The Chimera of Macroeconomics

  For the sake of convenience, we copy the following from somewhere else:   [The policy “guidance” called Oku’s law] is sometimes described as g= 3%- 2Δu , where “ g ” is the percentage increase in GDP [( ΔY/ Y ) over two consecutive periods, and Δu is the percentage decrease in human power ( Δu ≒ - ΔL/L ) between two time points apart by a year. The linkage can be justified only when the unemployment ratios at the two points effectively represent the labor input in the respective period. This assumption is counterfactual if in a “cyclical” economy.       Moreover, this law’s prediction that the percentage gap in GDP is twice (2) as big as the gap in the labor input is the polar opposite of the Solow model’s spirit for the long run: the law of diminishing marginal product of labor puts the number small than the unity (1). Incidentally, the elasticity coefficient is hardly larger than 0.8 for the short or long run if the Cobb-Douglas function i...

  Theory from Science. Scientific theories are all about causality: A cause results in the effect. If we set the end, we might find a means to have the end obtained. If a self-claimed scientist, abstract or empirical, gets the causality wrong, he shall convincingly confuse innocent citizens, domestic or alien. As such, we may call “reverse causation” the first sin of science. All Correlations are Not Equal . In practice of concurrence , most anything is correlated nearly everything else. In that sense, “correlation” is a matter of degree . I the Meanest do not   only share the same period of time with a little less mean family but also with all different kinds of celebs. Alas, I cannot with the closest related and most honorable parents of mine!              On the contrary, causality of different direction results in a great difference in kind , such as a plan of highest feasibility versus a pipedream. In gener...