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Monthly Archives: February 2012

It is surrounded by hills of rice porridge and you only gain access by eating yourself a tunnel. Once inside, roasted fowl fly into your mouth, there are fountains of wine to satisfy your thirst, and, miracle, you don’t lose appetite. It is the Land of Cockaigne.

My research has seemed like that. When I discovered that I like to see issues in a systematic format it became a pleasure to turn them into systems indeed. We can see this for example also with David Luenberger who’s laudable books present subjects in a systematic and transparant manner.

I tend to go a bit further by actually re-engineering a subject. There are important world issues that require resolution. When such a subject wasn’t transparent then this meant (1) that it required re-engineering to make it so, (2) that new ideas might have to be inserted along the way.

The distinction between textbooks for received wisdom and journals for innovations here falls apart. A key phenomenon in my work is that my innovations may only be understood by this development of the issues from a bottom-up redesign.

The subjects that I found interesting for this approach have been:

A Logic of Exceptions 1981, 2007, 2011: proper development of logic and set theory, solution of the liar paradox for the first time since 2300 years, solution of the Russell paradox and the Gödeliar, 2007, 2011: redefinition of the derivative and resolution of the paradoxes of division by zero
Trias Politica & Centraal Planbureau (Dutch) and Definition & Reality in the General Theory of Political Economy 1990, 1994, 2000, 2005, 2011: solution of the Great Stagflation including the current economic crisis, proper scope on the impact of taxation on the economy, extension of Montesquieu’s Trias Politica into a Tessera Politica with an Economic Supreme Court
Voting Theory for Democracy 1990, 2001, 2011: proper development of voting theory, solution of the paradox by Arrow’s impossibility theorem, suggestion of a good way to select (political) leaders (via representative parliaments who use the Borda Fixed Point method to select the Prime Minister)
Papers on risk and one on the value of life 1993, 2000: the proper definition (later seen to be used by H.A. Lorentz), inclusion in the utility function, solution of the Allais paradox
Elegance with Substance and Conquest of the Plane 2009, 2011: re-engineering of the education in mathematics, resolution of various didactic issues, clarification how Descartes’ application of algebra to space can be extended with the application of algebra to the derivative (see ALOE), clarificatin that Space, once defined, cannot be simply redefined 
Contra Cantor Pro Occam and Neoclassical mathematics for the Schools 2011: clarification of the notion of infinity, resolution of the paradox by Cantor
Support for Tinbergen and Hueting 2000, 2009: support for these two authors on the economics of ecological survival
World governance 2005: suggestion to world citizens to simply start with a world parliament, see also DRGTPE

The moral of the story: Reading and studying these books will also be a Land of Cockaigne for readers and students, with hard work to tunnel through the rice porridge but with lots of clarity once there. Subsequently, we can adapt our economies such that our ancestors would call these veritable Lands of Cockaigne indeed.

PM. There is always a surprise. This memo started from the notion of the Land of Cockaigne. A check on its spelling generated the wikipedia article on Bruegel’s painting, and an observation by Ross Frank there:

“that the painting is a political satire directed at the participants in the first stages of the Dutch Revolt, where the roasted fowl represents the humiliation and failure of the nobleman (who would otherwise form the fourth spoke of the wheel) in his leadership of the Netherlands, and the overall scene depicts the complacency of the Netherlandish people, too content with their abundance to take the risks that would bring about significant religious and political change.”

Apparently there hasn’t been much change since 1567.

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We should pay our respect to president Karolos Papoulias of Greece. He is from 1929, fought the Nazi’s, opposed the Greek dictatorship and has worked towards peace in various parts of the world. We should also pay guarded respect to Wolfgang Schäuble, minister of Finance of Germany. He is from 1942, has been an important figure in German politics, survived an assassination attempt, and would have been more prominent in Europe if not for a problematic election contributions scandal that apparently was never totally resolved.

Schäuble suggested that Greece might be a bottomless pit and better surrender some national sovereignty, and Papoulias defended the national honour again, see also the Guardian or eKathimerini: “Who is Mr Schäuble to insult Greece? Who are the Dutch? Who are the Finnish? We always had the pride to defend not only our own freedom, not only our own country, but the freedom of Europe.”

Indeed, Holland and Finland did not so well during World War II. That war is only 65 years in the past. The USA civil war is 150 years in the past but we still see its traces. But Germany has recovered from its dismal past and the idea is that we now live together in peace.

The Greek consumer organisation INKA now calls for a boycott (“mpoukotaz“) of products from Germany and Holland. Apparently INKA called for a boycott earlier and a wise German living in Athens already explained that it would be counterproductive. Apparently, the bodies of lawyers and doctors recently join in nevertheless. We can only hope that the Greek people don’t get so confused that they start boycotting tourists as well (since this would be a money inflow and not an outflow). Dutch readers might check this report in a Dutch newspaper about the call for a boycott from Greece – with the image of a policeman trying to contain a woman who is distressed about a colleague who threatens to jump from a balcony because of the cutbacks.

The clash between Schäuble and Papoulias is political. It are politicians at the European level who fail to address the crisis that started in August 2007. As a voter in Holland I am abhorred about the maltreatment of common civilians in Europe, the unemployment, destroyed businesses, the suicides, the lack of international outcry even amongst so-called pan-European political movements.

This weblog however presents my comments as an econometric scientist. The relevant comment here is that there is an alternative economic plan for Europe.

To minister Schäuble I would like to say that Kanzler Merkel follows a dangerous course, see my interview by Protesilaos Stavrou.

To president Papoulias I would like to say that he has been a witness of Greek politics for all his life and that he might understand some of the Northern European distress about all the money that has gone into Greece. Admittedly, creditors were unwise by lending too much but there is also some responsibility on the part of the debtors. The new talk about a “Marshall plan” (for Southern Europe) is somewhat curious given the EU structural funds and the bonanza of cheap rates of interest in the early euro years. Also the economic plan that I am proposing and that invests EUR 400 billion in the banks, EUR 300 billion in Italy and 100 billion in Greece also contains the suggestion that the banks, Italy and Greece provide some collateral, the banks via shares and the countries e.g. via higher taxes on the wealthy or via the creation of international investment zones.

There is, however, one good reason why Greece could boycott Holland, namely to defend the freedom of science. If president Papoulias would want to engage a new fight for freedom and peace, then he could explain that to his nation, to Germany, to the world.

PM. Athens News reports: “Earlier, the president said he had given up his salary in a symbolic gesture of support for recession-hit citizens. Papoulias receives an annual income of €283,694 for the job. (…) The president announced his decision (…) three days after parliament slashed Greece’s minimum wage as part of a drastic new austerity package.”

The payment of politicians is always an issue. Greek parliament has about the same salary costs (excluding perks) as Dutch parliament though Greece has a population of 65%. Cutting Greek parliament to the same “voters per member” as in Holland would save € 10 million per year. In that light president Papoulias’s € 0.3 million is symbolic.

  Holland Greece Greece alt. UK
Inhabitants (million) 17 11 11 62
Ministers 11 20 p.m. 23
House of Commons 150 300 146 650
Senate 75 0 0 788
Salary member H. of C. (excl. of perks) € 95,000 € 65,000 € 65,000 £ 65,738 ≈
€ 79,000
Website link link   link
Parliamentarians (2 chambers) 225 300 146 1438
Voters per member 75556 36667 75556 43115
Salary cost of parliament (euro million) 21.4 19.5 9.5 p.m.

Note: For the UK we might have to include the Scottish parliament. For all countries there are regions and municipalities, with executives and councils. Greece with mountains and islands might require more parliamentarians to serve different districts. Holland seems geographically homogeneous yet has a long history with all kinds of (regional) subcultures (as well).

My original advice to boycott Holland came with the exception of communication, like websites, newspapers and publishers, since a nation needs to be able to discuss what to do when it is facing a boycott.

Now mathematician Timothy Gowers complained about the high cost and oligopolistic practices of Reed Elsevier and this caused a call for a boycott by scientists to stop contributing to journals published by them: http://thecostofknowledge.com/ 

Thus, these are two entirely different things.

Interestingly, Gowers also appears to be thinking about different ways to score contributions to science other than merely counting publications weighted by journal factor. My own idea since the beginning of the internet was that it would be sufficient to use that internet. A later proposal of more than 10 years ago was to use the Elo or Rasch rating as used in chess, see for example chapter 7 in Voting Theory for Democracy. The problem of course is to establish what would constitute a “match” since scientific papers don’t have the clarity of a chess match. But if scientists put their work on their websites and link to work of others then Google by itself would give a basic ranking (that is what Google does). So I have been looking with amazement at scientific journals from the very beginning of the internet.

There is actually a good example. In this weblog professor Gowers explains the distinction between countable and uncountable sets.  It happens that I wrote the paper “Contra Cantor Pro Occam” with the new definition of “bijection by abstraction” (also labelled as “bijection in the limit”) with the consequence that the set of natural numbers and the set of real numbers are “equally large”. This reduces infinity to the two notions that Aristotle already gave – potential infinity (natural numbers) and actual infinity (the continuum) – but as mere transforms or different orderings of each other. The happy consequence is that we are saved from Cantor’s “transfinites” and the squandered research funds on these illusions. Another consequence is that we can discuss the real numbers in highschool mathematics without feeling that we are leaving out something important. The paper has been rejected by the Dutch journal “Nieuw Archief voor Wiskunde” as “interesting but not for mathematics specialists” and “too long for a journal”. They should have said: “interesting but try to make it shorter for specialists who don’t need the introductions”. Now, if professor Gowers would look into the paper and put a review on the web, then we would have “peer review on the spot” and we are off to a “new way of publishing” (namely to use the internet).

On February 14 2012, there is a letter by the Ambassadors of ten Eastern European nations to the Dutch people and their political leaders. They all plead for tolerance and express concern about a website by a political party PVV that discriminates against Eastern Europeans living in Holland.

The Ambassadors relate that Holland has been an example of freedom and tolerance for Eastern Europe for decades. They express their hope that Holland remains true to this positive image.

There will be much truth in that. Holland may have a strong tradition of liberty though historians are the first to forward corrections. It is striking, however, that Holland has been censoring an economic analysis since 1989/90 that would have been beneficial for Eastern Europe. One would hope that the Ambassadors also observe this.

When the Berlin Wall fell, on November 9 1989, this also caused a cascade of thoughts in my mind on the economic analysis of the situation. This document, somewhat distorted by Optical Character non-Recognition (OCR), still bears witness. There the problem is formulated in terms of the long term projection 1990-2015 I was involved in. This other memo the next year mentions Eastern Europe explicitly. The key point is that Western Europe had an obligation to resolve unemployment at home so that newly liberated Eastern Europe could invest and would find export markets. The unemployment in Western Europe in 1989 had been created by errors in policy making and policy advice, which errors continue to this day in 2012, and which are still relevant for the current economic crisis. See this recent memo of 2011. Unfortunately, my brainwave and subsequently cool analysis in 1989 hit another wall, now in the minds of the CPB directorate, and stagnation endures till this day. Eastern Europe suffered terrible times, with war in Yugoslavia, and the promise of Vaclav Havel died in economic misconceptions.

Thus: Ambassadors Plamen Christov Petkov of Bulgaria, Argo Kangro of Estland, Gyala Sumerghy of Hungary, Maris Klisans ofLetland, Vaidotas Verba of Lithuania, Janusz Stanczyk of Poland, Andrei Hateganu of Roumania, Leon Marc of Slovenia, Jaroslav Chlebo of Slowakia, Jaroslav Horak: please report back to your countries that modern economic theory advises a boycott of Holland till the censorship of science in Holland is ended.

Europe is fragmented by languages and borders but with some overlap.

For example, people in Flanders speak Dutch and can follow what happens in Holland. How do the Flemish think about the censorship of science in Holland and the advice to boycott Holland till the issue is resolved ?

An internationally known economist is Paul de Grauwe, who worked in Leuven, Belgium, and who since May 2011 even has become a member of the Central Planning Commission (CPC) of the CPB in Holland. The CPC is an advisory council for the CPB about its work and methods. If the CPC would hold that the censorship of science at the CPB should stop then a clash with the directorate would surely draw attention of the Dutch media and parliament.

During this European crisis De Grauwe is present a lot on Vox EU and Belgian television, for example last Monday because of the Greece again. Perhaps EU President Herman van Rompuy relaxes a bit by watching his former colleague. An angle of human interest is that De Grauwe has been forcefully retired at 65 so that he had to ask a younger colleague to sign his university papers, and he has moved to de London School of Economics (interview Belgian TV).

My problem is a bit that I informed De Grauwe in 2004 about both my advice to boycott Holland and the second edition of DRGTPE. He must be very busy, and didn’t reply. For Dutch and Flemish readers and translators I copy that email below.

But now he is a member of the CPC. Unfortunately in November 2011 I copied another email to him and did not receive a response. He must still be too busy with analyzing the crisis to be able to look deeper into his task for CPC and my crisis solution proposal. Such are the paradoxes of modern society. A censored scientist needs protective ambassadors to represent the case, but if he would have had them then that censorship would not have occurred in the first place.

===
Date: Thu, 25 Nov 2004
To: Paul.DeGrauwe
From: Thomas Colignatus / Thomas Cool
Subject: Advies tot een boycot van Nederland

Geachte professor De Grauwe,

U kent mij niet, maar ik acht uw oordeel belangrijk en hoop dat u me toestaat u te benaderen.

Ik ben gaan adviseren tot een boycot van Nederland. Zoals u begrijpt kan zo’n boycot beter in het buitenland besproken worden: wellicht dat u gevoelig bent voor mijn argumentatie, ook opgenomen in EconWPA: http://www.dataweb.nl/~cool/AdviceToBoycottHolland.html

In januari 2005 zal ook de tweede editie van mijn boek DRGTPE verschijnen bij Dutch University Press: http://www.dataweb.nl/~cool/Papers/Drgtpe/Index.html

Indien u reeds de PDF zou willen lezen om mijn argumentatie t.a.v. de boycot beter te begrijpen, dan zou ik u eventueel het password daarvoor kunnen geven.

Mijns inziens zou u deze teksten interessant moeten vinden gezien uw eigen onderzoek.

Met mijn hoogachting,

Thomas Colignatus / Thomas Cool
(links now adjusted to http://thomascool.eu)

The IMF has an Independent Evaluation Office (IEO), http://www.ieo-imf.org, see also Wolf (2011). On “Boxing Day” December 2011 I wrote its director Moises Schwartz with respect to a misleading discussion about the Dutch Central Planning Bureau (CPB) in the October Outlook, IMF (2011). Unfortunately I haven’t received a reply yet. 

Date: Mon, 26 Dec 2011
To: ieo@imf.org
From: Thomas Cool / Thomas Colignatus
Subject: Protest against the October Outlook

To the IEO of the IMF

Dear Mr. Moises Schwartz,

My best wishes for 2012 for you and the IMF.

I noticed a misleading discussion about the Dutch Central Planning Bureau (CPB) in the October Outlook.

I discuss this here:

http://thomascool.eu/Papers/Drgtpe/Crisis-2007plus/2011-10-16-Ghost-1989.html

I am an econometrician and worked at the Dutch CPB in 1982-1991 in the position of scientist. I developed an analysis on unemployment, but this was censored while I was dismissed with untruths. The legal court did not investigate the untruths and allowed the dismissal.

I have developed my analysis into this book:
http://thomascool.eu/Papers/Drgtpe/Index.html

This is a discussion at Vox EU:
http://www.voxeu.org/index.php?q=node/3087

The book does not contain the full theory yet, since there is still continued censorship of science. Therefor I advise to a boycott of Holland till that censorship is lifted.

Hence, if you allow some logic: the current most advanced economic theory causes the advice to boycott Holland till that censorship of science is lifted. Economic scientists who do not support that advice are behind in theory. My proposal is that the IMF adopts that analysis as well, and supports that advice in its reports to governments.

I can imagine that this step in logic might be rather radical to you at first. It is sound reasoning though. You might want to look at my book on logic:
http://thomascool.eu/Papers/ALOE/Index.html

I am also advising the dismissal of Dutch professors of economics, for their neglect of the integrity of economic science.

Now that I have reported this to you, what will be happening ? This message is important also with respect to the current economic crisis, see above link to DRGTPE and my papers on the crisis. Are you going to distribute copies of DRGTPE to researchers at IMF ? Are you going to organise a seminar ? Will someone visit me here in Holland to write a report ? I would welcome a response by you about the follow up.

Sincerely yours,

Thomas Cool / Thomas Colignatus
http://econpapers.hhs.se/RAS/pco170.htm

(Links now adjusted to http://thomascool.eu.)

This is a summary of an Economic plan for Europe (see the links for the supporting longer papers):

(1) In the short term, economies and policy makers are under too much stress, which is painful for the people who are suffering and unwise for policy makers who need a cool head. Thus my advice is to allow for eurozone bonds for some years at 3% of GDP max per annum. I advise against eurozone bonds as the long term solution but their use allows a short term moratorium.

(2) For the longer term: To resolve future government debt and the trajectory to stability around 60% GDP my suggestion is to create a regime ladder. Below 80% EU members are free to use bullet bonds but with some support from the ECB to maintain the range of the rate of discount, between 80-90% they have to use annuity bonds and still have support of the ECB to control the rate of discount, and above 90% they are free again but without any support. Investors thus have time to get out in time. This requires a change of the treaty on the ECB. See my note in the Royal Economic Society Newsletter or the longer paper.

(3) For the longer term as well: The suggestion is to focus on four points: (1) better governance, (2) investments for employment and growth, (3) fiscal policy based upon functional finance, and (4) monetary stability. Better governance is attained not by surrendering more power to Brussels but by having a constitutional Economic Supreme Court per member state. The debt overhang of Italy and Greece can be sterilized within the monetary system provided that they provide some collateral, such as establishing international investment zones. National Investment Banks are crucial for the functioning of an economy. See the longer paper or the interview by graduate student Protesilaos Stavrou, or the article in eKathimerini. (Actually, I fid the articles there by Nick Malkoutzis quite informative.)

These are the main points. This summary seems useful since it is easy to lose focus. More details are at my 2007+ crisis page. This economic plan is based upon the new synthesis in economic theory presented in DRGTPE.

PS. For the USA and the G20: check out this.