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Most recent update: Jul 3rd, 2017 - 15:54:31

REAL Economics : Belief Systems

As we noted previously, "Truth can have a variety of meanings, such as the state of being in accord with a particular fact or reality, or being in accord with the body of real things, real events, an actuality, or having fidelity to an original, or fidelity to a standard or an ideal. The opposite of truth is falsehood, which can correspondingly take logical, factual or ethical meanings."

Notice how this definition describes falsehood. It is the opposite of truth in that it does not relate to reality or is not based on factual observations but of course we can still, "correspondingly take logical, factual or ethical meanings".

In other words we can still build up a story with logical argument but if it is not grounded in real observed facts (in the scientific sense) then it will be a fairy story.

Science is based on direct observable facts with which all can agree. We all see the effects of gravity and we all agree that there is a force pulling bodies on Earth down directly towards the centre of the Earth. The force of gravity is directly felt by us all and no-one would argue that it does not exist. This is a scientific fact. If we make logical arguments based on this agreed fact then we develop a scientific system which we know to be the truth. Further, we can make careful measurements of the effects of the force of gravity and from these new facts we can make predictions about how bodies will move under the influence of Earth's gravity. We develop and extend our scientific system. If our predictions always come true we then develop a great deal of trust in our theory about gravity and if it remains true for many decades or centuries then we call our theory a scientific law.

However, any scientific theory - even a law - is still subject to continual assessment. It is possible that something could be wrong with the theory but we just haven't discovered it yet. If we do discover a case which doesn't accord with our theory then the theory is wrong.

If a theory is shown to be wrong then it is a falsehood and it's predictive value drops to zero.

When we consider Belief Systems we come across a group of ideas that seem to have all the attributes of a scientific theory but when we examine the basic "facts" upon which the theory is based we discover that some or all of them are not facts. We might also discover flaws in the arguments made, so that the conclusions do not follow logically from the premises.

Our world is full of Belief Systems which people believe to be true but which are not based on observed facts. Now the Belief might be true or it might be false. If it is not based on observable facts in the real world then it might be true just by coincidence but it has not been proven true. If we test the predictions of the Belief System and find one that is not true than the Belief System is false and tells us nothing useful about the real world.

More than that it will mislead us and can lead to many problems and arguments and a great deal of unhappiness.

All Systems of Belief and Science should be continually subject to reality tests to see if they are true or not. If their predictions are not true then the system is not true.

Humans are great at believing what they want to believe. It makes the world nicer to live in. Just like the child who believes that there are fairies at the bottom of the garden and Santa Claus gives them presents at Xmas, feels that she lives in a nice comfortable world.

As children grow up however they begin to discover the horrible truth. Santa is not real!

Oct 11, 2010, 11:30

REAL Economics : Belief Systems
Religions Are Belief Systems

This is not to say that a religion is not true. It is to illustrate that because a religion is a belief system it is not possible to prove that it is true. Neither is it possible to prove that it is false - in the sense that we define these words in our introduction.
(See http://en.wikipedia.org/wiki/Religion)

Remember, one counter example of a scientific theory proves that it is false. Proving it is true is not so easy. It takes many examples showing it is true before we begin to think that it is true but we are always ready to find somewhere, something that shows our much loved theory to be wrong - or preferably that someone else's theory is wrong.

When we look at religions we see that they all teach different things. They consist of the teachings of leaders, prophets and wise men. They tell stories about how the world was formed and how mankind came to exist.

If we look at these ideas we see that they are all different and because of this they cannot all be true. Maybe one religion is true but it is not possible to prove that it is true. Neither is it possible to prove that it is false.

We just have our own beliefs and that is that.

Oct 10, 2010, 12:36

REAL Economics : Belief Systems
Placebos are Belief Systems

The human brain is a very powerful part of our body. Just believing something, can actually cause it to happen. People can believe that a condition is curable and it can be cured even though medical science cannot show the link between cause and effect. "It works but we don't know how."
(See http://en.wikipedia.org/wiki/Placebo)

Hypnotism is also a means of causing changes in the body by using the mind.
(See http://en.wikipedia.org/wiki/Hypnosis)

People can be cured of cigarette smoking by hypnosis. The mind really believes that cigarettes taste dreadful and the body responds accordingly. Mind over matter in fact. This means that hypnosis can be described as a placebo - a very powerful placebo.

So belief systems are very powerful and can be very useful.

Oct 9, 2010, 12:55

REAL Economics : Belief Systems
Climate Change - Belief System or Science

With all the propaganda we experience about Climate Change we can just about say without further thought that it must be a Belief System. Don't believers claim that non-believers are Climate Change deniers?

An enormous amount of effort has gone into converting the world into believers of Global Warming and Climate Change. Why is this happening? If we follow the money (as they do in the best detective novels) we see that the new Carbon Taxes are producing significant increases in taxation, even as the world is trembling on the edge of a double dip recession. We also see that some corporations are making large amounts of money from government handouts to help with Green Electricity - producing power from windmills which is much more expensive than most other methods and only exists as it does today because of government subsidisation.

Remember that the argument was not about "Climate Change" but about "Global Warming". The hypothesis was that carbon dioxide produced by human activity was excessive and was causing the "greenhouse effect". This is what was supposed to be causing global warming.

Unfortunately the world seems to be cooling at the moment.
(See http://climaterealists.com/index.php?id=6017)
(See http://blogs.telegraph.co.uk/news/jamesdelingpole/100055500/global-cooling-and-the-new-world-order/)

Now, this is not the time or place for a detailed argument about the pros and cons of climate change but it would be in order to try to get this subject into perspective.

Earth's climate has been changing ever since creation (another topic ripe with pungent belief systems) and it is still changing today. In our recent past, geologically speaking, we have seen a succession of Ice Ages. Each one followed by a warm period. Obviously this warm period started cold and warmed up for a while - a few tens of thousands of years - and then cooled down again to the next Ice Age.

We are currently in between Ice Ages and experiencing a nice warm period of Earth's history. So it may help to see what we know from scientific studies of climate change:

First of all, the Ice Ages:
(See, http://en.wikipedia.org/wiki/Ice_age)

An understanding from the geologists point of view:
(See, http://en.wikipedia.org/wiki/Pleistocene)

What mankind was doing during this period:
(See, http://en.wikipedia.org/wiki/Paleolithic)

And a look at the last glacial period:
(See, http://en.wikipedia.org/wiki/Last_glacial_period)

But what does our Wikipedia have to say about global warming?
(See, http://en.wikipedia.org/wiki/Global_warming)

So there we have it. You will have to make up your own mind about this controversial subject. It is included in our work on REAL Economics to illustrate the point about the value of not progressing a study without laying a firm foundation and then continually referring back to basics that are properly understood and agreed.

Some scientists value this perspective greatly and are very concerned that money can make such a difference to a scientific(?) study - as illustrated in the next section.

Oct 7, 2010, 17:21

REAL Economics : Belief Systems
Resignation Over Beliefs

Harold Lewis is Emeritus Professor of Physics, University of California, Santa Barbara, former Chairman; Former member Defense Science Board, chairman of Technology panel; Chairman DSB study on Nuclear Winter; Former member Advisory Committee on Reactor Safeguards; Former member, Presidentís Nuclear Safety Oversight Committee; Chairman APS study on Nuclear Reactor Safety Chairman Risk Assessment Review Group; Co-founder and former Chairman of JASON; Former member USAF Scientific Advisory Board; Served in US Navy in WW II; books: Technological Risk (about, surprise, technological risk) and Why Flip a Coin (about decision making).

Hal Lewis is obviously an extremely well qualified scientist and a very principled person. He cannot be a scientist and agree with the American Physical Society on Climate Change.

Click the heading to see his letter of resignation.

Oct 7, 2010, 12:13

REAL Economics : Belief Systems
Intelligent Design

Things that Never Could Have Evolved

This is interesting in that it argues that some things are so complex that they couldn't have happened by accident and just restates the proposition continually.

At no stage is any proof offered from a directly observed fact to any conclusion.

Hardly a challenge. This is a belief system and it is possible that it is true. However no evidence exists to indicate this.

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Oct 6, 2010, 14:34

REAL Economics : Belief Systems

Of recent years people working in our health system have started referring to modern medicine as an "Evidence Based" health system. It is not entirely clear what they mean by this but we assume that it means "scientific" and therefore correct.

Fair enough. But Grandmother's cure may some times be preferable to modern pills with their side effects. No doubt, like me, you have many opinions about modern medicine but when it comes to showing that the purported cure is true it is remarkably difficult to find the elusive evidence. And so we just believe what we are told by the official health person in the white coat!

We are told, for instance, that cholesterol causes heart attacks and death by blocking the arteries around the heart. This is believed by almost everyone I have talked to. Strangely, but I think this is not true. Even stranger, the only people I have found who agree with me are three cardiologists!

Let us examine this health belief more closely. Click on the heading for the story.

Oct 5, 2010, 15:15

REAL Economics : Belief Systems
So What?

Economics is referred to as "The Dismal Science" but when we examine economics more closely we realise that what is taught in our Universities and believed by the majority of practising economists is more belief system than science.

This is a bold statement with ramifications and so I shall need to prove my point very carefully indeed.

We just need to understand the difference between a scientific system and a belief system:

The scientific system is based on observed facts about which people who have studied these observations can all agree. There may then be developed an hypothesis which shows that these facts cause a particular effect.

If people then conduct experiments and find that the facts cause the same effect each time then this hypothesis can be advanced to the status of a theory.

To show that the theory is wrong takes just one example of it not working and then we know that either the theory is right but only in a limited way, or the theory is wrong.

A belief system on the other hand does not rest on the solid foundation of carefully observed fact. If an economist proposes a theory to me then I have two options:

1. I can analyse the theory and the basic propositions looking for the facts from which the theory arose and then show that they are true or false, or

2. I can see what the theory predicts in real life and if it is true I am inclined to think that it has a chance of being true and I look for more occurrences of its predictions being true. The more times it's predictions are true then the more I am inclined to believe it.

If one of its predictions is wrong, then the theory is wrong and I look to see if it may be true in a limited case and whether this is useful or not as a limited theory.

This is the hard world of scientific truth.

It would also seem that in our strangely controlled world we are subject to a wide range of very convincing propaganda which purports to be scientific evidence but which is not true at all.

Many people are now starting to question the "facts" they are given by authorities and are using the internet to check out the facts for themselves. Of course, the internet is just as full of belief systems and muddled thinking as it is of the truth. But now we can tell the difference.

Oct 4, 2010, 11:55

REAL Economics : Belief Systems
What Can the Law of Diminishing Marginal Utility Teach Us?

And now for a small intellectual exercise - if you wish. This will help you to understand the building blocks of Austrian Economics and be certain that what you know is true.

Human Action is a book written by Ludwig von Mises to provide a complete science of economics. One of the basic building blocks of this science is the idea of diminishing marginal utility. By starting with a basic axiom which is self evidently true we are able to come to REAL conclusions by the use of logic alone. This means that we can build up a body of knowledge that we know to be true.

Perhaps I should let Thorsten explain the idea. He does it better than most.

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Sep 22, 2010, 13:56

Creating Wealth and Keeping it

The New book by Phil Scott, President of the Foundation for Economic Growth.

"This book is good, damn good and no statistics!" Lindsay Gordon, MA, MSC, PHD.

Every serious economics student should have a copy and read this ground-breaking foundation of clear economic thinking. Real Economics explains how human actions shape our world and why so much seems to be going wrong for Western economies. This book will bring enlightenment for the general reader who will see why a few very wealthy are becoming exceedingly rich and the middle classes are on the road to serfdom.

See more: www.realeconomics.co.nz