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Well, that was worth posting. (Sorry I didn't see it immediately).

I'm not capable of following the mathematical argument, but I'll take your word. As for practical measurement... Colman mentions unemployment, but let's go straight to employment, annual hours worked, where there are different measurement tools, concepts, and calculations, making international comparisons impossible (says OECD), and don't let's go on to output, productivity...

Possibly practical decisions can be made within one country, much like a businessman who doesn't understand his balance sheet, or has reason to know it's bs anyway, can still have a canny sense of how to run his business. But it's seat-of-pants flying... And may end in a nosedive.

The pretension to accurate drawing of a universal picture seems to have taken a knock with the World Bank's China PPP announcement. But if you're right and it's Aristotelian physics, 40% or 4% yardstick error, what does it matter?

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Nov 17th, 2007 at 02:51:55 PM EST
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Possibly practical decisions can be made within one country, much like a businessman who doesn't understand his balance sheet, or has reason to know it's bs anyway, can still have a canny sense of how to run his business.

That's exactly what Keynes was saying in The General Theory...

Nevertheless these difficulties are rightly regarded as 'conundrums'. They are 'purely theoretical' in the sense that they never perplex, or indeed enter in any way into, business decisions and have no relevance to the causal sequence of economic events, which are clear-cut and determinate in spite of the quantitative indeterminacy of these concepts. It is natural, therefore, to conclude that they not only lack precision but are unnecessary.


We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Nov 19th, 2007 at 02:45:51 AM EST
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It is natural, therefore, to conclude

Does he go on to say that this natural logic is justified?

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Nov 19th, 2007 at 03:53:07 AM EST
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What do you mean?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Nov 19th, 2007 at 08:21:17 AM EST
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Natural doesn't tell us if Keynes finally validates that conclusion. Does he in fact conclude that such instruments are unnecessary?

(In my example, I assumed a businessman was better off understanding the balance sheet all the same...)

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Nov 20th, 2007 at 03:09:59 AM EST
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Yes, he is concluding that (see BruceMcF's statement that Keynes worked with nominal GDP). But Keynes is very vague on the reasons why. The extended quote I gave is the entire argument as far as I can tell. So unless he developed it further in previous books, or it was "widely known" at the time that there were some problems (and what was the consensus back then?) it will be hard to figure out exactly what keynes had in mind.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Tue Nov 20th, 2007 at 03:31:03 AM EST
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