One handed economics

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Man Bites Man! One-Handed Economics?
1
As they say be careful what you wish for. The trouble is that swords have a double-edge. Truman
was hoping for answers from one handed economists, but unfortunately, that may have been of
the kind similar to those driven by clever tumblers and found in casinos. One policy would be
argued forcefully by an economist, then, "on the other hand" the economist's latent litany of
doubts would follow.
Truman's lamentation was really that economics is scholasticism, not a reliable tool like Hook's
Law or Ohm’s power formula, or the Right Hand Rule derived from scientific method. Just as
what is overlooked, Kahnemann's rational System 2 only works where the formulas do work,
provably. Doubt is best until faced with proof. Hypothesis is only observation even if often
repeated but not proof unless testable. Rhetoric requires no science outside itself.
Every theory in economics has been sophism rendered as negotiable, a political tool of rhetoric.
All are faith, subject of schisms, mutable because there is no empirical test possible of what is
devised as justification for policy. Ruefully as President Truman asked for a one-handed
economist, he asked for rational demonstrable and accountable practices.
That is the consequence of conventional thought Drucker referred to as clever, brilliant and
bankrupt economics1
. He might have been tactful and said complex obscure and deficient. Any
determinist synthesis of two or more untestable hypotheses does not a valid theory make. They
are left with their faith in what amounts to an arsenal of divining rods and martingales, or
tumblers and dice. The illusion of pea and shell might as well do, for repertoire.
The relationship of scientific discovery to justify economics by metaphor and allegory in lieu of
testable hypothesis was established, right at this beginning of the intellectual foundations of the
abysmal science. Ultimately Physiocrats insisted the merchant class as sterile out of their
preference for patronage of landed gentry among whom they list themselves.
The Physiocrats at least dealt with the obvious, clearly visible, while surficially tying all to land
value, consistent with their preference for landowner and property. However, it is just rhetoric of
a Greek classical erudition St Augustine extolled and Bacon rebuked. The Physiocrats sanguine
metaphor made popular by Quesnay’s enthusiasm for Harvey’s discovery of vascularity, rather
than empirical economic fact of an enslaved serfdom and fixed money “the sanguinarity of land”
1
Peter F. Drucker, The Unseen Revolution (New York: Harper & Row, 1976), pp. 114–15
“The strongest arguments prove nothing so long as the conclusions are not verified by
experience. Experimental science is the queen of sciences and the goal of all speculation.” – Friar
Roger Bacon (c. 1214–1294)
“What we know is a drop, what we don't know is an ocean.” - Sir Isaac Newton
"All my economists say, 'on the one hand... and on the other hand’... Someone give me a one-
handed economist!" - President Harry Truman

“
drove their principles of nutritional value at root creating all wealth. Meanwhile the creations of
luxury were those on which they lavished their wealth as rentiers of their Second Estate
corporate farmlands made productive by the Third Estate of peasants. The Fourth Estate must be
sterile for those views to pertain. Today management treats labour much the same as that wish.
The Pysiocrats’ bias was clear in likening nutritional surplus production under their control as
the only resource of a national economy substantiated all else as dependent, in their world view
of God’s perfect creation fixed and unchanging under God and Sun-King. Even as Adam Smith
published, Wealth, Edward Gibbons2
extended the Physiocratic metaphor to rewrite explanations
for Rome’s economic history as seen in produce of the land as supreme instrument when luxury
goods dominated trade records for millennia through Africa to Ceylon, while the rich plains of
Gaul provided grains and timber as they were cleared and occupied.
Given Roman ostentatious display of Baltic amber it became traded at near the weight of gold,
much to tribal glee. Such luxury seeking lead to debasement ruining the solidus before its
disappearance after also the disappearance of three legions in Teutoburg to enforce amber trade.
Gibbon applied his bias as he retold Tacitus’ record3
. So much of economics does not even relate
to history for its examples as known at its writing, but reinterpreted to suit newly current bias.
Silver coins most often became more widely distributed with scarcity of gold as was often found
buried. Biblically, Herod family rule is entirely based on such a find of buried gold coin looting
King David’s tomb to pay 3000 talents to break Jerusalem siege by Antiochus. Remnant was
sufficient to finance several cities fitted with aqueducts and public temples and attain political
position for his heirs.
Silver and bronze numissa replacement resorted to in Antonine, Constantine and Justinian rule
remained in circulation while gold just disappeared. Gresham’s name is merely attached to an
ancient repeated economic phenomenon. Dukes would scoop the Carolingian gold livres and
debase alloy into their own mintings. Even silver became so adulterated as to be known as
argentis nigra, silver blackened, with bronze. The finest Flemish wool cloth was given Harun
Al-Rashid in diplomatic friendship tribute4
in 799 for which Charlemagne received a clock.
No matter where you read in history even into the limited surviving chronicles and records of the
European Middle Ages with its successive disasters from intrigues for war, nobles
marauding brigandry, and plague, you read about lack of demand due to depopulation causing
inflation, scarcity of goods and of labour causing inflation, devaluation of the coin to finance
wars causing inflation5
. Much just does not fit with economic theory written in texts and spouted
even today, in evening business news and houses of representatives in parliament.
2
Edward Gibbons, Decline and Fall of the Roman Empire, 1776
3
Publius or Gaius Cornelius Tacitus (ca. 56–ca. 117), Germania, Agricola, trans, R.B Townshend, London, 1894
4
H. St. L. B. Moss, The Birth of the Middle Ages, Oxford, 1935
5
Barbara Tuchman, A Distant Mirror: The Calamitous 14th Century, New York, 1978

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To conform to his particular bias Pirene6
rewrites the silver mining from 10th
century at
Rammelsberg as recorded, by Adam of Bremen7
, to 15th
century, completely ignoring Henry II
minting of coins in Goslar, 1002, two and half centuries before gros tournouis of Louis IX in
Liege or florins in Florence, and reintroduction of gold coin in Sicily. No one confirms where
this new gold was mined, though Mali is likely, courtesy of the Berber trade.
Merchant trade and the rise of villains through craft guilds and faubourg market towns slips
Pirene’s explanation that gold renewed trade flows in Europe. Trade had spread already for four
centuries even on letters of credit and usury notes for return while stumbling over nobles’ tolls
and outright larceny as chronicled. Faith trumps experience and scientific method. The brigandry
of nobles’ mercenary armies was necessary for their chivalrous wars or their idled support.
Inflation is the one factor that evidences growth in the business cycle but the one thing Statutes
of Labour had attempted to constrain and withstood Charter of Liberties and Magna Carta until
the Rand Formula finally knocked-down, but not out. Exploitation of the coloni is still wanted as
presently argued in campaign rhetoric nearer two millennia later than introduced by Justinian.
Inflation is the lungs of the economy filling. It fills with population growth or raised productivity
and the advantages obtained of innovation. Just do not hyperventilate or confusion will spread.
“Treacle-down” has been shown8
one third as effective as targeted stimulus at the labour end of
consumer income. Even the basic as every barrow-boy knows that without a buyer’s demand
there will be no sale, becomes victim to substitute 'truisms' of supply-side and trickle-down
bunkum. The rhetoric where "deficits do not matter" goes forward in a real world we suffer. That
is a falsity we continue to debate for restoration long past its evident failure in practice. Many
will ignore the rhymes of history to proselytize policy to their advantage. Among the most
diverse educated and literate society, mysticism abounds, subversion and newspeak still works.
Confidence builds the terms for any enterprise, even medieval wars of princes and papacy over
property and wealth production; or, Madison’s Men pitch of product preferences creating
demand. Veblen has been largely marginalized footnote but conspicuous consumption has
consistently been an issue of public policy and the core of Madison Avenue persuasion practices.
It has taken an extensive amount of hypothesis-test-analysis-synthesis to displace the diving rod
for finding water or surgeon’s four humours of diagnosis. The foundations of science Roger
Bacon laid-out were in his ‘heresy’ of direct experience, empirical justification, in opposition to
Curial cant and scholasticism of Augustine. Humanism has its roots in the muddle.
Our scientific reliance on experience adduces we understand less than 4% of the universe
phenomena, as we pose strings and theory of everything to unify separate forces. The rest is dark
6
Henri Pirene, Economic and Social History of Medieval Europe, 1933, trans 1936
7
Gesta Hammaburgensis Ecclesiae Pontificum, trans., Francis J. Tschan. Columbia University Press. New York (1959)
8
Robert Reich, Aftershock: The Next Economy and America's Future, 2010

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matter and dark energy. Our recognizance of our ignorance9
just grows larger. Economics has
tried so very hard to be regarded as science, but their meaning is as technology. As science
economics cannot qualify, and not gotten to either, yet, preferring sophist allusion much as
ancient rhetoric was ‘science’ in Friar Roger Bacon’s time. Despite the furious tries of so many
talented clever and bright minds they are still unable to adequately attest what goes in and what
comes out while the economic box itself remained a black whole adding nothing to science10
.
In their seas of equilibrium they are attuned to see only fog where clouds cannot be real. Their
views can seem only a compendium of highly scholastic rhetoric when confronted with real
economy of the real world. Can there be any wonder Soros and Dalio prefer keeping a weather
eye to economic theory while preferring their profit to loss?
The wayfarers of Polynesia with each season would look to the patterns of waves, directions of
flotsam currents and rising clouds at sea to find their way to land11
. An unerring rhythm of the
markets we have found is the tendency for stocks trading above our Risk Price to continue rising
in price. It may be the collective wisdom and wonk of the market buyer to be so inclined, but that
is commentary aside from the facts. We can feed on the facts while saving the sophist
speculations for dessert amusement.
Economists trained to optimize fund performance based on their studious models discerning brief
intervals for arbitrage do gape in awe of the results Dalio, Soros and Robertson have obtained.
These former paragons of profit affirm hopeful and ambitious claims made for the conventional
studied methods are large and sufficient, but simply do not bear out. Dalio, Soros and Robertson
are towering examples to the industry for long run success, yet have not relied on the
conventional methods analyst Houyhnhnms use after their extensive study of equilibrium.
The broad patterns and rhythms of the market are what these paragons have sought to find out.
They have looked for the behaviours of market participants. They have sought out the “music of
spheres” of market buyers as spheres of market influence, as the ancients would have
encouraged. They found them not epicyclic as tradition insisted and Curia would require but
elliptical as Kepler resolved. Literally they indulge in a life-long search for the ‘score’ of the
market to find its metre. Their heuristic takes over where rational measures leave others
indecisive, as the economists to Truman, left-off groping for the not quite right conviction but
useful answer for their political moment. Science should trump rhetoric.
Fortunately our Risk Price has proven itself, logically, and mathematically. It is a metric that
empirically has offered us a score sheet on which the markets’ metre can be seen and its equities
measure taken. While our back testing of more than a decade of DJI market data clearly shows
and confirms the tendency, more importantly, the blind test as we have put into public display in
9
The Encyclopedia of Ignorance, edited by R. Duncan and M. Weston-Smith, 1977 Pergamon Press Ltd, Oxford.
10
Ibid, of 51 essays from cosmology to artificial intelligence, no essay could be offered for economics. “They are ill discoverers
that think there is no land when they can see nothing but sea” - Sir Francis Bacon
11
Wade Davis, The Wayfinders: Why Ancient Wisdom Matters in the Modern World, Massey lecture, 2010

“
A-B-C realtime test has offered similar results in the TSX and NYSE partitions of “likeables” as
we do obtain.
We recognize not all markets behave the same, just as our results do confirm for each market.
The tendency of the Dow-Jones Indices is prone to lesser gains but higher dividends than the
more diverse and innovative firms traded in the NASDAQ. We are able to digest the results in
market segments just as well. We can fairly say the Modal Geometry of the Firm12
is the only
theory of the firm, just as continues to prove itself to be.
We invest to earn wealth. You should too.
Our reasons for having any equity in our portfolios are clear, concise and consistent. The equities
we hold are “likeables” tending to gain 67% of the time. We do not make stock prices but can
reasonably respond to stock price tendencies, by our knowing the price of risk, the downside, and
buying and holding accordingly. That is new fundamentals from theory we have put into policy
obtaining 29% IRR average.
Know What You Have. Have What You Know
Our view is risk averse. Of course we require a fee for doing that. Mail us for our help.
Ernst and Hans Goetze,
Architypes Inc and StockTakers Limited
Head Office
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450 538-1270
12
E. Goetze, The Modal Geometry of the Firm and the Balance Sheet Worth of the Trading Connections, unpublished
manuscript, 2006 and 2010, available from the author.

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