Archive

Tag Archives: taxes

Listening to Izaline Calister “Mi Pais
“Atardi Korsou ta Bunita”, or Willem Hendrikse,
or Rudy Plaate “Dushi Korsou” or IC & CR “Mi ta stimabu“,
and Frank might also have liked Las Unicas “Ban Gradici Senjor” from Aruba

 

Frank Martinus Arion passed away yesterday in Curaçao. The English wikipedia site is a bit short, with his 1973 literary debut Double play. His important scientific work is his thesis: “The kiss of a slave”, that traces Papiamentu to Africa.

Kiss of a Slave, by Martinus Arion, Thesis Univ. of Amsterdam 1996

The Kiss of a Slave, by Efraim Frank Martinus (Arion), Thesis at the Univ. of Amsterdam 1996

Masha Danki !

Frank wouldn’t have wanted us to be sad. The best way to to thank him is to have the biggest party of all.

2013-curacao-carneval

Carneval 2013 (Source: Screenshot)

I met Frank in the bar of the then hotel Mira Punda in Scharloo. These are old pictures taken by its then-owner Jose Rosales in 2005. Nowadays it is refurbished, and you should check out Hotel Scharloo or see pictures, or see booking.com.

2006-Mira-Punda

Hotel Mira Punda 2005 before the refurbishment to Hotel Scharloo (Source: Jose Rosales)

A second time in 2005-2006 Frank came by to discuss the future of the Caribbean, and we sat there on the terras of Mira Punda. I was just getting my driver’s licence so it was impossible to drive up to his place.

Just a year later, in 2006, when I had returned to Holland, his book Double Play was presented as the Dutch liberaries book of the year, and I met him again in The Hague.

Here is my view on the future of the Caribbean, no doubt influenced by these brief but powerful meetings about national independence. Perhaps the Caribbean could develop a sense of nationhood ?

PENAFC

February 2013 already gave a weblog entry Cause and Cure of the Crisis and November 2013 a YouTube video – though with a rather slow speed of presentation.

Now in September 2014 there is a short paper (MPRA  58592) with the same title. The paper gives a review of the books DRGTPE and CSBH that are at the core of this weblog – apart for our admiration for Art Buchwald and attention to the education of mathematics.

This may be occasion to pay a small tribute to John Maynard Keynes (1883-1946) and Jan Tinbergen (1903-1994). The analysis on the cause and cure of the crisis is based upon their work, and thus the world can only cure the crisis by properly reading up on Keynes and Tinbergen as well. It requires an understanding not only on economic theory but also econometric methods, with a role for mathematics.

There is another storyline that links up to mathematics education.

Tinbergen studied physics and wrote his thesis with Paul Ehrenfest (1880–1933). As a student he walked in Leiden, saw the poverty, decided to study economics, and doing so he created econometrics.

Ehrenfest’s wife Tatyana Afanasyeva (Kiev, 1876 – Leiden, 1964) wrote on math education too. Her work was hotly debated in small circles. One of the discussants was Hans Freudenthal (1905-1990), another German immigrant to Holland. Freudenthal became the promotor of Pierre van Hiele (1909-2010), which makes the circle round, see this entry on this weblog.

http://nl.wikipedia.org/wiki/Jan_Tinbergen#mediaviewer/File:Ehrenfeststudents.jpg

Paul Ehrenfest’s students, Leiden 1924. Left to right: Gerhard Heinrich Dieke, Samuel Abraham Goudsmit, Jan Tinbergen, Paul Ehrenfest, Ralph Kronig, and Enrico Fermi. (Source: Wikimedia commons)

On the borders of the EU the cannons are barking, and it are mostly civilians and their properties that are hit, in the Ukraine, Syria & Iraq, Israel & Gaza, and Libya.

In the Dutch Parliament, economist and Christian Democrat dr. Pieter Omtzigt calls for a recognition by the Dutch government of the genocide by the “Islam State” on the Yazidi people. The world should not allow what happened in Rwanda in 1994. He said so in a talkshow of August 11, in which he also mentioned that his priorities are Dutch pensions, persecuted Christians, and his home region Twente. The talkshow of August 11 only mentions them but the persecuted Christians get his full attention in the same talkshow of July 31.

It seems unwise to regard, define and frame the problems of the Middle East in terms of Islam, Christendom and Judaism. There are actors who have an interest in such framing. Who joins this framing supports their interests.

Obviously, it are religious fanatics who have this interest. They have little to offer except their religion, and hence they grow in importance whenever it is accepted that religion would really be the issue.

There are also other powers who refer to religion but who have a more hidden agenda. Said “Islam State” is run so well, and makes such profits, that one may wonder whether the real issue is Islam, for it may just be the robbing of the possessions of others.

Thus, I would urge Pieter Omtzigt to desist from framing his objective in terms of “persecuted Christians”. In principle it are civilians who are at issue. In principle it is freedom of religion that is at issue. That someone calls himself or herself to be a Christian is not the first point of relevance, since he or she may well be a fundamentalist on the road to a new crusade. When a Christian in the Middle East loses his or her children then this is as heartbreaking as when a Sunnite or Shiite loses his or her children. I am pretty sure that Pieter Omtzigt will agree on the latter, but he doesn’t recognize yet that he is inconsistent by putting such an emphasis on Christians. He is opening Pandora’s Box, and apparently invites Dutch Parliament to join him in doing so.

Pandora 1879

Pandora, by Dante Gabriel Rossetti, 1879 (Source: Wikimedia Commons)

Dr. Omtzigt wrote a thesis in econometrics. He is one of the few Dutch Parlementarians who has some grasp of economics and finance. He is not only on the Parliamentary Commission for Foreign Affairs but also on Commissions on Economics and Finance. For years there have been the “Economists for Peace”, now EPSEU and EPSUSA (formerly ECAAR). They study the costs of the Arms Race, or, for example, the costs of the political lies that resulted in the Iraq War. Remember that it were “re-born” Christians George W. Bush and Tony Blair who used lies to cause the Iraq War. The least that we could ask of economist Omtzigt is to look at what EPSEU has to say.

In my analysis the greatest contribution to peace will come from the solution of unemployment. Young people who have no future now and who experience the seduction of security in religion, would have better options if the economy would allow them to find a job, get economic security and the prospect to start a family. Unemployment is not a natural phenomenon, like a vulcano, that we have no control over. Unemployment is man-made, and a failure in policy. Unemployment both in the EU and the USA has been caused by neoliberal economists who adhere to dogma’s that economic science proves to be incorrect.

Pieter Omtzigt thus actually has a co-responsibility for those wars and those persecuted Christians. He should be in the seat of the accused rather than in the seat of the DA or judge.

Like the EU and the USA, Holland has a perverse system of taxation. The system in Holland is even more perverse, not only due to the larger Dutch welfare state but also because of some political pecularities. In 1997 minister of finance Gerrit Zalm (VVD) (now CEO of the ABN-AMRO bank) and secretary of finance Willem Vermeend (PvdA) lied to Dutch Parliament, when they proposed to replace tax exemption by a tax credit. Effectively they made it politically more difficult to tackle low wage unemployment. In 2013 there was a row about Bulgarian fraudsters who milked the Dutch tax credit system. The case is described in this paper: Economics as victim between lawyers and mathematics (2013).

Now, if fellow-economist Pieter Omtzigt just would take the time to study that paper, and ask questions about what would not be clear to him, then the chance for world peace could improve.

PM. Etgar Keret rightly observes that people tend to expect peace to “descend from above” while the better perspective is that you have to work hard on compromise (Los Angeles Times, July 14 2014).

The French word for “forget” is “oublier”. An oubliette is a French dungeon in which you are dumped to be forgotten.

Thomas Piketty‘s book on Capital is discussed in the capitals of the world, but this is only because of the English translation. The original French “Le capital au XXIe siecle” of August 2013 received a cold reception by the intellectuals in Paris itself (David Priestland, Guardian May 7, and Peter Vermaas, NRC Handelsblad May 31). Priestland: “Interestingly, in his native France, where readers prefer philosophy and abstraction over numbers and equations, his book has been met with a massive Gallic shrug.”  Please note though that Piketty rejected the mathematical approaches at MIT and returned to France to include historical methods in his work. Thus Piketty is already quite French, but for his compatriots apparently not French enough.

Except for that translation, his work might as well have been dumped in the oubliette that is formed by the French language itself. The French bureaucrats in Brussels may have such low esteem of their native French economists that they apply the art of oublier as well.

Another piece of evidence for this oubliette of French is this: In 2011 Piketty together with Camille Landais and Emmanuel Saez put out a book in French that describes a fiscal revolution with more progressive taxation. The book on Capital mainly forms the statistical base for the earlier policy discussion on taxation. We thus observe a delay of 2011 to 2014 because of the French language drag. The list of titles of earlier publications by Piketty suggests that the drag is even larger. American readers who now regard Piketty as a world star in economics will be wondering how this gem has been hiding so long.

If you recall, there is an economic crisis since 2007. Wouldn’t more progressive taxation on income and capital have helped to restore government finances and economic prospects in the countries of Europe ? Thus the proper question is: Why didn’t France lead Europe in taking this road ? Why did we allow capital flight from Greece instead of having the rich Greek return parts of their gains ? See my earlier text What Greeks do to each other. As Christine Lagarde, now at the IMF, is also mentioned as a potential President of the EU Commission: isn’t she French, isn’t she known from the Lagarde List, and wouldn’t she have known about Piketty’s analysis on inequality and advice on taxation: so why the drag since say 2010 ?

It is conventional wisdom that the bureaucrats in Brussels speak both English and French. It may be more likely that they speak German. It used to be the strategy by Charles de Gaulle to entangle Germany and the rest of Europe within Brussels, and then let the French bureaucrats rule from Brussels. His scheme fails because the French bureaucrats aren’t so competent anymore. The Germans are taking over, reports Jan Tromp in Brussels lies in Germany (Dutch Volkskrant April 14). Since France cannot balance Germany anymore, it would seem wiser to select a native English speaker for the next President of the EU Commission.

I haven’t read any of Piketty’s work, only some summaries. A Dutch report is here. I don’t think that I am going to read his Capital, since the summaries show that there actually isn’t real news. The argument for progressive taxation on income, wealth and inheritance has already been made in the 1800s (see J.S. Mill for pro’s and con’s). Piketty’s book with his statistics apparently is mainly a contribution to economic history. The policy issue is known and will be decided upon by requiring wider models.

Note that Piketty’s advice on progressive taxation received nominal support by François Hollande who won the elections of 2012 but who apparently got cold feet when he discovered that he had to make the French economy more attractive to international investors. Will this be an argument in favour of European integration, with a common tax base, and progressive taxes on the richer North to support the poorer South and East ?

Before you decide on all of this, you still need some mathematics and the analysis in DRGTPE to complete the picture, with:

  1. the solution approach to unemployment (e.g. if you worry about inequality, note that unemployment affects it)
  2. the tax void (that affects people at the bottom of the income distribution, with the benefit burden for the richer)
  3. the dynamic marginal tax rate (that is important for efficient and fair taxation)
  4. an Economic Supreme Court (that allows policy to be based in science instead of fads and fashions)
  5. and a review of James Galbraith’s book on inequality Created Unequal.

While the French language is an oubliette, the Dutch language is an even bigger dungeon. Let me refer to my earlier text on Spinoza and the Crazy Centuries, about the loss of a lingua franca.

My earlier discussion of cult behaviour by advocates of the Basic Income (BI) in Holland was re-posted on BInews.org. The tally showed about 70 new readers. The re-posting showed openness of mind but the comments there fit the cult behaviour again. Is cult behaviour contagious ?

Before discussing those comments, let me further clarify the situation in Holland.

  1. Dutch readers may look at my criticism on BI in 1994. On the website of the Dutch BI association we even find a 1995 reference to part of my criticism, see this link and footnote 36. The latter link uses a search on my name, so that you can confirm that only part of my analysis is mentioned, without reference, and that there is no attention since 1995. (Nowadays better search on Colignatus.)
  2. This does not only hold w.r.t. my work but also w.r.t. others. There is a fine discussion by Michel Verbeek 2013 (whom I didn’t know before and whom I haven’t met) on the Sargasso weblog, that shows that the BI is costly & counterproductive and that there exists a better alternative in full employment and (rejuvenating) the Welfare State (which is my position as well). A search on the Dutch BI website on Michel Verbeek’s name remains negative. A search on Sargasso (which isn’t logical)  renders an overview article in which his article is listed. That overview article however misstates his argument. The BI adherent argues that the Welfare State is being redressed because of its inherent problems, so that the Welfare State cannot be the answer. However, the true reason why it is being redressed is politics. Politicians like Reagan and Thatcher were not interested in adapting the Welfare State to the 1970+ challenges, but let it implode and took the opportunity to start abolishing it. As scientists we can only respect political decisions but we must protest when false arguments are given, by Reagan, Thatcher and BI-advocates alike.
  3. I asked the chairman of the Dutch BI association last month whether their website could post links to my 1994 criticism and 2014 weblog. He answered that he had transferred that question to a research committee, and that he himself was too busy advocating BI. It should be obvious that there is little to “research” on this. The BI might have some complexity, but if you don’t understand it, then you should not advocate it. A chairman who advocates BI should be able to understand the criticism put forward by me and indeed also Verbeek. A chairman should be able to understand what criticism on cult behaviour entails, and react with alarm instead of putting the ostrich head ever deeper in the Dutch clay.

Last week professor H.J. Witteveen, former IMF-director, gave a fine lecture on the IS-LM model. His idea is that much more can be done on Dutch unemployment. See my former weblog entry on his lecture and my comments.

In composing those comments, a google also gave an article in The American Prospect, History’s Missed Moment“, September 2011: “The epic financial crash of 2007–2008 should have produced a massive political defeat for the conservative ideology whose resurgence began three decades ago.” Well, this weblog Boycott Holland is essentially scientific, and hence neutral on conservatism or progressivity. What matters here is that issues aren’t stated with false arguments. In that TAP article, I actually also saw quotes from Paul de Beer, professor in Amsterdam, who also featured prominently in the said BI cult behaviour criticism:

“In the neighboring Netherlands, Labor Prime Minister Wim Kok brokered a grand bargain in 1999. Employers got more discretion to hire temporary and part-time workers, but these workers were supposed to be accorded the same protections as those with regular contracts. Unemployment fell. “He was hailed as a miracle worker,” says economist Paul de Beer of the University of Amsterdam, “but it had a lot more to do with North Sea oil and favorable macroeconomic trends—higher worldwide growth, low interest rates—than with Kok’s reforms.”

(…) The overall consequence of these shifts is declining security and declining earnings. Among young Dutch workers, fully 61 percent have low-wage jobs. Meanwhile, the center-right government, which took power in 2002 with Labor as a junior partner since 2006, has acted to splinter other welfare-state programs. “Health insurance used to be mandatory and fixed,” de Beer says. “Now everyone has to insure themselves, there are many different kinds of policies, and companies engage in cherry-picking.” This story is all too American. What’s surprising is to find it in the Netherlands, much less as the partial handiwork of a labor party.”

It is up to the TAP reporter what questions are asked and how De Beer is quoted. Nevertheless, I maintain that De Beer blocks my ideas from further discussion by others like The American Prospect. He could have explained to the TAP reporter that there was a sensational new approach to tackle unemployment. He could have explained that he himself at that Dutch PvdA labour party had blocked that approach from discussion since 1990, after which that party and its leader Wim Kok started to use false arguments to deceive the public and help abolish the Welfare State, in a neoliberal delusion that also Europe’s social-democrats suffer from.

Let us now look at BInews.org. There are four comments on my protest on BI cult behaviour in Holland:

(1) LUI (Lui Smyth): “The title alone suggests he’s a crank, and he rails against censorship but then doesn’t allow comments on the blog. Which is just as well, because his whole argument hinges on the spurious claim that we can return to full employment simply by eliminating the “tax void”…which appears to be a reference to the income tax paid by on minimum wage.”

(a) Commenting is off, since it would take too much time eliminating spam. You cannot construe this as censorship itself.

(b) The claim is that we can return to full employment. Full employment in 1950-1970 wasn’t a fluke but derived from economic conditions that can be identified, and that are subtler than mere “restoration after WW 2”. Read carefully: abolishing the tax void is not sufficient, as DRGTPE clearly points to the Economic Supreme Court and National Investment Banks as well. The abolition of the void is however presented as an eye-opener to that analysis.

(c) The tax void is not “the income tax paid by on minimum wage”. See here.

(d) LUI doesn’t read well and starts slandering. LUI presents himself: “I am a postgraduate researcher in UCL’s anthropology department studying the Bitcoin community.” Don’t they teach anthropologists at UCL manners ?

(2) Timothy Roscoe Carter: “I was hoping there would be real critique of the basic income here to respond to. But this is just an academic who is upset that an academic committee with a BIG advocate on it it ignoring his personal theory that he thinks will help more people than a BI. Whether his theory is right or wrong, this really has nothing to do with a basic income.”

(a) It was not “an academic committee with a BIG advocate on it”. My text clearly described the Wiardi Beckman Stichting as the scientific bureau of the Dutch labour party PvdA. It advised Wim Kok (PvdA) who advised German Kanzler Schröder (SPD) who now embraces and advises Vladimir Putin.

(b) “just” and “personal theory” is derogative: the theory is up for scrutiny by the scientific community (except for the censorship that I seek to be lifted).

(c) Inconsistent: “theory will help more people than BI” and “this really has nothing to do with a basic income”. It is an important element for the BI that it is not only attractive in itself but also it should also be more effective.

(d) TRC appears to be a disability and taxation attorney in San Francisco (CA). He likes Science Fiction, and might appreciate my SF book. He wrote: The One Minute Case for a Basic Income (2013). He lists 11 “one minute” arguments for the Basic Income “to promote the abolition of poverty.” However, my argument was that the Basic Income will rather increase poverty.

(e) Hence Timothy Roscoe Carter would fit that question: Isn’t this pure evil ?

 (3) The BInews.org moderator US BIG doubts whether I am an academic. Well, I am a researcher and worked mostly at research institutes and indeed a short period of two years also at the regular “academia” of a university department. Why “doubt” when my cv is available (though needs updating) ?

(4) Jonah: “To investigate critical perspectives on BI is important. But the “pure evil” talking blogger is really just a crank. Nothing substantive there.”

(a) My weblog entry focussed on BI cult behaviour in particular in Holland and did not elaborate on an evaluation of BI compared to other arrangements. The Jonah response is non sequitur and slander.

(b) If Jonah thinks that “critical perspectives on BI is important” then he could have looked at DRGTPE that I referred to. Why didn’t he do so ? Perhaps he didn’t like the discussion on censorship and BI cult behaviour in Holland, but that is no reason to throw out the baby with the bathwater.

(c) There is no further link to identify who Jonah actually is. A google on “Jonah Basic Income” generates this article by Jonah Goldberg, also at the American Enterprise Institute. I hope that Jonah comes forward and that he doesn’t have to apologize at AEI for above behaviour.

Goldberg proposes: “According to Rector, 100 million Americans receive aid from the government at an average cost of $9,000 per recipient. Surely some of them are equipped to spend that money better than the government. Why not give them a shot at proving it? If they fail, they can always switch back to the old system.” The suggestion that this would be better is nothing but a newspaper article and the flash of some new idea, not supported by research. Possibly the below-$9000 will step out and ask for the full $9000 ? Or, let a recipient squander the money in the first day, visiting Las Vegas, and then for the rest of the year he or she would be a bum on the street: is that the goal ? This does not really get better if you do this on a monthly base. Basically, Jonah Goldberg proposes that the current monitoring system is replaced by one that monitors monitoring. This merely means that the system might be improved a bit, by a bit more freedom for dependents. My response is that it would be better to return to full employment and create a Welfare State that works.

Apparenly nobody at BInews.org was able to check this out themselves. Nobody defended my work against these absurd responses. The Dutch BI cult behaviour is either contagious or perhaps only an example of a wider world phenomenon. Indeed, Goldberg refers to Friedrich Hayek and Milton Friedman, and it is well-known that these economists didn’t really study the Basic Income and only mentioned it as an element in their ideology.

In 2005-2006 I worked on Curaçao, the Netherlands Antilles (NA). Back home I collected my analyses in the book The Political Economy of the Netherlands Antilles and the Future of the Caribbean (PENAFC, 2006), now out of print but the PDF is available on the web. The book is a supplement to the main analysis DRGTPE 2000 and now also CSBH 2012, see the About menu or the Video

PENAFC is relevant for e.g. these points:

  1. The NA appeared to have a social security system similar to that of Holland. By consequence it has the same welfare state diseases, even though the NA is partly a developing country. The same solution approach of DRGTPE applies, with the abolition of the tax void and so on.
  2. There had been a spectacular crash of the bridge across the harbour entrance. The historical picture is on the front page, with compliments to Wim ter Hart. In 1889 Dutch engineer / economist A.J. Cohen Stuart coined an analogy about income taxation and the ability to pay: “A bridge must first bear its own weight before it can carry a load.” My analysis agrees that tax exemption must be set at the level of the net minimum wage and that Value Added Tax (VAT) be around 1%.
  3. Traditionally there is the theory of Island Economies that regards islands as sea-locked. Nowadays, however, sea transport technology and logistics cause ships to have often comparative advantage over trucking and rail. See the book Transport Science for Operations Magagement.
  4. The idea of an Economic Supreme Court per nation allows countries to have forms of Union that are more intelligent than the traditional models. Let us learn from the mistakes of the European Union.
  5. Thus, the NA may find a better future not with Holland but within a Caribbean Union that avoids those mistakes. (See an earlier text on this weblog.)

Just to be sure: PENAFC had no impact. On October 10 2010 the NA ceased to exist. It split into two new countries Curaçao and Sint Maarten and three “special Dutch municipalities” Bonaire, Saba and Sint Eustatius. The Island Economy still applies here: with more power to the local elite we already see a rise in corruption.

Looking at the Caribbean, one cannot fail to see Cuba. It would be a prime partner in such a Caribbean Union. With the collapse of the Berlin Wall in 1989 and the end of the Cold War, one wonders why the boycott of Cuba continues now almost 25 years.

http://en.wikipedia.org/wiki/File:Caribbean_general_map.png

Caribbean (Source: Wikipedia)

There was the thesis van Peter van Bergeijk in 1991 that boycotts generally do not work and are counterproductive. This is an important thesis for this website Boycott Holland of course. A boycott does not affect the power elite much, who will tend to find ways around it. A boycott will affect the general population and reduce their means to resist against the power elite. A boycott could be effective for generally rich Holland when people get annoyed that the punch bowl is taken away and want it back. For Cuba it is counterproductive.

This causes the question why the USA would continue to support Castro by a boycott that enhances his power over Cuba ? In PENAFC I speculated that Castro might have been involved in the assassination of JFK. Castro would have suffered so many assassination attempts upon his own person that he retaliated. The USA could not state this in the open since the popular anger to do something might cause a nuclear war with the USSR. These days the murder of JFK 50 years ago got general attention again. Of the various complot theories this Cuba option still seems the strongest to me. Why persist in boycotting Cuba 25 years after the end of the Cold War, while it is counterproductive in the first place ?

However, my American correspondent writes: “I agree with your assessment about what the US should do in respect to Cuba.  But I think the US unwillingness to change has to do with Cuban exiles in Florida, who have resisted a softening of the approach. And Florida matters tremendously electorally.  If they all lived in New York, they would have no impact.  I think that is sufficient explanation for the US stance, but who knows if there is more?”

Yes, I did not think about that angle. Well, there is one way to test this: Let the good people in Florida study the Van Bergeijk thesis. If their objective is to get rid of the Castro regime, their best policy option is to end the boycott of Cuba.

PM. I rely on Van Bergeijk’s thesis in Dutch, 1991. I did not read the English version of 1994 but let me refer to (1994), Economic diplomacy, trade and commercial policy: positive and negative sanctions in a new world order. Edward Elgar. Most recent are the chapters in (2009), Economic Diplomacy and the Geography of International Trade. Edward Elgar.

After World War II most nations created institutes for economic planning. The Great Depression of 1929-1940 and the war effort of 1940-1945 taught the importance of economic science. The analysis by Keynes of 1936 had been confirmed, i.e. the huge investments for the war effort had pulled the US economy out of the Great Depression. New techniques had been developed like linear programming for military sea transports. Economic planning overtook the world and it is as common now as the weather forecast.

Forecasting the weather is fairly simple. You look at the satellite picture and figure out the direction and speed of the wind. Economic projections for next year have a similar structure. Businesses have to decide on their budgets and investments some time in advance and thus it is a good technique to sample them on their intentions. Also governments must decide on their budgets and appropriations, and thus the national economic planning bureaus provide the required integration and co-ordination of the various ministerial plans with the economic prospects.

The problem lies with looking ahead for more years, when also results for next year depend upon what people expect for later on. The economic planning bureau must be based in science, in order to respect the statistics of the past and the samples taken this year, and to separate reasonable expectations for the longer run from political dreams by the administration in power.

Europe has many countries and each has its national economic planning bureau. The EU has now 28 members and thus 28 planning desks. There is much double work and inefficiency as they all try to forecast next year’s outlook. This inefficiency doesn’t matter much. It is like 28 students in a classroom trying to solve the same math exam question: doing it yourself keeps you alert. People normally don’t mind 28 weather forecasters either, who have to translate to local conditions anyway. Variety also prevents group think. Still, it would be somewhat strange if, for example, Germany would forecast 0% and France would forecast 2% for EU growth. Thus there is co-ordination by the EU Commission and by a group like the Association of the European Conjuncture Institutes (with French abbreviation AIECE). Co-ordination of course re-introduces the risk of groupthink via this backdoor.

The Dutch Central Planning Bureau (CPB) is a member of AIECE. As the directorate of CPB has been censoring my analysis since 1990, we may presume that they have not been informing AIECE about it. Neither will they have reported to AIECE that the present economic crisis confirms my analysis. Earlier I explained where my work can be found and why it tends not to be present in “peer reviewed journals”. Hence the economic planning bureaus of Europe are likely to be blissfully unaware of the economic analysis that would greatly contribute to the resolution of the Great Stagflation since 1970 and the economic crisis since 2007.

Hence, I took the liberty to send the economic planning bureaus the email in the appendix below. I have editted the text for readability. The moment of sending the email is a bit awkward: I received various vacation absentee notices of contact persons. The weather forecast requires daily presence, even in sunny California, but economic planning still allows for vacations. Hopefully the AIECE secretariat takes proper care.

It is a moot point whether the other economic planning bureaus would have acted in the same manner as the directorate of the CPB: censoring my analysis and dismissing me with untruths. These institutes may not be immune to the bureaucracy-bug, and we may linger a longer while on the question which bureaus had staff members who issued warnings about a potential crisis before 2007. The suggestion of creating national Economic Supreme Courts would be relevant here.

Appendix: parts of an email

To: the UK Office of Budget Responsibility (OBR), the German Sachverstaedigenrat, the French Commissariat general a la strategie et a la prospective (CGSP),  the Belgian Federaal Planbureau, the Italian ISTAT, the Spanish Direccion General de Analisis Macroeconomico y Economia  Internacional, the Swedish NIER, the Danish DORS, Statistics Norway, the Polish Institute For Market, Consumption And Business Cycles Research, the Greek KEPE, the Finnish ETLA, and AIECE, and CC the Financial Times
Subject: My solution approach to the deepening European crisis / Protest against censorship of science in Holland
Date: Tue, 30 July 2013

Dear fellow economists,

There is a serious risk that the economic crisis in Europe could develop into a much larger one. The euro works out as a gold standard and then consider what happened in the Great Depression.

You might therefor allow me to call your attention to my suggested solution approach in my book DRGTPE that I regard as a nice sequel to Keynes’s “General Theory”. […]  I invite [econometricians] to test my additional analysis in the paper “Money as gold versus money as water” (2013). This is supplementary to DRGTPE (2000, 2005, 2012). I refer to the internet links below. Please be aware that my internet site changed from dataweb.nl to thomascool.eu.

You will generally not be aware of the censorship of science by the directorate of the Dutch Central Planning Bureau (CPB) since 1990. The Dutch government recently appointed per August 1 2013 as new CPB-director ms. Laura van Geest, who however is a bureaucrat and has no track record as a scientist. The same happened in 1988/9 when the government appointed bureaucrat and non-scientist Gerrit Zalm, who after his CPB-period till 1994 continued as Dutch minister of Finance (adopting the euro) and now is CEO of the Dutch bank ABN-AMRO. Regrettably, Zalm started in 1990 censoring my analysis on unemployment and dismissed me with untruths in 1991. Holland hasn’t been able to resolve the issue yet. I advise to a boycott of Holland till the issue is resolved.

Key points in my analysis are:

(1) Between net minimum wage income and gross minimum wage costs there is a tax void. This can be abolished without costs, allowing a reduction of minimum wage costs.

(2) The relevant marginal tax rate is the dynamic marginal tax rate, that comes about by using the total derivative that includes tax changes over time, instead of the partial derivative. Thus VAT be best at 1% (for statistical purposes and as an optional tool for the cycle).

(3) Modern economies require counter-cyclical national investment banks.

(4) When standard macro-economic models are adapted for 1-3 then we have an explanation for the Great Stagflation with its shift of the Phillipscurve since 1965. This stagflation was hidden by the economic deregulations since 1980 but now that we are re-regulating again the problem comes back into the open. PM. Note that Holland tries to solve its 1-3 problems by a low wage policy that exports its unemployment to other countries. Germany copied that policy, with the resulting trade imbalances in the EU.

(5) The lesson learned for the future: The Trias Politica system of government with subordinate planning bureaus fails, and requires the amendment of an Economic Supreme Court.

(6) Since the euro works as a gold standard, this requires a new treaty on an euro 2.0. However, we need not wait for the political process of adoption of a new treaty. European governments can already express their interest and commitment, and create acting national Economic Supreme Courts, so that the process can start fast.

(7) And naturally various details to complete the picture.

Note that DRGTPE 2012 with the PDF on the website consists of the 2005 edition that focusses on unemployment. It includes only summaries of my papers since 2007 on the present crisis. Those papers themselves have often PDFs at MRPA, and are collected in the book “Common Sense: Boycott Holland” (CSBH, no PDF).

I hope that you will study DRGTPE and CSBH, and that you also adopt my advice to boycott Holland till this issue of scientific integrity in Holland is resolved.

PM 1. […]
PM 2. My intention was to send this email to the planning agencies of the countries in the EU. Clearly there are a lot of those, and there is the issue of whom to contact. The above is a fair effort. Perhaps you can make sure that this email reaches the appropriate colleagues at your institute (e.g. the other members of OBR or Sachverstaendigenrat) and the other institutes, where you might perhaps ask AIECE to co-ordinate.

Sincerely yours,

Thomas Cool / Thomas Colignatus
Econometrician (Groningen 1982) and teacher of mathematics (Leiden 2008)
http://thomascool.eu/
http://econpapers.hhs.se/RAS/pco170.htm
https://boycottholland.wordpress.com/

[… omitted additional appendix …]
[PM August 19: I should have included the EuroFrame network but informed them separately now.]