56 comments on “Timmy elsewhere

  1. It’s not crap. It’s just that it can’t make specific predictions. Good economics knows the limits of its own knowledge. It can say, “this policy will produce this outcome” but not specifically when or how.

    Classical physics cant solve the three body problem, or turbulence. QM can’t even measure the position and momentum of a particle simultaneously. Good science knows its own limits.

    Which is why economic planning can never work, and the delusional predictions of x% economic growth in two years are utterly useless.

  2. Ian B,

    I believe there are a very large number of people who simply cannot cope with uncertainty. I’m sure that’s why there are so many people who believe the US govt was behind 9/11, they are happier living in a state run by omni-potent psychopathic murderers, rather than incompetent buffoons. It also explains religion.

  3. As a confirmed anti-monarchist , I suddenly saw the merit of Chesterton’s defence of monarchy: that it could produce people who make simple common sense observations and have influence, when her Maj put the Economists in their place over not noticing the Credit Crunch.
    Personally I believe that it is time to start closing down University Economics departments in the UK particularly in Oxbridge.
    Academically most disciplines define themselves by a canon of accepted theories and authorities .The Founding Fathers of Economics such as the Physiocrats, Adam Smith ,John Stuart Mill ,David Ricardo all laid down that you have to prevent land prices rising when prosperity kicked in or it would bring the economy to a shuddering halt.Unlike other disciplines ( Literature does not get rid of Shakespeare,and Chaucer from the canon,History does not abandon the eighteenth and nineteen centuries as irrelevant) Economics treats these major figures as if they do not exist, at least in so far as they say anything about the existential damage done by property price inflation.The Adam Institute so ignores Adam Smith’s arguments for a Land Value Tax that it is practically in breach of the Trades Description Act. Has any other academic subject occasioned so many strikes (Sorbonne 2000), boycotts (Mankiw was boycotted) and revolts by its own students as Economics?

  4. DBC-

    Science abandons bad theory. The early economists you describe all made errors with the Theory Of Value which meant they made wrong predictions, which is why those ideas have been abandoned. We didn’t get the correct theory of value (marginal utility) until Menger et al.

    Ricardo’s theory of rent is just wrong. Please try to read some economics written since then.

  5. “Ricardo’s theory of rent is just wrong”

    I thought ‘Eh?’ But maybe I’m way off beam here. Let’s google it quickly.

    “The Law of rent was formulated by David Ricardo around 1809, and presented in its most developed form in his magnum opus, On the Principles of Political Economy and Taxation. This is the origin of the term Ricardian rent. Ricardo’s formulation of the law was the first clear exposition of the source and magnitude of rent, and is among the most important and firmly established principles of economics.”

    Oh.

  6. DBC:”Personally I believe that it is time to start closing down University Economics departments in the UK particularly in Oxbridge.”

    Its time to close ALL non-science/engineering Uni courses and sack–sans compo and pension–their staff. In order to ensure that attempts to train up the next generation of socialist poisoners is wrecked by ex-students hitting reality head-on before being brain-smashed by dogma.

  7. It’s actually wrong though. If it’s right, you’d better start demanding an LVT. You might want to check out the critique of that assertion on the Wiki talk page; the article has been in that state for a long time because it’s not much trafficked because, contrary to your claim, Ricardo’s law of rent is not “among the most important and firmly established principles of economics” at all. But a certain constituency are fond of it, and they wrote the Wiki page.

    Inded, I didn’t even need to click the link to know it would be to that Wiki page because LVTers love to link to it to argue from authority.

    Anyway, Ricardo’s claim that the rent is the surplus above the output (measured in corn) of the marginal plot isn’t true, never has been and never will be. If you want the explanation of where the error is, let me know.

  8. I think almost everyone predicted the crash. I certainly did. The “boom” was built on house price inflation and the economy is cyclic anyway.

    What you couldn’t predict was *when* it would happen

  9. “The analogy I use is that this area of the subject is at the same stage of development where chemistry was when it was still pondering phlogiston” is absurdly flattering to macroeconomics.

  10. Thats if you believe only science and engineering have value.
    Logistics? Hospitality? Design? Marketing? Retail? You may not find such things useful, others will.

  11. “You may not find such things useful, others will.”

    They can pay for them then. And if their is a market for the paid private teaching of socialist bullshit that’s also fine with me. But not agitprop on tax money.

  12. Martin-

    I think what Ecks was getting at was that most of the “liberal arts” side of University is now just a recruiting ground for proggies. Using my fave example of feminism, “womens studies” doesn’t study women, it is just there to recruit for feminism and provide with agitprop. Etc.

    PPE famously does not produce expertise in Politics, Philosophy or Economics. It’s just a foundation course for politicians and bureaucrats to get them plugged into the careers network. If any course needs shutting down, it’s that.

  13. Dearieme-

    An argument can be made that Macroeconomics is completely false and thus in the realm of astrology rather than phlogiston (which was simply an erroneous hypothesis). That is, Macro’s entire field of study does not actually exist.

  14. Ian B,

    I tend to agree.

    I was having a conversation with a mate in about 2004 after we’d both seen a TV show which was about mortgages and how there was “self-certification” of income, and we were both saying that it was going to blow up soon. When lenders start going crazy with lending, it’s going to blow soon. As it happens, longer than we thought but that’s just complexity of the data.

    I think economics is just a very immature science. At one time, everyone was a creationist. Along comes Darwin and a few others and starts to say that that’s wrong. That we’re descended from apes. At first, this is written off as complete bollocks, but gradually lots of people realise Darwin was right. Lots of people really don’t want Darwin to be right because they had a special interest in him not being right. We then found Darwin was wrong in certain ways, but broadly that evolution is right and have tweaked it since.

    And I think that’s where we’re at with economics. Adam Smith and Milton Friedman are right. We have so much data that the Marxists were wrong that I think Marxism belongs with creationism – that you either support because you’re stupid or out of narrow self-interest.

    As for degrees, that’s just about complexity. No-one can predict who will win a horse race due to the complexity of the factors involved. But you can pretty much guess who is most likely to win between a horse with good breeding at its prime and an old nag.

  15. Stig-

    I think the remaining stumbling block to a better economics, following what I said above, is the belief in Macro, which is akin to a faith position. The idea that there are certain relations between aggregate variables which can be expressed as mathematical functions is I think one of those things people believe to be true because they want it to be true- because it then makes the economy both predictable and centrally managable.

    There is no actual solid evidence that such relationships exist, and solid logical reasoning to think that they don’t. But if that is true, then a lot of economists are out of a job, and the basis of government policy for the past century is falsified. Nobody wants that.

  16. @IB
    Economics may have moved on from the simple observation that, if there’s more money about, the rising property market will cancel out its beneficial effects but the Economy hasn’t. I think everybody (even on here!) recognises we’re stoking up another property bubble then crash.Meanwhile autistic savants are holed up in universities trying to explain problems that don’t rally exist with algebraic formulae and algorithms.(The term “autistic” to describe current economics was first used by the Sorbonne students.)

  17. Economics may have moved on from the simple observation that, if there’s more money about, the rising property market will cancel out its beneficial effects but the Economy hasn’t.

    I don’t know anyone who believes that. The general point is that if you create new money, it has to go somewhere, which is why you get bubbles in areas of the economy that can attract it (dot coms, property, railway shares, the South Seas). So the lesson is not to print new money.

  18. @ Stigler ” I think Marxism belongs with creationism”

    A very interesting analogy, Marxism being economic wishful thinking, you’d like it to be true but reality keeps smacking you in the face. Like Eduardo and his price fixing of energy tariffs, yeah, sure Ed, that’s going to work.

    I’d almost like him to get in to power just to see how he actually deals with that, we have tpo apply Hanlon’s razor, he’s either an utter scoundrel that knows it’s bollocks but worth a few votes, or more likely just a total idiot.

    No doubt when he realises he can’t overcome reality, it would end up being the most watered down legislation that has no effect but he would claim a great victory.

  19. The Stigler said:

    I was having a conversation with a mate in about 2004 after we’d both seen a TV show which was about mortgages and how there was “self-certification” of income, and we were both saying that it was going to blow up soon. When lenders start going crazy with lending, it’s going to blow soon. As it happens, longer than we thought but that’s just complexity of the data.

    Yes. There were a fair few low key warning signs around that time, and one or two big ones. Reports in the media about collateralised debt obligations being complex and risky, reports about self-cert mortgages, 125% mortgages, etc. Even Mervyn King got in on the act warning about household debt and house prices: Bank of England governor Mervyn King has warned of the growing risk that house prices may start to fall.

    The UK Government was already deficit spending by then. But on what and why, when Brown was adamant he had abolished boom n bust, I have no idea.

  20. Of course you have to create and issue new money, otherwise the economy can’t grow. Basically the Cross of Gold speech.

  21. DBC-

    No, economic growth is not created by, or dependent on, creating money.

    Suppose there is a totally fixed money supply (gold pieces, Dungeons And Dragons style) and everyone doubles their production, so they are producing twice as many goods (shoes, ships, celing wax, cabbages). Prices will fall to compensate. Economic growth has occurred. Same quantity of money.

  22. Um, that should be sealing wax. I’m not sure if there is also a specific wax for ceilings.

  23. Gareth,

    “Yes. There were a fair few low key warning signs around that time, and one or two big ones.”

    What I hadn’t realised until later was how much further they’d stretched things: 30 year terms, interest-only mortgages. All so that people could pay the buying price and that kept the market rising.

  24. “Well, because economics is a bit crap really,”
    Economist are, aren’t they.
    Back in 2007, this part time plumber & bar fly began winding up his affairs & preparing to f**k off. Since then I’ve made about 20% from €/£ movements & now seem to be making another few bob.
    My source of inspiration.
    Back then, the number of phone calls from banks pleading with me to take oodles of cash from them on unsecured loans, on remarkably low rates of interest. Personally, i wouldn’t lend myself the cab fare.
    So, I work on the basis, when all the experts are agreeing, best thing to do is bet the other way.

  25. ” I’m not sure if there is also a specific wax for ceilings.”

    Only if you’re using Polish plasterers.

  26. @DBC Reed
    “Of course you have to create and issue new money, otherwise the economy can’t grow. Basically the Cross of Gold speech”.

    Did the industrial revolution not happen?

  27. Ian B,

    Macro predictions are daft. There is no point trying to predict what the economy will do. All you can do is to look at policies from a Bayesian perspective and ask if we think it will make us richer or not and then try and measure that outcome.

    And all the mucking around with interest rates, exchange rates or QE is just shuffling the deckchairs around. Making a country richer is about people having incentives to innovate and work hard. And we’ve mostly hit the limit of what the state can provide to help with that.

  28. Careful guys, you are deciding what will be useful in the next 50+ years. Unless you want companies recruiting overseas to get the skillsets needed? And UK people unable to get the work?
    Wide range of degrees possible then there is both the basic knowledge and skillsets that might be useful.
    PPE as an example has been raised. How useful is that? How many MPs have had it? How many PMs or cabinet post holders? Perhaps it is indeed useful then?

  29. As was said it is useful to wannabe political scum. You might regard that as generally useful. I see it as a curse.

  30. Martin Davies,

    “PPE as an example has been raised. How useful is that? How many MPs have had it? How many PMs or cabinet post holders? Perhaps it is indeed useful then?”

    I’d question its usefulness. But, even beyond that, how many people with a PPE have a degree-quality job? It’s like looking at number 1 singles produced by X Factor contestants and seeing that as successful, without considering the thousands that go to auditions and how much they spent on getting to the audition.

  31. The Stigler

    “That we’re descended from apes.”

    No, Darwin never said that. He said that homo sapiens and apes had a common ancestor.

    The comparison of economics and evolutionary biology is interesting. Both are good at interpreting what happened, but rather weak on predicting what will happen. So neither is a hard science, like physics or chemistry, but both are scientific – as far as their subject matters will allow. Ideology will always creep into any human or social science.

  32. By all means question its usefulness to you.
    You and I cannot predict what knowledge will be useful. We can’t say a particular degree is of no use. May be no use to you and I, may be useful to someone.

    Certainly these days having a degree of some sort is a requirement for many jobs, requirement for higher level study.

  33. The reason macro economists are so popular is that they give politicians the illusion that there are some levers they can pull to make the economy will do what they want – pull this lever, employment comes down, push that one growth kicks on, turn that wheel and inequality disappears ……

  34. Well ultimately what matters is whether a degree results in some kind of useful output later on. Let’s take a silly example; the Queen has ladies of the bath who assist her at her bath. Competition being fierce, a university starts doing a degree in monarch bathing. Ladies of the bath are well paid, so this degree may earn you a good income if you get one of the few jobs washing the Queen’s feet.

    Is this useful? The bathing ladies are paid by the State. We’re not getting any sort of economic output from them. The degree would not exist if the State did not create the monarchy-bather job. The whole thing- including the cost of taking the degree, and paying the successful bathers- is a “cost not a benefit” to the economy. If there were no monarch bathers at all, everyone else would be slightly better off and GDP slightly higher.

    Some uncharitable souls might suggest that a PPE is of a similar nature to a degree in monarch bathing.

    This comes back to the old problem that state funded things have no measure of output. All you can measure is what has been spent on them.

  35. IanB

    “He actually said (or the theory does) that we’re all apes.”

    No, he didn’t; and no it doesn’t. What he and it say is that the genus homo and the genuses pan, gorilla and pongo are descended from a single ape-like ancestor. To say we are descended from apes is rather like saying you are the child of your cousin. And to say we are apes is absurdly reductive.

  36. Theophrastus,

    “No, Darwin never said that. He said that homo sapiens and apes had a common ancestor.”

    OK, yes – my point was more about how ideas arrive and how they are adopted.

    “The comparison of economics and evolutionary biology is interesting. Both are good at interpreting what happened, but rather weak on predicting what will happen. So neither is a hard science, like physics or chemistry, but both are scientific – as far as their subject matters will allow.”

    You can’t accurately predict with economics, but it’s mature enough to be practical, for people to not be dismissing it. Just because a doctor can’t tell me if or when I’ll die of cancer from smoking doesn’t mean it’s not good advice to stop.

    “Ideology will always creep into any human or social science.”

    To some extent, yes, but look at the decline of hard socialism/communism globally. In this country, the only parties representing it are the Greens and the SNP. There’s still people like Owen Jones trying to make a case for it, but not many people are listening.

  37. “Certainly these days having a degree of some sort is a requirement for many jobs”

    But how much of this is simply those who recruit for jobs having degrees themselves? So the process is just a form of self validation.
    I’m minded of a friend’s daughter who’s apparently doing very well in the field of HR. Yet the business of the sector she recruits for, she knows nothing whatsoever about. Further than what the company claims as its “what we do” on its website. But she does have a good english degree. Which is how she got her job.

  38. The ultimate aim of the system is that brushing the street will require a degree and a licence. That way the bureaucrats have endless jobs controlling the rest of us and anyone who doesn’t kiss arse loses their livelihood no matter how humble.

  39. No Theo, we’re apes. In that sense, since the common ancestors of us and chimps were apes we are also descended from an ape species. We only like to think of homo as not apey because it’s us and we’re emotionally chauvinist.

    Broadly speaking, if species X, Y and Z are all the species of ape, their last common ancestor was also an ape, because it was the first ape species.

    In other news, the SNP aren’t hard socialists, let alone communists. They’re progressive social democrats. There is a weird idea developing among panicking Tories that Miliband and Sturgeon are some raw, extremist communists, when in fact they’re middle of the road centrists compared to the good old Left like Foot and Benn. The funny thing is that the scare numbers on extra spending are virtually rounding errors on the State budget these days.

    You only have to look at the list of vague aspirations on Miliband’s Tombstone to see how cautious the parties are these days compared to the likes of Attlee.

    http://www.telegraph.co.uk/news/politics/ed-miliband/11580062/Ed-Miliband-will-install-limestone-manifesto-monument-in-Downing-Street.html

  40. As to the degree mill, it’s an arms race or inflationary spiral or some other metaphor, driven by the increasingly awful jobs market. Most of the degrees themselves are educationally worthless. You have to get one just to prove you got one.

  41. “The ultimate aim of the system is that brushing the street will require a degree and a licence.”

    Well, no. Long before this happens you’ll see a fissioning of qualifications between “those who are Professionals” (stress the cap) & “those people over there”.

    For although we should indeed be equal, we wouldn’t like we should be considered of common value.

  42. Ian B,

    “There is a weird idea developing among panicking Tories that Miliband and Sturgeon are some raw, extremist communists, when in fact they’re middle of the road centrists compared to the good old Left like Foot and Benn.”

    I’d assumed they were, but having just read the SNP manifesto, you’re right. It’s slightly to the left of Labour who are slightly to the left of the Conservatives. Sturgeon makes the noises of a firebrand, but this isn’t even as far left as John Smith was. Which leaves the Greens, who are nuts.

  43. IanB

    Yes, we are apes; yes, we are apey. But we are not descended from apes. All apes – including homo sapiens – share a common ancestor, an ape-like primate. The common ancestor was not an ape as such.

  44. “Miliband and Sturgeon are…middle of the road centrists compared to the good old Left like Foot and Benn.”

    But we aren’t comparing them with Foot and Benn, we are comparing them with the status quo. Miliband/Sturgeon would like to reverse 35 years of free market reforms, borrow more, tax more, etc, etc. A Miliband government would produce a greek-cum-venezuelan crisis in the UK.

    As for the manifestos, don’t believe them. They are deliberately anodyne to reassure the 30, 000 floating voters in the key marginals who will decide the election result.

  45. Theo,

    Whether or not you are right as to their real agenda – and if I am honest I rather doubt the greek-cum-venezuelan comparison, but actually that doesn’t matter – you nailed it in the next comment:

    “They are deliberately anodyne to reassure the 30,000 floating voters in the key marginals who will decide the election result.”

    I am not one of that 30,000, nor I suspect are you.

    Hence, you and I, and about 30 / 40 million others, have a free vote, completely unencumbered by whether we believe any of their manifestos or not.

    All the rest of us do is make up the “total vote” numbers for each party, hence, we can vote with our consciences.

  46. Tony Dye
    Tony Dye
    Tony Dye
    Tony Dye
    Tony Dye
    Tony Dye
    I said the bubble must burst, too
    BUT WHO THE HELL SAYS THAT TONY DYE FAILED TO FORECAST THE CRASH?
    Liars, every one.

  47. @The Stigler

    “To some extent, yes, but look at the decline of hard socialism/communism globally. In this country, the only parties representing it are the Greens and the SNP. There’s still people like Owen Jones trying to make a case for it, but not many people are listening.”

    Sadly I think more people are listening than you think. My daughters attend a school for posh kids where ninety per cent of the teachers and the kids (and as far as I can tell roughly fifty per cent of the parents) are hard leftists (allowing for most of the kids being idiots because they’re kids).

    They held a blind vote the other day using logo free manifestos and the vote was roughly 80-10-5-5 Green-Labour-LibDem-Tory.

    One of my daughters’ form tutors was asked if anyone had voted UKIP and his reply was, ‘God, I hope not.)

  48. DBC Reed is an utter idiot who is venting his spleen against those who are unable to avoid demonstrating that they are intellectually superior to him.
    The overwhelming majority of the guys who do not go to Oxbridge do not share DBC Reed’s resentment: I have personal experiernce of that.

  49. “Sadly I think more people are listening than you think. My daughters attend a school for posh kids where ninety per cent of the teachers and the kids (and as far as I can tell roughly fifty per cent of the parents) are hard leftists (allowing for most of the kids being idiots because they’re kids).”

    Kids and teachers are like that. And a lot of posh people are either working for the state, or rely on state protectionism to keep the competition out. The people I know who were born into wealth are nearly all Labour or Green supporters. They run things like libraries and museums, things we need a lot less of, and so naturally, they’re going to vote against any sort of axeman who might ask why the hell we’re keeping a museum open that only has a couple of people in it at any time. On the other hand, couple of the security guards I know are kippers. My father-in-law, raised in a 3-to-a-room council house is Conservative. My uncle, someone who was raised working class and became a service engineer hates Labour.

  50. The Stigler – “The people I know who were born into wealth are nearly all Labour or Green supporters.”

    If I look around at the people I know or am related to, the people born to wealth are not merely voting for those that fund the local library. They live in all White neighbourhoods (maybe with a token East Asian these days). Their children all got married before having any children. And got married to White people. The wives tend to stay at home even if they have medical degrees.

    They are living in the 1950s. But they won’t defend that life style. They all vote Green. They vocally defend lesbians and their lifestyles, but none of their children are Gay. Well out, anyway.

    It is not just about government funding. It is a values issue. They simply do not support the values that shape their lives.

    In the meantime, the working class people …. well let’s say they have a slightly more robust view of the War on Terror and thought Thatcher was the best thing ever.

  51. As for the manifestos, don’t believe them. They are deliberately anodyne to reassure the 30, 000 floating voters in the key marginals who will decide the election result.

    I think that caution applies more to the Tories than Labour et al. The Left can afford to be very honest about their intentions, since their voters like these intentions. The Tories on the other hand are a party who have to fool conservatives and others non-leftists into voting for their SJW agenda, since their purpose is to act as a roadblock to any real “right wing” party getting into the Commons. Hence it is they who need the more dishonest manifesto, to create the illusion they will be in some sense traditionalist, free market, Eurosceptic etc.

    The Tories these days are a party of the Progressive (Left) with a dash of benefit sanctioning to satisfy the clapping seals.

  52. PF
    I should have added ‘all other things being equal’ when mentioning the 30,000 voters in the key marginals. If ‘kippers eat into the Tory vote, more seats will become marginal. The 30000 swing voters are a necessary but not a sufficient condition of victory/largest party status.

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