21–30 of 63 posts
>This notion of effective theory sets a useful standard for considering economics. Economists are not without knowledge. We know that restrictions on trade tend to help narrow interests at the expense of broader prosperity. We know that there aren't any countries which rose to first world status without judicious application of tariffs, subsidies or currency manipulation.
This is a great article although the stuff about Austrian economics and how economics will move left should be tossed. Mr. Kling should save those opinions for Cato. Aside from that, I always wonder why we have never had a "Great Economic Project." In WWII we united scientists of all stripes to come together to build the atom bomb and more recently Obama launched the BRAIN initiative. Understanding how our economy wo…
There's a reason why Western-style market capitalism has taken over the world. You aren't anywhere near remotely worried enough about it.
Discussions like this always seem a little strange. Sure, they're important, but taken out of context they're counterproductive and even harmful. This is the problem: what is the alternative? The pet theory of a madman or sociopath? The difficult truth is that everyone has an economic theory, whether they admit it or not. The question is, whose theories do we want to pay attention to? People who spend their lives arg…
That's the thing, it has proven really, really hard to "change those things". I'm looking at the latest (still current?) economic/financial crisis. Lots of "economic theory tells us this should never happen"-things did in fact happen, and consistently so (there was not just a random event that you could blame in the theory not being 100% there). It matters because policy decisions are still taken based on theories that have proved themselves wrong, or at least those theories were not able to "explain" (for a lack of a better word) how our present-day economy works. Those policy decisions affect (some of them negatively) the lives of millions, even hundreds of millions.
At least when a theoretical physicist is wrong in his/her assessment nothing that bad can happen to the outside world, in the great scheme of things. But when an economist is wrong, but his theory is nevertheless taken into consideration and acted upon, then the damage can be quite substantial, its effect measurable in decades.
I don't know what needs to be done. I'm not ditching economic theory entirely. For example the Chinese authorities' current push to stop Chinese billionaires' money moving outside the country reminded me of Jean-Baptiste Say's explanation of how no Government can put a stop to the flow of currency that wants to escape a certain jurisdiction, a phenomenon that he wrote about ~200 years ago and which still seems to be in effect, almost like a "law" of economics. And there are still other "basic" economic truths/laws that have seemed to keep their relevance over the centuries. But, AFAIK, almost all of those "laws" were common sense, so to speak, they didn't involve mathematiac equations with second derivatives and the like (for example there's no "second derivative" equation with which to model the "lack of trust" in financial transactions, which once it sets in you can bet will bring any financial market down pretty fast).
So what I'm trying to say in a convoluted way is that economics should return to basics, ditch most of the mathematics with which it has become enamored and try to be a little more on the "social science"-side of things: more observation of humans and their acts, less abstract computations.
Discussions like this always seem a little strange. Sure, they're important, but taken out of context they're counterproductive and even harmful. This is the problem: what is the alternative? The pet theory of a madman or sociopath? The difficult truth is that everyone has an economic theory, whether they admit it or not. The question is, whose theories do we want to pay attention to? People who spend their lives arg…
> Sure, lots about classical economic theory is really ridiculous, and the source of a lot of problems, but then you change those things and then move on. That's the thing, it has proven really, really hard to "change those things". I'm looking at the latest (still current?) economic/financial crisis. Lots of "economic theory tells us this should never happen"-things did in fact happen, and consistently so (there was…
An interesting article (that was posted to HN a while back) that discusses this is "How economists rode maths to become our era’s astrologers": https://aeon.co/essays/how-economists-rode-maths-to-become-o...
Though it's been posted a few times, there hasn't been that much discussion on HN: https://hn.algolia.com/?query=https:%2F%2Faeon.co%2Fessays%2...
First one is that it is based on drawing conclusions from models that attempt to simplify extremely complex interactions of billions of agents.
Second one is that although these models are imperfect (otherwise they would be unsolvable and bring no meaningful intuition), they are getting better over time.
Stop dismissing economics because 'it doesn't work.' The subject of the science simply doesn't have any determinism to it whatsoever, and things aren't reasoned through discovery as it is the case with natural sciences.
No respectable author would dare ask such a question about the effectiveness of, say, theoretical Physics, Computer Science, or the Theory of Evolution -- to name other bodies of theory familiar to general audiences. The fact that the question is being asked about Economic Theory in a respectable, prominent magazine like National Affairs provides the answer.
No respectable author would dare ask such a question about the effectiveness of, say, theoretical Physics, Computer Science, or the Theory of Evolution -- to name other bodies of theory familiar to general audiences. The fact that the question is being asked about Economic Theory in a respectable, prominent magazine like National Affairs provides the answer.
When it comes to economic theory, scrutiny becomes of paramount importance if you are going to make laws based upon it!
This is a great article although the stuff about Austrian economics and how economics will move left should be tossed. Mr. Kling should save those opinions for Cato. Aside from that, I always wonder why we have never had a "Great Economic Project." In WWII we united scientists of all stripes to come together to build the atom bomb and more recently Obama launched the BRAIN initiative. Understanding how our economy wo…
The nature of politics is such that if the government funded such a thing, the only acceptable outcome for it to come to is that the people funding it already had the correct model. The alternative is that the politicians funding it would have spent a lot of political capital to get that funding only to be told that they're wrong, probably wrong about everything.
On one level or another, even politicians realize that they might as well just cut out the middleman here and operate on the vigorous and loud assumption that they are already correct about economics and anyone who disagrees is the literal embodiment of evil.