The Search of Neuroscience for the Quintessence of Economics

By Con George-Kotzabasis—October 03, 2014

A reply to “of markets and minds” –by professor Peter Bossaerts

Melbourne University Magazine

Economics is the application of scarce means for the attainment of countless abundant ends. Since all ends cannot be fulfilled because of the scarcity of resources, human choice selects those ends that are more needful or pleasurable to man than those that are less so. The attainment of those more needful ends is a result of human action. These ends, however, are the fruits of the future and the inevitable uncertainty that is riveted upon it. Therefore human action is always speculation based, however, not upon the throw of the dice but upon ratiocination. Furthermore, actions are determined by the value judgments of individuals i.e., the ends they are eager to attain. These valuations differ among individuals due to the different circumstances and living conditions of these individuals and to the variable desires and wishes that emanate from the plethora of their personalities. There is no constant relationship between these valuations, as they emanate from the different wishes, desires and caprices of an umpteenth of individuals, and are therefore beyond the bailiwick of science to measure them; what scientific method could measure with precision the capricious longings of man and the uncertainty that surrounds his existence?

Professor Bossaerts’ attempt therefore, to identify and control the ‘cells’ of the economy and finance and the complex interactions that determine their course by the scientific method of neuroscience for the purpose of rationally directing the process of the economy to a more beneficial path, is in vain and is bound to fail. Science measures constant relationships in the controlled experimental environment of the lab but cannot measure uncontrolled innumerable variants that determine, in our case, the process of a free market economy. The search, therefore, of finding the inexorably elusive quintessence of the economic process by the tools of the hard sciences, though a laudable task, is purblind, as it cannot see nor understand that science is incapable of measuring the measureless.

The endeavour to supplant and redress, on the one hand, the imperfections of the free market economy, and on the other, the failures of government dirigisme to regulate and direct the economic process of the free market to a more optimal state, by the powerful algorithmic tools of science, will be found to be another futile attempt to direct the economy from a central command post, this time by the methods of neuroscience and not by an omniscient cabal of socialist planners.

In an imperfect and uncertain world, the free market economy will proceed and move by trial and error and continue to spread its benefits to mankind. But the intervention of man’s reason and understanding will substantially diminish the errors by increasing their correction in time by the power of man’s imagination and ratiocination.

Radical Left Experiments its Policies Using Greeks as Guinea Pigs

The jarring interests of reason and piety [read ideology] Edward Gibbon

By Con George-Kotzabasis

The radical left party of Syriza, led by its green horn, tongue in cheek, know-all adventurist leader Alexis Tsipras, armed with the omniscient Marxist ideology and holding with devotional piety the rosary of communism in both hands, is experimenting its policies using Greeks as guinea pigs. Against all reason and hope, it persists and is determined, if after June 17 it comes to be the new government, one-sidedly to denounce and repudiate the European Memorandum without risking the country’s exit from the Eurozone. Unable to see through the nebulous clouds of their ideology, the materialist Marxists cannot see the reality as embodied in the clear expressions of all European leaders, representing to a high degree the wishes of their constituents respectively, and high technocrats, that such denunciation of the Memorandum would immediately lead to the cessation of all financial help to the stricken country and to the latter’s inevitable return to the drachma and absolute poverty with catastrophic results to the standard of living of the majority of the population. This economic and social break-down of the country would spark a social war of all against all that would crack the foundations of democracy and on whose ruins would be built a fascist state, either of the left or of the right.

Moreover, their hopefulness that the European Union is bluffing and would not dare to turn the financial tap off as such a move would lead to the mutual destruction of Greece and Europe, is a Fata Morgana in view of the fact that all these leaders and technocrats have put their credibility and reputation on the line in regard to the exit, not to mention the other obvious fact that all the Wall Streets, and banks of the world, and evaluative institutions, such as Standard and Poor’s, and Moodies are showing on their financial electronic screens the great possibility of a Greek exit and are making preparations for it. To consider, as Syriza does, that all these political, technocrat, and financial actors are engaging and participating in a grand bluff against Greece, in regard to its exit from Europe, is to be a fugitive from one’s senses; and to ventilate such an idea among the Greek populace, is a gigantic falsehood.

The economic programme of Syriza as presented by its leader Tsipras on May 31, promises a horn of plenty to Greeks with the government’s coffers empty. It promises higher wages, higher pensions, and an extension of unemployment allowances from one to two years, an expansion in the employment of public servants, and full employment in a dateless future, without however indicating where it will find the funds to implement the above measures. Nor does it compute their costs, according to an admission of a prominent economist of Syriza itself. This is unprecedented in the history of electoral campaigns, as pointed out by Antonis Samaras, the leader of New Democracy, when a political party presents its economic policies to the electorate and admitting at the same time that they have not been costed.

This is a populist bag of gifts that only a Santa Claus could deliver to longing and credulous children. Syriza claims falsely that the expenses of these outlays for the above measures will be covered by taxing enterprises, ship-owners, and people on higher incomes, without however specifying the height of these incomes, and by imposing a levy on seven-hundred-thousand households with a net of 2,000 euros. In the present dire recession that the country is in and where enterprises can hardly show even modicum profits in their balance sheets, and where people with higher incomes have been inflicted by a cut of 50% in their salaries(Professor Yanis Varoufakis who teaches economics at Athens University and whose salary was cut by 50%, fled Greece and went to the United States), the claim of Syriza that it will have the funds from these sources to implement its promises, is a swindle of gargantuan magnitude of the Greek people. Moreover, this impossibility of funding its measures from these sources leads to the suspicion, as again pointed out by Samaras, that Syriza has a hidden agenda to impose taxes on ordinary people’s bank deposits and on private property.

Furthermore, Syriza pledges to reverse all previous commitments to privatization and go back to state ownership of all companies that were going to be privatized, and hence continue the increase of bureaucratization, thus bringing back to life all the deadly worms that in the past gnawed and eroded the economic foundations of the country that brought it to its present calamitous state. Also in its foreign policy it commits itself to exit from NATO and seek a new alliance in South America, with such countries like Venezuela and Nicaragua, which, with mathematical precision would lead to the ‘Cubanization’ of Greece as well as leave the country geopolitically defenceless. But this is not surprising since many of Syriza’s higher echelons are strong votaries of Fidel Castro, Che Guevara, and Hugo Chavez; birds of a feather flock together.

Syriza’s economic and political manifesto is a draft of dangerous irresponsibility and naivety, doctrinal dogmatism and blindness, and swashbuckling political adventurism at its best. With its policies, the fate of Greece’s future generations will be played on the green tables of a casino with Alexis Tsipras playing high stakes poker–which, according to a latest interview he gave on American television, he loves–with other people’s money, and all he has to lose is Greece’s future.

All the President’s Disablers

I’m republishing the following piece for the readers of this new blog.

A response by Con George-Kotzabasis to:

All the President’s Enablers by Paul Krugman
The New York Times July 20, 2007

The fundamental principle of power and of any political activity is that these should never be any appearance of weakness. Niccolo Machiavelli

The eminent professor of economics Paul Krugman who ditched his solid professorial chair for the ephemeral glitter and celebrity status that accrues from being a peer pundit of The New York Times, ridicules George Bush, in his latest article, of a misplaced confidence that verges to a “lost touch with reality”. Confident to bring in Osama dead or alive, confident toward the insurgents “to bring it on”, confident that the war will be won, when the latest report of the National Intelligence Estimate is so gloomy about the prospects in Iraq and the war against al Qaeda that would make even the most optimistic of Presidents to have second thoughts about his policy, but not George Bush. Krugman states, “thanks to Mr. Bush’s poor leadership America is losing the struggle with al Qaeda. Yet Mr. Bush remains confident”. Such a stand “doesn’t demonstrate Mr. Bush’s strength of character” but his stubbornness to prove himself right despite the grim reality.

But Krugman saves his main grapeshot to fire it against the Republican doyen Senator Richard Luger and General Petraeus both of whom he considers to be the “smart sensible” enablers of the President. He argues that while Senator Luger knows, and indeed, acknowledges, that Bush’s policy in Iraq is wrong, he nonetheless is not prepared to take a strong stand against it. And he cleverly in anticipation of the September report of General Petraeus that might be favourable to the situation on the ground as an outcome of the surge, he launches a pre-emptive strike on the credibility of the general by quoting extensively from an article the latter wrote in the Washington Post on Sept. 26, 2004, whose assessment about Iraq at the time was overly optimistic if not completely wrong. In the article the general wrote, “that Iraqi leaders are stepping forward, leading their country and their security forces courageously” and “are displaying courage and resilience” and “momentum has gathered in recent months”. It’s by such implied non sequiturs that our former professor attempts to discredit General Petraeus. Just because he might have been “wrong” in the past it does not follow that he would be wrong also in the future. And Krugman caps his argument by saying that because of these “enablers” of the President, “Mr. Bush keeps doing damage because many people who understand how his folly is endangering the nation’s security still refuse, out of political caution and careerism, to do anything about it”.

But how serious are these strictures of Krugman against the President and his so called enablers? Let us first deal with the optimism of Bush and his confident statements about the war in Iraq and the struggle against al Qaeda. Krugman is lamentably forgetful that when the President committed the U.S. to take the fight to the terrorists he stated clearly and unambiguously that this would be a generational struggle. And in this long war against al Qaeda and its affiliates and those states that support them, he was confident that America would prevail. Hence all the confident statements of Bush were made in the context of a long span and not of a short one as Krugman with unusual cerebral myopia made them to be. His argument therefore against the President’s optimism and confidence, which he ridicules with the pleasure of one “twisting the knife”, is premised on a misperception. Moreover, did Krugman expect that the Commander-In-Chief of the sole superpower not to have expressed his hopefulness and confidence to the American people, when they were attacked so brutally on 9/11, that the U.S. in this long war would prevail? And is it possible that our pundit to be so unread in history and not to have realized that in all critical moments of a nation’s existence it’s of the utmost importance that its leaders rally their people against a mortal threat with statements of hope and confidence, as Winston Churchill did in the Second World War, that the nation would be victorious against its enemies? Would Krugman have the President of the United States adopt the gloom and doom of the so called realists as a strategy against al Qaeda, its numerous franchises, and the rogue states that support them by sinister and covert means?

Indeed, the liberal’s and The New York Times’  “Bush derangement syndrome…has spread” not only “to former loyal Bushies”, to quote Krugman , but to more than two thirds of the American people thanks to this ignominious coterie of  all the President’s disablers of the liberal establishment, and its pundits, like Paul Krugman. The paramount duty and responsibility of the media, being the Fourth Estate in the political structure of a democratic society, at a time when a nation faces and confronts a great danger from a remorseless and determined enemy, is to morally mobilize and rally its people behind their government and their armed forces that are engaged in war. In the present defensive pre-emptive war–the latter as a result of the nature of the enemy and his potential to acquire nuclear weapons–that has issued from the aftermath of 9/11 and the cogent convincing concerns of the Bush administration of a possible nexus in the near future between al Qaeda and its sundry affiliates with rogue states armed with weapons of mass destruction and nuclear ones, and the portentous and abysmal danger this would pose not only to the U.S. but to the world at large, the media has a “sacred” obligation to unite the American people behind its government of whatever political hue. No errors of judgment or mishandling the planning of the war by the Bush administration can excuse the media from abdicating from this historical responsibility.

There is no fogless war and no one can see and perceive and measure correctly all its dimensions. And the frailty of human nature further exacerbates this inability. But no Churchillian confidence in one’s actions and strategic acumen throws the towel because of mistakes. One corrects one’s errors and keeps intact his resolution to defeat the enemy with a new strategy. (And one has to be reminded that the greatest scientific discoveries have been built on a pile of mistakes.)  It would be an indelible obloquy to one’s amour propre to even consider that these uncivilized obtuse fanatics, and seventy-two virgin pursuers, could come close to conceiving a strategy that would defeat the know-how and scientific mastery of Western civilization and its epitome the United States of America. Only a lack of resolve of its politicians and its opinion-makers, as a result of their fatal embrace with supine populism, appeasement, and pacifism, could lead to such shameful and historic defeat.

America at this critical juncture of its historical and Herculean task to defeat Islamofascism in a long, far from free of heavy casualties, painstaking arduous war  needs a wise, imaginative, and resolute political and military leadership that will overcome all the difficulties and imponderables of war and will strike a decisive lethal blow to this determined suicidal enemy. The new “Surge” strategy of the resolute Bush administration implemented by that “superb commander”, according to his troops, General Petraeus, seems to be accomplishing its objectives. Two prominent and vehement critics of Bush Michael O’Hanlon and Kenneth Pollack of  The Brookings Institution who had accused the President of mishandling the war, after an eight-day visit in Iraq talking to high officials now believe that we are fighting in “a war we just might win”. And Petraeus, like a stronger Atlas, is pushing the rise of the sun of victory in the up till now dark sky of Iraq. Hence, the courageous actions and sacrifices of U.S soldiers in Iraq are not wasted and will be written with adamantine letters in the military annals. At this momentous noteworthy victory all the President’s and the nation’s disablers will be cast into the pit of ignominy by history. 

I rest on my oars: your turn now…