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Monthly Archives: June 2015

Listening to Mikroutsikos – Milva – Volpe d”amore
and Live 1995

Part surprise, part dark fear that this was always a possibility: ZFC is inconsistent.

You can read the paper here.

For who doesn’t get the letter soup: ZFC stands for the Zermelo & Fraenkel & Axiom of Choice system of axioms for set theory. ZFC is supposed to be the foundation for modern mathematics. Alas, mathematics appears to be founded in the minds of mathematicians and not on those axioms.

Around 1900, Gottlob Frege (1848-1925) started the business of axiomising set theory. When he had one of his books ready for print, Bertrand Russell (1872-1970) wrote him about what became known as Russell’s paradox. Frege still wanted his book printed, but hurriedly included a line that Russell’s paradox made him doubt.

“Hardly anything more unfortunate can befall a scientific writer than to have one of the foundations of his edifice shaken after the work is finished. This was the position I was placed in by a letter of Mr. Bertrand Russell, just when the printing of this volume was nearing its completion.” (Gottlob Frege, 1903)

Logicomix tells the saga in vivid comics. The problem with Logicomix is that they haven’t read my book ALOE (1981, 2007, 2011), while there now is this new result on ZFC, that puts quite a bit of flavour on the connection between Russell and Cantor and ZFC.

Indeed, there is a new dramatic story to tell, involving the need to boycott Holland.

Also, the authors of Logicomix are all Greek, except for Annie Di Donna: which not only shows the importance of exceptions, but also indicates the surprising links in Europe, say between Holland and Greece – or my admiration for Milva in 1995 in Syracuse (Magna Graecia). But, of course, math is an issue for the whole world, so don’t feel excluded.

Logicomix, cover (Source: wikimedia commons)

Logicomix, cover (Source: wikimedia commons)

Listening to Ο Διγενής (Ριζίτικο) – Ν. Ξυλούρης, Γ. Μαρκόπουλος

 

Some economists signed below letter in the Financial Times, June 5, on the final hour. When I do my petitions then I try to make a point. Let us read this open letter and identify its holes.

Title: In the final hour, a plea for economic sanity and humanity

The suggestion of a final hour is scare mongering. It is not true either, because it is a safe bet that there will be another hour after that. Subsequently it is insulting to Angela Merkel: as if she has not been working hard on economic sanity and humanity. If you want her to read something then find an appealing title, something like: “How to get Putin pay attention and listen”.

Signatures

Groucho Marx didn’t want to join a club who wanted him as a member. One can look at the signatures for a long while and wonder why one would want to be on that list. If these would be 100,000 economists from Europe, well, perhaps. A single European Nobel Prize winning economist might be sufficient, but there isn’t one on the list. I need to ask Hillary Wainwright from Amsterdam what she thinks about the censorship of economic science in Holland. (After Greek Statistics we also have Dutch Economics.)

Prof Joseph Stiglitz, Columbia University; Nobel Prize winner of Economics, Prof Thomas Piketty, Paris School of Economics, Massimo D’Alema Former prime minister of Italy; president of FEPS (Foundation of European Progressive Studies) Prof Stephany Griffith-Jones IPD Columbia University Prof Mary Kaldor London School of Economics Hilary Wainwright Transnational Institute, Amsterdam Prof Marcus Miller Warwick University Prof John Grahl Middlesex University, London Michael Burke Economists Against Austerity Prof Panicos Demetriadis University of Leicester Prof Trevor Evans Berlin School of Economics and Law Prof Jamie Galbraith Dept of Government, University of Texas Prof Gustav A Horn Macroeconomic Policy Institute (IMK) Prof Andras Inotai Emeritus and former Director, Institute for World Economics, Budapest Sir Richard Jolly Honorary Professor, IDS, Sussex University Prof Inge Kaul Adjunct professor, Hertie School of Governance, Berlin Neil MacKinnon VTB Capital Prof Jacques Mazier University of Paris Dr Robin Murray London School of Economics Prof Jose Antonio Ocampo Columbia University Prof Dominique Plihon University of Paris Avinash Persaud Peterson Institute for International Economics Prof Mario Pianta University of Urbino Helmut Reisen Shifting Wealth Consultancy Dr Ernst Stetter Secretary General, FEPS (Foundation fro European Progressive Studies) Prof Simon Wren-Lewis Merton College Oxford

Copyright

The copyright of the open letter has been transferred to the Financial Times:

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don’t cut articles from FT.com and redistribute by email or post to the web.” (Financial Times website)

This is not handy. If you want to distribute your open letter to all kinds of newsmedia, you should not transfer the rights to a single newspaper. See why I don’t blog at the Financial Times.

It actually means that I am also handicapped in deconstructing this open letter. I can quote, of course, but deconstructing everything becomes less inviting. I intended to deconstruct it all, but now, seeing that awkward copyright statement, I lose my enthusiasm.

Opening paragraph

“Sir, The future of the EU is at stake in the negotiations between Greece and its creditor institutions, now close to a climax. To avoid failure, concessions will be needed from both sides. From the EU, forbearance and finance to promote structural reform and economic recovery, and to preserve the integrity of the Eurozone. From Greece, credible commitment to show that, while it is against austerity, it is in favour of reform and wants to play a positive role in the EU.” (Letter by Stiglitz et al. FT June 5 2015)

  • Please don’t address Angela Merkel as “Sir”.
  • Why is it a concession from the EU to exercise forbearance and finance, which they have been doing all the time ?
  • Why is it a concession from Greece to present a credible commitment ? Don’t they claim that they have been doing so all the time ? Or, are Greece’s “best friends” now back-stabbing the Greeks ?
Are these impartial economists or members of Syriza ?

“Syriza is the only hope for legitimacy in Greece. Failure to reach a compromise would undermine democracy in [sic] and result in much more radical and dysfunctional challenges, fundamentally hostile to the EU.” (Letter by Stiglitz et al. FT June 5 2015)

  • Are these impartial economists ?
  • Aren’t there other political parties who have some views on reform and such ?
  • Shouldn’t economists be highly critical of incompetent Yanis Varoufakis, the Syriza minister of finance ? See my earlier criticism, or discussion of Angela riding this minotaur.
A new Marshall Plan ?

“Consider, on the other hand, a rapid move to a positive programme for recovery in Greece (and in the EU as a whole), using the massive financial strength of the Eurozone to promote investment, rescuing young Europeans from mass unemployment with measures that would increase employment today and growth in the future”  (Letter by Stiglitz et al. FT June 5 2015)

  • Yes, of course, see for example my Economic Plan for Europe, and this short text in eKathimerini 2011. Was there one single response from a Greek economist – such as Yanis Varoufakis ? No. See actually my list of papers on the crisis.
  • There is one crucial difference between the rosy view by Stiglitz & Piketty & friends and my more mundane analysis: they assume that the Eurozone will forget about the past, and for the future believe Greece again in whatever Greece promises, while I adopt the more realistic position that there has been a break-down of confidence already. 

Compare: Berlusconi did not ask for a bail-out but Tsipras does. Why would Tsipras think that the Eurozone loves him more than Berlusconi ? Earlier I indicated the link between Russia and Greece – the orthodox church – but why does Tsipras make a solo trip to Russia without taking account of sentiments in the rest of Europe on the Ukraine, or like in Holland on MH17 ?

Berlusconi did not ask for a bail-out but Tsipras does

Berlusconi did not ask for a bail-out but Tsipras does (2008, Source: wikimedia commons)

Thus, a new Marshall Plan is not going to work, unless there are firm regulations in place.

  • It boggles my mind that Greek policy makers do not understand this.
  • It boggles my mind that a political party like Syriza performs such populism, to promise relief without actually presenting a credible plan to achieve this. Surely, populism gets you elected, but does one not have a grain of responsibility ?
  • It boggles my mind that above supposedly serious economists support such populism instead of developing a plan that would actually work. James Galbraith is partly excused for presenting the “Modest Propopsal” jointly with Yanis Varoufakis and Stuart Holland. But he should know about my criticism. Obviously Angela Merkel will not be easily convinced either (e.g. on eurozone bonds).
Conclusion

Economic scientists must observe impartiality. Economic proposals should be backed-up with a minimum of a plan. Analyses should clearly indicate where parties are in error, and otherwise allow for a “core” (see the Edgeworth diagram) with a range of possible compromises. None of these are provided by Stiglitz & Piketty et al. The letter is a miserable failure.

Philippe Legrain (1973) is a British economist who worked as an advisor for former communist and later EU commission president José Manuel Durão Barroso in 2011-2014. Legrain has now written a book on a European Spring, something that Manny tried hard to achieve, as readers of this weblog know, as I tried to advise Manny too.

The real news from Brussels is that Manny’s successor Jean-Claude Juncker doesn’t want a Spring but a Hot Summer. A showdown with Putin should unite the peoples of the EU, and also force Greece to choose sides, JCJ thinks.  Philippe Legrain’s book is old hat. I am still waiting for approval by JCJ to spill some of the beans of our luncheons, dinner parties and fire-side chats. The big secret in Europe is that Angela, François, Jean-Claude and me were all born in 1954, and that we share an obligation to make it all work, though I am for peace-with-strength and they are hopelessly confused.

This Sunday, Philippe Legrain allowed Dutch television to interview him on his Spring eulogy. Legrain is unaware that Dutch TV journalists are hypocrites by profession, and that he is sucked dry like in those vampire movies.

The interview is in English with Dutch undertitles, and you can check how interviewer Marcia Luyten (1971) takes Legrain for a walk in the woods, guts him, and leaves his body somewhere in a ditch.

About a key moment in the economic crisis:

“There was a panic across the Eurozone, and people thought that governments could not pay their debts. And actually it was a panic that ultimately the ECB was able to solve. In the case of the Netherlands it wasn’t even a panic. This was just a mistake made by this government, under pressure from Brussels, and Berlin.” (Philippe Legrain, minute 35).

It is absurd to portray Holland as a victim of Brussels. It is the other way around. Europe is a victim of Holland:

  • It were rather speculators who saw an opportunity to make a killing. It wasn’t a panic but a real threat, caused by wrong legal rules.
  • The solution provided by the ECB still is an improvisation, and we still need a new treaty, see my piece on the two Mario’s.
  • It were Dutch hawks who joined with Germany and imposed austerity on the rest of Europe, also using Brussels as a front for the Dutch electorate.

Other major errors in the interview are:

  • Legrain apparently never really studied Holland. For him it is a small country that falls under his radar. For hm, Holland is not a perpetrator but a victim. For him, these are nice people, and not hypocrites. Apparently he regards Holland as a free, tolerant, open-minded country, that just happens to have made some policy errors, without kids delving into the trash as now happens in Greece. He can’t make himself see Marcia Luyten as co-responsible for making kids in Greece do so. But she is a hypocrite and co-responsible. She never properly informed the Dutch viewers.
  • Legrain just answers the questions that Marcia asks. He doesn’t expose Holland as a major perpetrator. He does not expose Marcia as belonging to the hypocrites who helped cause the problems. He joins Marcia in her “frame” that it are politicians who do not want to lose face, while a major part of the story is that it are journalists who have been misreporting and misrepresenting.
  • Legrain doesn’t expose Jeroen Dijsselbloem as a major stumbling block: an agricultural economist who got into politics too quickly and who apparently isn’t able to deal with these issues properly. (Dijsselbloem already failed on the policy w.r.t. the education on mathematics.) (See Dijsselbloem on Dutch exports.)
Marcia Luyten reads the English book title "European Spring", by Philippe Legrain

Marcia Luyten reads the English book title “European Spring”, by Philippe Legrain (minutes 22-40)

Thus, Philippe, the next time that you visit Holland, first consider my books DRGTPE and CSBH, and let us discuss those, before you face Dutch journalism.

Incidently, we appear to agree with a lot. For example, that the surplus on the Dutch or German exports account was invested abroad, and basically was squandered when investments failed, is a key feature in my analysis since 1990. See also Johannes Witteveen, a former executive director of the IMF.  But the hypocrites on Dutch television will not allow viewers to hear this from home grown economists. They will welcome people like you, Philippe, who criticize Germany and France, instead of the local Dutch incrowd hawks and perpetrators, and their messenger prime minister Mark Rutte, who has a degree in history and who does not know much about economics but still is zealot about Margaret Thatcher, and who got the Rathenau prize on freedom while he censors economic science in Holland.

But, you also state that you have a proposal how a currency union would work with decentralised decision making. I wonder how you could achieve that. My suggestion has been that each nation adopts an Economic Supreme Court. I wonder whether your ideas are the same. Apparently those are behind a pay wall. This will not work.  Even a crisis should not force people to buy into books that might be scientifically unwarranted.

PM. This hypocritical Buitenhof TV broadcast also contains a discussion with Nikos Koulousios, six minutes before Philippe Legrain. This is somewhat amusing, but not really so.

  • The suggestion is that when Greece and Germany collaborate on jokes, and the Germans admit that they don’t have a sense of humour, then we see a proper collaboration in Europe: and all is fine, and people should feel satisfied that the notion of a unified Europe might work. I am afraid that this only confirms national stereotypes and isn’t real humour.
  • Koulousios calls it typical that a letter signed by economists like Joseph Stiglitz and Thomas Piketty did appear in the Greek paper efsyn.gr but not in other papers, except in the Financial Times in which it appeared originally. He seems to suggest some kind of conspiracy, in which the Greek readership is manipulated and not given the right information. However, it may just be that the FT expects royalties. Check why I don’t blog at the FT. Thus the proper diagnosis is that journalists can be quite hypocritical, not only in Holland but even in Greece.

There is one real conclusion from all this. I will discuss it with JCJ the next time I see him. Rather than joining Putin in a hot Summer war on the Ukraine, the EU should pay Russian journalists more money for accurate reporting about the state of the world.