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Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

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Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#51

Post by AnimalMuppet »

hl5 wrote: post #29
Retric wrote: post #2

Great Depression: industrial production in the United States declined 47 percent and real gross domestic product (GDP) fell 30 percent. In comparison 2010-2014 was a minor blip, with less than 3% GDP drop, that barely qualifies as a correction. I fear central banks have actually gotten to good at minimizing these issues as we could easily do the same thing in another 10 years, where the great depression created far m…

A minor blip where millions lost their jobs, houses, and businesses... The hard part about economic analysis is you can never know all the variables in a dynamic system. It's a common error to summarize based on variables convenient to the theme you choose to present only to later realize your analysis should have included some fairly obvious factors.

Yes millions lost their jobs, houses, and business. And yes it was a minor blip. If you think otherwise, you don't grasp how bad the Great Depression was. Think about 35% unemployment for years.

The majority of mainstream economists didn't see it coming. That's a totally valid criticism. But they did a much better job of handling it than in 1929, and the damage, while major, was still nothing like the Great Depression.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#52

Post by seoguru »

gozur88 wrote: post #28
tcbawo wrote: post #14

Earlier quoted context omitted.

I think what he's suggesting is that paying down debt through austerity can be more costly than growth, since austerity hurts growth. The trick is, where does growth come from?

The mistake there is thinking printing money brings you growth. Where has this worked?

Where has deficit spending brought growth?

WW2 would be a good example: http://neweconomicperspectives.org/2013/08/mobilization-and-...

And just imagine if we did the same thing, except instead of building weapons, we invested in healthcare, education, renewable energy, etc.

Once you understand the money system, you understand that we are drastically under performing compared to our potential because our citizens and politicians have a backwards understanding of our money. reminds me of a great little clip by Alan Watts: https://www.youtube.com/watch?v=g-JMHiaYIiU

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#53

Post by zaphar »

flukus wrote: post #48
Fordrus wrote: post #35

Earlier quoted context omitted.

My Gosh, that is an extremely salient and DEEPLY DEPRESSING point. I've been drawn to question what to do about that quite often, but I havent happened across an acceptable answer as yet.

Vote for better politicians.

Step 1 is to get better politicians to run. Only then can you vote for them.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#54

Post by ThomPete »

Economists are mostly to be considered historians and even as historians they have very little actual data about the things that make an economy.

This is most visible in the fact that they treat technology as an externality even though its probably the most important factor in understanding our current economy. These economists with their models still assume production as primarily an output of labour are advicing our politicians. Its going to be seen as an era of great ignorance to the factors that really matter to an economy today.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#55

Post by ThomPete »

AnimalMuppet wrote: post #51
hl5 wrote: post #29

Earlier quoted context omitted.

A minor blip where millions lost their jobs, houses, and businesses... The hard part about economic analysis is you can never know all the variables in a dynamic system. It's a common error to summarize based on variables convenient to the theme you choose to present only to later realize your analysis should have included some fairly obvious factors.

Yes millions lost their jobs, houses, and business. And yes it was a minor blip. If you think otherwise, you don't grasp how bad the Great Depression was. Think about 35% unemployment for years . The majority of mainstream economists didn't see it coming. That's a totally valid criticism. But they did a much better job of handling it than in 1929, and the damage, while major, was still nothing like the Great Depressi…

I think you owe it to yourself to look up how the US defines a job. Most jobs created since 2008 are trmp jobs not actuallu structurally solid jobs so sure there is less unemployment but the employment there is is way more fragile.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#56

Post by nabla9 »

It seems that people are too hurried to read the article and are commenting the title and economics on general level.

Basic macroeconomics did fine. Austerity side Alesina/Ardagna/Reinhart/Rogoff camp was utterly wrong. Spreadsheet errors in their studies that became basis for political action etc. Even after the austerity approach has been shown to be baseless in academia it continues to live in politics. Politicians have little or no ability to evaluate what they hear or read.

Backgrounder:

How the Case for Austerity Has Crumbled http://www.nybooks.com/articles/2013/06/06/how-case-austerit...

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#57

Post by matt4077 »

api wrote: post #27

There was another article on academic incentives today that referenced a wonderful quote: "When a measure is used as a target, it ceases to be a good measure." My impression is that economics as a whole does not understand this. When you target GDP for example, GDP ceases to be a good measure of anything. The trouble with economics as a science is that its results are used to guide the economy. This creates a feedbac…

That's true if what you measure is only a proxy for some other reality that you actually want to affect, but that is harder to measure. Cholesterol, for example, has long been targeted because it had shown a high correlation to cardiovascular health and life expectancy. The result was a long series of medications that successfully lowered cholesterol, with occasional death as a side effect.

GDP is pretty close to what you actually want to change. There are some other measures, such as social mobility, Gini, or poverty–but rising GDP has almost always been good for people.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#58

Post by SubiculumCode »

It is hard to characterize as diverse a field as economics. However, there are some influential sectors of the field of economics that 1) avoids rigorous empirical research, and/or 2) identifies economic policies that benefit their benefactors, and then produce economic theory that support those policies. Which is backwards, or at least distorted.

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#59

Post by FullMtlAlcoholc »

SubiculumCode wrote: post #58

It is hard to characterize as diverse a field as economics. However, there are some influential sectors of the field of economics that 1) avoids rigorous empirical research, and/or 2) identifies economic policies that benefit their benefactors, and then produce economic theory that support those policies. Which is backwards, or at least distorted.

There is also a troubling cult of personality that plagues the field, where Nobel Prize winners and other luminaries' research is accepted as truth without peer review. Example: Greenspan

Re: Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?

#60

Post by matt4077 »

makosdv wrote: post #50
josephlord wrote: post #30

Earlier quoted context omitted.

Firstly there are two ways that money is printed. 1) Government/central bank spend more than they take in taxes. 2) Private banks make loans to private sector (biz or individuals). Money is destroyed by government running a surplus or by loans being repaid. Note also that for the government to run a surplus the private sector must run a deficit (decrease savings or increase borrowing) in most circumstances. The quest…

Why does money need to be managed and controlled? Real money inherently has a limited supply, so there is no need for it to be managed or controlled; the market does that on its own. However, the fiat currencies that are used by central banks around the world are not real money. The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country is what lea…

Economic crises today are nowhere near the disasters they were in the past. It's pretty obvious that the system's stability has increased–in the past, depression could mean starvation.

> The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country...

The arrogance of physicians thinking they can manage and control the biological interactions of billions of cells...

Just because something has a lot of moving parts doesn't make it intractable. "Complex" is just latin for "put together", and we can always try to take it apart, learn about individual parts, and work our way up.

In any case, not doing anything is also a decision. It's a completely arbitrary idea–as if monetary policy were some sort of intrusion into the "natural law" of the economy.

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