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

bradford-delong.com

101–110 of 116 posts

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

#101

Earlier quoted context omitted.

Since politicians don't observe the consensus in a more rigorous science (climate), there's even less reason to think they'll observe it in economics.

My point exactly. Although I think UBI is a highly imperfect solution to the threat automation poses towards the livelihoods of those replaced, there isn't anything better on the table. I fear that our government won't take this seriously and reject UBI simply on moral grounds even if all the research and evidence pointed towards it being the best policy option.

Politicians don't like evidence. Look what happened to David Nutt in the UK.

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

#102
post #50

Earlier quoted context omitted.

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 billi…

I don't think that the rarity of starvation in modern times is due to central banks, but instead due to advances in farming that allows a very small percentage of people to produce enough food for everyone.

Physicians don't think they can manage and control the billions of cells in our bodies; we still don't understand how all of our cells even work. Physicians apply tested practices to individual people and hope that it addresses whatever medical problem is being observed. They understand that treatments are not one-size-fits-all and that mistakes can kill people. They also understand that our bodies self regulate and they are only trying to address a specific imbalance in their specific patient, not something that applies to an entire population.

Central banks think they can turn a couple of knobs (currency supply and interest rates) and control an entire economy made up of millions of people. Using the physician example, that's like thinking that the only two treatments needed for any medical condition are adjustments to our blood level and body temperature.

Monetary policy is a newer invention in the history of human civilization and even then, it wasn't always applied so universally. Monetary policy can only exist with central banks.

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

#103
post #49

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…

Yes, that's all true. I'm just balking at the idea that "austerity hurts growth". I think the alternative hurts growth even more.

Firstly, empirical evidence suggests otherwise. Political instability and inequality, both consequences of austerity, significantly hamper long-term growth and innovation. No country ever went from poor to rich by neglecting to invest in its people and infrastructure. Lots of countries have gone from rich to poor that way though.

Secondly, even if this were true what does it matter? Many people don't care about how fast the economy is growing overall if their personal fortunes are dwindling. That's just robbing Peter to pay Paul, except in this case Paul is already filthy rich.

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

#104
post #98
post #93

Earlier quoted context omitted.

If you look now, you will see that this is simple not true. Countries with independent aggressive monetary policy did the best. Countries one the Euro that did Austerity did better then those that increased taxes. Maybe in Krugmans fantasy land you can do neither, but most people live in the real world. The IMF actually apologized to Britain after attacking it about cuts. It was Krugman that was horrible wrong on the…

Today's prominent Keynesians certainly still advocate for independent aggressive monetary policy, but they also claim that fiscal policy matters a lot. In the case of the "fiscal cliff"/sequester, there was indeed fiscal tightening in the federal government, but it was offset by less tightening at the state level. Does that mean it was wrong to warn against cuts at any level of government? Of course not. Here is Krug…

Krugman, Krugman, when other people make evasion like that, then he attacks them so aggressively that you would think it was personal. When he does it, it is simply that people did not understand his arguments.

If there was tighting before 2013 already, that makes his story even worse. Why did the economy continue to grow on path when there 4 years of tighting? Taking the 'cyclically adjusted data' to save his point is pretty fishy to me.

Its also not true that Krugman always advocated for more aggressive monetary policy, they all claimed that monetary policy was 'out of ammo' and fiscal expansion was needed. He said that

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

#105

Earlier quoted context omitted.

Economics is not about predicting, it's about understanding things. It's basically impossible to do the former at scale for time periods over 6 months, we're slowly getting better at the latter. One big reason economic forecasting is so hard is that agents in the system you are forecasting are taking your present period forecast into account when acting in future periods.

If you cannot predict, you do not really understand.

A coin flip with 50/50 odds is understandable even without predictions.

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

#106
post #105

Earlier quoted context omitted.

If you cannot predict, you do not really understand.

A coin flip with 50/50 odds is understandable even without predictions.

This is a technicality / edge case of 'pure randomness', rather than a rebuttal.

Furthermore, I can predict the distribution of results for a coin quite accurately over long time timeframes. Indeed being the 'understanding' of a successful gambler means being able to make predictions about what will happen with a random process over time.

Roulette for example is analogous to the coin toss; most casinos seem extremely able to predict what will happen over time quite well.

Or are you hinting at a counterargument that most of the world is a truly random process analogous to a coin throw?

In which case, your experience with reality must be terrifying. Will the sun come up today? Who knows? Will gravity work in a minute? And so on.

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

#107

Earlier quoted context omitted.

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.

The actual criticism is the US not counting people not actively looking for a job as unemployed, thus dismissing those who have given up/gone back to school/retired early/found their calling as a stay-at-home dad. Still: if you believe today's troubles are in any way comparable to the 20s, you owe it to yourself to read up on that period. Check for "starvation" in the index.

Federal nutritional programs weren't available until 1932. Social Security Act passed in 1935. It's these programs that eliminated the starvation headlines in the US.

I agree it's not comparable -- many billions more people are negatively affected by the Great Recession simply because world population has grown so much since 1929.

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

#108
post #56

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. Politician…

The problem is that politicians don't give a solitary shit about economics except when it gives them cover for doing what they wanted to do anyway. I hope no one genuinely believe that politicians wanted to enact austerity measures or shrink government because of economics. They do it because huge corporations and billionaires want less taxes and lower regulation so they can accumulate more wealth personally. Whether…

As you probably might also agree, its a bit of both. Politicians don't go into politics thinking they're just going to accept donations and do whatever. They believe the stuff at some level and then get corrupted by the marketing/lobbying. The greater problem is that politicians are lay people, and even if they wanted to listen to economists they would first have to navigate the topology of the topic at large, and then understand the minutia of what each side represents. Now apply that for 10 different varied fields including foreign policy/medicine/science/defense/social issues/etc and you quickly realize that its just impossible for any one person to make accurate decisions across such a wide swath of issues. Maybe the answer is more decentralization, but then you cant do the moonshots where you need to pool in the resources/talents/labor across a large populace. Its all a shitshow to some extent. But then again, the world hasn't gone to shit just yet so at-least somethings working .. :)

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

#109
post #4

Earlier quoted context omitted.

Yeah, well, hold on to your hat.

Japan style stagnation seems like the most likely outcome to me, what's your prediction?

Did Japan elect a lunatic that wanted to roll back all the institutions put in place in the last sixty years?

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

#110
post #26
post #4

Earlier quoted context omitted.

Japan style stagnation seems like the most likely outcome to me, what's your prediction?

I think you're right. The government can keep things in sort of a gentle downward glide slope by printing money as long as they don't overdo it.

It's always a gentle glide until a mountain shows up and then you crater into it.
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