Blame Economists for the Mess We’re In • Hacker News Board

Re: Blame Economists for the Mess We’re In

#91

Post by gbacon » Sun, Aug 25, 2019, 7:10 PM UTC

Peter Boettke responds[0] by quoting Hayek’s Nobel banquet speech in which he warned about economists making pronouncements outside their respective areas of expertise

[Hayek’s worry about establishing the Prize in economics] is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess.

This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.

But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.

and pointing out the op-ed piece’s mistaken diagnosis.

The problem with narratives like Appelbaum’s isn’t that he is suspicious of the pretensions of economists, it is that he is blaming the wrong culprit for the mess we’re in. Here it is important that every one of these critics read Gregory Mankiw’s very important piece[1], published before the financial crisis, on the macroeconomist as scientists (read Chicago New Classical and Monetarists) and the macroeconomists as engineers (read MIT/Harvard Keynesian and New Keynesians).

[0]: https://www.aier.org/article/blame-economists

[1]: https://www.aeaweb.org/articles?id=10.1257/jep.20.4.29

Re: Blame Economists for the Mess We’re In

#92

Post by sprafa » Sun, Aug 25, 2019, 7:22 PM UTC

ethbro wrote: post #63

jcfrei wrote: post #56

Earlier quoted context omitted.

Whether something is a science or not depends on the methods which are applied - not how much is known about the subject. You could argue that biology is not a science because we don't understand how lots of basic cell functions work.

Exactly. The relevant question for those bemoaning policy implementations of economic theories is, "If not guided by economics, then by what?" Personally, I prefer a discipline which attempts to treat its subject matter scientifically, even if the sum of experimentally proven knowledge is small. Psychology runs into the same difficulties. But with both (or biology, or high-energy physics), I don't hold it over their…

Behavioural psychology has actually given us a lot of the insights that have now been been expanded into behavioural economics, which is the only branch of economics that has some predictive power (and this in my view makes it scientific). So psychology has issues but I feel like a lot more science to it than people expect, if you look into the right circles.

Re: Blame Economists for the Mess We’re In

#93

Post by gbacon » Sun, Aug 25, 2019, 7:22 PM UTC

ianai wrote: post #47

TheOtherHobbes wrote: post #38

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.

Unfortunately, people professing to know economics often gives lawmakers rationalizations for whatever they want to do. There’s always someone ready to defend whatever conclusion politicians are already decided upon.

In his Nobel lecture[0], Hayek condemned these rationalizations cloaked in superficial appearance of rigor as scientism.

It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences – an attempt which in our field may lead to outright error. It is an approach which has come to be described as the “scientistic” attitude – an attitude which, as I defined it some thirty years ago, “is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.”[1] I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error.

[0]: https://www.nobelprize.org/prizes/economic-sciences/1974/hay...

[1]: “Scientism and the Study of Society”, Economica, vol. IX, no. 35, August 1942, reprinted in The Counter-Revolution of Science, Glencoe, Ill., 1952, p. 15 of this reprint.

Re: Blame Economists for the Mess We’re In

#94

Post by gbacon » Sun, Aug 25, 2019, 7:35 PM UTC

naasking wrote: post #72

ethbro wrote: post #63

Earlier quoted context omitted.

Exactly. The relevant question for those bemoaning policy implementations of economic theories is, "If not guided by economics, then by what?" Personally, I prefer a discipline which attempts to treat its subject matter scientifically, even if the sum of experimentally proven knowledge is small. Psychology runs into the same difficulties. But with both (or biology, or high-energy physics), I don't hold it over their…

The problem is when our incomplete understanding is used to justify inadequate policy, simply because that's the part of the problem we understand. For instance, deregulating industries because markets are generally more efficient, thus disregarding whether that particular market naturally leads to monopoly. It sometimes leads to regulatory capture and whack-a-mole problem solving that are wholely inadequate.

Likewise there is the problem of central banks capturing the academy by lavishly funding their sycophants and cutting off researchers critical of their methods or policies. The conflict of interest is obvious, but nearly the entire field pretends it does not exist.

Re: Blame Economists for the Mess We’re In

#95

Post by jhbadger » Sun, Aug 25, 2019, 7:37 PM UTC

mrozel wrote: 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.

The whole reason for the 1968 creation of the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" (misleadingly often referred to as the Economics Nobel Prize, although Nobel had nothing to do with its creation) is to make the public think that it is a science on par with physics, physiology/medicine and chemistry, though.

Re: Blame Economists for the Mess We’re In

#96

Post by gbacon » Sun, Aug 25, 2019, 7:38 PM UTC

krilly wrote: post #89

trentnix wrote: post #61

Earlier quoted context omitted.

Once upon a time being poor absolutely meant being hungry. No more. That is an utterly remarkable change and is unprecedented in all of human history. And so many wizards of smart assured the people of their time that population growth was going to lead to famine. They were dead-ass wrong.

I think we can all agree This is due to technological advancement, not economics, which is what we are discussing

Reasons why said technological advancement occurs in some times and places but not others is most definitely a question of economics.

Re: Blame Economists for the Mess We’re In

#97

Post by iikoolpp » Sun, Aug 25, 2019, 7:39 PM UTC

spodek wrote: post #79

klez wrote: 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-…

> I propose more government mandated slavery

Let me fix that for you.

Re: Blame Economists for the Mess We’re In

#98

Post by HSO » Sun, Aug 25, 2019, 7:46 PM UTC

TheOtherHobbes wrote: post #38

sprafa wrote: post #22

Earlier quoted context omitted.

Good economists do it. What makes you think economics is scientific? To be honest it seems to me we’re at the alchemy level of economics - basically we barely understand what we’re doing

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 policy regime.

This interpretation of economics (as a field) is consistent with the history of economic ideas. No economic ideas are ever discarded or disproven (the very antithesis of science if you will). As the Economist aptly put it: "Macroeconomic arguments tend not to produce winners and losers: only those with more in- fluence and those with less."[2]

That's why economics (the field) is really less about economics (the substance) but about politics and power.

____________________

[1] Hyperbolically speaking, of course, and aimed in particular at macro- and monetary economists. There are some nice results but they apply, as far as I could tell, mostly to smaller settings, not the aggregate economy.

[2] The Economist. Free exchange: Magic or logic? page 69, Mar 16 2019.

Re: Blame Economists for the Mess We’re In

#99

Post by gbacon » Sun, Aug 25, 2019, 7:46 PM UTC

ukj wrote: post #33

Nobody pays attention to Goodman's problem of induction [1]. The truth is that nobody really knows how we ought to arrange society, and which arrangement is likely to work. Everybody is guessing! The moment you arrange the system one way, people game it and your economic model no longer applies. What worked in 1999 needs not work in 2019. Blaming the people you chose to listen to is just another form of avoiding the…

To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm. In the physical sciences there may be little objection to trying to do the impossible; one might even feel that one ought not to discourage the over-confident because their experiments may after all produce some new insights. But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims. We are only beginning to understand on how subtle a communication system the functioning of an advanced industrial society is based – a communications system which we call the market and which turns out to be a more efficient mechanism for digesting dispersed information than any that man has deliberately designed.

https://www.nobelprize.org/prizes/economic-sciences/1974/hay...

Re: Blame Economists for the Mess We’re In

#100

Post by lostlogin » Sun, Aug 25, 2019, 8:00 PM UTC

zarkov99 wrote: post #44

klez wrote: 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.

Absolutely. A draft would also force Americans of all backgrounds to interact with each other in an environment that builds cohesion. It would also give even the most powerful of Americans skin in the game when it comes to starting wars.

> A draft would also force Americans of all backgrounds to interact with each other in an environment that builds cohesion.

Every American presidential election has a side show about the candidates military record and a meaningful number appear to have dodged their service - current president included.