tag:blogger.com,1999:blog-2974725225114485009.post3397158611691524736..comments2023-10-20T07:24:00.534-07:00Comments on His Story is Bunk: Economics man behaving badlyPatrick Sullivanhttp://www.blogger.com/profile/14948365865741313524noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2974725225114485009.post-33027017633022784112014-05-03T14:10:56.457-07:002014-05-03T14:10:56.457-07:00Theory is a better guide to policy than observatio...Theory is a better guide to policy than observation, because it is much simpler. <br /><br />After the equations are written down, they can be manipulated according to the laws of formal logic to produce miraculous results, even if they have been rearranged to reverse cause and effect.<br /><br />Cause and effect are not part of formal logic, they come from observation. Observation is merely anecdote and unscientific we are told.<br /><br />---<br />A phishing email uses a very effective ploy which I call the Aura of Truth. It provides links to authentic sites and refers to real events, followed by fake claims. The aura of truth from the first items spills over to the fake claims.<br /><br />Most people think that they are immune to that ploy. They are sophisticated. But, this is the primary ploy used by politicians to push their plans. They say a few true things followed by their false additions. It works great.<br /><br />Keynesian economics is sold in exactly this way. Some absolutely true accounting identities are offered, followed by true observed economic relationships, followed by wishful thinking and reversals of cause and effect.<br /><br />The commonly taught and usually believed Keynes Multiplier is probably the most destructive piece of false economics. It provides support for government borrowing and spending regardless of the merits of the project. The act of spending is supposed to create more wealth than the wealth wasted by the spending. So, why not spend big?<br /><br />But, the commonly taught derivation is laughably illogical, not merely a bad estimate.<br /><br /><a href="http://easyopinions.blogspot.com/2013/07/the-illogic-of-keynes-multiplier-1.html" rel="nofollow"><b>The Illogic of the Keynes Multiplier</b></a><br />Andrew_M_Garlandhttps://www.blogger.com/profile/02855052302054611917noreply@blogger.com