> **
> Thanks Leon. To answer question b), I would love to read some more sense.
> Thanks
> Jaco
> Sent from my BlackBerry® wireless device
> ------------------------------
> *From: * "Leon Louw (gmail)" <leonlo...@gmail.com>
> *Sender: * libsa@googlegroups.com
> *Date: *Fri, 9 Nov 2012 21:52:01 +0200
> *To: *<libsa@googlegroups.com>
> *ReplyTo: * libsa@googlegroups.com
> *Subject: *Re: [Libsa] Fwd: An economist who speaks sense - see attached
> article
> You're being unfair to economists, Trevor. Surveys find that there's a
> high level of consensus amongst economists on most issues. The impression
> that there are muddled economists arises mainly because media present "both
> sides", which leaves the impression that nutters like Krugman and Stiglitz
> are representative.
> As for clarity, most economics I've read are as clear as intellectuals
> get, eg *Freakonomics* and dozens of other books/articles.
> Economics should be distinguished from *econometrics *and *mathematical
> economics*, which, in turn, differ fundamentally from each other. The
> two of them are also typically quite clear, provided one is into
> quantification or mathematics.
> Although, having written that, I should add that
> what econometricians write tends to be clear, *provided* you make
> allowances for their curious methodology and assumptions. Outside their
> logic bubble, much of it garbage.
> There are many examples. Take the way they calculate GDP. That's their
> way of saying how much wealthier (or poorer) we are. Mainstream
> econometrics (as opposed to what comes from *our *guys) is what gets
> Krugman spouting such absurdities "seriously" (his word) as the need to
> spend as if as if we’re expecting an alien invasion -- that's his
> crypto-intellectual version of digging and filling trenches to create
> wealth. It also gets muddle-headed commentators saying superstorm Sandy,
> wars and other horrid stuff that goes bump in the night, "stimulate"
> growth.
> No, that’s not a typo; it’s really what they say. Such sophistry entails
> variations of the old broken window fallacy, which vary in form, not
> substance. Likewise beneficiation babble.
> It goes like this: when you build a house it's added to the GDP. That
> it's *you*, not the rest of us, who has the house doesn’t occur to
> econometricians, but that's another matter. Collectivism and
> macro-economic aggregates presume what's yours is ours. I like that. You
> being richer somehow makes us richer, and the main responsibility of
> econometricians is to keep telling us that.
> Anyhow, when your house gets blown away by three little piggies or a
> tornado, you'd expect econometricians to deduct it from the GDP, but they
> don't. In fact, they *add *it in again when rebuilt. They create the
> illusion that the country is a house richer whereas it's a house poorer.
> You have to give them credit for looking on the bright side when the
> pawpaw hits the air conditioner.
> There's also the seen and unseen; we see the rebuilt house, but not what
> else there would have been had resources not been diverted. In case you're
> thinking econometricians are remiss, take back your naughty thoughts. It's
> simply and obviously completely impossible to know or even speculate how
> else the resources would have been deployed. Would there have been more
> tooth picks, jumbo jets, wrestling matches, game drives, promiscuity, moon
> landings, radio channels, tweets, widgets, woblets, wangles, globifers or
> waggloplets? Or lunches. Since no one has the slightest idea, it's best
> to ignore alternatives and look only at what we have, which is a new house.
> To point out that there's no such thing as a free lunch is mean and nasty
> and spoils the fun of the numbers game.
> We don't really have a new house, of course -- we have the same number we
> had before -- but, with all this building going on, it's unreasonable to
> ask econometricians to say nothing happened, nor to expect them to sow doom
> and gloom by saying we're a house poorer when there's a new house for all
> to see. No one would believe them anyway, and they'd lose credibility.
> Nor can we ask them to muse about what might have been, nor (as
> micro-economists do) to say it's your house. It's more congenial, after
> all, to say we're all in this together, and to prove it with impressive
> numbers and acronyms.
> Another example of econobabble is international trade. Everyone knows
> that if you get more than you give, you have a surplus. Yet
> econometricians call precisely the same thing when it happens
> internationally a "deficit". Getting more than you give for them is being
> worse-off. Yes, I know that's weird, so I’ll explain how they perform the
> smoke-and-mirrors illusion in a moment.
> Meanwhile, ordinary folk also know -- or would were they to think about it
> -- that all voluntary exchanges add value; they leave all parties
> wealthier. Otherwise they wouldn't trade. That’s obvious. Well, not
> really. Accountants aren't quite so cheerful, so they don't see a
> perpetual positive sum game. For them everyone's goofy because they go to
> all the effort (transaction cost) of trading at the end of which all their
> books balance *to the nearest cent*, which means *all* transactions are
> always in precise equilibrium and therefore a complete waste of time.
> If you think that's weird, you ain't seen nothing yet. Enter
> econometricians. They're really amazing; they add all the
> participants’ pluses, and all the accountants' zeros, and, as if by magic,
> they declare a deficit.
> How do they achieve this astounding feat? Unlike everyone who trades, and
> all accountants, econometricians attach zero value to what's traded.
> That's right, for them, what people do (internationally at least) is pass
> money around in a kind of global parlour game during which econometricians
> take occasional snapshots. At the end of fiscal years, or quarters, or
> whatever, if everyone collectively in country A paid more to people in
> country B than they got from them, it's called a "deficit". Admit it, you
> can't argue with that. Country B gained money at the expense of country A.
> Since no one questions the assumption that international trade is a
> money-circulating parlour game, no one blows the whistle of the
> surplus-deficit illusion. Anyway, econometricians are really clever, so no
> one dares argue with them even if the nation’s experience isn't theirs.
> We assume clever people would never do something so manifestly nuts as to
> ignore *why* people pass money around.
> In their defence, econometricians have to do what they do, you see,
> because if they don't, like accountants, they'd keep reporting zero
> balances, and they’d be boring and/or unemployed. Instead, they've create
> elaborate schools of thought, and win Nobel prizes, and churn out complex
> theories about how countries can get more money than they give, whereas
> everyone else wants to know how to get more stuff than they give; how to
> get more for their money rather than how to get more money *per se*.
> So, Trevor, be fair, and give credit where credit is due. On reflection,
> don’t give credit; you might create a debt crisis. I'll explain that too
> if anyone (a) reads this far and (b) wants to know how econometricians turn
> lots of individual debts into "national" debt. There is, of course, no
> such thing, but unless we assume there is, we'd have no need for
> pseudo-intellectual mumbo-jumbo about national debt? Just forget it all,
> Trevor, and enjoy the clear congenial economist who pleased you ... and me
> ... thereby increasing the GNH. That's econometrese for gross national
> happiness.
> ciao
> Leon
> On 9 November 2012 13:42, Trevor Watkins <bas...@gmail.com> wrote:
> An excellent article, unambiguous and clear. Unusual for an economist.
> Trevor Watkins - Base Software
> bas...@gmail.com 083 44 11 721 - 042 293 1405 - (fax)0866 532 363
> PO Box 3302, Jeffreys Bay, 633
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