Economics is not a science, because economists try to
prove a theory by plugging in real data, and it doesn't
work. So, they just change the equation.
Aah, my dear,
that is not a science.
that was easy.
The economics prize is called the Nobel, but it ain't.
Some Swedish bank has paid for it to appear like a
Nobel. They ought to get a Nobel for that degree
of corrupt behaviour in the aid of corrupt economic
thinking.
Now, I think I've posted Paul Ormerod's (I think) thesis
on how Nobel Laureates in Economics (a misnomer)
and their ideas have actually led us directly to the
crash of 2008.
The documentary Inside Job showed us how many
important economists are on the take from the banks.
And many others are sponsored. Is it just conveniently
coincidental that the ideas used by plutocrats are rubber
stamped by economics profs? I don't think so.
Economists are providing cover, by, you guessed it, lying.
Next, a recent winner, George Pissarides, is
another of the LSE's fine cadre of empirialists, I mean
imperialists. His thesis was that, after the banking crash,
one way to improve a country's productivity was to cut
unemployment benefit. thanks, Pisser. You're a big help.
Well, I saw a tv show (can't find it) where Pisser
complained about losing his big Prof savings in
the Cyprus bail in. I was shouting at the tv saying,
"well you only encouraged the bastards. Did you
think they would spare you, I mean, not rob you?"
F%^&k nut!
But, now here's the (social) science on how useless
Economics is, from William Black
checkit: Naked
capitalism
Bill
Black: Great Moments in Nobel Prize History – 2007 Winner Pumps for Plutocracy,
Billionaire CEOs
By
Bill Black, the author of The Best Way to Rob a Bank is to Own One and an
associate professor of economics and law at the University of Missouri-Kansas
City.
Introduction
This
article begins a project to critique the work by economists concerning
regulation that has led to the award of Nobel prizes. The prize in economics in
honor of Alfred Nobel is unique. It is not part of the formal Nobel Prize
system. It was created by a large Swedish bank and it is the only “science”
prize frequently given to those who proved incorrect. The theme of my series is how poorly the work has stood the test of
predictive accuracy. Worse, it has led to policies in the private and public
sector that are criminogenic and explain our recurrent, intensifying
financial crises.
I
want to stress that the reason that the work has proven so faulty is not that
the Nobel Laureates in economics are
incompetent or evil. Indeed, that is part of my theme. Economics is not a hard
science and its pretensions that it is have helped make even brilliant
economists vulnerable to grievous error, particularly those who were most dogmatic about their hostility to even
democratic governments. A recurrent defect that will emerge is the failure of economics to take ethics
seriously.
This
article responds to the Prize Lecture of Roger Myerson, who was made a Laureate
in 2007 for his work on “mechanism design.” Mechanism design theory was
developed in parallel to Michael Jensen’s work that led to modern executive
compensation. Jensen criticized existing executive compensation as paying CEOs
as if they were “bureaucrats” and argued that it led CEOs to shirk effort and
avoid taking productive risks. These variants of the classic “unfaithful agent”
problem were reminiscent of Ayn Rand’s premise of the CEOs going on a mass
strike, but here the strike was against the board of directors and the cause
was their “inadequate” pay.
Myerson’s
Prize Lecture uses a variant of CEO compensation as central to his argument on
mechanism design. CEO compensation is the subject of Myerson’s most interesting
policy recommendation – the CEOs of large firms need to be billionaires and his
most controversial conclusion – capitalism’s unique strength is plutocracy.
Myerson’s
Prize Lecture returns repeatedly to the theme of demonstrating the inferiority
of what he refers to as “socialism” (but appears to be referring to communist
systems) and to advancing the views of Friedrich August von Hayek. Hayek’s most
famous work warned that the democratic governments of the West were headed
inexorably on The Road to Serfdom because of their mixed economies. Myerson’s
Prize Lecture’s twin laments are that economics had proven unable to prove the
inferiority of government programs and Hayek’s dismissal of the utility of
mathematical economics.
Ethics,
We Don’t Need No Stinkin’ Ethics
At
first glance, it might appear that mechanism design involves an emphasis on
ethics.
…
Myerson’s
Policies Optimize the Criminogenic Environment for Control Fraud
The
most fundamental problem with Myerson’s analysis of moral hazard and adverse
selection is that they both predict
accounting control fraud and Myerson assumes that his mechanism design prevents
accounting control fraud. It does not
and cannot. Indeed, by creating complacency through the fabulous claims that plutocrats are pure and
principled, markets self-correct, and regulators cause injury Myerson’s
proposals would make our economy even more criminogenic. Firm outputs are
“hidden” by fraudulent accounting and as George Akerlof and Paul Romer
explained in 1993, accounting control fraud is a “sure thing” (“Looting: The
Economic Underworld of Bankrutpcy”). Indeed, if a large firm is failing the
billionaire CEO who has hundreds of millions of dollars invested in the failing
projects has a powerful incentive to falsify the accounting to declare the
project was successful and pay himself off with a firm buyout of his
“profitable” interest in the project.
Myerson
ignores the fact that plutocracies produce crony capitalism, making “free
markets” and real democracies impossible. Plutocracy greatly increases the
ability of corrupt CEOs to loot with impunity, making a mockery of
incentive-compatibility.
