Debunking Economics? - Page 3

IchabodPlain · 29th June 2012, 11:46 AM

Originally Posted by Kevin_Lowe

I think the problem here is just that you are confused about what neoclassical microeconomics claims. Neoclassical microeconomics holds that businesses face upward-sloping supply curves, and production is determined by the intersection of those supply curves with price. If price goes up supply goes up, and if price goes down supply goes down.

That wasn't your previous claim. Let me illustrate:

Quote:

The point under dispute is that neoclassicists think the cost of production always goes up with volume

I asked for evidence of this claim, and you've not provided it. I feel it's relatively easy to dispute your claim (see: marginal cost, cost curve). I also mentioned economies of scale because it contradicts your claim that costs always go up with volume. Either provide evidence for your claim or withdraw it.

Quote:

Sure, businesses keep selling stuff until it stops being profitable. (Give or take unusual situations). However the reason it stops being profitable past a certain point is due to marketing costs, transport costs, brand loyalty and so on rather than production costs. They aren't the problem, because they scale downwards or stay flat with increased production. Transport, marketing and such scale up and together determine how much stuff is produced.

Transportation costs are explicitly a factor of production (capital, though sometimes treated seperately), as is marketing (labor). You haven't presented a case as to why these shouldn't be included, and I can quite easily demonstrate that they are. Either justify (read: provide evidence) your claim or withdraw it.

Telecast · 29th June 2012, 12:34 PM

Originally Posted by Kevin_Lowe

I think Keen would say that it's a very strange idea that you should start by teaching people a model which is utter tripe, and then try to patch it as you go along without fixing the underlying absurdity. (This is totally distinct from the practice in areas like physics, where they start you with simpler equations that are actually right, and then move you on to the more complicated ones that are also right).

As I've had to say a few times now, the fact that the Easter Bunny theory correctly predicts the existence of chocolate eggs in your back yard doesn't make it a good theory.

Bingo. It is indeed fundamental. Without those nice, upward-sloping curves the neoclassical model can't explain how prices arise, how producers decide how much to produce, how employers decide how many employees they should hire... anything at all, really.

Nope. It doesn't say anything of the sort. It says that the more items I can make, the lower the price I can accept for each one and still make a profit, and that the number of items I make is not the least bit limited by the marginal cost of production, because the marginal cost of production is always well below the sale price.

Make no mistake, I'm not advocating the position that Keen has a model that's superior in practical terms. I'll believe that when I see Keen or someone utilising his theories sitting on a huge pile of cash they acquired by predicting market behaviour better than anybody else.

The mere fact that there are people here trying to maintain that supply curves slope upward in the real world should tell you that there is in fact some significant point of disagreement here.

Nothing in there is actually a question. So I'm still in the dark as to what you are asking, unless you're asking something incredibly silly.

Alright, at this point it's clear that reason is not getting through. Marginal cost may be below marginal revenue in actuality, it may be greater than, but not through intention. Profit is always maximized when marginal revenue equals marginal costs. It's simple calculus.

You refuse to acknowledge the implication that a downward sloping demand curve requires that a firm prefer to produce more at a lower price than more at a higher price. Which, with the goal of profit maximization, is irrational. Economies of scale do not alter this reality. You've claimed scarcity is insignificant. You've just argued in favor of everything that makes absolutely no sense..
Pretty much you've succeeded at proving yourself total economically incompetent, and showed me the fool for wasting my time.

psionl0 · 29th June 2012, 06:38 PM

Originally Posted by Telecast

. . . . and showed me the fool for wasting my time.

It hasn't been a total waste of time. I, for one, am quite impressed by the standard of your introductory posts.

Welcome to the forum and may you make many a contribution while you are here.

Kevin_Lowe · 29th June 2012, 07:04 PM

Originally Posted by IchabodPlain

That wasn't your previous claim. Let me illustrate:

I asked for evidence of this claim, and you've not provided it. I feel it's relatively easy to dispute your claim (see: marginal cost, cost curve). I also mentioned economies of scale because it contradicts your claim that costs always go up with volume. Either provide evidence for your claim or withdraw it.

Transportation costs are explicitly a factor of production (capital, though sometimes treated seperately), as is marketing (labor). You haven't presented a case as to why these shouldn't be included, and I can quite easily demonstrate that they are. Either justify (read: provide evidence) your claim or withdraw it.

We're talking at cross purposes simply because you are confused about what the neoclassical microeconomic model is. In that model transportation and marketing costs are outright ignored, not explicitly a factor of production as you claim. I don't think there's much further benefit in engaging with you because you're arguing with a phantom and you refuse to be corrected.

You also seem to be confused about costs, although what you posted is phrased ambiguously enough that it's difficult to track down exactly where your misunderstanding lies. Costs of production usually stay flat or slope down, while the total cost of producing, transporting and marketing can do all sorts of things but curves up at the end to limit the amount you can sell profitably to some finite amount.

Originally Posted by Telecast

Alright, at this point it's clear that reason is not getting through. Marginal cost may be below marginal revenue in actuality, it may be greater than, but not through intention. Profit is always maximized when marginal revenue equals marginal costs. It's simple calculus.

You are in the same boat as Ichabod. You're trying to argue that neoclassical microeconomics is right because profit is maximised when marginal revenue equals marginal costs including factors neoclassical microeconomics ignores like marketing and transportation. You're not wrong in what you are saying, you are wrong in thinking that what you are saying is a response to the points I've been making.

If you don't think the factor that determines production is the intersection of an upward-sloping supply curve based only on cost of production with price, we're on the same page.

Quote:

You refuse to acknowledge the implication that a downward sloping demand curve requires that a firm prefer to produce more at a lower price than more at a higher price.

I haven't "refused to acknowledge" it, I've shown that it's an error on your part. A flat or downward-sloping demand curve only means that a firm is happy to produce an infinite amount of product as long as the average sale price is greater than the average cost of production, if you pretend no other costs exist.

Quote:

Pretty much you've succeeded at proving yourself total economically incompetent, and showed me the fool for wasting my time.

Well, when you learn what a supply curve is you can come on back and pretend that other people are incompetent. Until then, have fun being "competent".

Originally Posted by psionl0

It hasn't been a total waste of time. I, for one, am quite impressed by the standard of your introductory posts.

Welcome to the forum and may you make many a contribution while you are here.

I don't want to have to get the ruler out, but you've ben skipping your homework. I told you to go look up the SMD conditions, remember? You snipped that bit and tried to pretend it didn't exist. Well now we're checking homework. What are the SMD conditions, do they ever apply in real life, and what consequences follow for the neoclassicist model if they don't apply in real life?

psionl0 · 29th June 2012, 09:18 PM

Originally Posted by Kevin_Lowe

I told you to go look up the SMD conditions, remember?

If you are referring to the Sonnenschein Mantel Debreu theorem, that doesn't say that supply curves slope downwards either. In fact, it doesn't mention supply at all - only demand.

LINK.

If you were amenable to discussion, this would be an interesting theorum to explore.

Kevin_Lowe · 29th June 2012, 09:28 PM

Originally Posted by psionl0

If you are referring to the Sonnenschein Mantel Debreu theorem, that doesn't say that supply curves slope downwards either. In fact, it doesn't mention supply at all - only demand.

LINK.

If you were amenable to discussion, this would be an interesting theorum to explore.

Nobody ever said it had anything to do with the slope of a supply curve.

I asked what the SMD conditions were, whether they ever obtained in real life, and what the consequences were for neoclassical economics if they never did so.

I thought you were waiting to look at actual maths? There's some actual maths to talk about.

psionl0 · 29th June 2012, 10:38 PM

Originally Posted by Kevin_Lowe

There's some actual maths to talk about.

Yes, but nobody to talk about it with.

Kevin_Lowe · 30th June 2012, 05:01 PM

Originally Posted by psionl0

Yes, but nobody to talk about it with.

And so he left knowing no more than he did when he came.

Telecast · 30th June 2012, 08:56 PM

Please, lets get into the math, thats an area I'd find myself most comfortable.

Kevin_Lowe · 1st July 2012, 09:02 AM

Originally Posted by Telecast

Please, lets get into the math, thats an area I'd find myself most comfortable.

Same question goes out to you as did to psionl0 then.

BobTheCoward · 1st July 2012, 02:24 PM

Originally Posted by Telecast

Please, lets get into the math, thats an area I'd find myself most comfortable.

And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it.

Startz · 1st July 2012, 02:52 PM

Originally Posted by BobTheCoward

And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it.

Really? Whose "classic saying?"

(My personal opinion is that there's too much math in some economics and not enough in other parts.)

psionl0 · 2nd July 2012, 01:19 AM

Originally Posted by Startz

My personal opinion is that there's too much math in some economics . . . .

SACRILEGE!!!

Telecast · 2nd July 2012, 02:35 AM

Originally Posted by BobTheCoward

And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it.

I only asked for it because reason was getting me nowhere with Kevin Lowe. So he mentioned that there is mathematical evidence supporting his argument, and i figure at least there is a chance that there will be some logic in that.

I majored in math too, so it figured it's something i can hopefully get a grip on.

psionl0 · 2nd July 2012, 03:14 AM

Originally Posted by Telecast

I only asked for it because reason was getting me nowhere with Kevin Lowe. So he mentioned that there is mathematical evidence supporting his argument, and i figure at least there is a chance that there will be some logic in that.

Don't be a slow learner.

BobTheCoward · 2nd July 2012, 05:06 PM

Originally Posted by Startz

Really? Whose "classic saying?"

(My personal opinion is that there's too much math in some economics and not enough in other parts.)

For the life of me I can't find who said it. It goes something like...

Develop your theory with math. And then find a formal way to explain it. Then toss out the math. If it is a good econ theory he doesn't need math to relate human action.

Startz · 2nd July 2012, 05:34 PM

Originally Posted by BobTheCoward

For the life of me I can't find who said it. It goes something like...

Develop your theory with math. And then find a formal way to explain it. Then toss out the math. If it is a good econ theory he doesn't need math to relate human action.

Probably pretty good advice for most cases.

29th June 2012, 11:46 AM	#81
IchabodPlain Graduate Poster Join Date: Nov 2007 Location: Florida Posts: 1,250	Originally Posted by Kevin_Lowe I think the problem here is just that you are confused about what neoclassical microeconomics claims. Neoclassical microeconomics holds that businesses face upward-sloping supply curves, and production is determined by the intersection of those supply curves with price. If price goes up supply goes up, and if price goes down supply goes down. That wasn't your previous claim. Let me illustrate: Quote: The point under dispute is that neoclassicists think the cost of production always goes up with volume I asked for evidence of this claim, and you've not provided it. I feel it's relatively easy to dispute your claim (see: marginal cost, cost curve). I also mentioned economies of scale because it contradicts your claim that costs always go up with volume. Either provide evidence for your claim or withdraw it. Quote: Sure, businesses keep selling stuff until it stops being profitable. (Give or take unusual situations). However the reason it stops being profitable past a certain point is due to marketing costs, transport costs, brand loyalty and so on rather than production costs. They aren't the problem, because they scale downwards or stay flat with increased production. Transport, marketing and such scale up and together determine how much stuff is produced. Transportation costs are explicitly a factor of production (capital, though sometimes treated seperately), as is marketing (labor). You haven't presented a case as to why these shouldn't be included, and I can quite easily demonstrate that they are. Either justify (read: provide evidence) your claim or withdraw it.
	__________________ ...and with the joy of responsibility comes the burden of obligation. ~ Hank Hill Last edited by IchabodPlain; 29th June 2012 at 11:50 AM.

29th June 2012, 12:34 PM	#82
Telecast Student Join Date: Jun 2012 Posts: 33	Originally Posted by Kevin_Lowe I think Keen would say that it's a very strange idea that you should start by teaching people a model which is utter tripe, and then try to patch it as you go along without fixing the underlying absurdity. (This is totally distinct from the practice in areas like physics, where they start you with simpler equations that are actually right, and then move you on to the more complicated ones that are also right). As I've had to say a few times now, the fact that the Easter Bunny theory correctly predicts the existence of chocolate eggs in your back yard doesn't make it a good theory. Bingo. It is indeed fundamental. Without those nice, upward-sloping curves the neoclassical model can't explain how prices arise, how producers decide how much to produce, how employers decide how many employees they should hire... anything at all, really. Nope. It doesn't say anything of the sort. It says that the more items I can make, the lower the price I can accept for each one and still make a profit, and that the number of items I make is not the least bit limited by the marginal cost of production, because the marginal cost of production is always well below the sale price. Make no mistake, I'm not advocating the position that Keen has a model that's superior in practical terms. I'll believe that when I see Keen or someone utilising his theories sitting on a huge pile of cash they acquired by predicting market behaviour better than anybody else. The mere fact that there are people here trying to maintain that supply curves slope upward in the real world should tell you that there is in fact some significant point of disagreement here. Nothing in there is actually a question. So I'm still in the dark as to what you are asking, unless you're asking something incredibly silly. Alright, at this point it's clear that reason is not getting through. Marginal cost may be below marginal revenue in actuality, it may be greater than, but not through intention. Profit is always maximized when marginal revenue equals marginal costs. It's simple calculus. You refuse to acknowledge the implication that a downward sloping demand curve requires that a firm prefer to produce more at a lower price than more at a higher price. Which, with the goal of profit maximization, is irrational. Economies of scale do not alter this reality. You've claimed scarcity is insignificant. You've just argued in favor of everything that makes absolutely no sense.. Pretty much you've succeeded at proving yourself total economically incompetent, and showed me the fool for wasting my time.
Telecast Student Join Date: Jun 2012 Posts: 33

29th June 2012, 07:04 PM	#84
Kevin_Lowe Penultimate Amazing Join Date: Feb 2003 Location: Queensland Posts: 10,283	Originally Posted by IchabodPlain That wasn't your previous claim. Let me illustrate: I asked for evidence of this claim, and you've not provided it. I feel it's relatively easy to dispute your claim (see: marginal cost, cost curve). I also mentioned economies of scale because it contradicts your claim that costs always go up with volume. Either provide evidence for your claim or withdraw it. Transportation costs are explicitly a factor of production (capital, though sometimes treated seperately), as is marketing (labor). You haven't presented a case as to why these shouldn't be included, and I can quite easily demonstrate that they are. Either justify (read: provide evidence) your claim or withdraw it. We're talking at cross purposes simply because you are confused about what the neoclassical microeconomic model is. In that model transportation and marketing costs are outright ignored, not explicitly a factor of production as you claim. I don't think there's much further benefit in engaging with you because you're arguing with a phantom and you refuse to be corrected. You also seem to be confused about costs, although what you posted is phrased ambiguously enough that it's difficult to track down exactly where your misunderstanding lies. Costs of production usually stay flat or slope down, while the total cost of producing, transporting and marketing can do all sorts of things but curves up at the end to limit the amount you can sell profitably to some finite amount. Originally Posted by Telecast Alright, at this point it's clear that reason is not getting through. Marginal cost may be below marginal revenue in actuality, it may be greater than, but not through intention. Profit is always maximized when marginal revenue equals marginal costs. It's simple calculus. You are in the same boat as Ichabod. You're trying to argue that neoclassical microeconomics is right because profit is maximised when marginal revenue equals marginal costs including factors neoclassical microeconomics ignores like marketing and transportation. You're not wrong in what you are saying, you are wrong in thinking that what you are saying is a response to the points I've been making. If you don't think the factor that determines production is the intersection of an upward-sloping supply curve based only on cost of production with price, we're on the same page. Quote: You refuse to acknowledge the implication that a downward sloping demand curve requires that a firm prefer to produce more at a lower price than more at a higher price. I haven't "refused to acknowledge" it, I've shown that it's an error on your part. A flat or downward-sloping demand curve only means that a firm is happy to produce an infinite amount of product as long as the average sale price is greater than the average cost of production, if you pretend no other costs exist. Quote: Pretty much you've succeeded at proving yourself total economically incompetent, and showed me the fool for wasting my time. Well, when you learn what a supply curve is you can come on back and pretend that other people are incompetent. Until then, have fun being "competent". Originally Posted by psionl0 It hasn't been a total waste of time. I, for one, am quite impressed by the standard of your introductory posts. Welcome to the forum and may you make many a contribution while you are here. I don't want to have to get the ruler out, but you've ben skipping your homework. I told you to go look up the SMD conditions, remember? You snipped that bit and tried to pretend it didn't exist. Well now we're checking homework. What are the SMD conditions, do they ever apply in real life, and what consequences follow for the neoclassicist model if they don't apply in real life?
	__________________ Thinking is skilled work....People with untrained minds should no more expect to think clearly and logically than people who have never learned and never practiced can expect to find themselves good carpenters, golfers, bridge-players, or pianists. -- Alfred Mander

29th June 2012, 09:28 PM	#86
Kevin_Lowe Penultimate Amazing Join Date: Feb 2003 Location: Queensland Posts: 10,283	Originally Posted by psionl0 If you are referring to the Sonnenschein Mantel Debreu theorem, that doesn't say that supply curves slope downwards either. In fact, it doesn't mention supply at all - only demand. LINK. If you were amenable to discussion, this would be an interesting theorum to explore. Nobody ever said it had anything to do with the slope of a supply curve. I asked what the SMD conditions were, whether they ever obtained in real life, and what the consequences were for neoclassical economics if they never did so. I thought you were waiting to look at actual maths? There's some actual maths to talk about.
	__________________ Thinking is skilled work....People with untrained minds should no more expect to think clearly and logically than people who have never learned and never practiced can expect to find themselves good carpenters, golfers, bridge-players, or pianists. -- Alfred Mander

30th June 2012, 05:01 PM	#88
Kevin_Lowe Penultimate Amazing Join Date: Feb 2003 Location: Queensland Posts: 10,283	Originally Posted by psionl0 Yes, but nobody to talk about it with. And so he left knowing no more than he did when he came.
	__________________ Thinking is skilled work....People with untrained minds should no more expect to think clearly and logically than people who have never learned and never practiced can expect to find themselves good carpenters, golfers, bridge-players, or pianists. -- Alfred Mander

29th June 2012, 06:38 PM	#83
psionl0 Illuminator Join Date: Sep 2010 Location: 31°58'S 115°57'E Posts: 4,785	Originally Posted by Telecast . . . . and showed me the fool for wasting my time. It hasn't been a total waste of time. I, for one, am quite impressed by the standard of your introductory posts. Welcome to the forum and may you make many a contribution while you are here.

29th June 2012, 09:18 PM	#85
psionl0 Illuminator Join Date: Sep 2010 Location: 31°58'S 115°57'E Posts: 4,785	Originally Posted by Kevin_Lowe I told you to go look up the SMD conditions, remember? If you are referring to the Sonnenschein Mantel Debreu theorem, that doesn't say that supply curves slope downwards either. In fact, it doesn't mention supply at all - only demand. LINK. If you were amenable to discussion, this would be an interesting theorum to explore.

29th June 2012, 10:38 PM	#87
psionl0 Illuminator Join Date: Sep 2010 Location: 31°58'S 115°57'E Posts: 4,785	Originally Posted by Kevin_Lowe There's some actual maths to talk about. Yes, but nobody to talk about it with.

30th June 2012, 08:56 PM	#89
Telecast Student Join Date: Jun 2012 Posts: 33	Please, lets get into the math, thats an area I'd find myself most comfortable.
Telecast Student Join Date: Jun 2012 Posts: 33	Last edited by Telecast; 30th June 2012 at 09:07 PM. Reason: Lets just get to the math.

1st July 2012, 09:02 AM	#90
Kevin_Lowe Penultimate Amazing Join Date: Feb 2003 Location: Queensland Posts: 10,283	Originally Posted by Telecast Please, lets get into the math, thats an area I'd find myself most comfortable. Same question goes out to you as did to psionl0 then.
	__________________ Thinking is skilled work....People with untrained minds should no more expect to think clearly and logically than people who have never learned and never practiced can expect to find themselves good carpenters, golfers, bridge-players, or pianists. -- Alfred Mander

1st July 2012, 02:24 PM	#91
BobTheCoward Muse Join Date: Nov 2010 Posts: 699	Originally Posted by Telecast Please, lets get into the math, thats an area I'd find myself most comfortable. And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it.
BobTheCoward Muse Join Date: Nov 2010 Posts: 699

1st July 2012, 02:52 PM	#92
Startz Critical Thinker Join Date: Nov 2004 Location: Santa Barbara, CA Posts: 388	Originally Posted by BobTheCoward And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it. Really? Whose "classic saying?" (My personal opinion is that there's too much math in some economics and not enough in other parts.)

2nd July 2012, 01:19 AM	#93
psionl0 Illuminator Join Date: Sep 2010 Location: 31°58'S 115°57'E Posts: 4,785	Originally Posted by Startz My personal opinion is that there's too much math in some economics . . . . SACRILEGE!!!
	Last edited by psionl0; 2nd July 2012 at 01:22 AM.

2nd July 2012, 02:35 AM	#94
Telecast Student Join Date: Jun 2012 Posts: 33	Originally Posted by BobTheCoward And it is the classic saying of economics that if it is a good idea, we can toss out the math and debate it without it. I only asked for it because reason was getting me nowhere with Kevin Lowe. So he mentioned that there is mathematical evidence supporting his argument, and i figure at least there is a chance that there will be some logic in that. I majored in math too, so it figured it's something i can hopefully get a grip on.
Telecast Student Join Date: Jun 2012 Posts: 33

2nd July 2012, 03:14 AM	#95
psionl0 Illuminator Join Date: Sep 2010 Location: 31°58'S 115°57'E Posts: 4,785	Originally Posted by Telecast I only asked for it because reason was getting me nowhere with Kevin Lowe. So he mentioned that there is mathematical evidence supporting his argument, and i figure at least there is a chance that there will be some logic in that. Don't be a slow learner.

2nd July 2012, 05:06 PM	#96
BobTheCoward Muse Join Date: Nov 2010 Posts: 699	Originally Posted by Startz Really? Whose "classic saying?" (My personal opinion is that there's too much math in some economics and not enough in other parts.) For the life of me I can't find who said it. It goes something like... Develop your theory with math. And then find a formal way to explain it. Then toss out the math. If it is a good econ theory he doesn't need math to relate human action.
BobTheCoward Muse Join Date: Nov 2010 Posts: 699

2nd July 2012, 05:34 PM	#97
Startz Critical Thinker Join Date: Nov 2004 Location: Santa Barbara, CA Posts: 388	Originally Posted by BobTheCoward For the life of me I can't find who said it. It goes something like... Develop your theory with math. And then find a formal way to explain it. Then toss out the math. If it is a good econ theory he doesn't need math to relate human action. Probably pretty good advice for most cases.