The Urgent Need to Save Orthodox Economists from their Crippling Myths

William K. Black
February 29, 2016     Brooklyn, N.Y.

A blogger has trolled all heterodox economists as believers in the “occult.”  More precisely, he is upset about “econ people” (who are likely not economists) and who tweet him or post comments on his blog site.  The blogger further complains that these commenters say that they believe in heterodox economics and “new methodologies [that] are poised to topple mainstream economics.”  He then goes on to say:  “My typical response is to ask what these new methodologies are. But incredibly, I can almost never get an answer.”

The UMKC economics department is chock full of heterodox economists who share the blogger’s experience.  We too get weird blogs and tweets that are long on revolutionary conclusions and short on specifics.  Some of these messages come from folks who say they are heterodox and some from those that write to denounce heterodox economics.  We also get an endless stream of policy nostrums from orthodox economists that promise to transform America (in good ways).  They have, collectively, transformed America in terrible ways.

The blogger summarizes his complaint in this paragraph.

So far, the main “heterodox” econ “schools” – Post-Keynesian, MMT, and Austrian – show every indication of having no new methodology whatsoever. Anyone who points this out will, of course, be greeted with a shower of insults from ardent followers of this “school”. But when polite, patient requests for enlightenment and information have failed enough times, what else can we conclude?

The blogger conflated “new methodology” with “heterodox.”  He provides no rationale for conflating those concepts, so the entire denunciation of heterodox economics wilts upon examination.  My colleagues and I use conventional research methodologies to reach predictions and policy recommendations that vary greatly from orthodox economists, and we win hands down in predictive abilities because of the soundness of our use of conventional research methodologies.

I have explained this many times in posts that are not behind pay walls (which the blogger understandably complains about).  My colleagues have provided scores of detailed posts on MMT that are freely available.  None of the bloggers examples relate to us.  “Ardent followers” are, of course, beyond any scholar’s control.  The kind who “shower” with “insults” “polite” requests for information are acting badly and need to be barred.  All bloggers face this problem and we never blame orthodox scholars for the insulting actions of their “ardent followers.”

I have personally had a perfectly collegial exchange in person with the blogger at a conference where I made a presentation complete with lots of slides.  Anyone can have a copy of my slides without charge.  My work rests on very old research methodologies that one is taught in a doctoral research methods class in almost every social science – except economics.  Economists are often trained almost exclusively about a tiny subset of research methods – econometrics (a subset of statistics).  In any event, the keys to sound research remain predictive ability, logical consistency, and hypothesis testing.

For the sake of brevity, I will describe only a few examples of the heterodox implications of sound, conventional research methodologies that I employ.  As a savings and loan regulator, my office “autopsied” every failure beginning in late 1984 to look at what was contributing to their failures.  At this time, orthodox economists “knew” that the failures were due to “gambling for resurrection.”  They also “knew” that our reregulation and re-supervision of the industry was a terrible mistake and that we should be encouraging further deregulation.  They described “gambling for resurrection” as a product of “moral hazard” and they claimed that our reregulation was absurd on the basis of econometric studies that found that the S&Ls that invested most heavily in the assets we proposed to restrict reported the highest profits.  They recommended that we encourage such “profitable” investments.

Our autopsies revealed a number of patterns that proved critical to our analysis, predictions, and policy prescriptions.  For the sake of brevity I will not define here terms I have explained in hundreds of blogs, articles, and slides.  As I noted, the blogger has heard me present and define the terms.  First, we came to understand that the S&Ls were “control frauds.”  Second, we found that “accounting” was the “weapon of choice” in finance – we were dealing with “accounting control frauds.”  Third, we realized that accounting control fraud had become epidemic.  Fourth, we realized that the control frauds were so numerous and concentrated (by asset type, commercial real estate loans (CRE) and geography) and growing so quickly that they were hyper-inflating regional real estate bubbles in the Southwest.  Fifth, we identified the four “ingredients” of the fraud “recipe” for a lender.  Sixth, we recognized that the CEOs running control frauds ran them for their personal benefit, by looting the S&L.  Seventh, we recognized that firms following the fraud recipe were mathematically guaranteed to report record (albeit fictional) profits.  Eighth, we realized the truth of the industry saying: “a rolling loan gathers no loss.”  Ninth, we identified the recurrent scams by which S&L control frauds, individually and collectively, transmuted massive losses into fictional gains.  Tenth, we realized that the CEOs running accounting control frauds were routinely able to suborn supposed “controls” by using the ability to hire, fire, and expand the engagement (in the case of outside auditors and counsel) to generate a “Gresham’s” dynamic (Akerlof 1970).  Eleventh, we realized that the accounting control frauds had a great “tell” – they had to gut their underwriting and internal controls to follow the first two ingredients of the fraud recipe.  Twelfth, we saw that the fraud recipe created an Achilles’ “heel” – the need for extreme growth, so we adopted a rule limiting growth.

These insights, in turn, led us to realize that orthodox econometric analyses that purported to evaluate the desirability of S&Ls investing in particular asset categories would produce the worst possible policy recommendations.  Whatever asset categories best facilitated accounting fraud would show the strongest association with higher profits (or stock prices) in the early years.  The massive losses would only appear years later.  We, therefore, ignored Lincoln Savings’ experts (Alan Greenspan and Daniel Fischel) and sharply limited direct investments.  Every S&L in the entire group of roughly 34 S&Ls that made heavy direct investment that had been praised by Charles Keating’s experts because those S&L reported far higher profits than the industry average soon failed.  We openly targeted the S&Ls reporting the highest profits for priority in examinations.

We also realized the importance of the concept of a criminogenic environment and the implications for the invalidity of financial models that assume and exogenous distribution.  Any criminologist realizes that crime can become endemic if we shape sufficiently perverse incentives.  Again, this fact along with the perverse incentives to game the models to overstate asset values in order to maximize compensation, explains the horrific failures of the pricing and risk models in most recent current crisis.

George Akerlof and Paul Romer, in their classic 1993 article entitled “Looting: The Economic Underworld of Bankruptcy for Profit,” stressed the success of these heterodox analyses.

Neither the public nor economists foresaw that the [S&L deregulations] of the 1980s were bound to produce looting. Nor, unaware of the concept, could they have known how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself.

Similarly, we demonstrated that S&Ls did not act as economists assumed to engage in (legal) “gambling for resurrection.”   First, the pattern of reported returns made no sense for honest but ultra-high risk “gamblers.”  Why would they all report in the near term extraordinary profits – followed invariably by catastrophic losses even in markets with booming economies?  Second the pattern of behavior – particularly the destruction of underwriting – made no sense for an honest gambler that only profits if the gamble succeeds.

“[S]omeone who is gambling that his thrift might actually make a profit would never operate the way many thrifts did, with total disregard for even the most basic principles of lending: maintaining reasonable documentation about loans … verifying information on loan applications…. applications”5

5Black (1993b) forcefully makes this point.

(Akerlof & Romer 1993: 5).

Note how Akerlof and Romer stressed their agreement with my “forceful” point that what would eventually became known as “liar’s” loans would “never” be made by honest lenders.  Note also that orthodox economists not only ignored Akerlof and Romer’s warnings but also their hopes that they might “learn from experience.”  Instead, economists today “know” that the S&L debacle was caused by “gambling for resurrection” and deposit insurance.  (That was another area in which our heterodox analysis and predictions proved superior when the Enron-era scandals were driven overwhelmingly by accounting control frauds by firms that lacked deposit insurance or any other implicit or explicit government guarantee.  As we predicted, lenders did not provide effective private market discipline.  Instead, they eagerly funded the massive growth and leverage of the Enron-era frauds that, for years, reported epic profits.)

The story is similar in MMT, but I will leave that to my colleagues.  They started by actually understanding the real world monetary system just as we made the “investment” to understand the real world of S&Ls.  The results for MMT scholars have been markedly superior predictive ability and considerable respect in the professional investment community.  The blogger will agree that orthodox macro models are a travesty when it comes to money, banks, and finance.

I don’t see any actual dispute among the blogger and UMKC’s economists.  His column strikes me as a made up quarrel based on the obviously phony premise that heterodox scholars invented some secretive methodology that they (whoever “they” are) have refused to provide him without charge.

We urge economists of any label to push to cease to ignore critical economic principles that our examiners had figured out by 1983.  Top of that list would be control fraud.  It is shameful that prominent economists such as the Richmond Fed’s Research Director, Kartik Athreya, still repeat these multiple myths falsified three decades ago as if they were revealed truths not requiring the refutation of a Nobel Laureate, the findings of regulators, over a thousand successful felony prosecutions, or the Nation’s top white-collar criminologists (2013: 335-336).

“An unfortunate side effect of the introduction of deposit insurance is that it creates a principal-agent problem.  Namely, if depositors do not care about the health of a bank (and why would they, if they are insured?), then they will fund its activities irrespective of the ownership stake held by the present management.  This can create tremendous difficulty in bad macroeconomic times.

The savings and loan crisis of the late 1980s, followed by the recent recession, drove many banks and S&Ls to the brink of worthlessness, setting up a toxic dynamic in which the very thing that was supposed to render banking safe made the rest of society far less so.  [Deposit insurance leads CEOs to] “gamble for resurrection by picking long-shot projects which, if they succeeded, would enrich the owners”  “This irresistible setup has led in the past to great damage and misallocation of resources.  For this reason, deposit insurance, while crucial to any firm that looks like a DD [Diamond Dybvig] firm, needs oversight.  It is why all modern societies at least try to regulate banks.”

Each of those quoted sentences is false.  Athreya isn’t trying to be malicious, he is simply illustrating the sad state of orthodox economics, which needs to be rescued by people of good will.  This is not a classic left v. right debate.  The orthodox economics world of the “New Democrats” chants the same long-falsified myths with the same absence of any supporting citation or reasoning that could pass the most elementary test of logic in hypothesis testing. The Council of Economic Advisers (CEA) issued a remarkably similar clunker under President Obama (2010: 159, 169).

Although the system of regulation put together during the Depression served us well for many years, warning signs appeared periodically. The savings and loan crisis of the late 1980s and early 1990s showed how banking regulation itself can have unintended consequences. At that time, deregulation coupled with generous deposit insurance combined to create a dangerous pattern of risk-taking that eventually led to a large Federal bailout of the financial system.


A constant tension in macroprudential regulation is that the attempt to prevent bank runs can itself lead to new forms of moral hazard. Because they have deposit insurance, small depositors no longer need to monitor the safety of their banks; therefore, unless regulators are watching carefully, the banks may take excessive risks with no fear of losing deposits. This latent problem was exacerbated during the 1980s by deregulation in the thrift industry. Following this deregulation, thrift institutions began aggressively seeking out deposits by paying ever-higher interest rates and then intermediating these deposits into speculative investments. This strategy allowed thrifts to use FDIC insurance to gamble for solvency, and when the investments failed, a wave of thrift failures swept through Texas, the Midwest, and New England in the 1980s and early 1990s. This wave, now known as the savings and loan crisis, represented the first significant increase in bank failures since the Great Depression. The failures, it should be noted, were not caused by bank runs—they were not driven by a liquidity mismatch between deposits and loans. Deposit insurance remained intact, and no insured deposit lost any money. Rather, the bank failures were caused by the insolvency of the banks, as they gambled and lost with (effectively) government money.

Note that the fraud epidemic that drove the S&L debacle disappears from both accounts by orthodox economists without any need to explain the bowdlerization of history.  Not every sentence in the CEA excerpts I quoted contains a false statement, but nearly every sentence fails that test.  Again, I am not suggesting they are out to do harm, but I cannot imagine a field other than economics in which scholars in that field would ignore the work of a Nobel Laureate (and the regulators, criminologists, and criminal justice system) that explains why the claim they are repeating is false.  Orthodox economists have a primitive tribal taboo against using the “f” word (fraud).

The failure to understand the role of epidemics of accounting control fraud in driving each of our three modern financial crises is not a small failure of orthodoxy, it should be viewed as a crisis that endangers the global economy.  We should all be working together urgently to repair that failure, which will require a multi-disciplinary and multi-methodological effort.  Some of us have been trying to do this for decades.  We hope the blogger will join us in that ongoing effort.  Your fears that you need to learn a newly invented, secret and “occult” methodology in order to practice effective economics are baseless.  Reading Akerlof and Romer (available free on line) and some of our hundreds of freely available articles is a good start.

33 responses to “The Urgent Need to Save Orthodox Economists from their Crippling Myths

  1. Haha! I mistakenly followed the “blogger” in question when I first joined Twitter (suggested based on others I followed). However, I quickly realized that they were (IMO) exactly what you intimated, Prof – a troll – albeit a somewhat respected and sophisticated one. I have joked that sometimes their communications feel like that of an advanced AI, not a person – such is the calculated, dispassionate tone. Thanks for calling them out! #notAlone

  2. Dr. Paul Lockard

    My experience with academic and other professionals is that once people have invested a great deal of time and effort mastering models and other requirements to become certified in their field, they will not readily admit that their models are flawed. To do so would be, at some psychological level, to admit that not only what they learned is wrong, but all that effort was “wasted.” It would also involve a change in their world view – neither easy nor desirable.

  3. Great insight, as usual. But here’s a question: Say the economist DO have their “aha” moment someday and the ugly realities of control fraud and epidemic trends do get integrated into the literature. How does that ultimately lead to having DOJ do its job–arresting the fraudsters and prosecuting the hell out of them? Was it easier to do this with the S&L criminals just because they were smaller fry? Or is there really something to DOJ’s and SEC’s claim that the 2008 crimes were just too complicated to prosecute (doubtful)…

  4. Micky9finger

    True that!

  5. An important backdrop to all this accounting fraud is the green light that courts routinely gave/give not only to executives and financial managers but to the crudest frauds that are often required to sustain such control frauds until they reach runaway levels. For example, the property-transfer frauds implicit in the MERS scheme, followed by robo-signing schemes, were court-confirmed processes that became pervasive and routine before any court took them seriously. The public was surprised and outraged to learn that the practices existed. To litigators, the surprise came when a court finally took the trouble to repudiate them.

  6. “I cannot imagine a field other than economics in which scholars in that field would ignore the work of a Nobel Laureate (and the regulators, criminologists, and criminal justice system) that explains why the claim they are repeating is false.”

    Both politics and economics are like this. No one cares about what is true and what is false in the areas of Wing Nut economics and politics. They only care about orthodoxy, as explained in the article here below. Also, many economists and economics pundits are on Wingnut Welfare.

    The article below is about the Right Wing. However, even many Democrats believe these same things, as Right Wingers publish their beliefs and their “facts” everywhere that will let them publish them. And many mainstream publications want to publish “both sides” of issues, and thus are willing to publish whatever bs Right Wingers submit, in addition to the actual facts, which, as Stephen Colbert has noted, “have a liberal bias.”

    Twilight of the Apparatchiks

    We are all Right Wing now, due to being immersed in their propaganda 24/7/365, except for maybe Bernie. The country has swerved far to the Right in the past few decades.

    • Brent Irving

      I must say this article is pretty rich coming from Krugman. There have been more than a few on this site who have pointed out Krugmans inability to see beyond his orthodoxy, and of course he receives rewards for this

  7. Samantha Watts

    Noah Smith has no idea what he’s talking about. He said:

    “What Post-Keynesians seem to have in common are *conclusions*. Private debt is bad, Govt spending is good, pumping up wages is good, etc.”

    He couldn’t pass a 101 course in Post-Keynesian Economics. He obviously has no idea what Post-Keynesian Economics is. He just doesn’t know how ignorant he sounds.

    His CV says he’s a Professor at Stony Brook, but from what I can tell he spends all of his time on Twitter fighting with people. He appears to have published zero research and doesn’t appear to support a specific economic model so I don’t know why he is criticizing anyone else for not publishing research.

    • Is the site a fraud? I see criticism, lack of curiosity, and censorship by criticism.

      “Noah Smith has no idea what he’s talking about.”

      He also seems to have no idea about physics which he claims to have switched from to economics. Specifically, it looks like he did not learn the last part of the first course.

      I had asked him about the equation of motion of a spring oscilator. The vertical movement of a mass on the end of a vertical spring moving up and down. The equation is dY(t)/dt=-k*Y(t). This is covered in the end of the first physics class. He not could give the differential equation or solution. The solution graphed with position on the vertical axis and time on the horizontal axis looks like a wave, He gave no evidence that he had finished the first mechanics course.

      The reason I asked him this, was to get him thinking about dynamic cycles rather than equilibrium. It is well known that there are business cycles. Such spring weight system is one of the simplest models of an existing cyclic system. Of course the business cycle is more conmplicated.

      • Of course it is usual for 30% of the class to leave before the end of class. And, there is not much shame in doing so. The course is a challange and managed that way. It is called a weeder course and many people change more promising things for them.

      • Correction,

        Equation is,
        ignoring friction and gravity. Gravity only effects the streched out position not dynamics, period of oscillation, or amplitude of oscillation.

        Demonstration and theory,
        Demonstration at 9 minutes in.
        What kind of accuracy at 20 minutes and at end.

        For the theory, it is based on the observed fact that the mass times the acceleration equals the sum of forces applied on a mass. That is where all the starting equations and diagrams come from.

  8. Dr. Black writes great articles, IMO.

    In a video he appears in, from Columbia, their modern money and public policy series, he almost makes a statement like ‘there are no black swans’, while giving an answer to a questioner. I thought that was great, and if Dr. Black actually agrees with that idea, that there are no black swans, it would be nice to have that as a direct statement.

    Just after the ~2:13:30 to ~2:18:45mark.

    There is no exogenous distribution of risk.
    The statement has something to do with the ‘tail risk’ idea or something like that. The idea I believe has to do with the risks being fully endogenous, or within the system, the risks are in the loan writing standards, the control frauds committed, the liars loans, the corporate looting, the ‘low quality revenue’…. And so there are no black swans, because the destabilization is coming directly from within the finance sector, not coming from exogenous events.

    In any case, that’s how I memorized it, ‘there are no black swans’. I guess I don’t really need an article, cause I can re-watch the video! There are some other really nice answers Dr. Black gives in the video, so watch.

  9. David Harold Chester

    It is good to see the discussion on this difficult question. Past economics has become very confused and it is time that it was better arranged and understood. It should be an academic subject, but it is one that is full of emotion not common sense. There is a large number of economics who treat it as a “political science”, that is to say, who adopt a line of political philosophy and policy and wrap their ideas around this biased approach. They are unable to improve on the amount of understanding of the subject, which is unscientific at best. Today with the variegated political activities of the US, these kinds of economists are making more confusing noises, but adding nothing to how the subject should be properly understood.

    There is another group, who see economics and particularly macroeconomics as a pseudo science and who ideally wish to eliminate the pseudo part and make it a true science. They are the researchers, some of whom write papers of significance and from whom we can better understand about ourselves within a sociological framework. My new book “Consequential Macroeconomics” lays within this class of knowledge. Write to me for a reviewer’s e-copy, [email protected] . It is about time that we stop confusing these two groups’ ways of thinking.

  10. Brent Irving

    Hi Professor Black:

    Not explicitly related to the topic of this article (the blogger) but more on the work you have done on accounting control fraud (some in this article). Could you please explain, perhaps a future blog post would be most appropriate, how exactly financial institutions were able to show record profits in either the S&L and/or the 2007-2008 financial collapse.

    Here is my attempted explanation with what I am struggling with, keeping in mind I am not an accountant. I assume that the loan recipients have to be able to make some mortgage payments for a certain period of time in order to show profits? Perhaps not? How did it work with institutions, like Countrywide whistleblower Michael Winston has stated, that had policies expressed by the vanity plate “Fund Em”, or give anyone who can fog a mirror and had no job, no income and no assets, a loan. Surely by definition they cannot even make the first mortgage payment. How exactly, using the rules of accrual based accounting, does just giving a loan show up as profits? I have tried to read your many articles and watch your videos but still am struggling with the details. If you have already explained this in detail elsewhere perhaps you can simply point me in the right direction.

    Thanks for your consideration.

  11. The orthodox economists don’t think they have any crippling myths. They have good jobs, towing the economic party line, that they do not want to be saved from.

    If they believed in a larger society, they might be concerned. But they don’t. They believe that we are each separate atoms, each pursuing our own individual self interest, writing whatever we are being paid to write, each unaffected by the fraud, water pollution, financial system catastrophes etc. that we each cause The globe for each of us consists of our own profit hungry head alone. And writing Right Wing economic and political propaganda pays well indeed. Being a Koch sucker is a well paid and envied job.

  12. Brent Irving

    I am heavily leaning to Jill’s view here. I think Noah Smith (the blogger) is not dialoging in good faith and hence Professor Black is remiss in assuming he is and extending his hand to join him in his fight for justice.

    As a person from the left (full disclosure) I have long ago stopped trying to converse with people like Noah Smith for this very reason.

    At the same time this article does not give me reason for a lot of hope either. Hope that we can unify (enough) people that believe in a larger society, justice, peace, equality, efficiency, cooperation, sustainability, liberty, solidarity, democracy…. I am afraid, as Jill mentioned, that people of Noah’s stripe have no interest in this project and will actually actively fight against it, even sometimes while saying they are fighting for the same values. Of course one also should recognize it is a spectrum and there may be people in the spectrum that are worth one’s efforts and perhaps could be convinced, presumably where professor Black sits with this individual. Or perhaps professor Black is applying the Godfather maxim; keep your friends close and your enemies closer?

    Take this statement for instance:

    “The UMKC economics department is chock full of heterodox economists who share the blogger’s experience.  We too get weird blogs and tweets that are long on revolutionary conclusions and short on specifics.”

    I think statements like this have the potential to leave certain readers believing they never receive reasonable proposals or in fact reasonable proposals, particularly those that propose revolutionary level changes (system changes) instead of reforms are even possible. Essentially the TINBA defence (There Is No Better Alternative).

    I am in favor of the reforms proposed by professor Black and others of this heterodox school, and I also agree that they offer the best explanations and understandings of how our current rendition of capitalism is functioning, but I disagree that there are no other ways to organize ourselves than some form of reformed capitalism to move more towards the values expressed above. E.g., Reforms, IMHO, still leave us with undemocratic institutions like corporations and negative market pressures expressed here leading to increased inequality, unsustainability and ecological degradation. i.e., effective reforms require mammoth resources to police inherently defective institutions resulting in a less efficient method of moving towards the expressed values than revolutionizing institutions.

    My personal views lean towards the revolutionary ideas expressed in PARECON by Economics Professor Robin Hahnel and Michael Albert (hardly “short on specifics”) but for brevity I will stop here trying to convince people that it is worth their effort to look into it (Much accessible and free through Znet, but then again so is info. on “Austrian” economics at Mises dot org)

    I think the main reasons that keep people like professor Black from spending any significant time on these other views is they believe we need some form of differential material reward incentives to get the right people (entrepreneurs?) to do the right things lest we all starve or suffer in other ways, and perhaps anything other than “regulated” markets will also bring disaster as well. Needless to say I think PARECON addresses these concerns.

    At the very least I think people who share the above values need to come together now in a serious conversation, as difficult as that may seem when they hold quite opposite views about things like incentives and markets. Even without serious threats like devastating wars (maxing out at potential nuclear annihilation) and ecological disaster (potentially existential risks including others e.g.,, which make this project imperative, I think those with the above values should be largely in favour of this.

    Perhaps is a start. I am pretty sure professor Randall Wray has signed up so that gives me some hope.

    Sorry for the long post.

  13. Brent Irving

    One more plug for PARECON (Participatory Economics) if I can be so bold. A relatively new video by Robin Hahnel, for those more inclined to this medium, at the introductory level, discussing the ideas of PARECON.

    A whole 988 views at the time of this posting.

    Also a further comment on why people do not look into these “other” proposals seriously and one I often come up against is of course the “human nature” argument, and again in my view this is carefully discussed and defended in PARECON literature as are many many other concerns that have been raised over the many years of development.

  14. Brent Irving

    If it is totally inappropriate plugging PARECON on this site I apologize once again but I just noticed a web site I had not seen before (it was in the video and I assume it is relatively new) dedicated solely to PARECON so I thought I would pass it along.

    I really do think it is worthwhile for people, particularly those well educated in economics, to look seriously at their proposals and critique them. Again I am not sure of a strategy I can use to convince people of this recognizing that the laissez faire people of various stripes, the orthodox economists and the heterodox economists are using many of the same arguments to convince people to study their ideas. Ultimately the words are often the same, for example freedom, but their meanings are often different.

    • David Chester

      It is inappropriate to propose a different economic system, not only because it is political but also because it is not necessarily any better. Firstly we need to properly understand how our present economic system REALLY works and what is wrong with it and needing change. When will our understanding of the system become sufficiently analytic that the truth stands out!

      • Brent Irving

        First I would respectfully disagree that economics is not political (again I am not an economist or attempting to be one). What to produce, what to consume, how to distribute… are these not political questions?

        For example Ha-Joon Chang:

        Personally I don’t see how more analytics changes that. Some economists, including on this site if memory serves, say that the overuse and/or perhaps incorrect use (e.g., a bunch of assumptions or initial conditions that are not necessarily so) of analytics is part of the problem with some economics.

        I have waded through the reeds of orthodox and other heterodox, even Austrian, economics in an attempt to try and understand the political and economic world we live in. IMHO this site and others like it (Billy Blog) have offered me the some of the best understandings (perhaps more in the macro sense).

        I am searching for a general understanding, realizing that it cannot be oversimplified if that causes critical loss of explanatory value (i.e., Einsteins simple as possible but no simpler). I admit there are probably many areas where I don’t understand how the “economic system REALLY works”. I have to hope, if I am to believe democracy is even possible (by democracy I mean, to try and nutshell it, we are each involved in decisions in proportion to how we are affected by them), that this is not fatal and we will not simply have to rely on the experts (technocracy? and I realize many actually want this or believe this is the only thing possible). This is as far as we can expect most people to get in any world in most subjects (not their specialty) and not even that far in our current rendition of non-participatory “democratic?” capitalism. I would argue a system that encourages non participation by the many.

        Here is my approach. I try and understand, given the many constraints of time etc. how the “system” is functioning (aside: the world is not only about economics). In other words where are we. What is the current state. Then I carefully consider what I value, what type of world do I want, is it reasonable to expect this etc. Then I look at how the current state scores and how other proposals score. This is how I evaluate if one proposal is “any better” than any other. Not necessarily on only things like productivity or efficiency but against all of my values (perhaps weighted).

        I also admit that I am human and thinking involves emotion.

        I also apply the late Howard Zinn maxim “that you can’t be neutral on a moving train”. I try and remain as open as possible to new or different ideas and new evidence.

        Of course this is often all ridiculously impossible but what else have we got?

        I was proposing PARECON because after briefly listing in a previous comment, without much detail, what I value, I have found this proposed system to be the best scoring in moving towards these. Yes, maybe I am wrong, that is for each to decide. I know many economists who complain that the profession has become increasingly more insular and this cannot possibly promote new developments or new and creative ways of thinking.

        I also suggested people look into because I think we facing potentially devastating problems and we need to start serious conversations and serious experiments in different ways of organizing ourselves. Perhaps you don’t and are unmotivated by this. For some, perhaps on this site, that means reforming the current system. For me this would be a tactic moving towards something better, PARECON being the ideas I am most sympathetic to at the moment. So in that vain I support essentially all of the proposals I have seen presented by this heterodox school (e.g., the job guarantee, re-regulation, gov’t stimulus when appropriate etc.) Either way it is true you have to have some (a lot? ) understanding of what it is you are changing (the current state), how you plan on changing it (reforms or in my case reforms on route to more revolutionary ideas/changes), and what that future state you are trying to achieve is (even if it is just reforms), vision so to speak, but not necessarily a blueprint.

        Apologies again. Terseness is not my strong suite.