When the seas and mountains fall (personal)
7 Aug, 2020 at 10:41 | Posted in Varia | 1 CommentPeople say time heals all wounds.
I wish that were true.
But some wounds never heal — you just learn to live with the scars.
In memory of Kristina Syll — beloved wife and mother of David and Tora.
Hegel — wenn der Geist aufs Ganze geht
6 Aug, 2020 at 12:36 | Posted in Theory of Science & Methodology | Leave a comment
Georg Wilhelm Friedrich Hegel ist unbestritten einer der wichtigsten philosophischen Denker der Neuzeit. Aber — 250 Jahre nach der Geburt des deutschen Philosophen kann man sich fragen: Was bleibt von Hegel? Wer war er? Was wollte er? Und wie würde er unsere Gegenwart und Zukunft fassen?
Econometrics — science based on questionable presumptions
6 Aug, 2020 at 12:11 | Posted in Statistics & Econometrics | Leave a commentWhat we are asked to assume is that the precept can be carried out in economics by techniques which are established for linear systems, serially independent disturbances, error-free observations, and samples of a size not generally obtainable in economic time series today. In view of such limitations, anyone using these techniques must find himself appealing at every stage less to what theory is saying to him than to what solvability requirements demand of him. Certain it is that the empirical work of this school yields numerous instances in which open questions of economics are resolved in a way that saves a mathematical theorem.
Still, there are doubtless many who will be prepared to make the assumptions required by this theory on pragmatic grounds. We cannot know in advance how well or badly they will work, and they commend themselves on the practical test of convenience. Moreover, as the authors point out, a great many models are compatible with what we know in economics – that is to say, do not violate any matters on which economists are agreed. Attractive as this view is, it fails to draw a necessary distinction between what is assumed and what is merely proposed as hypothesis. This distinction is forced upon us by an obvious but neglected fact of statistical theory: the matters “assumed” are put wholly beyond test, and the entire edifice of conclusions (e.g., about identifiability, optimum properties of the estimates, their sampling distributions, etc.) depends absolutely on the validity of these assumptions. The great merit of modern statistical inference is that it makes exact and efficient use of what we know about reality to forge new tools of discovery, but it teaches us painfully little about the efficacy of these tools when their basis of assumptions is not satisfied. It may be that the approximations involved in the present theory are tolerable ones; only repeated attempts to use them can decide that issue. Evidence exists that trials in this empirical spirit are finding a place in the work of the econometric school, and one may look forward to substantial changes in the methodological presumptions that have dominated this field until now.
Maintaining that economics is a science in the ‘true knowledge’ business, yours truly remains a sceptic of the pretences and aspirations of econometrics. The marginal return on its ever higher technical sophistication in no way makes up for the lack of serious under-labouring of its deeper philosophical and methodological foundations that already Millard Hastay complained about. The rather one-sided emphasis of usefulness and its concomitant instrumentalist justification cannot hide that the legions of probabilistic econometricians who give supportive evidence for their considering it ‘fruitful to believe’ in the possibility of treating unique economic data as the observable results of random drawings from an imaginary sampling of an imaginary population, are skating on thin ice.
A rigorous application of econometric methods in economics presupposes that the phenomena of our real world economies are ruled by stable causal relations between variables. The endemic lack of predictive success of the econometric project indicates that this hope of finding fixed parameters is a hope for which there, really, is no other ground than hope itself.
Mathematical slavery
5 Aug, 2020 at 14:07 | Posted in Economics | Leave a comment
None of this is an argument in favor of taking a road along which there is less rigorous thinking. Our problem is much more that we have developed our models using certain mathematical techniques and that we have become slaves to those techniques. It is surely this more than anything else that has led us to persist with a model that, to any outsider, seems such a poor description of what actually happens in markets. The real world is one in which various market forms coexist, where different prices for goods are observed, and where the individuals who participate have only very local information. The appropriate notion of demand in such a world is certainly not close to the definition that we find in general equilibrium theory, but this does not make it any less interesting to analyze. The only drawback is that we may have a lot more intellectual climbing to do.
Jag ska fånga en ängel
4 Aug, 2020 at 21:00 | Posted in Varia | Leave a comment
Människor som det på något vis känns som om de varit med oss hela livet är alltid svårt att mista. Det är en tröst att Teds och Kenneths underbara musik fortfarande finns kvar — men att de inte längre vandrar vid min sida kommer jag aldrig att kunna förlika mig med.
Genius of the week
4 Aug, 2020 at 12:58 | Posted in Politics & Society | 2 Comments
Confirms — again — what we already knew: Trump is a reckless, untruthful, outrageous, incompetent and undignified buffoon!
Keynes’ fundamental insight
4 Aug, 2020 at 12:47 | Posted in Economics | 3 CommentsThe difficulty lies, not in the new ideas, but in the escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
John Maynard Keynes
Mark Blaug (1927-2011) did more than any other economist to establish the philosophy and methodology of economics a respected subfield within economics. His path-breaking The methodology of economics (1980) is still a landmark (and the first textbook on economic methodology yours truly read as a student at Lund University).
La ‘cancel culture’ — une menace pour le débat public
3 Aug, 2020 at 11:54 | Posted in Politics & Society | 1 CommentL’échange libre des informations et des idées, qui est le moteur même des sociétés libérales, devient chaque jour plus limité. La censure, que l’on s’attendait plutôt à voir surgir du côté de la droite radicale, se répand largement aussi dans notre culture : intolérance à l’égard des opinions divergentes, goût pour l’humiliation publique et l’ostracisme, tendance à dissoudre des questions politiques complexes dans une certitude morale aveuglante. Nous défendons le principe d’un contre-discours solide et même caustique de toutes parts.
Or, les appels à sanctionner rapidement et sévèrement tout ce qui est perçu comme une transgression langagière et idéologique sont devenus monnaie courante. Plus inquiétant encore, des dirigeants institutionnels, ne sachant plus où donner de la tête pour limiter les dégâts, optent pour des sanctions hâtives et disproportionnées plutôt que pour des réformes réfléchies …
Quelles que soient les raisons invoquées, la conséquence en est qu’il est de plus en plus difficile de prendre la parole sans craindre des représailles. Nous en faisons déjà les frais, à en juger par l’aversion au risque qui se développe parmi les écrivains, les artistes et les journalistes, inhibés par la peur de perdre leur gagne-pain s’ils s’écartent du consensus ou même s’ils ne font pas preuve du zèle attendu pour se conformer …
Pour vaincre de mauvaises idées, il faut les exposer, argumenter et convaincre, et non pas essayer de les taire ou espérer qu’elles disparaissent.
Nous rejetons les faux choix qu’on nous présente entre la justice et la liberté : l’une n’existe pas sans l’autre. En tant qu’écrivains, notre métier repose sur la marge que la société nous accorde pour l’expérimentation, la prise de risque et même l’erreur. Nous avons besoin de préserver la possibilité d’un désaccord de bonne foi sans conséquences professionnelles désastreuses. Si nous ne défendons pas ce qui est la condition même de notre travail, nous ne pouvons pas nous attendre à ce que le public ou l’Etat le fasse pour nous.
Margaret Atwood, Noam Chomsky, Mark Lilla, Steven Lukes, Michael Walzer et al.
Epistemic humility — an intellectual virtue
3 Aug, 2020 at 08:53 | Posted in Economics | Leave a commentBeing a true expert involves not only knowing stuff about the world but also knowing the limits of your knowledge and expertise. It requires, as psychologists say, both cognitive and metacognitive skills. The point is not that true experts should withhold their beliefs or that they should never speak with conviction. Some beliefs are better supported by the evidence than others, after all, and we should not hesitate to say so. The point is that true experts express themselves with the proper degree of confidence—meaning with a degree of confidence that’s justified given the evidence …
Epistemic humility is an intellectual virtue. It is grounded in the realization that our knowledge is always provisional and incomplete—and that it might require revision in light of new evidence. A lack of epistemic humility is a vice—and it can cause massive damage both in our private lives and in public policy …
It’s never been more important to learn to separate the wheat from the chaff—the experts who offer well-sourced information from the charlatans who offer little but misdirection. The latter are sadly common, in part because they are in greater demand on TV and in politics. It can be hard to tell who’s who. But paying attention to their confidence offers a clue. People who express themselves with extreme confidence without having access to relevant information and the experience and training required to process it can safely be classified among the charlatans until further notice.
Der Glaube an die Wissenschaft
2 Aug, 2020 at 18:17 | Posted in Theory of Science & Methodology | Leave a commentBetrachtet man den Verschwörungsirrsinn, der sich dieser Tage im Internet tummelt, kann man nur zu dem Schluss kommen: Der Irrationalismus ist auf dem Vormarsch. Aber dieser erschreckende Vormarsch lässt sich nicht stoppen, indem die Wissenschaft selbst in einen ideologischen Tunnel fährt.
Ganz gleich, wie überzeugt man von seiner Sache ist: Als Aktivist muss man in einer Demokratie bereit sein, für seine Überzeugung auf dem Feld des weltanschaulichen Dissenses zu streiten – statt einen unsauberen Begriff von Wissenschaft wie einen Zauberspeer vor sich her zu tragen, der alle Gegner als “wissenschaftsfeindliche Tölpel” brandmarken und vor Scham verstummen lassen soll. Damit erreicht man nur, dass die Grenzen zwischen Wissenschaft und Ideologie, zwischen Vernunft und Unvernunft immer weiter verschwimmen.
All denjenigen, die heute ihre Heilserwartungen in die Wissenschaft projizieren, die an den Lippen von Forschern hängen, weil sie auf erlösende Sätze hoffen wie “Wir haben die Pandemie ein für alle Mal unter Kontrolle gebracht” oder “Der Klimawandel ist abgewendet”, sei gesagt: Wirkliche Seelenruhe, Zuversicht, den Glauben, dass “alles” gut wird, kann kein seriöser Wissenschaftler bieten. Die moderne Wissenschaft kommt von der Physik her, nicht von der Metaphysik. Deshalb kann sie keine Antworten darauf geben, wie der Mensch mit seiner Angst vor dem Ungewissen, seiner Angst vor dem Tod umgehen soll, wie er seinen Frieden mit der Tatsache machen kann, dass er nicht nur Herr seines Schicksals, sondern durch seine Sterblichkeit letzten Endes ein radikal Unterworfener ist.
Time to rewrite textbook chapters on money
2 Aug, 2020 at 13:53 | Posted in Economics | 1 CommentThis article has discussed how money is created in the modern economy. Most of the money in circulation is created, not by the printing presses of the Bank of England, but by the commercial banks themselves: banks create money whenever they lend to someone in the economy or buy an asset from consumers.
And in contrast to descriptions found in some textbooks, the Bank of England does not directly control the quantity of either base or broad money. The Bank of England is nevertheless still able to influence the amount of money in the economy. It does so in normal times by setting monetary policy — through the interest rate that it pays on reserves held by commercial banks with the Bank of England. More recently, though, with Bank Rate constrained by the effective lower bound, the Bank of England’s asset purchase programme has sought to raise the quantity of broad money in circulation. This in turn affects the prices and quantities of a range of assets in the economy, including money.
M. McLeay et al. / Bank of England’s Monetary Analysis Directorate
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