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Blame Economists for the Mess We’re In

nytimes.com

101–110 of 143 posts

Re: Blame Economists for the Mess We’re In

#101
post #98

Earlier quoted context omitted.

Nothing makes me think economics is scientific. But it's taught as if it's a science, handled inside academia as if it's a science, and has more influence on policy than hard science does. If it's not a science, those three facts are rather curious.

You can view economics (the field) as a coordination device. Basically, nobody knows anything[1]. But if everyone were to admit that, there would be no basis on which to conduct policy. → Chaos/arbitrariness/incoherence (over time and sectors) So people make up and promote a narrative (bullshit story) and if enough people believe / are made to believe in it, then you have a basis for relatively stable and coherent po…

I do not see why experimentation is impossible if we are in a position where there literally is no alternative other than doing 'experiments' except refusing to address the results and change tactics except under extreme political pressure. Things like 'we believe if taxes are lowered on businesses, it will result in them hiring more workers', after it has been tried for 30 years and has resoundingly shown to be a collassal untruth, actively destroying the middle class and leading to tremendous instability even among those who do remain employed, at least if we could say it was an experiment and we were uncertain of the outcome, we could say 'well that didn't work let's try something different' instead of it being a political battle fueled by people just trying to trick others into thinking that reality is different from what it is.

In a situation that affects so many people, it may seem unwise to do experiments and try things where we can not say with certainty what effects they might have, though we admit they may be substantial. The ethics are very dim on that front. But the alternative has to be considered. We do not have 'generally accepted treatment' to turn to and rely on. We only have other experiments, albeit while not calling them experiments and not treating them as if their outcomes are in doubt, simply forging ahead with blinders on. I can't imagine an argument that would justify that as more ethical than earnestly doing experiments.

Re: Blame Economists for the Mess We’re In

#102
post #98

Earlier quoted context omitted.

You can view economics (the field) as a coordination device. Basically, nobody knows anything[1]. But if everyone were to admit that, there would be no basis on which to conduct policy. → Chaos/arbitrariness/incoherence (over time and sectors) So people make up and promote a narrative (bullshit story) and if enough people believe / are made to believe in it, then you have a basis for relatively stable and coherent po…

I do not see why experimentation is impossible if we are in a position where there literally is no alternative other than doing 'experiments' except refusing to address the results and change tactics except under extreme political pressure. Things like 'we believe if taxes are lowered on businesses, it will result in them hiring more workers', after it has been tried for 30 years and has resoundingly shown to be a co…

It's obvious why: there are too many confounding variables to run experiments on macroeconomically relevant scales.

This is analogous to why econometrics is bullshit: lack of stationarity in the real world.

This is amplified by nonlinearities in the system. So even if things today were broadly comparable to, say, the 1990s (and they're emphatically not), what if there was this little thing somewhere (like an obscure accounting regulation) that led to massive differences in the outcome of the experiment?

Tbc, I think there are better and worse ways to deal with the problem, just because we know so little does not mean everything is equally meaningless.

Re: Blame Economists for the Mess We’re In

#103
post #79
post #14

Earlier quoted context omitted.

There are reasons the draft can be a good idea. When the military is only voluntary you get a military with specific ideas about foreign policy and how you see the enemy, whoever they are. If you introduce the draft you have a more heterogenous military.

I propose a civilian service academy and civilian service, which would achieve most of a draft's goals without the military. American infrastructure could use it, among other benefits. I talk about it in episode 138 in my podcast: http://joshuaspodek.com/guests/rants-raves-monologues-volume... . General McChrystal wrote about it in Time Magazine: Every American Should Serve For One Year https://time.com/4824366/year-…

This is what we have in Finland; basically either: 1. Military service ranging from half a year to a year. 2. Civil service for a year. 3. Half a year prison sentence. 4. Exemption for medical reasons.

https://en.m.wikipedia.org/wiki/Conscription_in_Finland

Re: Blame Economists for the Mess We’re In

#104
post #49
post #18

Earlier quoted context omitted.

A draft raises the cost of war, making war less likely.

Does this argument back-test successfully? Has the US suffered fewer war-fatalities in the era(s) where it had a draft (including the Civil War, WW1, WW2, & Vietnam), or in the era where it has an all-volunteer force (since 1973)?

Probably not but a lot has changed.

Re: Blame Economists for the Mess We’re In

#106
post #8

Applebaum tries to finger "elfin libertarian" Milton Friedman as "the most important figure". But the specific policies he attributes to Friedman don't seem so bad: * end the draft, replace with well-paid all-volunteer military * let international exchange rates vary * evaluate regulations based on the cost-to-save-a-life Does Applebaum want to bring back the draft? Put exchange rates back under direct political cont…

> Have a purely "feel-it-in-our-guts" approach to regulation

That is exactly what they want. The modern world of cost-benefit analysis and economic modeling has been unkind to the whimsical. They want emotions, narrative, and oratory--not reason and data--to guide policy.

Re: Blame Economists for the Mess We’re In

#107
post #8

Applebaum tries to finger "elfin libertarian" Milton Friedman as "the most important figure". But the specific policies he attributes to Friedman don't seem so bad: * end the draft, replace with well-paid all-volunteer military * let international exchange rates vary * evaluate regulations based on the cost-to-save-a-life Does Applebaum want to bring back the draft? Put exchange rates back under direct political cont…

Vietnam ended the draft.

Re: Blame Economists for the Mess We’re In

#108

For those who believe that economics has never done anything useful or benefits the common man, here's a small counterclaim. The widespread adoption of index funds was absolutely an outgrowth of academic financial economics. In particular the efficient market hypothesis and CAPM theories, as well as empirical research studying the (lack of) performance of active investment managers. In the US alone, index funds now m…

Obviously, this is a completely "free lunch"!!! If we just buy index funds, which preferentially buy any larger company over a smaller company by design, we avoid all those "wasteful fees"!

This is a classic "seen" versus "unseen" problem - the "wasteful fees" saved is obvious, but what is unseen here? A couple of options might be: 1. indexing makes uneconomic acquisitions easier - a CEO can make stupid acquisitions to get bigger simply because indexing will bail him/her out as being larger for the sake of being larger and representing a greater portion of the index leads to great investor inflows. 2. smaller companies are hurt because there are fewer active investors to bother to analyze them as they have been crowded out by indexing.

This may have "benefited ordinary and small investors the most" thus far, but what happens in the next market crash when indexing investors are rushing for the exits? What has happened to Main Street as a result of the trend towards indexing being firms gain investment simply by being "big"?

It is doubtful many will agree with "bigness for the sake of bigness" is a positive development...

Re: Blame Economists for the Mess We’re In

#109
post #23

I get tired of 'blame economist' articles. They're almost always cheap and circumstantial. People often forget that Economics is considered a philosophy and not a science. Sure, its great for coming up with ideas and theories but with this perspective would never put your faith into it like you would STEM.

I've never heard (let alone forgotten) that 'Economics is considered a philosophy', whatever that might mean.

Wikipedia: "Economics is the social science that studies..."

Re: Blame Economists for the Mess We’re In

#110
post #87

For those who believe that economics has never done anything useful or benefits the common man, here's a small counterclaim. The widespread adoption of index funds was absolutely an outgrowth of academic financial economics. In particular the efficient market hypothesis and CAPM theories, as well as empirical research studying the (lack of) performance of active investment managers. In the US alone, index funds now m…

It no doubt benefits individual investors, but if index funds were to swallow up the market the main benefit of capitalism - the efficient allocation of capital - would at some point arguably be destroyed. That raises the question of whether/when a centrally planned economy would start to outperform such a passive system?

If index funds were to become an inefficient way to allocate capital then their returns would become subpar and money would go elsewhere.
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