Thank you all for being here. This seminar is now over. I want to recap a few
important points.
All one needs to know about economic theory can fit on one sheet of paper. The
material can be found at http://tinyurl.com/3huenty
The centerpiece of neoclassical theory is "Pareto Optimality" (AKA, "economic
efficiency," AKA, "equilibrium"). If Pareto is false, then it's all false.
In 1952, Maurice Allais tested the Pareto theory and found that it failed to
correctly predict consumer behavior:
"A test of the theory's validity was presented to Savage by Maurice Allais over
lunch, during a conference in Paris in 1952. Allais made Savage fill out a list
of questions with which he could show that Savage violated his own theory." --
Floris Heukelom, Kahneman and Tversky and the Origin of Behavioral Economics,
2007
Pareto optimality was falsified in 1952. Economic efficiency was falsified in
1952. Economic equilibrium was falsified in 1952.
Economics became politics in 1952 when Friedman decided to ignore the fact that
his theory had been falsified.
Friedman was wrong in principle. Nash was wrong in principle. Neumann and
Morgenstern were wrong in principle. Game theory is wrong in principle. Animals
are "logical" -- NOT "mathematical":
"People surely do use some sort of logic. All languages have logical terms like
not, and, same, equivalent, and opposite. Children use and, not, or, and if
appropriately before they turn three, not only in English but in half a dozen
other languages that have been studied. Logical inferences are ubiquitous in
human thought, particularly when we understand language. … Logic is
indispensable in inferring true things about the world from piecemeal facts
acquired from other people via language or from one's own generalizations." —
Steven Pinker, HOW THE MIND WORKS, 1997
Biologists tell us a mathematical animal couldn't have evolved.
http://tinyurl.com/3kq7v3r
For an idea of how animals actually "decide" See http://tinyurl.com/3oklvsm
Global Capitalism is now limited by global "net energy." Thus, a economic reset
wouldn't solve the world's economic problems.
http://www.jayhanson.us/NewSynopsis.pdf
Capitalism can't run backwards and will eventually be replaced by other
political systems. The rich will not allow political change until it impacts
their personal lives -- by then it will be to late to avoid the worst. IMHO, a
rerun of Weimar Germany is our most-likely future.
Aloha,
Jay