- 17 Jul 2018 05:00
#14933320
The title above was shortened from this original intended title/subject.
I don't understand, why does nearly everyone believe a so-called scientific theory that is based on obviously false premises?
I'm going to hide what theory I'm talking about because I want you to look at this with an open mind.
Please do not jump ahead to see what it is.
Science is mostly base on experiments. When experiments can't be done, then it must look at observations of the past and use deductive logic.
Quoted from Wikipedia,
Suppose the science behind AGW, aka climate change, had as a premise, "The land area of the earth is entirely covered by deserts, there are no forests or farm land." And programed its climate simulating super-computer programs with this assumption. Would this not undermine your confidence in AGW?
Suppose Astronomy had as a premise, "Deep empty space has something in it that sucks the energy out of photons that pass through it at a very tine rate." And used this to prove that the observed red-shifts result only from this effect. Would this not undermine your confidence in Astronomy?
Suppose Political science had as a premise, "Votes in all countries are always counted 100% accurately, with no cheating, ever." Would this not undermine your confidence in the conclusions about the vote in Nigeria?
Whether or not the logic is valid, if even one premise, aka assumption, is in fact false, then the proof is NOT SOUND. Meaning worthless.
The so-called science I'm talking about uses many obviously false assumptions in its proofs and it can not do repeatable experiments. To me this means the Theory is Worthless. And yet, today it is accepted by over 90% of Americans and Europeans. It is used every day by many agencies as the basis of their public policy decisions. For examples: the US Congress, IMF, World Bank, WTO, Central European Bank, the big Wall St. Banks, etc.
Why is this?
A list of false assumptions used in Neo-Liberal [aka Neo-Classical or Mainstream] Economics ---
1] Banks just use the money deposited in them by depositors to make loans to either good businessmen or spendthrift credit card holders. With this assumption they prove that these transfers of money don't matter at a macroeconomic level, and so there is no need to include credit levels and, in fact, the entire banking system in the model. This is false because as everyone knows banks create dollars and so add to the "money supply" when they make loans.
2] The nation's or world's economy is in or near "equilibrium' most all the time. Actually this is false because the economy is in a constant state of change. It is constantly changing. Economists made this assumption way back in the 60s and 70s when the mathematical theory of Chaos had not been inverted yet. Chaos Theory now allows the calculation of complex equations which do not have singular solutions. Instead, they behave like the economy, i.e. constantly changing and never-ever returning to the starting point. This is illustrated by the famous "Butterfly Effect".
3] The Market sets the correct price of every good or service at all times because the economy is made up of "rational agents". These agents are assumed to all use the same info "to take account of available information, probabilities of events, and potential costs and benefits in determining preferences, and to act consistently in choosing the self-determined best choice of action." [quoted from Wikipedia]. This is false because nobody can possibly know ALL the available info on anything. It is false because it assumes that emotion plays NO part in economic decisions.
4] Whenever a nation cuts its budget its debt to GDP ratio will fall. So, cutting the Gov. budget is a good remedy for when the nation's debt to GDP ratio is too high. This is false because it is quite likely that cutting the nation's budget will cut the incomes of its people, so they will spend less, so the GDP will drop. If the GDP drops more than the budget is cut [which is almost always true in practice] then the debt to GDP ratio will go up not down. Austerity does not work as the theory says it will.
5] The US Gov. is just like a nuclear family. It can't keep spending more than it earns without negative consequences. This is false because actually the only sort of family the US Gov. is like is this family --- The extended Jones family has about 10 senor citizens, about 20-30 adults and about 40-50 children. In addition it has the ability to print real US $100 dollar bills and $100K dollar US Treasury Bonds both of which it can spend or sell. Since there is no such family in the US the assumption is false. Also, the US Gov. can increase its analogous income only with taxes which by definition will have a massive impact on the economy as a whole. Further, the nuclear family in the original assumption can easily cut its spending without also cutting its income. But, the only way the US Gov. can cut its analogous spending is to reduce its spending which by definition will reduce the GDP of the US and so reduce its income.
6] If the US Gov. keeps its deficit high for a long time there will be [or at least may be] hyperinflation. This is false because a Cato Institute study of all 56 instances that could be fond in all of recorded human history of hyperinflation; not even one of them was a result of only deficit spending. In every case there was also a massive reduction in the supply of many goods or a key good like oil. There was also very often some other important factor like the need of the Wiemar Republic to buy gold with newly printed D-Marks to pay the treaty required reparations in gold. So, even without one actual historical case; hyperinflation is still used as a threat if the deficit isn't controlled. [My source for this Cato Inst. study is a Stephanie Kelton video.]
I content that the world's economy has not recovered from the GFC of 2008. That this is so because the seen need for austerity has kept the great nations of the world from spending enough under Keynesian economic theory to off set the damage done by the GFC. That this means that the income and standard of living of every person who reads this is being kept too low solely by the current Mainstream economic theory [which is not SOUND because it is based on false premises].
So again, I ask. Why does everyone believe in this economic theory?
I don't understand, why does nearly everyone believe a so-called scientific theory that is based on obviously false premises?
I'm going to hide what theory I'm talking about because I want you to look at this with an open mind.
Please do not jump ahead to see what it is.
Science is mostly base on experiments. When experiments can't be done, then it must look at observations of the past and use deductive logic.
Quoted from Wikipedia,
Deductive reasoning, also deductive logic, logical deduction is the process of reasoning from one or more statements (premises) to reach a logically certain conclusion.[1]
Deductive reasoning goes in the same direction as that of the conditionals, and links premises with conclusions. If all premises are true, the terms are clear, and the rules of deductive logic are followed, then the conclusion reached is necessarily true.
Deductive arguments are evaluated in terms of their validity and soundness.
An argument is “valid” if it is impossible for its premises to be true while its conclusion is false. In other words, the conclusion must be true if the premises are true. An argument can be “valid” even if one or more of its premises are false.
An argument is “sound” if it is valid and the premises are true.
It is possible to have a deductive argument that is logically valid but is not sound. Fallacious arguments often take that form.
The following is an example of an argument that is “valid”, but not “sound”:
1. Everyone who eats carrots is a quarterback.
2. John eats carrots.
3. Therefore, John is a quarterback.
The example’s first premise is false – there are people who eat carrots who are not quarterbacks – but the conclusion would necessarily be true, if the premises were true. In other words, it is impossible for the premises to be true and the conclusion false. Therefore, the argument is “valid”, but not “sound”. False generalizations – such as "Everyone who eats carrots is a quarterback" – are often used to make unsound arguments. The fact that there are some people who eat carrots but are not quarterbacks proves the flaw of the argument.
Suppose the science behind AGW, aka climate change, had as a premise, "The land area of the earth is entirely covered by deserts, there are no forests or farm land." And programed its climate simulating super-computer programs with this assumption. Would this not undermine your confidence in AGW?
Suppose Astronomy had as a premise, "Deep empty space has something in it that sucks the energy out of photons that pass through it at a very tine rate." And used this to prove that the observed red-shifts result only from this effect. Would this not undermine your confidence in Astronomy?
Suppose Political science had as a premise, "Votes in all countries are always counted 100% accurately, with no cheating, ever." Would this not undermine your confidence in the conclusions about the vote in Nigeria?
Whether or not the logic is valid, if even one premise, aka assumption, is in fact false, then the proof is NOT SOUND. Meaning worthless.
The so-called science I'm talking about uses many obviously false assumptions in its proofs and it can not do repeatable experiments. To me this means the Theory is Worthless. And yet, today it is accepted by over 90% of Americans and Europeans. It is used every day by many agencies as the basis of their public policy decisions. For examples: the US Congress, IMF, World Bank, WTO, Central European Bank, the big Wall St. Banks, etc.
Why is this?
A list of false assumptions used in Neo-Liberal [aka Neo-Classical or Mainstream] Economics ---
1] Banks just use the money deposited in them by depositors to make loans to either good businessmen or spendthrift credit card holders. With this assumption they prove that these transfers of money don't matter at a macroeconomic level, and so there is no need to include credit levels and, in fact, the entire banking system in the model. This is false because as everyone knows banks create dollars and so add to the "money supply" when they make loans.
2] The nation's or world's economy is in or near "equilibrium' most all the time. Actually this is false because the economy is in a constant state of change. It is constantly changing. Economists made this assumption way back in the 60s and 70s when the mathematical theory of Chaos had not been inverted yet. Chaos Theory now allows the calculation of complex equations which do not have singular solutions. Instead, they behave like the economy, i.e. constantly changing and never-ever returning to the starting point. This is illustrated by the famous "Butterfly Effect".
3] The Market sets the correct price of every good or service at all times because the economy is made up of "rational agents". These agents are assumed to all use the same info "to take account of available information, probabilities of events, and potential costs and benefits in determining preferences, and to act consistently in choosing the self-determined best choice of action." [quoted from Wikipedia]. This is false because nobody can possibly know ALL the available info on anything. It is false because it assumes that emotion plays NO part in economic decisions.
4] Whenever a nation cuts its budget its debt to GDP ratio will fall. So, cutting the Gov. budget is a good remedy for when the nation's debt to GDP ratio is too high. This is false because it is quite likely that cutting the nation's budget will cut the incomes of its people, so they will spend less, so the GDP will drop. If the GDP drops more than the budget is cut [which is almost always true in practice] then the debt to GDP ratio will go up not down. Austerity does not work as the theory says it will.
5] The US Gov. is just like a nuclear family. It can't keep spending more than it earns without negative consequences. This is false because actually the only sort of family the US Gov. is like is this family --- The extended Jones family has about 10 senor citizens, about 20-30 adults and about 40-50 children. In addition it has the ability to print real US $100 dollar bills and $100K dollar US Treasury Bonds both of which it can spend or sell. Since there is no such family in the US the assumption is false. Also, the US Gov. can increase its analogous income only with taxes which by definition will have a massive impact on the economy as a whole. Further, the nuclear family in the original assumption can easily cut its spending without also cutting its income. But, the only way the US Gov. can cut its analogous spending is to reduce its spending which by definition will reduce the GDP of the US and so reduce its income.
6] If the US Gov. keeps its deficit high for a long time there will be [or at least may be] hyperinflation. This is false because a Cato Institute study of all 56 instances that could be fond in all of recorded human history of hyperinflation; not even one of them was a result of only deficit spending. In every case there was also a massive reduction in the supply of many goods or a key good like oil. There was also very often some other important factor like the need of the Wiemar Republic to buy gold with newly printed D-Marks to pay the treaty required reparations in gold. So, even without one actual historical case; hyperinflation is still used as a threat if the deficit isn't controlled. [My source for this Cato Inst. study is a Stephanie Kelton video.]
I content that the world's economy has not recovered from the GFC of 2008. That this is so because the seen need for austerity has kept the great nations of the world from spending enough under Keynesian economic theory to off set the damage done by the GFC. That this means that the income and standard of living of every person who reads this is being kept too low solely by the current Mainstream economic theory [which is not SOUND because it is based on false premises].
So again, I ask. Why does everyone believe in this economic theory?