Monthly Archives: February 2012

Supposedly, a Dutch professor in economics would be appalled when confronted with censorship of science at the Dutch Central Planning Bureau. There would be a protest, and there would be a discussion amongst professors resulting in more protests.

This however is not the case in Holland. Does this mean that there is no censorship ? No, as explained earlier, there is. Does this mean that there are no economics professors in Holland ? Apparently it does imply that. They are labelled and paid as “professor” but logic causes the observation that they must be ostriches who do not know what science is.

In the February 23 ranking of downloads for Dutch economists at LogEc, Peter Nijkamp is first with 73,500 downloads, I am 80th with 7,800 and Georges Hübner is 200th with 4,000. It doesn’t mean much but it helps to identify some Dutch professors and check their websites.

Professor Nijkamp‘s webpage does not show any protest against the censorship. Runner up Thorsten Beck’s webpage doesn’t either. Well, and so on. A bit interesting would be the webpage of Jakob de Haan (22,400 downloads) who teaches political economy, yet who doesn’t mention the censorship. A bit curious is the position of professor Sweder van Wijnbergen (12,400 downloads), who was Secretary General of the Ministry of Economic Affairs that oversees the Central Planning Bureau. His webpage explains that he had that position but doesn’t explain that the minister dismissed him for interfering into politics. My criticism is that he didn’t properly oversee the CPB. As an SG he spoke up while he should have been silent, while I as a scientist at CPB was speaking up as I should but was silenced. Professor Van Wijnbergen seem very confused in this issue. Interesting too is Mirjam van Praag (10,600 downloads) who is member of the Central Planning Committee (jointly with Paul de Grauwe from Belgium) which CPC has an advisory role for CPB. Van Praag‘s webpage doesn’t mention the censorship either.

Arjo Klamer is not in this top 200 but is famous again for a 1990 book on the (mis-) education of economists. His webpage does not mention the censorship. He advises: “’A monetary union without political union is impossible to maintain,’ economist Arjo Klamer said 20 years ago. And as Europe struggles to deal with the euro crisis, the EU countries are still too different to politically unite, Klamer told RT.” Well, my book DRGTPE explains that when each member state adopts an Economic Supreme Court then there is scope for a monetary union without a strong political union. But Klamer neglects the censorship and the argument in DRGTPE.

There is the internationally less known parttime professor Raymond Gradus, also head of the scientific bureau of the Christian Democratic party (CDA). Unfortunately, his webpage does not express his concern about the censorship of science in Dutch government.

There is the internationally well-known Rick van der Ploeg , Dutch / British, now in Oxford, who has been a member of Dutch government and a member of a review committee on the CPB, who does not mention the censorship.

In this Dutch text I explain that Dutch professors in economics better be dismissed for their lack of understanding of what censorship and integrity of science mean. Holland is better served by real scientists.

Foreign professors in economics who support the advice to boycott Holland till the censorship is resolved might perhaps greatly qualify to replace them. This would also support a greater use of English in academic education. Yet the fragmentation in languages in Europe isn’t as easily solved as censorship, we should, at least, hope.

My advice to boycott Holland seems to come with the task of monitoring how much advance the world is making on this great goal. Already Greek consumers INKA are calling for a “mpoukotaz“, the Poles want a “bojkotowanie” and mathematics professor Tim Gowers concentrates on boycotting Reed Elsevier. All this should not be confused with the boycott of the town Holland, Michigan, which might be a worthy cause too yet is wrong by one continent.

Monitoring all this caused me to see the hilarious exchange on where a man looks for a woman. The exchange of ideas is like in times immemorial, it might be how a protestant from Sweden looks for a catholic in France, or how Don Quijote looks for his Dulcinea. Transferred to modern times, we see a muslim from London who looks for a Polish woman since he has observed how beautiful they are. The exchange of views takes six pages. The first response is whether he wants a woman or a passport. Only in response 22 the eager lover complains that he is not being taken serious. Reading this is great fun. I haven’t read all yet, and cannot say that he eventually succeeds. See here. Of course: let us hope that they find each other and live happily ever after.

Political economy is a science but a link to a political party gives access to a discussion forum with inside information and the possibility for others to get to know your ideas about theory and practice. We are familiar with the division in the USA between Democrats and Republicans and in the UK between Labour and Conservatives (and now LibDem too). The choices by political leaders are frequently effected by their appointments of like-minded economic advisors. The current managing director of the IMF, Lagarde, is an awkward example since she is a lawyer and not an economist. Yet the IMF policy to sanction Greece rather than promote employment, and neglect Germany and Holland with their excessive trade surplusses, fits like a glove with the current French president’s policy not to antagonize the German Kanzler.

Foreigners who meet with Dutch government and its economic advisors might take notice of the Dutch political landscape. Historically, Holland is divided in three main political parties, pillars of both politics and even society. They are the Christian Democrats (CDA), the Liberty & Democracy Party (VVD) and the Social Democrats (PvdA). [footnote] We see this reflected in some international appointments. For example, the managing director of the IMF 1973-1978, Witteveen, had been minister of Finance for the VVD. Duisenberg, the first president of the ECB 1998-2003, had been minister of Finance for the PvdA. Of course they did their job, but their link to a political party got them there.

My position as an economic scientist in Dutch society and on the international scene can be understood with reference to these pillars of Dutch politics. I was a member of the PvdA since 1974, when the directorate of the Dutch CPB censored my work in 1989/91. I received permission to present this paper at an economics conference in 1990, which presentation got a strong positive reaction of professsor Rudolf Meidner from Sweden. However, the directorate blocked the publication of the paper in the series “Research memoranda under the name of the author” which is censorship. I sent copies of the conference paper to parliament so that all parties were informed. Subsequently my hands were free to send a copy to the Scientific Bureau of the PvdA (WBS) with the suggestion to discuss it. This is how it is supposed to work in Dutch society. All parties assume that a topic is tabled only when it first has received some backing by one of the parties. Analyses without a sponsor don’t exist. However, WBS blocked discussion of the paper and blocked my participation in any of its discussions whatsoever. Apparently the PvdA in Dutch parliament accepted the censorship of science by the directorate of the CPB. Thus, most curiously, the Dutch labour party was not interested in discussing a possible cure for unemployment. Naturally, I left that PvdA. There is no reason to join one of the other pillar parties or fragments since the political views don’t match, since they don’t ask questions in parliament either, and since it is rather uncomfortable to give others the feeling that you only join up to discuss a hobby horse.

Hence, the innovations in economic theory contained in that conference paper and later the book DRGTPE (2000, 3rdedition 2011) have been blocked from discussion in Dutch society. I have tried other venues, like publishing a book for the general public, but in hindsight my advice since 2004 to boycott Holland reflects too much patience. Even now, while the economic crisis shows how right and valuable this analysis is, and while the PvdA has dropped in the polls from 30% to 10%, there is no sign of awareness there. A boycott of Holland would work wonders.

PM. Curiously, the WBS website reports on Maurice Glasman and David Marquand, but it seems to me that those would be served better by studying DRGTPE. The PvdA and WBS have been great sources for confusion for the rest of Europe, these last 20 years.

[footnote] Since these parties can be a bit out of touch with the times there is a rainbow of fragments like the greens (GL), socialists (SP), animal party, staunch Christians (CU and SGP), Geert Wilders (PVV) and so on. It might be that one or two of the upstarts (SP and PVV) outdo the old pillars at the polls, yet in a political sense they only confirm the traditional division since they run in the same main streams.

A modern fairy tale is that Ronald Reagan in 1981 started a supply side and neoliberal revolution, with lower taxes and deregulation of markets, such that the economic growth since then derived not from Keynes but from Hayek. Alan Greenspan believed that fairy tale and supported the Reagan revolution with his low interest policy. 

It is a fairy tale because hard economic analysis causes these qualifications: (1) lower taxes also provide a stimulus, (2) lower rates of interest provide a stimulus, (3) deregulation releases funds that then scramble for investment opportunities (and investment is demand too).

Thus we actually had Keynesian years. It is rather amazing how much the financial sector has been bloated to create that relatively meagre economic growth. Funds were sprayed around like water from a fire hose, in ict,, housing and the financial sector itself. Most investments failed but some were productive enough to count as economic growth.

The main thrust of the Reagan revolution lies not on the supply/demand distinction but on fundamental goals, such as on more income inequality and less parliamentary control of social-economic processes. To evaluate its success, it is necessary to correct for the “Keynesian” demand-side stimulus, otherwise we could exaggerate.

Of course there were supply side effects. Disentangling these effects is not easy. Policy measures have effects along different channels, and only partial effects might be classified as purely supply or demand. But these subtle issues get lost in the fairy tales that are being told.

This analysis is crucially important for understanding what we should do now in this phase of the economic crisis. The Reagan stimulus has fallen away and there is actually a contraction since we start re-regulate again. World investments have been paltry. Firms redirect funds towards consolidation rather than towards expansion and innovation. We now are in the anti-Keynesian years 2007-2012. Governments face a huge challenge to turn the scales and jump-start their economies again.

The best policy for governments is to set up National Investment Banks (NIBs) and redesign the tax mechanism, see DRGTPE. Value added tax (VAT) can be 1% and some countries may consider a 20% reduction in the working week, since such NIBs may take some time to get started.

PM. Piketty et al. (2011) consider the tax rate of the top 1% of the pre- and post-Reagan situations, and try to determine the impact. On income inequality they conclude: “the evolution of top tax rates is a good predictor of changes in pre-tax income concentration.” On wealth creation itself: “there is no correlation between cuts in top tax rates and average annual real GDP-per-capita growth since the 1970s.” I am a bit afraid that the discussion will be about their elasticities while the real clarification rather lies in the logic of the analysis. In my impression it is possible to already resolve current unemployment, see DRGTPE.

Cogito ergo sum. I exist. My protest against the censorship of science by the directorate of the Dutch Central Planning Bureau is a fact. The protest is a statistical datum. 

Econometrics, as founded by Jan Tinbergen and Ragnar Frisch, develops mathematical models of economic theories and confronts these with the statistical data. One economic model uses a social welfare function that depends upon the state of information, SWF[x, i] where x is the vector of standard economic variables and i is the indicator of information, i = 0 when the government does not know how to solve unemployment and i = 1 when the censorship is lifted and the government receives proper knowledge about how to tackle unemployment. See DRGTPE, Book IX on the reduced form, pag 198+.

Interestingly, many scientists who are aware that science is intended to explain empirical reality, manage to neglect some facts. To them, I don’t exist, the protest does not exist, the censorship does not exist. The “reality” they look at consists of rosy “facts” that fit their theories instead of the other way around.

One possibility is that I am mistaken and that there is no censorship of science by the directorate of the Dutch CPB. It shouldn’t be too difficult to determine this. The Dutch judiciary Court for Civil Servants decided that the CPB directorate had the power to decide what it wanted to publish or not. However, the publication series of “Research Memoranda under the name of the author” really states “under the name of the author” so that the directorate had decided earlier that it would not be involved. Hence there is an abuse of power and the Court is biased against the freedom of expression of science. How hard can it be to observe this as a fact ?

Apparently it can be awfully hard for Dutch people and even scientists to acknowledge that some unpleasant facts exist and that an otherwise highly esteemed directorate indeed censors science and abuses its power, and isn’t corrected by the Court.

Perhaps the world can help to flip the information indicator. And note that this problem would be much smaller in any democracy if each democracy adopted the constitutional amendment for an Economic Supreme Court.

Most people know by now that the world economy has suffered because of Greek statistics. Let us hope that people discover that the world economy suffered much more because of Dutch censorship of economic science. Both are a failure in integrity in science but theory can be more devastating than data.

This weblog already pays much attention to that Dutch censorship (see “About” above). For this page it suffices to just sketch the comparison of theory versus data. For the remainder, this page provides me with an opportunity to say that Greek statistics provide quite a challenge. The issue isn’t simple. For a sound judgement one must be an expert on Greece and EU statistics and the international treaties involved. I am none of these so that the only thing I do here is to formulate tentative questions.

An important piece of information is Nancy Koehn, “Inside the Greek vulcano“, NY Times August 13 2011, i.e. her review of Jason Manolopoulos, “Greece’s ‘Odious’ Debt: The Looting of the Hellenic Republic by the Euro, the Political Elite and the Investment Community”, Anthem Press. Even if the Greek statistics would have fitted international standards then they would have been misleading. Since consumption based upon debt statistically contributes to GDP and “economic growth”, Greece seemed doing well and was praised by EU leaders.

Another piece of information is that the inclusion of Italy and Greece in the Eurozone was a political decision such that the statistics hardly seemed to matter. France accepted the unification of Germany in exchange for the monetary union. In Holland, parlementarian and former professor of economics Henk de Haan proposed to keep Greece out of the euro, yet minister of finance Gerrit Zalm refused to delve into the statistics (Dutch TV). Zalm already had lost an earlier battle on Italy and most likely regarded Greece as something that had already been decided at the EU level too, so that a sudden veto from Dutch parliament would be embarrassing.

The quality of Greek statistics then is a topic of itself. Schott’s Vocab at the NY Times 2010 entry features Nikolaos Logothetis who is newly appointed at Statistics Ellas (Elstat) to help clean up. However, the new director Andreas Georgiou (with a background of mainly IMF and less in science) fires the newly appointed board in 2011, and Logothetis himself is accused of hacking into Georgiou’s computer.

This piece of drama has three aspects. (1) Mario Draghi, the current ECB president, worked in 2002-2006 at Goldman Sachs, when this bank helped Greece to put debt off-balance, but Draghi denies any involvement. Read here and here. (2) This NY Times article in 2010 reports:

“Greece has been criticized repeatedly for its statistics since it joined the euro zone in 2001, but never more so than this year. A scathing report from the European Commission last month accused Greece’s National Statistical Service, its General Accounting Office and the Finance Ministry of having “significant weaknesses” related to data gathering. It noted “severe irregularities in deficit notifications by the Greek government in April and October 2009” and singled out “the submission of incorrect data, nonrespect of accounting rules and of the timing of notification.”

(3) The new twist is that there is an accusation that the Greek deficit was misstated upwards in 2009, either to create a political climate for austerity or to create a “debt event” such that some investors could cash in (by buying up cheap debt and exercise CDS rights). This blog in September 2011: “Zoi Georganta, professor for Econometrics at the University of Macedonia, spoke to several Greek media on Friday and claimed that Greece’s budget deficit underwent a upward revision in 2009 to 15.4% instead of 12.6% just to force Greece to take the harsh austerity measures.” Andreas Georgiou fired her for thinking so. Apparently, Greek parliamentarians want a probe, see eKathimerini, February 9, 2012. See here for an accusation and a denial of an alleged CDS scam with an alleged link to former Greek premier Giorgos Papandreou. You probably need a law firm to disentangle this web of possibilities and allegations.

I already advised to outlaw the CDS since it is like the printing of money (certainty) which ought to be the monopoly of the Central Bank. These conspiracy theories enhance that idea.

My book Conquest of the Plane (COTP) uses Θ = 2 π = 6.2831853…. My proposal in supplement to COTP is to use the name “Archimedes” for this particular symbol (“capital theta” with such assigned value). It will be a new mathematical constant.

One Archimedes thus is the circumference of a circle with radius 1. Another relevant format is 1 / Θ = 0.15915494… When you take a circle with a radius of about 16 cm then the circumference will be about 1 meter. A circle with radius r has circumference C = r Θ and surface S = r 2 Θ / 2.

In wikipedia (today 2012-02-17) we can read that π is already called “Archimedes’ constant”. However, we commonly speak about “pi” and not about “Archimedes”. Thus the name is free to use as the name of Θ.

There is some momentum in the USA to use tau, thus τ = 2 π. Bob Palais (2001) originated the idea but used an own new symbol (pi with three legs like m), Peter Harremoes and Michael Hartl convinced him to use tau, and Vi Hart has a presentation on YouTube. One argument is that tau refers to “turn” or Greek “tornos”.

However, turns are counted along the unit circumference cirkel C = 1 and not along the unit (radius) circle r = 1. Thus this association of tau would be confusing. Also, there is not much difference in writing r or τ. This can create a lot of confusion in handwriting, doing homework or checking exams.

Independently from Bob Palais I also came up with the idea that 2 π is the proper unit of account. Looking at the various symbols available on the keyboard I rejected tau because of the similarity to r, and settled for Θ since it neatly looks like a circle. I wasn’t quite happy with its uninformative name Theta but we had that also with pi or “meter”. Vi Hart pointed out that lower case theta is often used for angles which causes the problem of “theta Theta”. This disappears when we use “Archimedes”.

The proposal is to take the plane itself as the unit of account for angles. We know how to cut up a pie in those pointy bits radiating from the center, and we can do the same with the whole plane, getting a half plane, a quarter plane, etcetera. All those pointy bits add up to 1 plane. When we make circles we can find one with a circumference of 1 by which we can measure the angles. Comparing circles, the Archimedes unit shows up as a proportionality factor.

We need empirical tests whether this indeed works out better for students.

Unit circumference circle =
Angular circle
Unit radius circle =
Unit circle
C = 1
r = 1 / Θ
angles α, β
functions Xur and Yur
r = 1
arcs φ = α Θ and ψ = β Θ
functions Cos and Sin

See COTP page 41. Here Xur[α] = Cos[α Θ]. Angles can be measured by arcs or possibly be identified by them. It helps to separate the notions somewhat by putting emphasis on angles on the angular circle and arcs on the unit circle.