By MANFRED BACK*
The deficit in correct economic forecasts by Focus economists is greater than the federal public debt, however, they are not held responsible for the errors and possible losses of their clients
“Up and down their indifference curves until they disappear into their own abscissas”
(Ted Wheelwright).
“The generational shift that allows new paradigms to emerge in the sciences does not occur in economics. The final factor that allows economics to escape the revolutionary change it desperately needs is quite ironic: myths in economics survive because, despite the dominance of our politics by economic ideas, you do not need economic theory or economists to have an economy. Economics exists independently of economists, and would probably function much better if economists simply did not exist.” (Steve Keen)
Focus economists, who pose as scientists and heralds of decimal arithmetic, are deficient in accurate predictions; in terms of standard deviation, they get very few right. But why are they so listened to, recognized and respected? If not even the traders, and treasury chiefs listen to them, much less follow them. Only you, dear unwary, fooled by the siren song of linear equations, disguised as “scientific” certainties. Have you ever stopped to think, why do they all say the same thing? And the worst part is, you and the media believe it!
“To use Nicholas Taleb’s phrase, economists have no ‘skin in the game’: they suffer no serious consequences when their advice is horribly wrong, and there are myriad complicating factors they can point to to explain any failure. Ironically, the fact that economists are not strictly necessary is something that gives them great power. They are the sorcerers of capitalism, holding the leaders of our society captive as they read the intricacies of their dynamic stochastic general equilibrium models, while at the same time having no idea how this society actually works.” (Steve Keen)
The neoclassical school's fetish for balance only became more extreme over time.
“If all this causes headaches to those nostalgic for the old parables of neoclassical writing, we should remember that academics are not born to live an easy existence. We must respect and evaluate the facts of life.” (Paul Samuelson 1966)
“Macroeconomics emerged as a distinct field in the 1940s as part of the intellectual response to the Great Depression. The term then referred to the body of knowledge and expertise that we hoped would prevent a recurrence of that economic disaster. My thesis in this lecture is that macroeconomics in this original sense succeeded: its central problem of preventing depression was solved, for all practical purposes, and indeed was solved for many decades.” (Robert Lucas 2003)
In 2008 they were unable to predict the biggest financial crisis since the great economic depression of the 1930s, it seems that this arsenal touted by Robert Lucas did not live up to its promise! The “dynamic stochastic general equilibrium” models are still the workhorses of neoclassical economics and economists at Focus Research!
“Today’s students are still being forced to learn these mysterious and misleading models, as if the crisis they failed to foresee had never occurred.” (Steve Keen)
“Macroeconomic theorists dismiss mere facts by feigning obtuse ignorance about simple statements like ‘tight monetary policy can cause a recession.’ Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by the action any one person takes.” (Paul Romer, 2018 Nobel Prize in Economics).
Making an analogy with the flutists of the models, our one-note musicians, the Focus economists sing with a single voice, now it's fiscal dominance! And you believe it! I ask: when do they get any predictions right?
“A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up familiar with it.” (Max Planck 1949)
“…the underlying neoclassical view of capitalism is highly seductive. It is a meritocracy in which what you get is what you deserve, where harmony prevails because of equilibrium, and which is free from coercion: there is no need for government control when the market works ‘perfectly.’ So even if some students turn away from neoclassical economics because of one of its flaws, enough ‘true believers’ can be found in the student body to replace the existing ‘true believers’ when they retire.” (Steve Keen)
The deficit of correct economic forecasts by Focus economists is greater than the federal public debt, but they are not held responsible for the errors and eventual losses of clients who blindly follow these oracles of false prophecies. On the contrary, they are rewarded with bonuses by financial institutions, in addition to often being invited to positions at the Central Bank, the Ministry of Finance or the Federal Revenue Service.
It sounds a bit hypocritical, for defenders of meritocracy to be blessed with vile money and positions for their mistakes, do what I say, but don't do what I do! A reward not for risk, but for incompetence, but they don't die, who will shout to the four corners of the world the ode of balance and meritocracy as a daily prayer. False prophets never die, unwary believers!
“By contrast, engineering does not exist independently of engineers: you need engineers to create the technological marvels that the rest of us take for granted, and when something goes wrong with the things engineers create, the engineers face real consequences: a collapsing bridge implicates the engineers who failed to take harmonics into account, a crashing plane implicates the engineers (or their managers) who approved a flawed design.” (Steve Keen)
This Focus is more like Hocus Pocus!
To paraphrase Steve Keen, Focus economists don’t use math: they abuse it.”Magicmatics".
The dominance is not fiscal, it is of a doctrine. Doctrine does not work with truths, but with dogmas and beliefs. Doctrine does not seek the truth, but to justify dogmas. Doctrine does not accept uncertainty, human infallibility, not knowing what tomorrow holds. Doctrine has no room for humility, for ignorance! Let us now begin an adjustment plan to combat the deficit caused to people's lives and the economy by the horsemen of the apocalypse: the Focus economists! And may the adjustment of their mistakes come!
“Fools walk in darkness” (ecclesiastes 2: 14)
*Manfred Back He has a degree in economics from PUC-SP and a master's degree in public administration from FGV-SP..
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