Hi folks,
I thought it'd be nice to talk shop today, shop being the cover-up performed by economists all over the world, from I don't know when till now.
It's been 5 years, 5 months, 55 days and a few hours till X-mas day, the most covered-up holiday of the last 55 centuries. (look it up: december 25. What shows underneath? You'll find out. You're clever. So be as clever as you are now and try to grasp the story hereafter....)
Economics is 1.5 centuries old. No scholar in his right mind (forgive me Agora, I forgot to mention you) would imagine that buying and selling would once constitute enough 'wisdom' to create a 'science'.
As it did.
And the world lost its virginity at that time.
The world got raped, molested, harrassed, victimised, warred on, killed by, ruled by, dominated by, indoctrinated by, sold by, bought by, enslaved by, impoverished by, mad by, incrediously joyful, happy, (only for the few) by,
E C O N O M I C S
or greed as it is commonly known in the western world.
This is my message of the day.
First of all, there is NO THING wrong with studying the way ancient or nowadays people conduct the interchange of goods and services with each other. This is called,
A N T H R O P O L O G Y
and a lot of interesting studies evolved on this angle. I really find it fascinating to study all these findings (study the 'Argonauts of the Western Hemisphere' or the history of Hopi indians and you will be more educated than studying the oracle Greenspan or other idiots).
Notwithstanding the above I'd like to stir up things a little in these stirring-up times.
I'd like to go down into the depths of economics, its foundation so to speak, in order to discover that economics has so-many flaws, so-many misconceptions, so-many total-denials, that even a 5th grade moron (I do NOT know of anyone more mentally handicapped) could understand there is something fishy in the state of Denmark (or any other state for that matter).
Once upon a time (it IS a fairy tale, so why not start with the standard fairy-tale beginning...)
there were a few 'good' men who thought about everyday things. You get paid, have to provide for your family, thus want to eat, thus buys some food at the market, build a house to live in and live happily ever after. Sofar for the fairy tale.
Sofar for the ignorant suckers that invented supply and demand being conducted AT a PRICE in a MARKET, which is the so-called equivalent of the above fairy tale reality.
Of course they (the ignorant suckers) went on and invented 'equilibrium', a mythical situation where at a given price the demand and supply of -say potatoes- was equal. Never ever happened of course, but these suckers were supposed to be 'scientists' so they did not know any better, but were allowed to study and get paid at the same time. They lived a comfortable life, got drunk every friday, dined a nice dinner, spend the night in a nice environment with whoever they fancied, and were allowed by their publisher to print whatever they liked.
So their stories got accepted.
And favoured by the mighty and the well-to-do (I'll come back to these subhumans in a minute or so, or not, I have free will).
They wrote books.
Nobody criticised them (who-ever would? Imagine your own favourite loser)
These books were printed, and reprinted, and revised and reprinted again...
Untill one day some sucker said: Hey, wouldn't it be nice to EDUCATE people with this wisdom?
And believe it or not, this idea stuck. Worse, Economics was becoming an accepted language, a sort of sub-science even, later the 'sub' disappeared (this was before Alfred Nobel instigated science awards for 'real' sciences. A bank in Norway made a historic error and awarded economics an 'equal' place amongst physics, chemistry, philosophy and others. Major error indeed. And we saw at least a hundred failure-ridden awards being given to ninkompoop economists who got heir money and recreated already MORE nonsense into the world).
Why this temper. Why so angry. Why so negative about well-meaning scientists doing their 'thing'. Adam Smith had a family, so had Keynes.... I explain:
It was not so bad when economists received their Nobel-award for so-called 'fundamental' research. This sort of research is purely fictional, because it has not ANY relation with the 'real world'. So it is harmless. Nice to have a new angle on fairy tales. These so-called GENERAL economists believed (remember: BELIEF is men's most creative phantasy) that they were modelling/describing the world of trade/imports/wages/profits/investments/losses/exports/ etcetera. Of course they did NOT but they were allowed their phantasies, because they were harmless anyway (This proved to be a historical error of the greatest magnitude in later years, but read on).
The end of the era of general economists can be placed in the 1970s. After that any well-thinking individual with an IQ above 100 could see that their days were numbered, indeed their days were finished, and this is a truism up to the year 2010 and further. It still amazes me that general economics professors are still being appointed, where even they themselves know they have nothing to say to the world....
BUT, they had a few items in their off-reality thoughts that deserved merit. I hate to say this, but it is true. The thing is: they related PRICES to QUANTITIES. I explain. They devised so-called demand-supply curves where in a dual-axial graphs, supply and demand would be shown with PRICE and QUANTITY depicted on both axes. If prices moved up, quantities sold moved down, and seen from the 'other side', if 'given consumer's demands prices were 'too' low, prices could be increased to meet consumer's demands, resulting in a demand-supply equilibrium price. Sofar for that bull shit.
We enter the world of 'real' business, a world any general economist, with his head full of supply and demand, imports versus exports, employment versus unemployment, etcetera, has no idea of. General economists live in their theoretical dreams and have since their inception never woken up. Examples are easy to find. Start with our national 'knuffel/cuddle'-economist Arnold Heertje. His son will inherit the earth, he won't, of course.
Next came the business-oriented economists. As I loath marketing people and as I even more fervently loath accounting people, and as I do NOT understand organisation economiocs at all, I concentrate (in my view) on the only theorising type of business-oriented economists around, being FINANCE people (it happens to be my field for the last 40 [minus 5] years).
I was brought up (in academia) to tell the whole truth and nothing BUT the finance truth.
And (OK, I know, shame on me...) so I did, for somany years...
I teached and convinced hundreds of students of the FINANCE way of economics.
A decade or so ago, I woke up (actually it was 1997).
There is NO RIGHT way.
Efficiency does NOT rule.
Equilibrium is a nowhere-existing-academic-construct (my belief since 1985 or so).
The economic Paradigm of rationalism, its axiomatic structure was disintegrating.
I tried to tell that story in my PhD dissertation...
And the socalled PEERS rejected that position.
Because it defied their existance/ their 'raison d'etre'/ their hanging on to 'science'
So I changed my dissertation
(I was in a hurry, my mother was about to die from cancer)
I removed the paradigm shift,
I removed the threats to reject rationalism...
and the PEERS were satisfied.
If god was on my side he would have slaughtered them Old Testament/Sharia style
But he's not there, so there's no hope left, but to B O W to his obedience...(or at least to pretend to do so, which any sane person would do)...
And so I did.
And published my main methodological arguments in a seperately published book on methodology (Google for the meaning of that 'word')
(which was accepted widely - academy style- that means a 100+ copies)
My message is: economics (which nowadays is mainly financial economics)
Lacks a few most important items in their theories, be they rational (market efficiency rules, equilibrium rules) or behavioral (we observe humans and find that they are surely NOT rational [as if anyone would have expected otherwise]).
These lacking 'items' are simple and for anyone to understand:
- apart from price, return and risk financial economists forget QUANTITY
- power rules EVERYTHING, a number two omission in financial economics.
I explain:
- Quantity and price are 1-1 related. No demand (at any price) means NO quantity sold.
- Power is the DNA of economics. Omitting that factor turns financial economics bankrupt.
I explain:
NO WHERE in Financial Economics (the only TRUE economics in my definition) quantity (bought or sold) is defined. Things that ARE defined are RETURNS and RISK, but NO quantities. This is completely nuts, weird, impossible to accept, a MAJOR, I mean M A J O R omission in financial theory.
Power, defined as the means to do what individuals can NEVER do, is UNDEFINED in Financial Theory, although even OBAMA knows different (I could have said Ronand Reagan, but he's dead).
This is the second MAJOR flaw in theoretical (?) Financial Economics.
I will patiently await the first economist that incorporates these 'items' into a comprehensive theory of financial economics.
Untill that time: NO economist should EVER receive a NOBEL-prize.
