In the preface to the 2008 edition of hyman minsky’s book on Keynes the preface notes that the most important thing minsky and Keynes had in common was that neither was a Keynesian.

Have a look at the comments to “Come Back Keynes, All Is Forgiven!” (16 October 2008). The last one, by a Brendan, was posted on October 24, 2008 at 5:13 pm.

Now tell me, doesn’t that comment appear to be an accurate prediction? And written, in black and white, for all to see. Unfortunately, Brendan did not argue his statement so that we could conclusively discard a fluke; even though, at face value, a fluke seems unlikely.

Which goes to show something: predictions don’t need to be quantitative or to be attached to a time frame to be accurate. All those details would add to the credibility of the prediction, to be sure, but are not essential: what is vital is an explanation of the way the prediction was made.

While there the archivist showed me a card that was in Keynes’ archive. On one side was a list he made on the eve of his marriage to the Russian ballerina Lydia Lopokova (“John Maynard Keynes had so many brains/ He had enough left over for Lydia Lopokova” as Dadie Rylands wrote). It was a list of every man he had ever slept with including Duncan Grant. An early entry just said “Stable boy in Belgravia”.

On the reverse side was a list of quarterly dates (using Cambridge terms eg Michaelmas) and four columns headed with the letters ): an O or C, A, P and W. There were numbers in each horizontal line for each entry of the order 20-30. A final column kept a running annual total (with one summation error I found so I can say I have corrected JMK). Nobody had ever been able to work out what the letters stood for. Those of a lascivious nature suggested they stood for possible sexual acts (use your imagination). I thought maybe they stood for Claret, Ale, Port & Wine and were a tally of his College drinks tab (O=?). It remains a mystery to this day.

Yep, I’ve read that piece, too.

Although you’re a mathematician, it did hurt you, didn’t it? I imagine it did, as it hurt me, and I am no economist, either :D.

In fact, I bet that article is more likely to hurt those who are not economists, but know something, even if just a little, about economics; than those who are economists by training, and don’t know crap about it.

And allow me to argue this.

The Keynes quote you cite is from 1936. This is a bit of that quote:

“But although the doctrine itself has remained unquestioned by orthodox economists up to a late date, its signal failure for purposes of scientific prediction has greatly impaired, in the course of time, the prestige of its practitioners”.

The hodgepodge today’s economists consider their “science” could be charged with the same crimes, with one additional aggravating circumstance: Friedman based the legitimacy of today’s neoclassical “economics” on its ability to produce… useful predictions, as he admitted it does not describe reality!

And we’re talking eighty years down the track, my friend.

And, if you dig a bit on that very same quote, you’ll find some very plausible reasons why neoclassical economics today is as impervious to change as the orthodoxy was in Keynes’ times. But I’ll leave that to you.

… professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likely to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and some higher degrees. Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, … Most … of our decisions to do something positive, … can only be taken as a result of animal spirits—of a spontaneous urge to action rather than inaction—and not to the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole is based on an exact calculation of benefits to come.”

Further, can anyone tell me what great increases in productivity Sth Korea and Japan have attained with their world’s fastest broadband?

How does residential broadband contribute to Australia gaining a competitive edge in intellectual property, pharmaceuticals; medical, IT, and green energy tech breakthroughs…… and all the other stuff a developed nation can export?

Let’s face it, fibre to the home is just another “CONSUMER service” with little to no capacity to increase GDP per capita. In fact it is likely to decrease it, by engaging human capital ever moreso in fruitless time wasting recreation like online gaming, watching latest release movies, and puerile social networking.

It is interesting that the trend in maths acumen is inversely correlated with rising use of the internet in developed nations.

Nevertheless I agree the creators of bubble charts should always be regarded with suspicion.