Economic crisis

Hans Rosling (1948-2017) was a professor of public health and at the Swedish Academy of Sciences. I hadn’t heard about him but his death caused newsmedia to report about his mission to better inform people by the innovative presentation of statistics. I looked at some of his presentations, and found them both informative and innovative indeed.

I applaud this chart in which he tabulates not only causes and effects but rather means and goals. (Clicking on the picture will bring you to the TED talk 2007, and at the end the audience may applaud for another reason, namely when he swallows a sword to illustrate that the “impossible is possible”.)

Hans Rosling 1948-2017

Hans Rosling 1948-2017

Continue the discussion

My impression is that we best honour Rosling by continuing the discussion about his work. Thus, my comments are as follows.

First of all, my book Definition & Reality in the General Theory of Political Economy shows that the Trias Politica model of democracy fails, because it allows politicians still too much room to manipulate information and to meddle in scientific advice on policy making. Thus, governance is much more important than Rosling suggested. Because of his analysis, Rosling in some of his simulations only used economic growth as the decisive causal factor to explain the development of countries. However, the key causal factor is governance. The statistical reporting on this is not well developed yet. Thus, I move one + from economic growth to governance.

Secondly, my draft book The Tinbergen & Hueting Approach in the Economics of Ecological Survival discusses that the environment has become a dominant risk for the world as we know it. It is not a mathematical certainty that there will be ecological collapse, but the very nature of ecological collapse is that it comes suddenly, when you don’t expect it. The ecology is so complex and we simply don’t have enough information to manage it properly. It is like standing at the edge of a ravine. With superb control you might risk to edge one millimeter closer, but if you are not certain that the ground will hold and that there will not be a sudden rush of wind, then you better back up. The table given by Rosling doesn’t reflect this key point. Thus, I move one + from economic growth to the environment.

In sum, we get the following adapted table.

Adapted from Hans Rosling

I have contemplated for the means whether I would want to shift another + from economic growth to either human rights (property rights) or education (I am also a teacher). However, my current objective is to highlight the main analytical difference only.

In the continued discussion we should take care of proper definitions.

What does “economic growth” mean ?

The term “economic growth” is confusing. There is a distinction between level and annual growth of income, and there is a distinction w.r.t. categories within. Economic welfare consists of both material products (production and services) and immaterial elements (conditions and services). If the term “economic growth” includes both then this would be okay. In that case, however, the whole table would already be included in the notion of welfare and economic growth. Apparently, Hans Rosling intended the term “economic growth” for the material products. I would suggest to replace his “economic growth” by “income level”, and thus focus on both income and level rather than annual change of a confusingly named statistic. Obviously, it is a policy target that all people would have a decent standard of living, but it is useful to remain aware that income is only a means to a higher purpose, namely to live a good life.

PM. This causes a discussion about the income distribution, and how the poor and the rich refer to each other, so that the notion of poverty is relative to the general standard of society. In the 1980s the computer was a luxury item and nowadays a cell-phone with larger capacity is a necessity. These are relevant aspects but a discussion would lead too far here now.

What does “environment” mean ?

In the adapted table, the environment gets ++ as both means and goal. There is slight change of meaning for these separate angles.

  • The environment as a goal means that we want to preserve nature for our descendants. Our kids and grandchildren should also have tigers and whales in their natural habitat, and not as photographs only.
  • The environment as means causes some flip-flop thinking.
    (1) In economic thought, everything that exists either already existed or mankind has crafted it from what was given. Thus we only have (i) the environment, (ii) human labour. There are no other means available. From this perspective the environment deserves +++.
    (2) For most of its existence (some 60,000 years), mankind took the environment for granted. Clear air and water where available, and if some got polluted it was easy to move to a next clean spot. The economic price of the environment was zero. (Or close to it: the cost of moving was not quite a burden or seen as an economic cost.) Thus, as a means, the environment didn’t figure, and from this viewpoint it deserves a 0. There are still many people who think in this manner. It might be an engrained cultural habit, but a rather dangerous one.
    (3) Perhaps around the middle of the past century, the 1950s, the environment has become scarce. As Lionel Robbins explained: the environment has become an economic good. The environment provides functions for human existence and survival, and those functions now get a price. Even more, the Tinbergen & Hueting approach acknowledges that the ecology has become risky for human survival. The USA and Europe might think that they can outsource most environmental pollution to the poorer regions of the world, but when the rain forests turn into deserts and when the CO2 turns the oceans into an acid soup that eats away the bones of fish, then the USA and Europe will suffer the consequences too. In that perspective, the environment deserves +++.
    (4) How can we make sure that the environment gets proper place in the framework of all issues ? Eventually, nature is stronger than mankind, and there might arise some natural correction. However, there is also governance. If we get our stuff together, then mankind might manage the world economy, save the environment at some cost, but still achieve the other goals. Thus governance is +++ and the environment is relative at ++. Thus we arrive at above adapted table.
Dynamic simulation

As a teacher of mathematics I emphasize the combined presentation of text, formula, numeric table, and graph. By looking at these different angles, there is greater scope for integrated understanding. Some students are better at single aspects, but by presenting the four angles you cover the various types of students, and all students get an opportunity to develop the aspects that they are weaker in.

Obviously, dynamic simulation is a fifth aspect. See for example the Wolfram Demonstrations project. Many have been making applets in Java and embedding this in html5, yet the use of Mathematica would allow for more exchangeable and editable code and embedding within educational contexts in which the manipulation of text, formula, numeric table, and graph would also be standard.

Obviously, role playing and simulation games are a sixth aspect. This adds human interaction and social psychology to the learning experience. Dennis Meadows has been using this to allow people to grow aware of the risk on the environment, see e.g. “Stratagem” or MIT-Sloan.

The economic crisis of 2007+

What I particularly like about Rosling’s table is his emphasis on culture as a goal. Artists and other people in the world of culture will already be convinced of this – see also Roefie Hueting on the jazz stage – yet others may not be aware that mankind exists by culture.

There is also an important economic angle on culture as a means. In recessions and depressions, the government can stimulate cultural activity, such that money starts flowing again with much less risk for competitive conditions. That is, if the government would support the automobile industry or steel and do specific investments, then this might favour some industries or services at the cost of others, and it might affect competitive conditions overall, and even insert imbalances into the economy in some structural manner. Yet stimulating cultural activity might be much more neutral and still generate an economic stimulus.

For example, Germany around 1920 got into economic problems and the government responded by printing more money, and this caused the hyperinflation. This experience got ingrained in the German attitude towards monetary issues. In the Eurozone Germany follows the hard line that inflation should be prevented at all costs. Thus the eurozone now has fiat money that still functions as a gold standard because of the strict rules. (See my paper on this.) By comparison, when the USA around 1930 got into economic problems and the central bank was hesitant to print money (no doubt looking at the German example), this eventually caused the Great Depression. Thus monetary policy has the Scylla and Charybdis character, with the risks of either too little or too much. Potentially, the option to organise cultural activity would be a welcome addition to the instruments to avoid such risks and smooth the path towards recovery.

I am not quite suggesting that the ECB should print money to pay the unemployed in Greece, Italy, Spain and Portugal to make music and dance in the streets, yet, when the EU would invest in musea and restorations and other cultural services so that Northern Europe can better enjoy their vacations in Southern Europe, then this likely would be more acceptable than when such funds would be invested directly in factories that start to compete with the North. The current situation that Southern Europe has both unemployment and less funds to maintain the cultural heritage is obviously less optimal.

The point is also made in my book Common Sense: Boycott Holland. Just to be sure: this notion w.r.t. culture is not the main point of CSBH. It is just a notion that is worthy of mentioning.

PM. Imagine a dynamic simulation of restoring the Colosseum. Or is it culturally more valuable as a ruin than fully restored ?

By Jaakko Luttinen - Own work, CC BY-SA 3.0,

By Jaakko Luttinen – Own work, CC BY-SA 3.0,

Radar TV is a consumer awareness programme, with Antoinette Hertsenberg in the role of Ralph Nader. Hertsenberg is annoyed that banks rule supreme again. Banks caused the 2007+ economic crisis and should have been tackled, cut up into pieces and put under surveillance. None of this happened, and we are heading for the next crisis.

Radar TV had two broadcasts in 2015 about borrowing and debt repayment, and then on January 14 2016 had a third event, a college / lecture, with presentations by three “experts” followed by discussion with the audience.

Unfortunately, the “experts” were no real experts: Dirk Bezemer, Klaas van Egmond, Gerhard Hormann.

A major problem is that economist Bezemer and engineer Van Egmond repeated the disinformation that they already committed with respect to Dutch Parliament in 2015. I reported on this in November 2015. Thus, Bezemer & Van Egmond have learned nothing and continue disinforming others.

PM. Some email-exchange on this with Van Egmond is included in this report, that deals with another issue, namely Rob van Dorland ((KNMI) in the context of the environment and climate change (check Paris 2015).

In earlier broadcasts but not now: Arnoud Boot

The earlier Radar TV broadcasts showed professor Arnoud Boot of the University of Amsterdam. He did not perform at this college / lecture.

Boot agrees on this: the ECB is buying time with its Quantitative Easing at the rate of EUR 60 bn per month. This money only stays in the financial circuits, reduces interest rates for savers and pensioners, raises stock prices for the wealthy, and doesn’t generate real investments when demand is wanting. When economies do not redress the banks then the next crisis will hurt even more.

There is a longer interview with Boot by “gold bug” Willem Middelkoop, December 24 2015. Around 2008, Middelkoop warned for an even bigger crash, set up a business advising people to buy gold and commodities rather than paper, and then sold his business. The bigger crash did not come. Apparently he still is taken seriously by some people. See my earlier discussion of the “gold bugs“. The 2015 interview with Boot shows that Middelkoop can ask some standard questions that are interesting when you haven’t heard them before. He doesn’t ask the critical ones. Boot doesn’t mind that people don’t ask the critical questions.

It is informative that Boot announces that he and the WRR (scientific council) will put out a report in April 2016 about disengaging the economy from the financial sector. Hopefully Boot and WRR will look at my paper “Money as gold versus money as water” (2013). Boot however fails by not protesting against the censorship of science by the directorate of the Dutch Central Planning Bureau, see here.

Bezemer repeats disinformation

Dirk Bezemer (University of Groningen) started out as an economist in agriculture and development. He shifted to finance after the crisis in 2007+. This change is acceptable. Also John Kenneth Galbraith (1908-2006) started out as an agricultural economist. Jeroen Dijsselbloem, the current (financial) president of the Eurozone, is an “agricultural engineer”. While this is acceptable, the problem lies in the attitude. When Dijsselbloem gets criticism that his knowledge on macro-economics is lacking, then he should pay attention, see here. When Bezemer receives criticism that he misinforms others, then he should take notice.

Bezemer drew much attention with the paper “No one saw this coming”. Bezemer here quotes Alan Greenspan, and then shows that there were warnings that Greenspan did not listen to.

You might expect that Bezemer might learn from such a paper that he himself should not make the same mistake as Greenspan. You might hope that Bezemer has become very careful in listening to criticism and warnings by others. However, Bezemer does not refer to my analysis since 1990 that also warned about the risks in the current economic structure. See my 2009 memo on this. He doesn’t do anything with my email to him about this. He does not study it, he does not write about it, he does not speak about it. Bezemer deliberately blocks my analysis with a wall of silence. We are 7 years further now, and Bezemer hasn’t found time to look at an analysis by a fellow economist who worked at the Dutch CPB in 1982-1991, and who was hit by censorship and foul dismissal.

This clarifies the distinction that I make between Boot and Bezemer. Both of them neglect the censorship of science by the directorate of the Dutch CPB. But Bezemer is much more outspoken about the blindness. Bezemer selected that blindness as his topic of research, and as a scientist he should look at all the evidence.

It is becoming a running gag on this weblog that Bezemer disinforms others. I already reported that he disinformed Sweden in 2012 and Dutch Parliament in 2015. It is not a running gag but a serious issue. This weblog has a scientific position, and malconduct by scientists cannot be neglected. Please note that I have not been following all that Bezemer has been doing or presenting.

In minute 90 Bezemer states that there is not enough communication about the issue (“Er is te weinig gesprek over.”), which neglects that he himself blocks my analysis with a wall of silence. Dutch readers may look at my evaluation of the deficient Report on Banking, written by Herman Wijffels (see below) and Arnoud Boot. Bezemer disinformed Radar TV not only on my analysis. When Klaas van Egmond made similar errors as I had warned about, Bezemer did not pass on my criticism (and did not say to me why my criticism would be deficient).

Bezemer: "There is not enough discussion." Source: Radar TV minute 90

Bezemer: “There is not enough communication.” Source: Radar TV minute 90

Klaas van Egmond repeats incompetence

Klaas van Egmond (University of Utrecht) is a food technology engineer who turned to environmental issues, who became head of the Dutch environmental planning agency (MNP), and who in the 2007+ crisis became co-founder of what they call the “Sustainable Finance Lab” (SFL) at UU.

In minute 110 in the college / lecture, Van Egmond rallies against banks that sold mortgages using the argument that the economy would continue to grow and grow forever.

  • He laments how dumb people have been in believing those banks.
  • He laments how mean and false those banks have been, since they must have known that their story was too good to be true.

However, in his own presentation (minute 45:30), Van Egmond presents a plan with “positive money” so that the economy can grow again (at least to 2050, perhaps not for ever and ever). This is inconsistent. In itself one can imagine an argument “continued growth is only possible with positive money”, but Van Egmond’s statement at minute 110 is apodictic against growth in general.

Growth by Van Egmond, Source: Radar TV minute 45:30.

Red line: growth by Van Egmond, Source: Radar TV minute 45:30.

More fundamentally, the “positive money” plan that Van Egmond presents suggests that the government would have billions from seigniorage to spend on public goods (perhaps even thirty billion). He suggests that this seigniorage is currently appropriated by banks. However, as I wrote him, he neglects both the proper value of the velocity of money and transaction costs. The payment system does not come for free. See my paper “Money as gold versus money as water” (2013) for an indicative calculation that seigniorage would be needed to cover the costs of the payment system. Unless you want to pay a percentage at each transaction, of course.

What is flabbergasting is that Van Egmond in an email acknowledges that he disinformed Dutch Parliament in 2015, but he still repeats the same disinformation at Radar TV in 2016. In this email he states both that he caused confusion for Parliament, and that a velocity of money of 1 (stock of money M = P Y / V = P Y = nominal national income) needs “careful attention”. Either this “careful attention” is a diplomatic rephrasing of “oops, this was a serious mistake” or he really doesn’t see the issue even when it has been pointed out to him: but in the latter case it is not clear what the “confusion” would be. Overall, Van Egmond disinforms Radar TV that above growth path would be feasible in the manner that he dreams up.

“Ik heb met de veronderstelling dat de velocity = 1 (geldhoeveelheid ongeveer gelijk aan BNP (pY)) inderdaad verwarring gesticht. Hoewel we op grond van onze berekeningen die veronderstelling menen te kunnen rechtvaardigen, is voorzichtigheid inderdaad geboden.” (Van Egmond, email 2015-11-18, here p26)

PM. There is the following curious issue. In the real-time broadcast Van Egmond stated that no economist had seen the crisis coming. I could not find this statement in the online version. Has it been edited out, or did I not search well enough ? In the session at Parliament, Van Egmond stated the same, and he quoted the paper by Bezemer as if this had shown that no economist had seen the crisis coming. The session at Parliament showed that Van Egmond hadn’t read Bezemer’s paper and misstated its summary. Perhaps Bezemer now protested, and Radar TV allowed Van Egmond to delete the passage ?

Van Egmond is a danger for his & the environment

The UU “Sustainable Finance Lab” (SFL) has been created by Klaas van Egmond and Herman Wijffels. At some time Arnoud Boot joined up. Van Egmond & Wijffels create the image as if they are supportive for the environment but critical of banks. Klaas van Egmond, however blocked Hueting’s analysis on the economics of the environment. Wijffels is a former CEO at RABO Bank, guilty of the same behaviour as banks in general, while Wijffels himself turned RABO Bank from a co-operative into the competitive bonus-driven bank that contributed to the LIBOR scandal. A diagram of the relationships may help to better see the abuse of science at Utrecht University.

Diagram of the abuse of science at University of Utrecht

Diagram of the abuse of science at Utrecht University

One would think that Dutch people are interested in rising sea levels. If there is one nation other than the island nations that will drown, one would expect that Holland would pay keen attention to Climate Change. Instead, Holland appointed Klaas van Egmond to become director of the Dutch environmental planning bureau (MNP).

Van Egmond blocked the analysis by Roefie Hueting on environmental sustainability. See my earlier weblog text on Hueting’s analysis.

In that same email of November 18 2015, Van Egmond argues that he didn’t see anything in Hueting’s analysis after “careful consideration” (my translation into English). However, Van Egmond never published what those “careful considerations” were. Thus he blocked a scientific discussion on those, and swept the issue under the carpet. In the email he states another apodiction: as if we cannot assess environmental damage. This runs counter to economic theory that policy better be formulated with the best information available. You may not like the quality of the information but it still is the best available, and you can at least try to handle the uncertainties as best as possible.

There is more: As long as Van Egmond uses such apodictions and doesn’t state in scientific manner what his objections are, we can suspect that his view actually is a matter of ideology and blindness. Namely, there are (at least) three approaches w.r.t. the economy and the environment:

  • (Neoclassical) Economists, like Pigou, Keynes, Robbins, Tinbergen, Hueting and me, who rely on the theory of economic welfare and national income accounting. Yes, there are discussions amongst economists, but they are all aware that governments must take decisions about next year’s budget. The Tinbergen & Hueting approach was much discriminated against by mainstream economists who were and are not interested in the environment. See my draft book: The Tinbergen & Hueting Approach in the Economics of Ecological Survival,
  • Engineers like Dennis Meadows and Van Egmond, who use “system dynamics” developed in engineering, for which economic theory is a distraction. This was used by the Club of Rome report that neglected price developments and such (so that many economists lost interest). The model that Van Egmond tries to use at “Sustainable Finance Lab” (with above misleading diagram on growth) is from this type of research.
  • Mathematicians like Georgescu-Roegen start with thermodynamics and entropy. Obviously entropy is a key notion in physics, but as long as the Sun keeps emitting light then Earth has an inflow of energy, and this approach on entropy may be abstractly correct but is not immediately relevant in terms of economics. Fleeing from Europe, Georgescu-Roegen came in the USA and they might have given him a professorship in statistics but they gave him erroneously a professorship in “economics”. There is a curious role by Herman Daly who had a B.A. and went directly to a Ph. D. in “economics” with thesis supervisor Georgescu-Roegen (see here). Daly continued with what is called “ecological economics” but which is not really economics. The field florished for a long while because mainstream economists were not so much interested in the environment.

The basic idea by SFL seems to be that the current structure of finance causes insustainability both for finance and the environment. This is a nice slogan that combines two topics that are somewhat popular. There is no proof for that slogan however. It is somewhat curious to link the notion of an insustainable financial debt to the issues of environmental sustainability. It makes more sense to regard the two subjects separately. See Hueting for the environment. See DRGTPE for finance, with updates in “Common Sense: Boycott Holland” (CSBH) and “Money as gold versus money as water”.

Gerhard Hormann and mortgage debt

A final Radar TV “expert” is Gerhard Hormann, urban planner and political scientist, who advised people before the 2007+ crisis to get rid of their mortgages. Hormann did not discover the risk himself but was alerted by a book by historian Eric Mecking. Perhaps it is useful to look at this connection later on, and see how Mecking and Hormann react when they hear that they have been disinformed by economists Wijffels, Boot and Bezemer.


The anatomy of Holland shows a morass fitting for a delta. It is encouraging to hear that Bezemer agrees that there is not enough communication and that Boot is working on yet another report on the banks. The issue will remain in people’s attention, perhaps till the delta is flooded by rising sea levels. It still is useful to boycott Holland till the censorship of science since 1990 by the directorate of the Dutch CPB is lifted.

Paris has 129 deaths and 352 injured people: what can one say ?

Let me refer to Charlie Hebdo, and then proceed with freedom and democracy.

This weblog proposes an improvement in freedom and democracy by the creation of a constitutional Economic Supreme Court (ESC) based in economic science, for each country. This will reduce the possibilities for politicians to manipulate information. This will allow a return to full employment. One likely effect is that the ESCs will exchange information themselves, which will allow co-ordination, and which may cause that the euro might work better without the need of a political union. See the paper Money as gold versus money as water (2013).

In 2012 I reported that Dirk Bezemer disinforms Sweden. Now he disinforms Dutch Parliament.

Before we look at the Bezemer screenshot we need some background.

A short background on money theory 1936-2015

Before you say anything on money, first read this booklet edited by Robert Gordon: Milton Friedman’s Monetary Framework (1975). I side with Don Patinkin that Friedman has highly confused the discussion, apparently by desiring to sound original, but basically (1) using phrases from Keynes’s theory of money, that relies on dynamics and allows flexibility in policy, and (2) not understanding dynamics and advising an Austrian policy of fixed money (gold) anyway. Keynes’s theory distinguishes the motives: transactions, precautionary and speculative store of value. The difference between Friedman’s comparative statics and Keynes’s dynamics is that the latter better deals with uncertainty (obviously from an unknown future).

PM. We must distinguish between the early Keynes of A tract on monetary reform and the later Keynes of the General Theory. The later Keynes did not refer to ideas of others as he should have, see here. The proposal to have an Economic Supreme Court is a generalisation of the General Theory, by bringing economic policy making into the model.


MF on MF


  • In 1936 Irving Fisher proposed – the “Chicago Plan” – to require banks to have 100% reserve backing for deposits. Banks would provide credit from their own reserves rather than from creating money, and become much more critical about whom to lend to. (Though Fisher didn’t see it that way, for us it is easy to get 100% reserves: the government supplement the difference between the current 4% to the required 100% by merely printing money, get proportional shares, and gradually step out using dividends and selling those shares.)
  • Holland had a Post- Cheque- and Giro-Service (bank) that facilitated the payment and transaction system, and little else. It was merged with other entities into ING Bank.
  • In a working paper at the IMF Jaromir Benes and Michael Kumhof (2012) reconsidered the Chicago Plan. Benes is still at the Fund, Kumhof is now senior research advisor a the Bank of England.
  • Before you start embracing that paper, see whether you have an answer to the criticism by Detlev Schlichter.
  • My own paper Money as gold versus money as water (2013) suggested that transaction deposits and money might as well be managed by the Central Banks, so that the payment system would never be in danger, as was the case in 2008. For the payment system there is no need for bank reserves and deposit insurance. In times of uncertainty, customers always have the option to transfer their funds into deposits in the payment system at the Central Bank. For commercial banks: savings and investments can be matched for their maturities. Investments depend upon unstable expectations, and democratic nations could adapt their constitutions with national Economic Supreme Courts (ESCs) so that the system of ESCs could provide for stability in those expectations.
  • Holland has an initiative to get a new full reserve transactions bank. Their website features some of the same names mentioned below. The problem with the website is that it doesn’t specify the costs of developing and running the software and other investment and operation costs. They require 16,000 people to open an account at EUR 50 to get started, which generates EUR 800,000: but all this money may well be lost to R&D.

Intermediate conclusion: The world should never allow this risk at the payment system like happened in 2008. Having this risk gives too much bargaining power to the banks. Thus a system change is advisable. How should the new system look like ?

A short background on the economic fringe 1936-2015

Enter the economic fringe. I discussed the economic fringe in 2014, and how there were interesting connections from gold bugs to the Wizard of Oz to Ayn Rand’s disciple Alan Greenspan. The fringe is obsessed with money and banks, and rather than studying economics they resort to meetings, petitions, websites, and what have you.

A prime objective of the fringe is to be taken seriously. They avoid economists who speak about censorship of economic science. Instead they will embrace (often defunct) academics who seem to treat them seriously.

Obviously the fringe doesn’t exist only in Holland but it is a world movement, see this “Positive Money” campaign in the UK and its connections to various other countries. This Positive Money website has a board of advisors with qualified economists Victoria Chick and Richard Werner, but, again, the fringe likes to be taken seriously.

Who wishes a quick introduction into this issue might read Edin Mujagic (in Dutch) or Chris Dillow (in English). Dillow advises state real investment banks, which is also my advice.

Educating the masses on economics: both official and fringe failures

One cannot say that economists, the textbooks and the Central Banks do a very good job in educating people on money and banking.

  • The European System of Central Banks might have warned the population that the creation of the euro without the proper political union was inadvisable.
  • Dutch Wim Duisenberg was happy to become the first president of the ECB instead of killing it.
  • The role of being Cassandra fell upon Bernard Connolly at the EU Commission who wrote The rotten heart of Europe in 1995. He played his role excellently: for like Cassandra people never listened to him.
  • Of course the fringe avoided Connolly too, since this would conflict with their desire to be taken seriously, and dine, drink and dance with the serious people.
  • Author Joris Luyendijk of course tries to educate people in his own journalistic manner – see a book title “This cannot be true”. He is more like a grasshopper, jumping from one topic to another, and see how he can turn his own bewilderment into a bestselling book.
A Dutch petition for a change in money

The Dutch fringe set up a petition for a change in the monetary system. Dutch law requires 40,000 signatures and then Parliament is due to discuss the topic and take a stand. They got more than 100,000 signatures. There was a theatre play about the rotten bank system, that always helps.

Of course, the fringe petition does not refer to my own scientifically based petition that advises to a parliamentary enquiry into the censorship of economic science since 1990 by the directorate of the Dutch CPB: today 14 signatures since the restart in September 2011. The fringe believes that it is an important issue that bank directors can lie to their customers, but it is not important that government directors can lie to the government and the people (or perhaps the fringe thinks that government directors always speak the truth).

(The CPB director who started the censorship in 1990 is Gerrit Zalm, later involved in the DSBank debacle, now CEO at ABN AMRO Bank. I will not try to wonder how the fringe deals with this change in position.)

The session at the House of Parliament

The session at Parliament of October 14 2015 was chaired by Pieter Duisenberg (1967), son of Wim. Parliament has been so kind to make a professional recording of the session. The 2:22 hours youtube video is here. And yes, I watched it all.

Members of the House Committee on Finance participating in this were: P.H. Omtzigt (econometrician), N.P.M. Klein (lawyer), M.L. Thieme (lawyer, only shortly present), H. Nijboer (economist), A.P.C. (Tony) van Dijck (technical management), M.G.J. Harbers (no degree, bit of economics), C.J. Schouten (MSc in business adm), A.Z. Merkies (economist), W. Koolmees (economist), P.J. Duisenberg (economist).

The first part of the session: the fringe

The first part of the session was with: Edgar Wortmann (lawyer, social activist rather than lobbyist), Luuk de Waal Malefijt (programmer, intrigued by bitcoin), George van Houts (actor and playwright) and Martijn Jeroen van der Linden (MSc in business administration and now Ph. D. student at TU Delft on money).

Given the Duisenberg family connection, one is reminded of other possible family connections: same names for euro-parliamentarian 2004-2014 Corien Wortmann-Kool and President of the Parliamentary Assembly of the Council of Europe 2005-2008, Rene van der Linden. Are these family indeed ? It doesn’t matter in itself. It is a small world anyhow. I have had an uncle in Parliament too.

The real question is: working on a Ph. D. on money at TU Delft ? Does the Technical University Delft have the knowledge to supervise a thesis on money ? This must be seriously doubted. Curiously, MJvdL in Parliament suggests that the principles are clear and that details are a matter of policy choice, while the thesis proposal suggests that some issues still require scientific attention and resolution. From the TU Delft website:

“In 2004 Martijn Jeroen van der Linden graduated from Tilburg University where he studied Business Administration. Thereafter he became a management trainee at ING where he mostly worked in the field of strategic management. Since the financial crash of 2008 new economic thinking has become more and more important to him. During the last five years, van der Linden has had various jobs in this field  ─ among others as coordinator of the Dutch platform for a green and social economy, freelance researcher and co-founder of an NGO named ‘Our Money’ (Ons Geld).

In February 2014  van der Linden started as a researcher at the EU-project Creating Economic Space for Social Innovation and as a PhD-candidate at TU Delft. His thesis is concerned with the phenomenon of money: its origins, its nature, its design, its technology, its impact on the relations between individuals in society and its ability to empower individuals. The overall aim is to answer the question how the functioning of the monetary system could be improved in terms of equity, freedom, and efficiency.” (Website MJvdL at TU Delft, retrieved November 16 2015)

These are somewhat petty comments: I already encountered Van der Linden as co-ordinator of the Platform DSE in 2011-2014, on which I warned scientists in 2013 about the likely abuse of their credibility for dubious purposes. Sociologist Frans Kerstholt is related to that group, and earlier “reviewed” my book (2004) De Ontketende Kiezer  and later “reviewed” Paul Krugman (2012) End This Depression Now.

But it is more than just petty: A reason to pay attention to this is that the Socalist Party (SP) has a strategy of infiltration. Activists can create actions officially unrelated to the SP, but still generating attention for views expounded by the SP. Parliament may think that they have a discussion with concerned citizens but this may actually be a hazy front for the SP. See my earlier text on the Dutch Taliban.

Having watched the video you might want to look into the position papers of these four speakers, but you might also feel glad that you are no parliamentarian and don’t have to.

A general complaint is that people don’t know enough about the system of money – and guess why. The fringe may also be blamed. A universe of concerned citizens is terrorized by maniaks with agenda’s of their own, intellectual slaves and addicts of some defunct economist.

The second part with scientists: Dirk Bezemer (University of Groningen)

Let us jump to the point where Dirk Bezemer disinforms Parliament. He tells that:

“Money is a form of credit.”

Dirk Bezemer disinforms Parliament, minute 1.42 (Screenshot)

Dirk Bezemer disinforms Dutch Parliament, hour 1:42 (Screenshot)

His example is that he himself writes a note of credit – “You get EUR 10,000 from Dirk Bezemer.” – and then gives this to someone who gives him EUR 10,000 in return. Then he states: “And when that note is accepted in general then it becomes money.”

Why is this disinformative ? Because:

  • The crux of fiat money is that the issuer is not under the obligation to give EUR 10,000. Thus, if someone would have that note, go to Dirk, and offer him the note “You get EUR 10,000 from Dirk Bezemer.” then Dirk would not have to give EUR 10,000, but may offer another note: “You get EUR 10,000 from Dirk Bezemer.” This might be a note of a different date and different handwriting, but it would still be a note and not EUR 10,000.
  • What is correct in Bezemer’s explanation: what turns such notes into money is that they are accepted as payment in general. This doesn’t happen so easily. The European Central Bank makes notes called “euro’s”, and changes euro’s into euro’s. These euro’s are supported by: (a) They are legal payment. When someone offers euro’s to settle a debt, then you cannot legally refuse. (b) They can be used to pay your tax. This explains that euro’s are more common as money than notes “You get EUR 10,000 from Dirk Bezemer.”.
  • Indeed, if the government buys your services for EUR 10,000 and later you pay your taxes with those EUR 10,000, then there is an exchange of credit in the form described by Bezemer. The original EUR 10,000 might be replaced by a note “You get EUR 10,000 from the Government.”, which you then hand in to pay your taxes. Thus, Bezemer might argue that he did not really disinform Dutch Parliament. I would agree with this interpretation if and only if all money is used to pay taxes. When the government buys stuff with notes that are not used to pay taxes then Bezemer’s criterion doesn’t work. I would also require that the members of Parliament would be able to explain the issue in these terms. When they cannot, then they are clearly misinformed. For example, in hour 1:30 Pieter Omtzigt asks what the value foundation of the new form of money would be: gold, foreign currency, real estate, forests ? I am afraid that he didn’t get a clear reply.

Most disinformative is, of course, that Bezemer doesn’t inform Parliament about the censorship of economic science since 1990 by the directorate of the Dutch CPB, which I informed him about. Can you imagine: an economic scientist, who doesn’t protest against censorship ? In a democracy, with free speech ? An academic with academic freedom ? Not telling Parliament that this censorship should stop ?

The second part with scientists: Klaas van Egmond (University of Utrecht)

Klaas van Egmond (1946) is an engineer in food technology, who turned to environmental issues, became head of the National Planning Agency for Nature and Environment in 2004-2008 (and actually its precursor since 1989), and must be a professor emeritus but apparently with a new professorship ? His position paper is here.

I am sorry to say that he doesn’t really have strong credentials in economics.

  • The eye-opener may be that Van Egmond (hour 1:08 and 1:44-1:47) uses the Fisher equation of exchange P Y = M V, but confuses the level growth (ΔM) of the money stock M with the level growth Δ(P Y) of gross GDP. A kind interpretation is that he takes a priori that velocity V = 1, but of course one must use the empirical value of V. This point was spotted by Parliamentarian Pieter Omtzigt but not taken up by the others. In my estimate ≈ 2 (see Money as gold versus money as water). In itself it is correct that (1 + r) P Y = V M (1 + r) so that growth in either or can be translated into a similar growth of M, keeping V constant. However, the size of is relevant when you translate a growth rate into an absolute change. In particular, in hour 2:05-2:08, Van Egmond holds that “if GDP growth is 1.5% then 1.5% of GDP must be added to the money stock” (my translation). And, using that Dutch GDP is EUR 600 bn: “if you desire 2% inflation then you can spend another EUR 12 billion” (my translation). However, if V = 2 then seigniorage is only EUR 6 billion. He suggests that the government could use seigniorage to cover government expenditure, but Money as gold versus money as water shows that seigniorage will be required to finance the payments system (people, buildings, computers). Van Egmond states the same confusion in his position paper (in Dutch).
Point 3 in the position paper by Van Egmond (Dutch original)

Point 3 in the position paper by Van Egmond & De Vries (Dutch original)

  • Van Egmond (hour 1:06) explains the 2007+ crisis from a co-ordination failure. I tend to agree. What we saw is that non-economists like politicians or deluded bureaucrats, also those turned academics, like Van Egmond started meddling in a system that they had no training for. This however is not the analysis that Van Egmond presents.
  • Van Egmond (hour 1:05) praises Dirk Bezemer for his article No one saw this coming (2009), and gives the wrong summary: “how it could be that economists didn’t see the crisis coming” while in fact Bezemer states that some economists saw it coming. His paper debunks statements by officials like Alan Greenspan that nobody saw it coming.
  • Van Egmond also misses my criticism on Bezemer, to the effect that Bezemer focuses on Hyman Minsky but doesn’t mention my protest against the censorship of economic science since 1990 by the directorate of the Dutch Central Planning Bureau.
  • Van Egmond apparently never really understood Roefie Hueting’s analysis on environmentally sustainable national income, see here – while Van Egmond was head of that national environmental agency.
  • Van Egmond has a book that also discusses the relationship between economics and religion, and given his lack of knowlegde of economics, one would hope that he at least knows something about religion: but then it would be less interesting from a scientific point of view.
The second part with scientists: commercial banking and the supervisors

We also have Teunis Brosens (ING Bank, mentioned above), Jan Marc Berk (DNB, European System of Central Banks) and Reinier Pollmann (AFM, supervisor of financial markets).

Their comments are defensive. More like Public Relations. Explaining what current policy is and why it should work. Increase capital and liquidity requirements, within the framework of European competition (going as slow as the weakest partner to prevent unfair competition). Berk allows for the option of a transactions money bank, like the earlier Postbank, but warns that it must have an earnings model to be viable. They all warn that people are short of memory and will tend to switch to the risky banks that promise higher returns.

Their testimonies are inadequate. That they are guardians of the current system should not turn them into protectors of the current system. The proper reply would be that some elements are useful to look into, and require scientific testing. See Money as gold versus money as water. Parliament should insist that the regulatory bodies do research in these alternative schemes. The world should not put itself at the risk to the payment system as in 2008, and thus these supervisors should design a sound alternative.

Sustainable Finance Lab at Utrecht University

A major source for all this nonsense is the Sustainable Finance Lab (SFL) at Utrecht University, an initiative in 2010 by said Klaas van Egmond, and “prof. dr.” Herman Wijffels (CEO of Rabobank in 1999) and Peter Blom (CEO Triodos Bank since 1997). These three observed the role of the banks in the 2007+ crisis and found in Utrecht University a willing victim for their potpourri of confusion, distraction, religion, self-importance, and need for attention and recognition. Nothing more wonderful than a honorary Ph. D. degree and professorship. The academic environment apparently doesn’t require a financial statement where the money comes from.

Originally, sustainability was intended for environmental sustainability only. Given the popularity of the phrase “sustainable” (Dutch “duurzaam”) suddenly everything had to be called that way. For this reason Roefie Hueting nowadays speaks about environmental sustainabilityto emphasize what the idea is really about. Herman Wijffels supports Hueting but also distracts from Hueting by this SFL and by lobbying for the banking sector in the mean time – see this criticism (in Dutch) how Wijffels saves the banks (higher reserves) and destroys the economy (less lending for investments).

Earlier, I have warned about this Sustainable Finance Lab too (in Dutch) and informed them about this warning. Obviously, they didn’t reply. They now continue to misinform Dutch Parliament, as they did their students.

It may be useful to reproduce the current list of members of the SFL, to track the disinformation from one to the other to the outside world. They are all economists except when stated differently: Harald Benink, Dirk Bezemer, Peter Blom (economist, banker, no scientist), Arnoud Boot, Klaas van Egmond (no economist), Ewald Engelen (no economist), Marleen Janssen Groesbeek (unknown background, journalist ?), Arjo Klamer (economist, parttime elderman for the Socialist Party), Clemens Kool, Karen Maas, Mark Sanders (economist, also with the “scientific bureau” of party D66, confused on voting and Kenneth Arrow’s Impossibility Theorem, see here how D66 misinforms Nick Clegg and the Liberal Democrats in the UK), Hans Schenk, Esther-Mirjam Sent (thesis done with Kenneth Arrow, mathematician), Irene van Staveren, Rens van Tilburg, Bert de Vries (unknown background), Francis Weyzig, Herman Wijffels (economist, banker, no scientist).

None of these scientists apparently looked at the paper Money as gold versus money as water. There was a newspaper report that stated that they had consulted 70 experts on full reserve banking – and I grant that I am no expert on this but merely wrote that paper – see my email to Charlotte van Dixhoorn.

There is also the paper by Van Egmond & De Vries (2015), “Dynamics of a sustainable financial-economic system”, that mentions only these two authors, who apparently are already at advanged age. Are there no Ph.D. students who collect the data, run the software and produce the graphics ? Page 4 states: “The model builds on work done by Godley and Lavoie (2007),Hallegatte et al. (2008), Yamaguchi (2010), Van Dixhoorn (2013) and others.” but when there are in-house collaborators working on the model then one would expect co-authors.

The UK connection: Positive Money (site designed by Luuk de Waal Malefijt)

One of the references by Van Egmond & De Vries is to Jackson & Dyson 2012:

“Andrew Jackson holds a BSc in Economics and a MSc in Development Economics from the University of Sussex, and is currently studying for a PhD at the University of Surrey. He is a co-author of the book “Where Does Money Come From? A guide to the UK monetary and banking system” with Josh Ryan-Collins and Tony Greenham from the New Economics Foundation, and Professor Richard Werner from the University of Southampton.”

  • Ben Dyson appears to have no degree. Under the heading “BSC, Development Economics” he clarifies that he doesn’t have a BSc:

“Completed the first two years of a degree at SOAS. Shortly after completing the final exams of the second year a business opportunity came up that was too good to miss so I withdrew from the course and moved into the business start-up world.”

Another statement at the Guardian is that he studied money for four years: but this then likely was self-study. There is nothing wrong with self-study, but try to avoid the confusion about it. In academic study the purpose is also to develop an open mind.

The Herman Daly connection

Herman Daly (1938) is also on the board of advisors of Positive Money. The book Modernising Money has a preface by him.  Daly had a BA in economics at Rice 1960 and proceeded directly to a Ph. D. in 1967 under Nicholas Georgescu-Roegen (NGR) (1906-1994). NGR was a mathematician who proceeded with statistics, and, perhaps because of the application of his statistics to economics, could become professor of economics at Vanderbilt: whence Daly’s thesis is counted as “economics” but it need not be economics in reality.

Economist Roefie Hueting (1929) explains that his economic analysis on the environment isn’t understood by Herman Daly, which is a pity since Daly worked at the department for the environment of the World Bank in 1988-1994. Libb Thims suggests that NGR and Daly have a wrong concept of thermodynamics as well: but I have not looked into this. We see a similar kind of confusion with Robert Costanza, who has a background in architecture and environmental system engineering, but who switched to what is called “ecological economics” but which quite surely need not be economics at all, but which may be an application of hoped-for notions of thermodynamics.

Daly solidly affirms the proposals in Mondernising Money, and has no criticism at all, which is the role of a much appreciated advisor:

“Money ranks with fire and the wheel as an invention without which the modern world would be unimaginable. Unfortunately, out-of-control money now injures more people than both out-of-control fires and wheels. Loss of control stems from the privilege enjoyed by the private banking sector of creating money from nothing and lending it at interest in the form of demand deposits. This power derives from the current design of the banking system, and can be corrected by moving to a system where new money can only be created by a public body, working in the public interest. This is simple to state, but difficult to bring about. Andrew Jackson and Ben Dyson do a fine job of explaining the malfunctioning present banking system, and showing the clear institutional reforms necessary for a sound monetary system. The main ideas go back to the leading economic thinkers of 50 to 75 years ago, including Irving Fisher, Frank Knight and Frederick Soddy. This book revives and modernises these ideas, and shows with clarity and in detail why they must be a key part of economic reform today.” (Herman Daly, preface)


We don’t see much science but a circus. We can only hope – for there is no guarantee – that Dutch Parliament distinguishes sense from nonsense.

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”.


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


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 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).

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.

Dustmann et al. reported on Germany’s transformation from the Sick Man of Europe around 2000 into the Economic Superstar after 2010, in 2014a VoxEU and 2014b the Journal of Economic Perspectives.

Their VoxEU summary is:

“In a slow-growth, high-unemployment continent, Germany’s performance stands out. The success is often ascribed to the politically difficult Hartz labour-market reforms. This column discusses evidence to the contrary. The Hartz reforms played no essential role. Rather, the key was the threat of offshoring to central Europe together with the pre-Hartz structure and autonomy of the German labour-market institutions. This structure allowed trade unions to make wage concessions necessary to adapt to the new realities. Other nations should decentralise bargaining to the firm level while keeping workers’ representatives.” (Dustmann, Fitzenberger, Schönberg, Spitz-Oener, VoxEU, Feb 3 2014, my emphasis)

The latter statement in bold is a New Myth.

Response to the New Myth

In 2014 former IMF managing director Johannes Witteveen (1921) gave his valedictorian lecture on the Dutch policy of wage restraint and the surplus on the external account. In comment C I already responded to the Dustmann et al. analysis:

“The Dutch surplus actually started in 1981, see my 2009 paper “A macro-economic lesson from Holland“.
Gerhard Schröder (BRD Kanzler 1998-2005) started to copy the Dutch model of wage restraint. The consequence was that Germany and Holland out-competed the rest of Europe, creating the imbalances of the eurozone.
See The Economist “Model Makers” May 2 2002.
In VoxEU Feb 3 2014, Dustmann et al. look at wage-bargaining structures and argue that it wasn’t Hartz 2002-2005 that caused the German low wage policy, but rather the German Reunification in 1989. Okay, but: (1) The Dutch example helped Schröder to target lower rather than higher wages, (2) It remains important to maintain macro-economic co-ordination. Herein lies the main policy objective rather than in such wage-bargaining structures. The analysis by Dustmann et al. might be interpreted as suggesting the abolition of national bargaining but that would be false. My advice is also an Economic Supreme Court per country.
(Colignatus, comment C, May 21 2014 now bold)

The Dutch Royal Association on Political Economy (KVS) had a Preadvies on collective bargaining in December 2013.

(Former) KVS chairman Arnoud Boot (1960) – also a member of the Dutch Social Economic Council (SER) that monitors collective bargaining in Holland – liked the discussion so much that I felt encouraged to inform him in Februari 2014 about the drawbacks of the analysis by Dustmann et al.


  • A factual analysis does not quite refute a counterfactual. The scenario of wage restraint might also have been adopted by central bargaining. When Germans grew aware decentrally that they needed restraint then this might also have surfaced centrally. The Dutch model of wage restraint was well known in Germany at that time.
  • Macro-economics remains more relevant than industrial relations. Papers on industrial relations say more about national conventions rather than about outcomes. Outcomes are rather determined by market conditions and policy decisions.
  • One should rather criticise the lack of co-ordination in Germany. Wage restraint (in West Germany) is no solution for the lack of investments (in East Germany). Certainly not when this causes problems in the rest of Europe.
  • If the advice by Dustmann et al. is followed then co-ordination in Southern Europe would be abolished, perhaps with ever lower wages without investments, which is a recipe for continued Depression. Beware of looking at the world through the glasses of industrial relations.
  • My comments on the KVS Preadviezen 2013 still stand: they are deficient on the Dutch policy of wage restraint and the lack of investments. Political Economy causes the suggestion of an Economic Supreme Court.
  • For the fall of the Berlin wall, see this memo.
Pseudo Erasmus and the European Soul

This issue becomes a bit more relevant since I came across a good summary of the New Myth by Pseudo Erasmus. This forms more entertaining reading, since this author isn’t quite interested in actual policy making, but rather searches for the elusive European Soul.

What makes Germany, France, England and so on tick, and keeps them apart ?

Reading requires these steps:

  1. First savour Der Todd des euro that debunks Emmanuel Todd‘s anti-German-isms.
  2. Secondly savour Pseudo Erasmus’s link to Graig Willy’s summary of Emmanuel Todd’s anthropological analysis on Europe.
  3. Thirdly savour Pseudo Erasmus’s discussion of the “anthropology” of the crisis, in which the New Myth also pops up. Pseudo Erasmus call’s Dustman et al. the “best” account of what happened but doesn’t think that the scheme would work in all countries. He basically agrees that the advice for decentralised bargaining in all countries is a myth indeed. His reasons differ from those above but can be supplemented with those.
  4. Finally check out that democratic nations need Economic Supreme Courts.

PM 1. I am reminded of Frank Sulloway, “Born to rebel”, 1996, who suggested a link with inheritance laws, in Catholic countries all going to the eldest son, and in Protestant countries an equal split. PM 2. Pseudo Erasmus states: “adjustment-through-recession is a painful process which might be alleviated, even avoided, if everyone could “share the pain”, rather than a select group of people be unemployed. But that just does not happen, because it cannot — except in Germany.” This isn’t quite true, since the Dutch model of wage restraint (exporting unemployment) is ex ante sharing of such pain (even before a recession). PM 3. Of course Germany should not be lumped together: there are important regional differences.

Since Pseudo Erasmus has an anonymous profile the picture prize is for Emmanuel Todd.

Emmanuel Todd in 2014 (Source: wikimedia)

Emmanuel Todd (1951) in 2014 (Source: wikimedia)

Listening to Saleas, I Paralia Ton Oniron Sou,
Love Dreams & Feelings, and
Live stin Tourkia sinaulia

Dutch television this 2015 Easter Sunday rehashed a potpourri of topics. Host Marcia Luyten spoke with journalist Tom-Jan Meeus, politician Halbe Zijlstra, Italian investigative reporter Loretta Napoleoni and Belgian author Tom Lanoye. I skip the last interview for practical purposes.

The Seattle Times on Warren Buffett exploiting the poor

Dutch journalist Tom-Jan Meeus reported how he had read an article in The Seattle Times about how Warren Buffett via his holdings in Clayton Homes exploited the poor (April 2, updated April 5). Sales tricks are being used that are similar to those that caused the collapse of mortgages and the housing industry in the onset of the current economic crisis. While Washington has been setting up new regulations to reduce or prevent such tricks, the lawyers of Warren Buffett would have been lobbying to have those regulations repealed or redrafted. If true, this report would surely taint Buffett’s image. The article appears to be a collaboration with the Center for Pubic Integrity.

Meeus also read a statement in The Washington Post by Tim Cook, CEO of Apple Inc., that “pro-discrimination ‘religious freedom’ laws are dangerous” (March 29). Such laws would enable devout adherents of religion X to only have business with people fitting their religion X. It would be a step back from religious tolerance. Meeus’s analysis was that Republicans had started this attack on tolerance so that Democrats might perhaps succeed in its defence, but the attack would rally so much conservative backlash that Democrats would surely lose the real battle on neoliberal economics. Compare abortus, euthanasia, gay marriages, and where this got the US in terms of economics.

The most amazing thing is that Dutch television deems it relevant to educate its viewers on American newspapers, and that tv journalism can be reduced to headlines and coffee table gossip.

Loretta Napoleoni on the Islamic State (min 17 – 33 in English)

There was an interview in English with Loretta Napoleoni on the Islamic State. This might perhaps be of value for foreign viewers too. I am not following the events on Islam and/or the Middle East, had not heard about Napoleoni before, and suppose that you will have when you have been following those events.

“Napoleoni holds an MA in international relations and economics from Johns Hopkins University, and a PhD in terrorism from the London School of Economics. For her work as a consultant for the commodities markets, she met often with officials of many Middle Eastern nations. Her latest book is Rogue Economics: Capitalism’s New Reality (…).” (

In the present interview:

  • She compares the meaning of Islamic State for jihadists with the meaning of Israel for Zionists.
  • IS came up not only because the US left Iraq but also because of a combination of focused leadership and Salafist finance. Al-Qaeda curiously had a distant enemy America, and got George W. Bush and Tony Blair to invade Iraq that had nothing to do with Al-Qaeda, but IS focuses on local olicharchies and wants to take over now that both Saddam Hussein and the US are gone.
  • Fighting IS would only make it stronger.  The real challenge is to understand what is happening in the minds of young moslims, all over the world but especially in Western countries where they feel alienated.

This analysis fits my own: (1) that the West should get its economies into order, see the About page, and (2) that education on religion should focus on deconstructing Christianity. For Westerners there is little efficiency in first studying the complexities of Islam and then discovering that it is just another religion to deconstruct. It is more sensible that people familiar with Christianity start deconstructing this, and that people familiar with Islam take an example from the deconstruction of Christianity. The political divisions in the Middle East are complex too and the West better develops a sensible position of containment and economic development after the Bush & Blair crime against humanity.

Loretta Napoleoni 2014

Loretta Napoleoni 2014

Dutch politics and ABN AMRO bank (assets EUR 400 bn)

Marcia Luyten also interviewed politician Halbe Zijlstra on his views on (1) dictatorial regimes and (2) the public outcry on the salaries of the top management of the ABN AMRO bank.

Let me focus on (2). In the crisis since 2007 this bank collapsed and was nationalised in 2008 for around EUR 28 bn – presumably with losses for the Royal Bank of Scotland too – while its market value now might be around 15 bn.

The media last weeks reported:

“(Reuters) – The Dutch government will reconsider selling off ABN Amro Finance Minister Jeroen Dijsselbloem said, after senior managers agreed to give up a controversial pay rise that had stalled progress on the bank’s proposed share listing.

In the face of a widespread public outcry, the managers said they would give up raises of 100,000 euros ($110,000) each, which had been approved by the supervisory board for six members of the managing board, all but Chief Executive Gerrit Zalm.

Lawmakers, who must approve an initial public offering, had decried the raises as evidence that the bank’s management culture was still flawed. Dijsselbloem said on Friday he would delay privatisation until questions over the increase were resolved.” (Reuters 2015-03-29)

The following may help understanding the situation.

The Dutch People’s Party for Freedom and Democracy (VVD) has a neoliberal conservative ideology, with occasional strains of a proper John Stuart Mill type of liberalism, but mostly thinking like Reagan & Thatcher. Johannes Witteveen (1921), former director of the IMF, has been a life-long member of VVD, but stands on the sidelines now, with his advice of a different economic policy than the Dutch government has been following since the onset of the crisis in 2007.

For the power brokers of the VVD three names are relevant here:

  • Gerrit Zalm (1952), economist, former civil servant at the Ministries of Finance and Economic Affairs (1975-1988), director of the Dutch Central Planning Bureau (CPB) (1989-1994), where he started the censorship of economic science that this website protests about, minister of Finance 1994-2002, 2003-2007, one of the introducers of the euro, now CEO of ABN AMRO bank (assets EUR 400 bn).
  • Mark Rutte (1967), historian, currently prime minister of the VVD-PvdA coalition, and eventually he might move on to the European Commission, perhaps even succeed Jean-Claude Juncker – see Angela Merkel presenting him the Rathenau Prize he should not have received.
  • Halbe Zijlstra (1969), sociologist, leader of the fraction in Dutch Parliament.
Dutch neoliberal conservatives Zalm (1952), Rutte (1967), Zijlstra (1969)

Dutch neoliberal conservatives Gerrit Zalm (1952), Mark Rutte (1967), Halbe Zijlstra (1969)

In the interview Zijlstra claims:

  • Zalm would be out of the picture since his salary wasn’t raised: which is absurd since Zalm is the CEO who defended the raise, and thus is central in the picture.
  • Now that the board has erased the raise, everyone should maintain calmness and focus on the IPO: which is nonsense since the problem concerns the very mentality of the original raise.
  • The IPO would be important since a privatised bank increases competition while a nationalised bank is subject to more regulations from Brussels: which is disingenious since the currently discussed IPO concerns only 20% of equity, and the Dutch banking market is rather oligopolistic anyway.
  • Other models to restructure the Dutch banking sector are out of the question: which is manipulative since one can at least study such models before making a decision on content rather than on ideology. For example, see my paper Money as gold versus money as water.

While Zalm is an economist, he is not such a good economist, with no training in econometrics, and with a background in the civil service instead of economic research. He was appointed by politicians – minister Rudolf de Korte (VVD) – from the ministries into the CPB which should not have happened because of his lack of research background – just like is the case now with current director Laura van Geest. Zalm’s claimed success as minister of Finance is based upon the Dutch wage moderation policy, which is a beggar thy neighbour policy, with a structural surplus on the external account – see again the criticism by former executive director of the IMF Johannes Witteveen.

Zalm’s successors Rutte and Zijlstra are no economists, and thus must embrace the neoliberal ideology with the zeal of true believers – since they will not know what they are talking about economically.

For Dutch readers, my protest as an economic scientist against this situation w.r.t. Zalm is updated here. My advice is to boycott Holland, no bank excepted.

Overall conclusion

A recurrent problem in cases like these is that Dutch journalists will not inform foreign guests like Loretta Napoleoni and Tom Lanoye about my new economic analysis since 1990 that would allow the tackling of the Great Stagflation since 1970 and the current crisis since 2007. Napoleoni and Lanoye may think that their interviewer Marcia Luyten is competent and that Dutch tv is open and interesting – certainly when the Dutch pay attention to what they have to say – but hence they will not observe how very closed the Dutch mind actually is.

My advice remains: boycott Holland till the censorship of economic science is lifted.

The following has been in the back of my mind during what now appears to be the whole of last year. In April 2014 Mario Monti gave an interview to Marc Peeperkorn in the Dutch newspaper Volkskrant, p10-13, “The man who saved Europe” (Dutch original: “De man die Europa redde“).

Mario Monti is not to be confused with Mario Draghi – especially where they collaborated on a rather dangerous trick.

Mario Monti was European Commissioner in 1995-2004 and Prime Minister of Italy in 2011-2013. Mario Draghi was Governor of the Bank of Italy in 2005-2011 and is President of the European Central Bank (ECB) since 2011. They performed their trick in 2012.

Mario Monti (left) and Mario Draphi (right) (Source: wikimedia commons)

Mario Monti (left) and Mario Draphi (right) (Source: wikimedia commons)

The trick is explained in the interview:

Monti: “During the European Summit in June 2012 I have used my full negotiation power – including a threat with a veto – to get approval for a seemingly boring paragraph. At four o’clock in the morning it had the signatures of all leaders, including Merkel, my good friend Rutte, and the Finish Prime Minister Katainen, you can say the monetary fire power from Northern Europe.

The paragraph mentioned curtly that countries in the Eurozone who did their homework, like Italy, were ensured of support from the European Central Bank. That statement – at the highest political level – did not impress the markets, since the leaders have authority but no money. A month later ECB-president Draghi came with his famous declaration: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” [verbatim, July 26 2012] That calmed the markets in one single stroke because Draghi has money. Draghi could say that because he had the political support from the leaders. Thanks to me, thanks to my position at the negotiation table. A half year sooner Draghi would have been devoured by the German monetary hawks, saying such a thing.”

Peeperkorn: “Draghi and Monti, thus it was an Italian set-up ?”

Monti (“laughing”): “See it as the Italian contribution to saving of the euro.”

As a trick, it deserves a compliment, and it would be difficult to argue convincingly that the European Summit has been misled in a significant way.

However, the trick comes with a price. This is that structural reform of the euro has not been put on the table.

The Eurozone leadership has been kept in the mental frame of muddling through, while instead it would have been useful to reconsider the monetary mechanism. The current set-up of the euro works like the gold standard, while our economies require the benefits of fiat money.

See my paper Money as gold versus money as water.

European leaders are not trained in economics and may not fully understand what has been happening. The two Marios however should understand. My proposal is that they meet again and discuss how their quick fix requires a follow up on structural reform.

Addendum March 29: Ambrose Evans-Pritchard in Venetian cunning of Draghi-Monti masterplan may save euro for now (The Telegraph August 5 2012) states what I tend to agree on:

  • “Just to be clear, I do not “support” the Draghi plan. It perpetuates a failed monetary union.”
  • “Yet it is churlish to deny that the two Marios have pulled off a feat of statecraft. They have wrested control of the ECB from Gold Standard zealots.”
  • “Europe remains a political minefield, but the risk of a global deflationary slump has dropped a notch. Hats off to the Italians.”

However, Evans-Pritchard seems to have no alternative other than a return to national currencies, and my paper suggests that the euro could survive with core national sovereignty provided that each nation adopts its own national Economic Supreme Court.

Economic paper: "Money as gold versus money as water" (RWER 2013)

Economic paper: “Money as gold versus money as water” (2013)

The Dutch uncontrolled hate & rage about the new Greek crisis with Tsipras & Varoufakis may require an explanation.

But first remember Keynes.

Keynes on loans and debt

J.M. Keynes gave the argument twice:

  • After World War 1: that victors and creditors should allow Germany to recover.
  • After World War 2: that the USA as victor and creditor (also of the UK) should give easy terms to the rest of the world, to allow for their investments and exports.

Thus there is not only the responsibility of the debtor. There is also the responsibility of the creditor. The latter responsibility might even be larger since the creditor has more leeway.

The Press Conference of January 30 2015

Jeroen Dijsselbloem was mortally insulted when Yanis Varoufakis killed the Troika. Dijsselbloem had gone to talk and help in Dutch Polder Model fashion. His attitude was Calvinistic, as the Dutch tend to be. Varoufakis slammed this door shut, and they departed in ice.

Helena Smith for The Guardian:

“Send off for Joren Dijsselbloem ended with incredible stand-off as Varoufakis socked him one over the troika. The Dutchman looked enraged, bending forward to whisper something in Varoufakis’ ear to which the Greek finance minister did not respond. Greek finance ministry staff standing behind me said “Oh my God.”” (The Guardian, 2015-01-30)

Varoufakis & Dijsselbloem Press Conference, Jan 30 2015 ((c) Aris Messinis, AFP)

Varoufakis & Dijsselbloem Press Conference, Jan 30 2015 ((c) Aris Messinis, AFP)

To understand this:

  • This crisis concerns money, which is an issue that is dear to the Dutch heart and mind.
  • The Dutch find themselves exposed as greedy fools who have lent money to Greece, while they should have seen that it wouldn’t come back.
  • Holland is Calvinistic, with sin & eternal damnation, and looking elsewhere to avoid responsibility. (Catholics in Holland are still rather Calvinistic, and differ from those in Southern Europe or the Orthodox Greeks.)
  • Holland is a rather small country, and the natural temptation is to pick on an even smaller country.
  • Germany and Holland with their surpluses on the external account are a prime cause for the crisis, but Holland will not criticise Germany, let alone exert self-criticism.
  • The directorate of the Dutch Central Planning Bureau (CPB) censors the proper analysis since 1990, so that the Dutch public and young policy makers like Dijsselbloem have been trained for at least 25 years to see the world in a distorted mirror.
Jean-Claude Juncker stands with empty hands

Jean-Claude Juncker felt forced to embrace and hold hands with Alexis Tsipras, to show that the EU still loves Greece. However, Juncker doesn’t offer much. He stands with empty hands, so to say. The Tsipras-Varoufakis approach is fickle and incompetent at heart, see the earlier discussion.

The proper resolution must be looked for in Northern Europe, and Holland in particular.

Juncker takes the initiative to hold hands with Tsipras (Source: screenshot)

Juncker takes the initiative to hold hands with Tsipras (Source: screenshot)

Hence, let us look deeper into the issue of the Dutch uncontrolled hate & rage about Greece.

Dijsselbloem seemed rather controlled in his rage, but beware of appearances

Just to be sure:

  • Dutch behaviour and statements might seem to be controlled and polite. Do not be deceived.
  • Controlled hate & rage are properly defined as: both dealing with the emotion and maintaining one’s logical capacities.
  • The Dutch hate & rage show from the inability to apply logic and common sense & decency.
  • Dutch upbringing of children is targeted at conformity. This means the sublimation of emotions into the illogical conventions of the day.
  • Thus hate & rage are not shown, and they neither are a cause to think again and to analyse their origin.
  • Logic and analysis may be a cause for non-conformity and thus must be avoided.
  • We might also say that the Dutch hate & rage are repressed, but this neglects the consequences of such repression. It is better to say that they are uncontrolled, since this causes an awareness of such consequences.
  • I am just a tentative psychologist in suggesting this diagnosis. See my earlier suggestion how to apply social psychology to economics. The master is Daniel Kahneman with prospect theory. The value of a gain may be less than the regret of a loss.

One of the Dutch parameters thus is:

The value of a logical insight may be less that the regret of not conforming to social convention.

The young Dutch fail in holding their own elders accountable

The proper response of the younger Dutch generation would be to hold their elder Dutch generation accountable for past policy errors like the euro and the censorship of science since 1990.

But the young Dutch coat the eminences grises of Dutch politics like Ruud Lubbers, Wim Kok and Wim Duisenberg (deceased) in teflon.

It is easier to blame the Greeks, even when they are young.

The Dutch government consists of a coalition of VVD and PvdA that betrays campaign promises. Prime minister Mark Rutte (VVD) is a neoliberal ideologue. He recently got the Rathenau prize but the kind people who gave the prize made a conceptual error. The social-democratic PvdA with Dijsselbloem has lost compass and integrity decades ago. The political opposition parties are escapist, like the fickle D66, the xenophobic Geert Wilders or the (Maoist) Socialist Party (SP).

The distinction between PvdA and SP might be somewhat enlightening. The PvdA (in government) belongs to the European Socialists (Socialist International), who apparently also want to change “socialist” into “social-democratic” ( PES). Their logo has a rose in a fist, and one also hopes that the rose has no thorns (or perhaps it should). Their international outlook should make that the PvdA should want to help their Greek labour brothers. Instead, the SP (in opposition) is nationalistic, similar to the nazi’s but without the antisemitism and only a mild aversion to immigration. Their emblem is a tomato, and they want that the Greeks throw their own tomatoes. Mao’s principle was not to follow convoluted Western socialist ideology but to follow popular sentiment so that the party can grow. Following Mao, the SP is opportunistic but with tight organisational control so that internal democracy consists out of following the leader who has the best nose for popular sentiment. (Dutch readers could look here.)

Dutch economists and journalists fail

Dutch economists and journalists fail in properly analysing the situation and reporting to the general public. Even the professionals blame the Greeks and want their money back. They don’t explain in adequate fashion what the Dutch export surplus means and how austerity blocks even the Dutch national investments. (And observe the perfidity, that low investments mean higher unemployment, which the Dutch translate as more wage moderation so that they can export more, implying the “exporting of unemployment”.)

There is one report that I can agree with for 99%: that is by Michel Verbeek on Sargasso (2014-12-30 in Dutch), who is not an economist but a biologist now working as a computer system manager (his own weblog), and who applies common sense to try to understand the economic crisis.

My 1% disagreement is that you need my own analysis to complete the picture, see here. Fellow economists are advised to read my books DRGTPE (before the crisis, free PDF) and its supplement CSBH (2012, during this crisis, paywall).

Diagnosis and treatment of the European crisis

The ship is not lost. Diagnosis and treatment w.r.t. the European crisis are:

  • The European Monetary Union (EMU, euro) is a political project, and advised against by many (though too few) economists.
  • The current EMU treaty fails and a new one is required.
  • The EMU is also a product of a breach of scientific integrity, see the censorship and abuse of power w.r.t. Bernard Connolly in 1995.
  • The situation might also have been different had my analysis not been censored in Holland in 1990. If Dutch parliament had done an inquiry in 1991 into the Dutch export surplus then many of these problems could have been resolved.
  • Greece squandered its loans and the rich Greeks left the country with the proceeds.
  • The Troika suffers from neoliberal economic ideology & incompetence.
  • See my suggestions for a solution approach as I already explained to Varoufakis in 2012. (A kind reminder, no rage.)
  • Overall, see the lecture Cause and cure of the crisis (2014).
PM. A short term escape route for Tsipras & Varoufakis

Professor Bagio Bossone already pointed to this provision:

“Article 14.4 of the ESCB statute states that: “National central banks may perform functions other than those specified in this Statute unless the Governing Council finds, by a majority of two thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. Such functions shall be performed on the responsibility and liability of national central banks and shall not be regarded as being part of the functions of the ESCB.” (ESCB 2008).” (Bagio Bossone, VoxEU 2013) (Check the Statute.)

If Tsipras & Varoufakis find a bit more than 1/3 of the vote that give them the benefit of the doubt, with measures that would conform with the overall objectives and tasks of the ESCB, then they might be able to prevent a collapse of the Greek economy, now that the ECB has stopped supporting the Greek banks. I would tend to favour that idea, and advise Dijsselbloem to do so too.

Listening to Stavros Xarhakos, the beautiful Aman … Amen

How can, will, must Angela Merkel deal with the new Greek minister of finance Yanis Varoufakis (who wrote this book on the Minotaur that I didn’t read) ?

My earlier weblog discussion on Varoufakis was in May 2012 and it still gives my position.

I read the Modest Proposal by Varoufakis & Holland – not the version with Galbraith joined up – and discovered that I didn’t need to write a reaction. It is better that they, on their turn, read my analysis.

In 2011 I got two emails from Varoufakis that he would read my Economic Plan for Europe (for economists) and get back to me. Apparently the paper & plan did not inspire him, or, there was another reason not to further respond.

Parts of my analysis have been published in the international community of economic research or in an online Greek newspaper. Unfortunately without a response by Varoufakis. Well, other economists didn’t react either. Somehow I still think that when your economy is in Depression like in Greece, Spain or Portugal, you would want to show some interest in a new analysis by an economist from Northern Europe, even an economist from Holland who gives severe criticism about his own minister of finance Jeroen Dijsselbloem – but no.

Bull leaping in Crete (Source:

Bull leaping in Crete (Source:

Varoufakis now is in the spotlights. I am afraid that it will not help to focus on Greece, since no Northern European country will trust proposals coming from them. Varoufakis already lost his “benefit of the doubt credibility as a new face”, by killing the Troika in his first contact with Dijsselbloem, and sending confusing signals about a “write-off” versus “a swap for growth bonds”.

Instructive reads are by Frances Coppola earlier on the Modest Proposal and recently on what would really work for recovery and reform. See also Klaus Kastner who has been trying to talk sense to Varoufakis for some years now. Paul Krugman has some kind of Game Theory tabulation of the Game of Chicken, with the Greek population held at ransom. Angela Merkel would not want Syriza to win but neither wants the blame caused by Greek unreliability and incompentence. The problem is that Krugman hasn’t studied my new analysis.  Martin Wolf in the Financial Times with his overview of the Game of Chicken rather than stalemate. For the solution approach, I would include Economic Supreme Courts, resolution of the cause of the Great Stagflation, rational use of money, National Investment Banks, and for Greece and Southern Italy Investment Zones under International Law (leases like Hong Kong originally).

Jos Collignon - The caged mouse that roared (Source: (c) Collignon, reproduced here with permission)

Jos CollignonThe caged mouse that roared (Source: (c) Collignon, reproduced here with permission)

Rather than Greece, it is more important to look at Holland. Like we had “Greek statistics” there is also “Dutch economics”. This has an abuse of power and censorship of economic science. I call on the world to boycott Holland till scientific freedom of thought is restored in Holland. See here.

Observe: the reason that you will not find so much of my work in the peer reviewed journals is that, of course, censorship must be lifted before the work can be published.

To return to the opening question: How can, will, must Angela Merkel deal with the new Greek minister of finance Yanis Varoufakis ? Well, it is part of the phenomenon of an economic crisis without national Economic Supreme Courts that this question will be hotly debated, with a rather risky outcome too.

PS 1. See also “Cause and Cure of the Crisis

PS 2. Bull-leaping is something else than the Minotaur, but I need a damsel in the picture to represent dr. Merkel.

PS 3. When I was in gymnasium I could draw the ancient plan of the Labyrinth at Knossos from memory, but these brain cells have been lost, while the current economic crisis anyhow is a maze:

maze refers to a complex branching (multicursal) puzzle with choices of path and direction; while a single-path (unicursal) labyrinth has only a single path to the center. A labyrinth in this sense has an unambiguous route to the center and back and is not difficult to navigate.” (quote in wikipedia)

PS 4. The title Modest Proposal is a satire by Jonathan Swift of 1729, that the poor people of Ireland offer their children for consumption by the rich, so that they at least serve some purpose. Copying this title by Varoufakis suggests satire, or it is a wrong choice. This fickleness on the title is a telling sign. I haven’t further checked Varoufakis’s work. If he did more on mathematics and Game Theory than econometrics as an empirical study, then we might see another case that mathematical abstraction can lead astray into wishful thinking. In that case I should perhaps read the version written jointly with Galbraith, whom I regard as an excellent and empirical economist. But the problem is not that I haven’t read this yet, but that they haven’t read my work (or responded with questions about what they don’t agree with or don’t understand yet). You cannot communicate something new if it isn’t read.

When you disagree with a newspaper, it is not the right approach to ring at the door, ask for the editor, climb the stairs, and shoot the editor and the crew. The outcry over the world on the massacre at Charlie Hebdo shows that civilised people agree on this.

Period. What else is there to say on this ? Basically nothing.

Still, the outcry by journalists themselves struck me as a bit too easy. Yes, they have every right & reason to protest that they shouldn’t be shot. Or spanked. Or tampered with. Or receive an ukase from Putin. So much is obvious.

However, journalists do make a lot of errors. They use too many lame excuses to cop out of criticism. They produce bad journalism, and bad journalism aggravates social problems.They should get their act together.

In a potential episode of the South Park animation we can well imagine that Eric, and some other dude under his spell who actually holds the gun, ring at the door, ask to see the editor, climb the stairs, and shoot the editor and the den of journalists. Like in a den of dragons, the journalists would be depicted as horrible monsters. See ? If you agree that you can imagine such a scene and would enjoy it, then it is not unreasonable to expect that you would be open to the idea that there is criticism and need for change.

Perhaps now is the moment that journalists might listen. If the argument is put as “we can imagine that some mean-spirited and revengeful people want to shoot journalists” then perhaps they pay attention – since apparently they don’t do so in normal life.

Let us mention some of these errors by journalism, and let us hope that they listen and get their act together:

  • Check the reporting on the creation of the euro. Bernard Connolly’s book The rotten heart of Europe still doesn’t get the attention that it deserves. Dutch readers may watch this video on NPO History on the Black Monday when monetary union and political union got separated.
  • There is my earlier weblog on the gap between science journalism (who neglect economics) and economic journalism (who neglect scientific standards like the integrity of science). Please note that religious radicalism would be less of a problem in the world if the economy would not be structurally depressed.
  • The reporting on the Bush & Blair invasion on Iraq was miserable. The US and UK governments presented Saddam Hussein as a member of Al Qaida responsible for 9/11 and in possession of weapons of mass destruction. Journalists succumbed to waves of patriotism instead of reporting that the governments misrepresented the facts.
  • Neighbourly love is great but scaring people with eternal damnation isn’t. News media do as if God exists while it is more reasonable to question the religions. Why not discuss the more reasonable case that Abraham, Moses and Jesus are mythical characters created for the purpose of the religious story itself ? See my book The simple mathematics of Jesus (SMOJ). If you think that a mythical origin is unreasonable, check how the myths of the Mormons came about, in this piece by Tarico & Nugent, and follow the money with Murdock.

Note that SMOJ is published as printing-on-demand, and that news media refuse to buy such books themselves. They want publishers to send them free copies. Guess what happens with most of those free copies: probably dumped in a waste bucket, so that the journalist can say that he or she threw it away, and then it is retrieved and sold to antiqbook or some outlet, so that the book editor has a small earning on the side. (This also happened to Eric’s book, which caused him to look for the editor and shoot him.)

PM 1. South Park just crossed my mind in looking for a cartoon figure, but it so happens that they had a problem on Mohammed too, see this Yahoo News report (easy journalism again). PM 2. The potential episode that I describe of course doesn’t exist (yet).

Addendum January 13 2015: I was happy to read Teju Cole Unmournable bodies in the New Yorker with a similar sobering note that the slogan of free speech comes along with hypocrisy.

Scene of South Park cartoon series (Source: Wikipedia)

A scene of the South Park animation series (Source: Wikipedia, (c) South Park)