Retrofitting Theories With Auxiliary Hypotheses is Borderline Fraud

Recently there have been attempts by authors of mainly social science textbooks to retrofit theories that failed to predict the 2007 financial crisis with auxiliary hypotheses that allow them to deal with such events. This may amount to scientific fraud.

Theories cannot be fixed, they just lose their status if they fail to make sound predictions. This has always been true in physics and it should also be true in every field. For example, ss soon as people realized that Newtonian mechanics could not explain the change in the perihelion of Mercury, the theory lost its status despite attempts to fix it. General relativity came to fill in the gap. If some new fact emerges that cannot be explained by GR, this theory will lose its status too.

Changing a book in economics, for example, to include a new fact that was not predicted by its material in the first place is retrofitting and maybe cheating. One must throw the theory away and look for something else in its place. Adding auxiliary hypotheses all the time is a sign of weakness and borderline fraud.

Outcome bias is in play when evaluating a theory given that the outcome is known. The theory must be evaluated based on its ability to predict unknown outcomes, like the financial crisis of 2007. Evaluating the theory knowing the fact, is the result of outcome bias. So is adding the chapter in the book after the crisis occurred. The chapter should have been there before. Adding it after the fact may be borderline fraud but scientific fraud is prevalent nowadays.

The current state of economic theories is that there are extremely naïve because they ignore how digital technology and globalization have changed the world. Neither the authors of those naive textbooks understand that but rely on their status of authority when in reality they are ignorant of what is going on. The system takes advantage of their ignorance by maintaining their status to maintain in turn its benefits. Students come out of economic departments and are basically brainwashed with garbage. At the same time, the technology oligarchs and their counterparts in Asia, the slave labor oligarchs, collect all the benefits of their ignorance. This is the current system. I predicted the financial crisis but not its exact timing in 2000. Now I dare to make another prediction that there will be a more severe financial crisis in the near future that will give rise to new paradigms and people will remember current economic theories as silly artifacts of a dark age.


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