tag:blogger.com,1999:blog-6837159629100463303.post7122534506035321627..comments2023-06-18T01:25:08.748-07:00Comments on Information Transfer Economics: KeenJason Smithhttp://www.blogger.com/profile/12680061127040420047noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-6837159629100463303.post-11369381362715507932019-07-27T11:23:43.299-07:002019-07-27T11:23:43.299-07:00Ha!Ha!Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-4672250776901809462019-07-27T06:06:30.350-07:002019-07-27T06:06:30.350-07:00Many say Keen predicted the GFC then link to his f...Many say Keen predicted the GFC then link to his failed prediction of an Australian housing crash and recession that never happened.<br /><br />He got in the door ag the new Zealand treasury first two days but they turned down his offer to build a minsky model for new Zealand Jim Rosehttps://www.blogger.com/profile/07337463816684447862noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-38655616772013386502019-06-22T11:36:23.594-07:002019-06-22T11:36:23.594-07:00Thanks for reading Iván.
I say that I'm pract...Thanks for reading Iván.<br /><br />I say that I'm practically a Marxist because a) my political economy is pretty far left in general, b) I often get push back from people who think I'm some sort of neoclassical econ defender — I'm not, I just don't go along with bad arguments because they're politically convenient, and c) I actually believe there is an aggregate (macro scale) "labor theory of value" (to get to your second question).<br /><br />I do not believe a labor theory of value sets individual prices (this has been shown to be generally a bad theory of prices with a variety of examples), but at the macro level the price level appears to be set (empirically!) by the quantity of labor. I've called this the "quantity theory of labor" elsewhere on my blog (e.g. <a href="https://informationtransfereconomics.blogspot.com/2017/03/the-quantity-theory-of-labor-and.html" rel="nofollow">here</a>). But in general, the more people are working (the more labor), the higher the prices of all goods in the economy.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-87250338621550543802019-06-22T07:09:30.678-07:002019-06-22T07:09:30.678-07:00Hi JS, as an initial economics student, your work ...Hi JS, as an initial economics student, your work is always a great source of insight, even though it´s usually way over my head.<br /><br />In what sense do you consider yourself practically a marxist? What do you think of the labor theory of value?Iván Beiselhttps://www.blogger.com/profile/04122015270003047155noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-54295388526796465472019-06-22T07:08:14.907-07:002019-06-22T07:08:14.907-07:00This comment has been removed by the author.Iván Beiselhttps://www.blogger.com/profile/04122015270003047155noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-36184611800804331562018-11-13T01:32:04.703-08:002018-11-13T01:32:04.703-08:00Agreed.
About Restly's comments, I am not re...Agreed. <br /><br />About Restly's comments, I am not really sure what he thought they meant. Take, for instance, the equation he derived in the first comment:<br /><br />Em = Ei + ln n / ln P.<br /><br />If n and P are larger than 1, then (ln n/ln P) is positive, which means that Em > Ei (that would contradict Rowe's claim that Ei > Em: "the elasticity of the individual farmer's demand function is much bigger than the elasticity of the market demand function").<br /><br />But if that was Restly's intention, it wouldn't work, for both Restly and Rowe (and apparently Steve Keen) agreed that <br /><br />Em = (1/slope)(P/Q) and <br /><br />Ei = (1/slope)(P/Qi).<br /><br />So, Restly's equation would mean that Qi > Q!!!<br /><br />He, I'm sure, knows that, and that's why he asks us to consider "very large n's and small P's". With that he makes (ln n/ln P) negative and Em < Ei, preempting thererefore that possible objection.<br /><br />Fair enough. But in that case the scenario he paints is one where a large number of farmers (large n) agree to give away their crops essentially for free (small P). <br /><br />-----<br /><br />Regarding Min: he/she doesn't know what a partial derivative is. <br /><br />What caught my attention in his/her comment is that that "argument" about constant versus independent follows a pattern common among pokeys.<br /><br />Check this post:<br />https://rwer.wordpress.com/2018/08/17/i-never-learned-maths-so-i-had-to-think/<br /><br />Or this one, where you'll find a contribution by one of your frequent commentators (this time, he is absolutely right).<br />https://fixingtheeconomists.wordpress.com/2013/09/03/clarity-and-obfuscation-in-the-use-of-mathematics-for-economic-reasoning/Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-51427211055641320272018-11-12T16:44:05.984-08:002018-11-12T16:44:05.984-08:00Arg. Typo. Re-posting.
Regarding Restly's com...Arg. Typo. Re-posting.<br /><br />Regarding Restly's comment, it doesn't matter what the shape of the demand curve is for a point estimate of the elasticity.<br /><br />Regarding Min's comment, it is nonsense. We can't have ∂q2/∂q1 = -1 unless q2 = -q1 which makes the original Q identically zero.Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-85379618577518029692018-11-07T19:39:58.226-08:002018-11-07T19:39:58.226-08:00Thanks for the reply, Jason.
I think you might be...Thanks for the reply, Jason.<br /><br /><i>I think you might be misreading one of Auld's comments where he said:</i><br /><br />Trust me, that specific observation is not what I am talking about. But never mind that. I am currently reviewing my rusty microeconomics and if I confirm my suspicions I'll be writing about that.<br /><br />What do you think of the comments to Nick Rowe's post by Frank Restly (December 01, 2012 at 03:40 PM and December 04, 2012 at 01:13 AM) and Min (December 02, 2012 at 06:34 PM)?Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-89120790593360082502018-11-07T17:27:22.249-08:002018-11-07T17:27:22.249-08:00I think you might be misreading one of Auld's ...I think you might be misreading one of Auld's comments where he said:<br /><br /><i>"Generally, any optimization problem that can be expressed as maximizing (f(x) – g(x)) with respect to x has the property that f'(x)=g'(x) at an internal solution ..."</i><br /><br />It's not *just* the derivative sum rule which Auld mentions and you state correctly:<br /><br /><i>"if F(x) = f(x) + g(x) (all functions continuous and differentiable), then F'(x) = f'(x) + g'(x)"</i><br /><br /><a href="https://en.wikipedia.org/wiki/Sum_rule_in_differentiation" rel="nofollow">https://en.wikipedia.org/wiki/Sum_rule_in_differentiation</a><br /><br />but that an optimum of a function F(x) occurs where its derivative is zero if it's not on a boundary — the <a href="https://en.wikipedia.org/wiki/Fermat%27s_theorem_(stationary_points)" rel="nofollow">interior extremum theorem</a>. I.e. if F'(x₀) = 0 and x₀ is not on a boundary, then x₀ is a local extremum (minimum or maximum). If F(x) = f(x) − g(x), then<br /><br />F'(x) = f'(x) − g'(x) = 0<br /><br />or<br /> <br />f'(x) = g'(x)<br /><br />is a condition for a local extremum (not on the boundary). This is Auld's point: if you have an economic optimum, then these marginal quantities (i.e. these derivatives in econ-speak) are going to be equal: marginal revenue equals marginal cost.<br /><br />In Keen's treatment, he just assumes that marginal revenue increases for all firms when one firm raises its price (i.e. firms collude). This does seem to be an appropriate approach in monopoly cases, but is hardly a proof that "econ is wrong".Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-50172229637000859492018-11-06T23:49:51.766-08:002018-11-06T23:49:51.766-08:00Jason,
Sorry for the belated reply. I thought you...Jason,<br /><br />Sorry for the belated reply. I thought you were not interested.<br /><br />If one were to give points for different aspects of the episode, I'd give Rowe points for honesty and civility. Keen, on the other hand, neither acknowledged Rowe's point, nor disputed his argument. Instead Keen promised a reply (which, to the best of my knowledge -- and I might be mistaken, for I no longer follow him -- never came) and pointed to a book which has nothing to do with his claim that the mathematical analysis of the model is wrong.<br /><br />In general I tend to agree with you but that's besides the point. What I'm really interested in is the mathematics of both parties.<br /><br />You see, if F(x) = f(x) + g(x) (all functions continuous and differentiable), then F'(x) = f'(x) + g'(x).<br /><br />Anyways. I've also read Chris Auld's post and unpublished paper and I think you should pay it more attention, for as Auld writes, Keen's claim is not that the model is inadequate or simplistic or whatever, but that the mathematical analysis of the model is inept.Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-63705459267049907932018-11-01T15:34:44.440-07:002018-11-01T15:34:44.440-07:00Thanks, I'll take a look.Thanks, I'll take a look.By The Wayhttps://www.blogger.com/profile/11544413001329820101noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-56578807312063398322018-11-01T14:58:40.835-07:002018-11-01T14:58:40.835-07:00I had an old blog with a friend of mine where we c...I had an old blog with a friend of mine where we critiqued the science appearing in the news that could have made good use of that title. However, we went with "Spittle-Flecked Ire" (based on a quote from this article:<br /><br /><a href="https://www.technologyreview.com/s/417008/the-case-of-the-collider-and-the-great-black-hole/" rel="nofollow">https://www.technologyreview.com/s/417008/the-case-of-the-collider-and-the-great-black-hole/</a>Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-76216519765394612942018-11-01T13:59:00.654-07:002018-11-01T13:59:00.654-07:00"Leaning over Backwards" ... a good name..."Leaning over Backwards" ... a good name for a blog.By The Wayhttps://www.blogger.com/profile/11544413001329820101noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-79213554709195008272018-10-29T14:28:39.660-07:002018-10-29T14:28:39.660-07:00I primarily wrote this post to be done with this. ...I primarily wrote this post to be done with this. Keen is a hack which is relatively easy to see from reading into his work more than not at all. I don't think Keen discredits MMT, stock-flow consistent approaches, post Keynesianism, or any of the other things Keen has latched onto in his effort to stay relevant (those things have their own issues, but that's for another time).<br /><br />That said, Rowe gives a reasonable argument while Keen essentially assumes his conclusion in the mathematics (see e.g. <a href="http://chrisauld.com/2012/12/06/steve-keen-still-butchering-basic-microeconomics/" rel="nofollow">here</a>) while misrepresenting both his own (non-)prediction of the global financial crisis as well as the SMD theorem (which does *not* say individual demand curves can't be aggregated, but rather that only a few properties of the individual demand curves survive aggregation).<br /><br />It's pretty easy to see which "side" is operating in good faith here.<br /><br />Beyond that, Keen's paper represents a failure to "lean over backwards" (in the words of Richard Feynman) to show how his own case could be incorrect (there is little introspection n where the difference in the mathematical results come from -- something corrected by Chris Auld who shows that the difference is that Keen effectively assumes monopoly to prove monopoly). <br /><br /><a href="http://www.paecon.net/PAEReview/issue53/KeenStandish53.pdf" rel="nofollow">http://www.paecon.net/PAEReview/issue53/KeenStandish53.pdf</a>Jason Smithhttps://www.blogger.com/profile/12680061127040420047noreply@blogger.comtag:blogger.com,1999:blog-6837159629100463303.post-44803885233167831222018-10-26T00:19:25.252-07:002018-10-26T00:19:25.252-07:00Life is full of wonderful coincidences, Jason. Jus...Life is full of wonderful coincidences, Jason. Just these days I've been giving Steve Keen's Debunking book a good, careful read.<br /><br />Some people had already written about a particular criticism Steve Keen made to the theory of the firm, Nick Rowe and Chris Auld among them. Until recently, I myself had not heard their side of the story.<br /><br />Here's Rowe's "A post for Steve Keen" [*]. It features comments by some of Keen's supporters and a reply by Steve Keen himself.<br /><br />Let me be clear, I don't enjoy this kind of debate. I find it tiresome and not very edificating. Both sides of the debate, in my opinion, are at fault. <b><i>Neither side</i></b> covers itself in glory. Both parties -- pro- and anti-mainstream -- appeal to all sorts of dishonest antics to prevail come what may (cheap shots, deliberate misrepresentation, red herrings, that kind of thing).<br /><br />That's why I refer to Rowe's post: in my opinion, it's an all-too-infrequent exception to the rule. I'm not a fan of Rowe, but one must give him something: he went out of his way to be reasonable, polite, and didactic. I actually found the post instructive.<br /><br />I have my own opinion about the final outcome of that debate and if you want, we can discuss that later. Here I'd like to have your opinion about it. <br /><br />[*] http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/a-post-for-steve-keen.html<br /><br /><br />Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.com