Date: 14 September 2006 (footnote added 22.9.2006)

Abstract:
We all, including economics professors, statisticians and journalists, know just by looking around that our comfort and prosperity is determined by the plethora of objects produced by technical innovations over the millennia, centuries and decades. The earnings of billionaire investment managers may come from their “services”, but their prosperity is manifest in their possession of, or ability to buy, things which have been grown, cooked, mined, constructed, or manufactured. However, by some quirk of social psychology, those economics professors, statisticians and journalists (and no doubt bankers too) apparently believe, simultaneously, that things are not “important”. Agriculture has already been written off as “contributing only 2% of the economy”, and manufacturing is “declining” towards the same invisibility. Recently headlines appeared in the Financial Times and the Daily Mail that “business and financial services eclipse manufacturing” and “the City is supreme as factories fade away”. What was the source of those preposterous views? None other that our Office of National Statistics, whose own press release had been headlined in a similar way. As usual there was no response from any quarter, not even from the CBI Manufacturing Council, to point out that the ONS data had absolutely nothing to do with the only aspect of manufacturing that matters for national prosperity, namely physical output. This note suggests that the ONS should put its house in order. We need not only facts, but a balanced presentation, without attention-seeking headlines.

The Office of National Statistics (ONS) and the "decline" of UK manufacturing

Imagine a pencil-making firm in some pastoral version of the Lake District. This firm uses its own employees to dig out the graphite, process it, shape it as leads for the pencils, tend its own trees, cut wood from them, season and prepare the wood, shape it as pencils, assemble the wood and graphite, paint the final product, pack it, transport it to little shops owned by the firm in all the surrounding villages, and finally, sell the pencils to the inhabitants.

The revenue, let us say, is £10000, and the final selling price of a pencil is 16p or £0.16.

This firm has no external inputs. Its output is formed entirely by the work of its own employees, working with tools and vehicles owned by the firm, in workshops and shops also owned by the firm. “The firm”, of course, is a collective name for the persons who own the capital, who pay the staff, and who pay themselves the surplus as recompense for their own efforts, and as the return due on the capital investments made in the past.

It is assumed that the firm buys nothing at all during one accounting year. The year’s revenue is accounted for exactly and in total by the sum of the payments to all employees and all owners.

Since there are no inputs, and the firm’s activities embrace all activity and capital up to the point of final sale to the consumer, the revenue of this firm, or equally, the total income provided by the firm to its employees and owners, is what economics statisticians would call the “output”, and at the same time, the “gross value added”, of the firm, at least if the statistics were being presented in the English language (ref. 1). The latter applies not only to the English-speaking countries, but to international institutions such as the European Union, the World bank, the International Monetary Fund, the United Nations, and generally to any individual non English-speaking country which wishes to make its statistics available to outsiders.

How does this usage, of what are after all normal words of the English language, compare with the reality?

The reality is that £10000 is the total revenue, or total income, or gross value added, generated by the firm, that this quantity is, as the words revenue and income imply in normal usage, merely a sum of money in units, (pounds sterling), which can convey no meaning whatever to any reader, unless that reader has some notion of the purchasing power of this unit. In the normal usage of the language, the output, product or production of the firm is not £10000, but a number of pencils. A number in this sense has no dimensions or units. One enumerates any body of objects, the fingers on one hand, the buttons on a cuff, by counting. Or in this case, one divides the revenue in pounds sterling (£10000) by the price per pencil in pounds sterling (£0.16), to give 62500 pencils, the £ units used in the ratio cancelling.

The foregoing must appear to any innocent reader as an unbelievably elementary account, perhaps aimed at page 2 of a primer for teenage students at GCSE level. Yet there is abundant evidence from press releases of the UK Office of National Statistics, and from commentaries by academics and journalists, that there is an ingrained conviction that the “output” presented in units of current pounds sterling in tables of “value added”, is indeed output, and is the chief indicator of what matters in the UK economy. To give just one example, in August 2005, the Office for National Statistics issued a news release (ref. 2) with the headline in very large type: “Business and financial services economic impact is double manufacturing”. This was based on figures showing that total income from sources defined by the ONS as manufacturing was only 15% of total income from all domestic sources (GDP), compared with 32% from sectors defined as business and financial services. The press duly followed with “business and financial services eclipse manufacturing” (Financial Times)(see ref. 10), and “the City is supreme as factories fade away” (Daily Mail). Nowhere, officially or in the press, was there any hint that the money figures had nothing to do with outcomes relating to the comfort and prosperity of the citizens, or that the business and financial services (and indeed all services) would evaporate to zero if manufacturing output were to cease.

It is conceivable that this rampantly idiotic misperception of what matters is confined to the Anglo-Saxon countries, perhaps only to the UK itself. A pointer to this possibility is that the European Union publishes summaries of national statistics for all member countries in three languages, English (ref. 1), German (ref. 3) and French (ref. 4). In the English version, the title of the document containing value added data in current money terms is “Output Side”. The German translation, presumably reflecting German national usage, does not use any of the eleven possibilities offered in my dictionary as a translation of “output”. It prefers “Entstehungsseite”, which might be roughly translated as “Origins Side”. Whereas the English word sounds as if something quantitative is being offered, the German, although almost equally zany in its own way, is merely pointing to the nature of the divisions, “agriculture”, “construction”, etc., as origins of income. In the titles of individual tables, the English drops output for value added, whereas the German sticks with something like “gross-worth-creation”, which is more or less equivalent to gross value added. The French version simply abandons any attempt to play this linguistic game. Both for the document title and for the table headings, it has the single term “Valeur ajoutée”. The officials of the United States also seem to be unaware of the importance given in UK English to this “output”. In a US database of 100 tables about the national economy (ref. 6), I found only two uses of the word, in relatively unimportant tables. The tentative conclusion I draw is that perhaps the UK is rather unusual, if not unique in not only labeling a table of current UK pounds with such a bizarrely inappropriate title as “output”, but in treating it in textual comment as if it was output, or of similar importance.

The perplexed plain man is bound to ask:     If what is called an output or a value added is in reality merely a money income expressed in current money units, would it not save a lot of idiotic commentary if the officials called it that – an income? (In ref. 5 – an ONS document - occurs the only place that so far I have been able to find, which actually abandons the usual rigmarole about inputs and outputs in relation to value added, but simply adds the incomes sent to employees, owners, and government from each sector – see, for example, page 358 of the reference.)

To say that banking and business services fill more pockets than manufacturing would surprise no one. But to say endlessly and without caveat that manufacturing is in process of “being eclipsed” or “fading away”, having less and less “economic impact”, is fully as absurd as saying that because the supply of air to breathe provides no income, it is of zero importance. Surely, when we turn away from the fantasies of journalists and professors, we can all see just by looking around, that without the modern abundance of manufactured goods (and goods of all kinds from tap water to ready meals to clothing to diesel fuel to housing and to aircraft), we would be back in the forests (although, even then, we might hope to possess the odd hut and spear). If this is so (and surely it is undeniable), then it must also be evident that virtually all of human economic activity is either in support of, or an adjunct to, the supply of physical goods - manufactured and other, much though the thought may be abhorred by the non-technical people who dominate the debate.

If, at the basic level portrayed above, there is a rooted inability to call a spade a spade, or even to see that it exists, it takes little to imagine the confusion which ensues when a simple concept like money is tampered with to provide what the statisticians tend to call “volumes”, a perfectly good alternative word for output.

In the simple illustration used above, the only product was a single-quality pencil. The volume of goods involved per year could be obtained by dividing one number in pounds, the revenue, by another number in pounds, the unique final sale price of each pencil. The product would need to be diversified only marginally to make this impossible. Even if there are two qualities of pencil, one superior at £0.25, one cheaper at £0.16, it becomes impossible to derive a volume expressed as one number. The same revenue as above, £10000 might be produced by the sale of 36000 pencils at £0.25, plus 6250 at £0.16, or by any other combination which yields the final revenue. As every 15-year old schoolboy knows (but seems to forget the moment he leaves school - especially if he becomes an economist), you cannot add apples and pears.

The statisticians, however, have to provide a number. The necessity proceeds from the fact of the continual change in the purchasing power of money, usually in a downwards direction. Everything that has been said above in relation to media fantasies relates to current money values, which are sufficient to show that money incomes from manufacturing in one year are a certain (always declining) fraction of total income in the same year. But everybody, of course, wants to know if we are better this year than last, and by how much.

By comparison with the pencil factory, national output (in the normal sense) is diverse almost beyond imagining. One product, electricity, is a pure commodity (i.e., it has no qualities apart from reliability), and the volume of national electrical output can be measured by one number, but this is unique. Even gas and oil vary very significantly in quality. As for adding the output of an ambulance service to that of an opera company, or even arriving at any notion of what their output is, the imaginings of one statistician are as good as another’s. The basic method, is to take the total income involved (which, for the whole country, is straightforward, in principle at least) and divide it by a price, and, for want of anything better, this price can only be the price of a representative “basket” of citizens’ purchases. How is this selected? And how is it adjusted to take account of changes in purchasing patterns? And how can it deal with changes (usually innovative improvements) in the intangible matter of quality? Goodness only knows, but the reader can imagine the options as well as anybody, and, no doubt, the international statistical fraternity have cobbled together a relatively uniform procedure. Actually, it is probably infinitely more important that the procedure should be uniform than that it should strive for complex detail. The nation can then compare the number of baskets affordable in one year compared with another year, and usually this is expressed as the annual percentage "real" growth rate of the income from domestic sources, i.e., the gross domestic product, or GDP. This latter term again illustrates the zanyness of the nomenclature. The GDP is unarguably nothing but a sum of money. If income deriving from sources abroad is added, the resulting sum is officially called the gross national income, or GNI. Why is one a product and the other an income? The god of statisticians only knows.

In an orderly world, a law would be passed forbidding that such annual growth rates should ever be re-expressed as money. It is permissible to give a table of growth rates for each year expressed as a percentage (an annex of the law would forbid more than one figure after the point). It is also permissible to select one year, call the GDP of that year 100.0, and use the percentages to scale this up and down for succeeding or preceding years. This form is called an index. I have the impression (not well researched) that the European Commission follows this law (ref. 7), and indeed that it may tend to eschew even indexes. The point is that if you read a percentage, it quite clearly disclaims any notion of an absolute value. A percentage must be relative to something else. With an index, it ought to be clear that a time-series expressed in this form can be multiplied throughout by any factor – an index too conveys only relative information. One member of the series of numbers, taken by itself, conveys nothing.

US and British statisticians often use indexes, but also can stoop to tabulating what they call chained volumes, expressed in the dollars (ref. 6) or pounds (ref. 8) of a chosen year. For that chosen year, all data are identical with that year’s data in current money terms, but for other years, the current money data are “deflated” (which in statistical jargon includes, when necessary, inflated) by the relative basket prices. This really is a sin, because, mathematically, this is an index, and it should be visually presented as such. The danger is, that when one moves from national volumes to sectoral volumes, the deflating factor for each sector is necessarily specific to the sector. While no one would dream of adding an index from one sector to an index from another, an innocent might imagine that two quantities seemingly expressed in terms of one unit, say “year 2000 US dollars”, could be added to give a meaningful sum, or divided to give a meaningful ratio.

An additional quibble is that whenever statisticians move from an index to “real terms money”, they at once abandon the normal feel for avoiding silly precision. Thus, while it would be recognized at once that to present an index based on 100.0 as 134.557 is visibly inappropriate (the apparent precision is wildly disconnected from the extremely arbitrary and approximate process involved in producing the number), the corresponding number expressed in year 2000 US dollars could very well be given as 11134.8 (this value is taken from an official US table - ref.9). Hardly anything in physics, a relatively precise science, is known to 6 significant figures. It is an everyday matter (and of course, perfectly proper) to see current money figures so quoted (say £1113.48 in a savings account), and it is this which leads (presumably) clever people to quote an utterly imprecise quantity (a current money value multiplied by the ratio of two very dubious basket prices) in a way which would attract heavy red marking in any schoolboy’s science exam paper.

The word “danger” was used above. In the context of this note, a very real danger is that if a journalist (but I do not exclude statisticians and professors) sees official figures for “the volume trend in value added” by the manufacturing sector in year 2000 pounds, and this number is a low percentage of the same measure for national “output” in year 2000 pounds, he will report (and why shouldn’t he if the official statisticians say so?) that manufacturing output is only a small fraction of total output.

This will flow from the pen, and be read by hundreds, perhaps, of interested and informed people, not many of whom will pause long enough to realize that while, for manufacturing, the sectoral income or value added can be mathematically expressed as a fraction of total income, the sectoral volume of output simply cannot be expressed as a fraction of total national volume of output. The outputs of a carpet factory and an opera company can hardly be defined in any convincing way, let alone divided to give a ratio. If both volumes were expressed as an index, say 134.6 for manufacturing and 131.2 for GDP, then it would be clear that there is no question of dividing one by the other. But, contrary to the dreary message of "decline" conveyed by the journalist, the true message would emerge, that manufacturing output has more than kept pace with GDP, in the years since the base year. Maybe the same tables would show that opera companies had kept up as well.

This danger is perhaps not just notional. It is conceivable that a country like the UK, whose educated class is informed day in and day out that manufacturing is “in decline”, is becoming ever less “important”, can be safely neglected because we are wonderful at banking services, could do itself a lot of harm. The only defence is the possibility that that our manufacturers do not read the papers, or ignore what they read, and will go blindly on, producing more and more. Or that we can depend on takeovers by foreigners to rescue us.

Is there a message from these observations?

First, the ONS should stand back and keep in the forefront of their minds that their arbitrary categorisation of economic sectors, while useful for analysis, does not exist in the real world. Huge swathes of our wonderful services sectors – retail, transport, finance, consultancy, design, parts of education – are there as essential supports of the industrial system, and would cease to function without the industrial link. Others depend on industrial goods to perform their service. The rest are performing services largely to obtain the money with which to buy the physical wherewithal to live.

Second, they should brush up on elementary mathematical concepts, such as units of measurement, dimensionless numbers, and, in a subject where precision is absent, abandon the idiocy and futility (to say nothing of the wastefulness of space) of printing numbers of digits far beyond anything you would find in more precise subjects. If a number is an index, don’t disguise it by quoting it in monetary units.

Third, try to take a lead in establishing a technical vocabulary where one word has one defined and constant meaning throughout the civilised world.

References

1.       Value added - English version

2.       The ONS press release

3.       Value added - German version

4.       Value added - French version

5.       ONS input-output analyses

6.       The US GDP database

7.       European Economy, Statistical annex

8.       The Blue Book

9.       The US GDP database - see Table 1.1.6

10.       Added 22.9.2006     Almost on cue, as far as this note is concerned, Philip Stephens, an associate editor of the Financial Times, had the following passage in an article published today:

"Britain does not make things any more – not much, anyway. The share of manufacturing in national income has been in decline for several decades. Since 1997 it has fallen from 20 to below 15 per cent."

This seems to trace directly from the ONS press release, issued on 19.8.2005 (ref. 2 above). Other ONS data shows that, in fact, current UK manufacturing output is the highest in history.

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Links to other papers

WITTGENSTEIN & RUSSELL - GIANT PYGMIES
Reading notes on the Tractatus Logico-Philosophicus

Abstract:
    Wittgenstein and Russell both in their different ways showed that they believed that ultimately, there were better things to do with one’s life than study or talk about philosophy. Both were remarkable men. The words of both appear in the English translation of the Tractatus, Russell’s in his introduction to Wittgenstein’s book. This note comments on these words, almost one at a time. The lack of clarity, logic and coherence of both authors raises the puzzling question – in what does greatness lie? Is it in personality, debating skill, membership of a mutually admiring elite? This note discovers nothing of interest or importance in anything actually written between the covers of this book. The note is essentially reading notes, as was my note on Keynes’ General Theory. I recall that when Keynes’ friend and rival, Pigou, vigorously attacked Keynes immediately the General Theory was published, he wrote that, “since a detailed running commentary would be both tedious and un-illuminating, I shall not adopt that method”. The notes below follow precisely this tedious route. The truth cannot always be entertaining. Pigou chose to challenge Keynes on the latter’s home ground, as a debater, a predictably hopeless task. For Wittgenstein, as for Keynes, I might argue that his work can be examined only by dismantling his rhetoric line by line to lay bare its lack of discipline, of coherence, of logical development, and of content.
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A LOGICAL VACUUM
- Reading notes on Keynes' The General Theory of Employment, Interest and Money, 1936

Abstract:
When Pigou vigorously attacked Keynes immediately the General Theory was published, he wrote that, “since a detailed running commentary would be both tedious and un-illuminating, I shall not adopt that method”. These reading notes follow precisely this tedious route. The truth cannot always be entertaining. Keynes was one of the most fluent and plausible rhetoricians of his age, and it could be argued that his work can be examined only by dismantling his rhetoric line by line to expose the total logical vacuum which in cold objective fact the General Theory is.

Keynes’ book was seemingly written at speed, contains no bibliography, virtually no mention of factual data, little evidence, pseudo-algebra only for appearances, no attempt at anything which could be called scientific method. His acknowledged greatness lay in his cleverness, and his great skill as a debater, negotiator, journalist, and politician, not at all in his ability or interest in searching out the truth. His “theory” is presented in terms of mechanistic cause-and-effect models of economic society, but quite demonstrably, these models are based on nothing but the repetitious re-statement of Keynes’s prior and evidence-free conviction that the cure for unemployment and recession is to stimulate spending, any spending, useful or useless, either by individuals or by governments. Keynes used every rhetorical trick imaginable to hide the empty centre of his work, from “as I shall show … ” onwards. His mainstay, as Pigou remarked, was a deliberate lack of precision and clarity. The great sociological mystery is - how did this transparently fact-free “theory” sweep everything before it?
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IS LOW INFLATION AN IMPORTANT CONDITION FOR HIGH GROWTH?

Abstract. It seems rash even to raise the question in the title. The universal belief is that the answer is and must be "yes". Yet factual evidence for this belief is curiously lacking, maybe even felt to be unnecessary. This paper takes what is thought to be all the, not very voluminous, post-war factual data which exists and which may bear on the matter, and treats this data in every plausible way to find if any convincing demonstration is possible that low inflation is associated with high long term growth rate in GNP. This includes special attention to Germany, the country which is the popular (and sole) paradigm among UK authorities and commentators. The paper concludes that no such demonstration is possible.
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INFLATION AND GROWTH

Abstract. In a previous paper, the author concluded that there was no evidence that low inflation was associated with improved growth rate. In this note, he examines a paper by R. J. Barro which tends to the opposing view. He suggests that the evidence of this paper in fact reinforces his conclusion.
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GROWTH IS NOT CORRELATED WITH INFLATION

Abstract. In a previous paper, the author concluded that there was no evidence that low inflation was associated with improved growth rate. In a later note, he examined a paper by R. J. Barro which tended to the opposing view, and suggested that the evidence of that paper in fact reinforced his conclusion. In this note he comments on a paper by W. R. J. Alexander, concluding that time series analysis, especially with additional variables as in this paper, is unlikely to be able to contradict cross-section results.
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THE FUNCTION OF THE CENTRAL BANK

WoPEc - Working papers in economics - WUSTL January 2002 Paper in pdf form

Abstract. The general view of the media, bankers, business and politicians, not noticeably contradicted by academics, is that one of the main functions, or the main function, of the central bank is to analyse the progress of the economy, and then to steer it with skilful judgement towards health and growth, by making decisions to change their base interest rate, with carefully chosen timing, amount and direction. The data presented here show that it is impossible to sustain this notion of skilful time-critical steering, or even that the central bank does in fact lead or determine the short term interest rates available to savers or business. The contrary proposition, that commercial short-term interest rates are in fact observed and followed by the central bank, is mathematically sustainable, and generally in accord with the observed facts.
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CENTRAL BANK INTEREST RATE MONITOR

WoPEc - Working papers in economics - WUSTL May 2003 Paper in pdf form

Abstract:     Following on from the note entitled “The Function of the Central Bank” (see above), this note brings the data up to date. It will be re-issued at intervals. It will monitor the tendency of short-term interest rates, give the author's judgement on the likely movement of the central bank rate in the UK, US and EU zones, and enable the reader to make his own judgement. An addendum shows that by the normal standards of statistical testing (which by their nature must always fall short of proof), the 3-month bank rate leads the changes announced by the central banks in their base rates.
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THE ABSENCE FROM PUBLIC DISCOURSE OF EVALUATIONS OF GDP BASED ON PURCHASING POWER

Abstract.     Politicians, journalists - commentators on economic matters generally - evolve a sort of quasi-stable rhetoric. They select two or three foreign countries with which they like to compare their own, either as models to be followed, or traps to be avoided. Other countries are rarely or never mentioned. They repeat over and over again mantras such as "we are the fourth largest economy in the world" in the UK, or variants of "the dot.com revolution" or "the new paradigm" in the USA. In arguments in the UK over the replacement of sterling by the Euro, it is almost a daily occurrence to hear growth in the UK contrasted with recession in Eurozone Germany. It appears likely that these stories emerge in part from appraisals of GDP expressed for the purpose of cross-country comparison in a currency unit (the Euro or dollar, say) calculated at the ruling rate of exchange. This calculation can be done instantly. It is "news". The more recent method of using purchasing power is much more complex and its results are published late. They are not "news", and do not affect the established rhetoric. Nevertheless, they are the truth, or as near to that as economic data can be, and often quite strikingly at variance with the current story.
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DE-INDUSTRIALISATION

WoPEc - Working papers in economics - WUSTL January 1996 Paper in pdf form

Abstract. The notion of de-industrialisation arises from the fact that industrial employment, having risen rapidly, is now in equally rapid decline. This paper presents the view that agriculture and industry together form, and have always formed, a "primary" sector which from the beginning, because of its inherent capacity for productivity gains, has progressively freed labour for non-productive work. The "industrial" revolution was really a "primary sector" (in the above sense) revolution. There is no new phenomenon of de-industrialisation, merely a speeding up of a process of labour-freeing from the primary sector, whose ever decreasing work force produces ever increasing output.
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ABSTRACTIONS, THINGS, WEALTH, AND DEINDUSTRIALIZATION

WoPEc - Working papers in economics - WUSTL April 1998 Paper in pdf form

Abstract. Economic theory is dominated by abstract structures. Underneath, there is no firm foundation. Above, there is a lack of rigorous confrontation with established fact. Basic theoretical concepts have no acknowledged definition. The apparatus of graphs, algebra and technical vocabulary are often vehicles for rhetoric rather than descriptions of truth. In this abstract world, it seems to be accepted without embarrassment that all opinions are possible, while adopting the style of science in delivering each conclusion as if it was a fact. The closest parallel is perhaps with theology, where also each practitioner presents his story as fact, but there are differing stories. This paper illustrates this theme, with particular reference to "deindustrialization".

It points out that it is tangible things which are the primary measure, literally the sine qua non, of all material, cultural and intellectual progress. Official statistics necessarily aggregate market transactions involving tangibles and intangibles at monetary exchange values. However it is an error, in the sense of being a misperception leading to wrong action, to mistake this equivalencing of things and non-things as more than a necessary procedural fiction. In this system, one opera performance equals, say, 100 lorryloads of gravel, but the logical reality is that gravel is part of the primary inventory, opera and all other intangibles are secondary or consequential. This inversion of the important and the estimable lies behind the paradox of the deindustrialization which is in process and the deagriculturalization which has already run its course in some parts of the world - namely that our entire civilisation rests (and logically and factually must always rest) on the output of this (in employment terms) disappearing sector. Eventually, the sector which ultimately produces all value will appear in the statistics as one which adds zero value in current terms. Fortunately, the real word of affairs shows no sign of acting on this erroneous perception. For those accustomed to see the world in abstractions, misperceptions still seem to obscure the reality.
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DE-INDUSTRIALISATION II

WoPEc - Working papers in economics - WUSTL July 2001 Paper in pdf form

Abstract: Is industrial production relatively in decline? No, it is not. This note displays the evidence that for the last 40 years, in the 6 largest economies of the world, industrial production has kept pace with total output.
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DE-INDUSTRIALISATION III

WoPEc - Working papers in economics - WUSTL December 2002 Paper in pdf form

Abstract:     The author of this note takes it as self evident that prosperity and the provision of "things" (buildings, roads, furniture, furnishings, clothes, machines and equipment of all sorts) go together. The way people generally speak and act is in line with this view. If this is so, domestic manufacturing must continually keep pace with gross domestic product, provided that the necessary "things" are not imported from elsewhere. However, many people are persuaded that domestic manufacturing is in terminal decline, and that the lost output is being replaced by imports from the developing world. Almost daily, one may read of manufacturing jobs being "exported" to the Far East. However, it is simply impossible to import goods without a more or less balancing volume of exports, and there is in reality limited scope for exporting a sufficient volume of services. Imports of goods must more or less be balanced by the export of domestically produced goods. How can a widespread perception of decline be reconciled with a reality of growth? The answer is that the "decline" which is perceived is a decline in employment in the industrial sector, but this decline is more than counterbalanced by the rise of productivity, so that the domestic output of goods by and large keeps pace with the growth of GDP. This note summarises the statistical evidence for the accuracy of this view. A substantial footnote discusses the role of journalists and academics in sustaining the perception of the decline of manufacturing.
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ESSAY ON BAYES

WoPEc - Working papers in economics - WUSTL June 1999 Paper in pdf form

Abstract. It has been said, fairly plausibly, that "Bayesian inference is one of the most widely known eponyms in all of science". But unlike common scientific eponyms, it is by no means clear exactly what "Bayesian" means, and what it has to do with Bayes. "Bayesian", and the dozen or so words and phrases which are usually associated with it, seem to be more like unspecific words of the English language, deployed by an author as he wishes, rather than fixed technical terms. The obscurity of the language, relative to the precise meanings associated with, say, Newton's laws or Heisenberg's uncertainty principle, is matched by the obscurity of the history - the virtually unknown Bayes, the posthumous paper, the impenetrable and incoherent style, the muddled logic, the virtual silence on his work for 200 years, the sudden emergence in the last several decades, not of new knowledge, but of new Bayesian additions to the vocabulary. This note surveys the notions and the history. It concludes that the Bayesian vocabulary is vague and pretentious, and serves no useful purpose.
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Notes on REDMAN, ECONOMICS AND THE PHILOSOPHY OF SCIENCE

Abstract:
These are critical notes made while reading Deborah A Redmans's "Economics and the Philosophy of Science". The philosophy is largely that of Popper, Kuhn and Lakatos. Redman begins in the style of a neutral reporter, but later shows her impatience with the confusions sown by those eminent people. Hutchison supplies the main sceptical comments. My main comment is that neither Redman, nor the philosophers she quotes, appear to recognise that it is simply impossible to discuss "science" if the unstated assumption is that science is whatever anyone chooses to call science. One has to start with the strikingly observed worldwide unanimity of physicists and chemists within their respective disciplines, and take account of the fall-off of unanimity (that is, the widening scope for disagreement) as one moves through biology, medicine, etc. (that is, as the matters studied become more and more complex). Economists are in the absurd situation of claiming to be scientists, or at least, wanting to appear to be scientific, when the matters they study are simply too complex ever to lead to consensus. The absurdity is demonstrated when, for example, Friedman is cited in this book as claiming that there is no fundamental distinction between economics and the physical sciences. At the other end of the spectrum, historians and philosophers do well to ply their trade without making inappropriate claims of objectivity.
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THE PIPEDREAM OF E O WILSON’S "CONSILIENCE"

Abstract:
E O Wilson’s book "Consilience" is a notably unscientific plea for science to take over the so-called social sciences, from economics to psychology, and extend also into art and religion. The text rambles on, with exalted brilliance according to one reviewer, over this whole field, but the brilliance sheds no new light, and fails to explain exactly what consilience is, how it might be achieved, and what benefit would result if any of these subjects (for example, art) was connected back to genes, biology, chemistry and finally physics. It is not mentioned that such a connection to the "harder" sciences is in any case a pipedream.
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Franz Grillparzer    DER ARME SPIELMANN   

This is my own translation of a work which appears from the bibliography to have a significant English-speaking audience, but of which there seems to be no readily accessible English version.
English translation

This counter is freely available from John and Ann Lockett's site at www.lockettpots.uklinux.net