes-all-the-rules-affecting-others' in monetary systems of exchange.)

I'm about to arm you to fight back.

Most people can't fight back. Almost all, well, because economics is intimidating. More precisely, what's taught as economics is. I don't blame most people for thinking this. Even economists can't fight back. Due to their training as economists, they aren't fighting back even when they think they are. Their training blinds them to most of the problems intrinsic within what they were taught. So even when some question theoretical 'laws' as some do, they use what they learned to do so. Sadly, although small parts of what they learned can be used to question or partially refute commonalities like oft-claimed 'laws' of supply or demand, these economists cannot break free from the chains which bind them within the theory that they've learned.

Economists like Steve Keen, for instance, debunk economics as far as their training allows. And that's well and good and entertaining.

But it's not enough. It tinkers about within the margins/limits of what they learned. It is those very margins that they must escape from.

Their being stuck occurs because the assumptions underlying and supporting the structure of mainstream theory hide what economics is really about. These assumptions make all existing theory descriptively inadequate regarding our economic activity and behavior.

That descriptive inadequacy leads to prescriptive inadequacies. Serious ones! For following such prescriptions is akin to letting a drinking buddy perform open-heart surgery because he's a very good juggler.

Mainstream economists are expert at juggling the balls within their theory, but juggling those balls is not what economics is about. Expertise at juggling such balls does not lead to any expert knowledge related to the economic activity of human beings.

For instance, current economic theory, wherein consumers are implied to be people like you or I, simply endows consumers with never changing budgets even as prices change. This absolutely ignores the reality that consumers must, can, and do change their budgets whenever prices change.

Because all 'demand curves' derived within in all mainstream economic theory nowadays rely on consumers’ having ever-fixed, never changing budgets, one must ask if it is possible to derive 'demand curves' since budgets are, in fact, constantly being reformulated when prices change. [Note 1.I will show why budgets must be reformulated when prices change in a later section entitled “DEMAND AND ALL THAT!” Which will follow after the parts A and B of “UTILITY AND ALL THAT!”] For if such demand curves cannot be derived when consumers change their budgets as prices change, then the so-called 'laws' of demand, and the mechanics underlying all equilibria between demand and supply... [Note 2. An equilibrium is said to exist when the amount of a good purchased by a consumer (or consumers) at a given price is equal to the amount supplied by the sellers of the good at that price. Because a ‘market equilibrium’ is obtained at the conjunction of ‘total market demand’:: obtained by theoretically adding up individual demand curves :: with total market supply at a given price, it is necessarily the case that if individual demand curves cannot be derived, then neither can ‘market demand curves’.]... simply do not exist. In addition, if people are not maximizing preferences based on their likes between goods but are more affected in their choices by the kinds of benefits they need or want to have and realize, then we must not derive ‘demand curves’, including aggregate demand curves within markets, given the limitations of the theoretic itself.

So, what is economics about?

It's about how we provide for ourselves through how we use goods to obtain benefits that we need and want to sustain our lives and improve our well being as individuals, families, groups, communities, and societies. In brief,,whether, how, and if we provide for ourselves is the subject matter of economics. Throughout history, human beings have had to manage the use of what they had to provide for themselves. Though, across time and cultures, needs change--Viz, a technological society with its water, energy, and communications infrastructures generates needs for indoor plumbing, wiring, and domestic technologies as essentials one must have to get by with-- as have our 'wants’ the important subject matter economics :: whether, if, and how we provide benefits for ourselves by using goods :: never changes.

You won't find anything like the above definition in economics texts. [You can find that out for yourselves.] But with it we can begin to to deconstruct modern economic theory and, while doing that, reconstruct economics as it should be. That’s my plan here: to reconstruct economics in a manner that disposes with existing theory more or less in its entirety while giving you the ammunition to fight against it and what it prescribes. In the process, I’ll be laying new foundations for you to use.

We live in monetary economies.

In such economies, whether and if we can provide for ourselves as individuals, families, communities, and nations depends largely on how the distribution of income and the accumulation of wealth occurs. That is because monetary economies uniquely impose an architecture of price ratios between goods, one absent in non-monetary economies. That price ratio architecture, in combination with the distribution of incomes/wealth, determines the budgets consumers must have to purchase goods for their use. Every change in prices between goods forces budgets to become reformulated. When such budgets cannot be reformulated, this drives people out of some markets completely. This forcing out of a market regularly happens in monetary economies.

Current economic theory has this forcing out happening rarely and effectively as special cases within the theoretic. That is because the entire body of what is called the Theory of the Consumer has never addressed how budgets are determined when prices change (and thus price ratios between goods). Rather than seriously examining this very important issue and its impacts on human well-being, the current theoretic always endows consumers with fixed, unchanging budgets in the face of price changes between goods. Such endowments with ever-fixed budgets remove from economic analysis all matters related to whether, how, and if people can provide for themselves in monetary economies. In short, it removes the essential subject matter economics itself.

In some ways, I am building this airplane as I am flying it. I apologize in advance if you experience any difficulties understanding what I say. Sometimes I may not be as clear as I want to be, not to mention that what’s clear to me may be mud to you. Let me know when that happens, for I can and will clarify whatever you find difficult. I’ll do that either as quickly as I can, or by discussing the matter thoroughly in a section to come.[It's also true that I can't footnote in this format so, sorree.

Now we can begin with all of the above in mind.

Cooperative vs Competitive vs False Balancing Argumentation

The empty neighborhood in the fog

In a short 2018 Scientific American article and a 2017 research paper published in the journal Cognitive Science, a team of cognitive scientists and psychologists describe their research findings on the effects of modes of engagement on how people perceive political issues and truth itself, including moral truth. Modes of engagement can be thought of as the mindset that a person in disagreement brings to the table when they are in disagreement with others about political issues.

The cooperative mindset

People who engage with a cooperative mindset tend to seek to learn from a person or people they disagree with. In that mode of engagement, people tend to try to learn from people they disagree with. They also tend to be more open to the idea that there is no objective truth about an issue such as abortion. This mode of engagement was found to influence how people view truth, which tends to be seen as mostly subjective and personal. Absolute or objective truth is not what people with this mindset usually see in various issues. The authors comment in their Cognitive Science paper:

“One form of social reasoning consists of a group of people searching together for the solution to a problem. Groups pursuing this strategy reap cognitive gains such as quickly identifying problems (Hill, 1982) and discovering the best solutions (Schwartz, 1995). These characteristics allow the performance of the group to go above and beyond the sum of its individual members (Woolley, Chabris, Pentland, Hashmi, & Malone, 2010). 

However, group reasoning does not always involve finding solutions to problems. Some group reasoning consists instead of argumentation (Walton, 1998). In group reasoning using argumentation, people start out with opposing views on a given question, and each individual proceeds by offering reasons or evidence in favor of his or her own view and against the opposing one.”

The competitive mindset

By contrast, when people are competitive and engage to win arguments, their view of truth tends to be more objective and absolute. It also affects their social behaviors, beliefs about people they disagree with and how truth and the issue at hand is understood. The competitive mindset leads to unfavorable views of, and increased animosity toward, people they disagree with. The researchers associate the rise of political tribalism with increases in competitive engagements relative to past years. This tendency to tribalize and weaponize politics is exacerbated by social media. The researchers comment in the SciAm article:

“At the same time, the rise of social media has revolutionized how information is consumed—news is often personalized to one’s political preferences. Rival perspectives can be completely shut out from one’s self-created media bubble. Making matters worse, outrage-inducing content is more likely to spread on these platforms, creating a breeding ground for clickbait headlines and fake news. This toxic online environment is very likely driving Americans further apart and fostering unproductive exchanges. ..... And although plenty of evidence suggests that contemporary political discourse is becoming more combative and focused on winning, our findings do not elucidate why that change has occurred. Rather they provide an important new piece of information to consider: the mode of argument we engage in actually changes our understanding of the question itself. The more we argue to win, the more we will feel that there is a single objectively correct answer and that all other answers are mistaken. Conversely, the more we argue to learn, the more we will feel that there is no single objective truth and different answers can be equally right. So the next time you are deciding how to enter into an argument on Facebook about the controversial question of the day, remember that you are not just making a choice about how to interact with a person who holds the opposing view. You are also making a decision that will shape the way you—and others—think about whether the question itself has a correct answer.”

As noted here in a recent discussion, political discourse has been weaponized by injecting moral absolutism into politics. Politicians, partisans and special interests have discovered that increasing irrationality and decreasing social trust lies in manipulating the moral framework of politics and fomenting competitive discourse over cooperative discourse. In my opinion, the point of increasing irrationality and decreasing social trust is to deceive and distract members of society, thereby draining both power and wealth from the masses and accumulating it at the top.

False balancing

False balancing is a complicating but important factor in political discourse. This arises when disagreements over a certain topic do not make much sense in view of actual objective knowledge. For example, enough objective knowledge exists to render moot disagreements over whether the Earth is flat, humans are causing climate change or vaccines are safe or effective. The evidence is overwhelming and there is not enough basis for rational debate. Engaging in false balancing debates tends to elevate the status of the contrary evidence and arguments to a level that is not socially or rationally merited. Such debates tend to foment and maintain false beliefs, confusion and distrust. That is much more socially damaging than beneficial.

False balancing and the president

Based on my recent online engagements with various Trump supporters or apologists, I now believe that trying to debate whether the president is a chronic liar, a crook, grossly incompetent, self-centered and maybe also a traitor engages in false balancing. In my opinion, the scant evidence that the president’s supporters sometimes raise does not come close to balancing contrary objective evidence of his character flaws and his bad behavior and failures in office. Of those topics, the allegation that he is a traitor is supported by less direct and circumstantial evidence than the other assertions of truth, which are backed by far more relevant evidence, much of it based on undeniable facts.

Holy Crap-a-roni!

A reporter, CNN’s Kaitlan Collins, was threatened with the Secret Service coming in and forcibly moving her to the back row of yesterday’s White House press briefing on the Coronavirus.  Evidently, the fellow in the back row refused to give up his chair also.  Here’s a link to the short video.

Yeah, another failure, among many, likely perpetrated by our illustrious POTUS, by going to the “totalitarian lengths” to rig his game.  [Can I hear a Sieg Heil??]  Is anyone surprised?  He's been doing this kind of self-preservation "me, me, me" thing all his life.

Acosta tells us that Trump’s personal aides are advising him that these nightly briefings are bringing “diminishing returns,” and he has more to lose by them, than to gain by them.  I personally see it that way too.

From my point of view, while Trump is already a loser, a wrecking ball par excellence, these briefings showcase his spectacular ignorance and still childlike thinking.  So I’m a bit bummed that he won’t be showing up and rambling on, with the same old-same old repeat phrases and (tremendous) "best words," night after night, implosion after implosion.  While I grant that it might be a dangerous game for us never-Trumpers to play ourselves, I want him out there making a fool of himself, so we can prove his ineptitude, showing how he really doesn't “know more than the generals,” and how he “alone can[not] fix it.”

Questions: What do you think?  Should Trump continue showing up at these briefings, force feeding us his word salad?  Is it good or bad for the country?  How so?

Thanks for posting and recommending.

Coronavirus Update 8

“The financial contributions will stop” if the GOP failed to pass its tax cuts. -- Sen. Lindsey Graham (R-SC); “My donors are basically saying, ‘Get it done or don’t ever call me again.'” -- Rep. Chris Collins (R-NY); “Get Obamacare repealed and replaced, get tax reform passed. “Get it done and we’ll open it back up.”-- wealthy Texas GOP political donor Doug Deason referring to the “piggy bank” being closed by GOP donors; “The most excited group out there are big CEOs, about our tax plan.” -- Trump's National Economic Director Gary Cohn; “You all just got a lot richer.” Trump speaking a few hours after he signed the bill into law to happy patrons at Mar-a-Lago

--- GOP comments about the December 2017 GOP tax cut (discussed here)

Trying to grasp what is going on is now is like trying to take a drink from a firehose. It will slap your lips around, like dog lips in the breeze, but you'll still be thirsty. 😲

The New York Magazine Intelligencer section writes on the increasingly obvious disconnects between conservative and populist rhetoric and behavior (CPRB) compared to actual contradicting reality. One crumbling bastion of CPRB ideology is the lie that “undocumented immigrants are a scourge of American society, a nefarious invading army that’s depriving native-born workers of precious jobs, filling our cities with crime, and leeching off our welfare programs.” That lie is made obvious by the government declaring many immigrants working in essential functions such as food production and distribution as “essential workers” doing work that the Department of Homeland Security considers such people to be, e.g., “critical to the food supply chain.”

The NYM article points out that, while the current administration has done a lot to go after undocumented immigrants, it has done almost nothing to go after the illegal employers who hires them, including the president himself.

The invisible hand vs visible rich people’s hands

Another pillar of CPRB ideology that has crumbled under the weight of obvious contradictory reality is the lie that the market is an apolitical thing that the impartial invisible hand governs. According to this vicious lie, (1) wealthy people and interests earn their gains fair and square, and therefore government usually (~always) cannot justify redistributing wealth from the top to lower levels, while (2) the working poor contribute no more value than what they are worth to the impartial invisible hand.

The contradictory reality is that wealthy people and interests use their undeniable political power to favor themselves and their interests. They buy influence in our corrupt pay-to-play political system. The market and its workings do not constitute a meritocracy. Governments, shaped by self-interests of donors, create and control markets, money, and corporations and the rules of operation.

Of course, this lie will die hard. CPRB on this point was obvious when the GOP’s initial cash relief proposal was less assistance to Americans too poor to pay federal taxes than to earners making  $75,000 a year. Recent data indicates that most tax cut and bailout benefits are going to the rich. That isn't invisible hand and meritocracy. It is bought and paid for government service by the wealthy for the wealthy. The marketplace is immoral and political, not amoral and apolitical.

We still do not know much about this virus - it is getting creepier

The Washington Post reports that doctors are starting to report new complications associated with SARS CoV-2. This is unsettling, but the reporting is still anecdotal. WaPo writes that some patients, about 20-40%, develop blood clots despite being given anticoagulants that should prevent clots. Also, anecdotal reports of damage to kidney, heart, intestine, liver and brain continue to come in. Initial thinking was that the virus would attack the lungs like similar respiratory viruses. The damage to other organs is tentatively linked to a damaging inflammatory reaction (a cytokine storm) the virus causes in some people. Nearly half the hospitalized people have blood or protein in their urine, which indicates kidney damage.

WaPo writes: “Autopsies have shown some people’s lungs fill with hundreds of microclots. Errant blood clots of a larger size can break off and travel to the brain or heart, causing a stroke or heart attack. ..... ‘The problem we are having is that while we understand that there is a clot, we don’t yet understand why there is a clot,’ Kaplan said. ‘We don’t know. And therefore, we are scared.’”

Other bizarre, almost impossible symptoms in some patients, are being reported as anecdotes. WaPo writes: “Increasingly, doctors also are reporting bizarre, unsettling cases that don’t seem to follow any of the textbooks they’ve trained on. They describe patients with startlingly low oxygen levels — so low that they would normally be unconscious or near death — talking and swiping on their phones. Asymptomatic pregnant women suddenly in cardiac arrest. Patients who by all conventional measures seem to have mild disease deteriorating within minutes and dying at home.”

When it comes to the pathology of this virus, we do not yet know what we are dealing with.

Tracking the virus

America is still woefully incapable of large scale testing for current infections (swab up the nose) and for antibodies in the blood people who have recovered from an infection, which sometimes they may not have known they had. The New York Times reports that data from California strongly suggests that the virus had been spreading for weeks in the US public weeks before there was any evidence of this. That raises the possibility that the same thing could have been happening in other states. It has taken until now to test the body of an infected woman who died on Feb. 6.

The NYT writes: “The unexpected new finding makes clear that the virus was circulating in the Bay Area of California as early as January, even before the federal government began restricting travel from China on Feb. 2. It also raises new questions about where else the virus might have been spreading undetected. ..... The new test results made public late Tuesday show that even this timeline failed to reveal how long the virus had been circulating. Ms. Dowd had not recently traveled outside the country, the authorities said, and yet she died a full 20 days before the earliest recorded case of community transmission. Another previously unconnected death in Santa Clara County, on Feb. 17, has also now been linked to the coronavirus. ‘Each one of those deaths is probably the tip of an iceberg of unknown size,’ Dr. Sara Cody, Santa Clara County’s medical officer, said in an interview.”

Incompetence and corruption

The president’s handling of this at the federal level has been incompetent and literally corrupt. The corruption includes his now-abandoned attempts to foist a possibly lethal hydroxyquinoline treatment on people, presumably in return for campaign contributions. In a different article, the NYT writes:
“In a scorching statement, Dr. Bright, who received a Ph.D. in immunology and molecular pathogenesis from Emory University, assailed the leadership at the health department, saying he was pressured to direct money toward hydroxychloroquine, one of several ‘potentially dangerous drugs promoted by those with political connections’ and repeatedly described by the president as a potential ‘game changer’ in the fight against the virus.

‘I believe this transfer was in response to my insistence that the government invest the billions of dollars allocated by Congress to address the Covid-19 pandemic into safe and scientifically vetted solutions, and not in drugs, vaccines and other technologies that lack scientific merit,’ he said in his statement. ‘I am speaking out because to combat this deadly virus, science — not politics or cronyism — has to lead the way.’”

This definitely is not going well, despite contrary claims from the president, his enablers and propagandists, and his deceived rank and file supporters. The last group is one that is going to pay the biggest price in all of this. The kleptocrats and blowhards at the top will be just fine, except for the few that get infected and die from it.