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posted by mrpg on Wednesday August 30 2017, @03:42AM   Printer-friendly
from the A-Star-To-Guide-Us dept.

When Christopher Nolan was promoting his previous film Interstellar, he made the casual observation that "Take a field like economics for example. [Unlike physics] you have real material things and it can't predict anything. It's always wrong." There is a lot more truth in that statement than most academic economists would like to admit.

[...] several famous Keynesian and neo-classical economists, including Paul Romer, [...] criticized the "Mathiness in the Theory of Economic Growth" and [...] Paul Krugman. In this instance, though, Krugman is mostly correct observing that "As I see it, the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth."

[...] But more fundamentally, as Austrian economist Frank Shostak notes, "In the natural sciences, a laboratory experiment can isolate various elements and their movements. There is no equivalent in the discipline of economics. The employment of econometrics and econometric model-building is an attempt to produce a laboratory where controlled experiments can be conducted."

The result is that economic forecasts are usually just wrong."

"[Levinovitz] approvingly quotes one economist saying "The interest of the profession is in pursuing its analysis in a language that's inaccessible to laypeople and even some economists. What we've done is monopolise this kind of expertise.[...] that gives us power.""

[...] because economics models are mostly useless and cannot predict the future with any sort of certainty, then centrally directing an economy would be effectively like flying blind. The failure of economic models to pan out is simply more proof of the pretense of knowledge. And it's not more knowledge that we need, it's more humility. The humility to know that "wise" bureaucrats are not the best at directing a market "

Economists Are the New Astrologers


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  • (Score: 5, Insightful) by Whoever on Wednesday August 30 2017, @06:11AM (11 children)

    by Whoever (4524) on Wednesday August 30 2017, @06:11AM (#561345) Journal

    You don't see a conflict between the ideas that economics are not a science and that economics is a "solved problem"?

    I guess doublethink is easy for some people.

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  • (Score: 1, Interesting) by Anonymous Coward on Wednesday August 30 2017, @08:20AM (10 children)

    by Anonymous Coward on Wednesday August 30 2017, @08:20AM (#561390)

    No. Mathematics and Philosophy contains many solved problems, that are not science.

    The Austrians take a non-empirical approach, and thus do not suffer from physics envy (their proofs do not require experiments), not do they suffer from mathiness, as they do not believe the qualia that are involved in human decision making can be measured.

    Here are Economists, that believe the economics establishment are astrologers, because the mainstream have adopted an inappropriate epistemology.

    • (Score: 1) by khallow on Wednesday August 30 2017, @11:45AM (7 children)

      by khallow (3766) Subscriber Badge on Wednesday August 30 2017, @11:45AM (#561439) Journal

      their proofs do not require experiments

      In other words, "not even wrong".

      • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @12:35PM (6 children)

        by Anonymous Coward on Wednesday August 30 2017, @12:35PM (#561458)

        1 + 1 = 2

        You don't need an experiment for that. You can disprove the assumptions, or find a flaw in the logic.

        You don't go about collecting a whole bunch of ones and experimentally combining them and then counting them.

        This is the difference between empiricism (experiments) and rationalism (proofs).

        The mainstream economists are trying to use empiricism dressed in maths and failing. The Austrians don't believe that economics should be based on reason. This is an epistemological difference.

        • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @03:52PM (1 child)

          by Anonymous Coward on Wednesday August 30 2017, @03:52PM (#561541)

          Math isn't science, so you don't need an experiment. You do need proof though. There are definitely situations where that wouldn't be true, such as adding 1 m/s of velocity to 1 m/s doesn't give you 2 m/s if we're really specific about it. It'll be close to 2 m/s, but thanks to relativity, it won't come out quite right if we're taking that into consideration. Likewise 2 hours of work isn't necessarily the same amount as if you worked the two hours separately.

          • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @05:40PM

            by Anonymous Coward on Wednesday August 30 2017, @05:40PM (#561604)

            Excellent. Austrian economics is like Math, and not a science. Mainstream economics is like science, well no, more like astrology. (Ibid.)

        • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @04:09PM (2 children)

          by Anonymous Coward on Wednesday August 30 2017, @04:09PM (#561550)

          Mathematics makes no statements about the real world. It only makes statements about abstract constructions. That's why mathematics needs no empirism.

          Now mathematics does give great tools to describe reality with. But to find out which mathematical tool can be applied to which real-world phenomenon under which circumstances, you need empirical data. For example, if you add a body at 1 Fahrenheit to another body at 1 Fahrenheit, you do not a body at 2 Fahrenheit. Did I just disprove 1+1=2? No, of course not. It's just that addition of numbers is not an appropriate mathematical model for temperatures of composite objects (while they are indeed an appropriate model e.g. for the mass of the volume of composite objects — well, in most cases; 1 liter of water and 1 liter of alcohol don't mix to 2 liters of alcoholic liquid). So how do we know? Well, through empirical data.

          Economics claims to make statements about the real world. To do so, it absolutely needs empirical testing. Statements about the real world that don't pass empirical tests are at best useless (if they are not testable), at worst wrong (if they are testable and don't pass the test).

          • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @05:51PM (1 child)

            by Anonymous Coward on Wednesday August 30 2017, @05:51PM (#561608)

            Austrian economics makes no statements about the real world. It only makes statements about abstract constructions. That's why Austrian economics needs no empirism.

            Now Austrian economics does give great tools to describe reality with. But to find out which Austrian economic tool can be applied to which real-world phenomenon under which circumstances, you need empirical data.

            That's paraphrasing your claims to emphasise the empirical parallels between your argument and the Austrian school.

            • (Score: 1) by khallow on Wednesday August 30 2017, @11:54PM

              by khallow (3766) Subscriber Badge on Wednesday August 30 2017, @11:54PM (#561845) Journal

              Now Austrian economics does give great tools to describe reality with. But to find out which Austrian economic tool can be applied to which real-world phenomenon under which circumstances, you need empirical data.

              Sorry, what tools? Let us recall that Austrian economics abandoned math just as much as it abandoned reality. That doesn't leave much left.

        • (Score: 1) by khallow on Friday September 01 2017, @01:59AM

          by khallow (3766) Subscriber Badge on Friday September 01 2017, @01:59AM (#562383) Journal
          Sorry, I don't buy that Austrian economics meets the standard of math rigor either. Among other things, several conflicts have been cited in this discussion between claims made by Mises (one of the more important advocates of the theory) and reality. That doesn't happen for math. If the preconditions hold, the consequences follow. The theory has some interesting ideas, but it is fundamentally broken in approach with neither the backing of evidence or the rigor of mathematical proof to support it.

          The mainstream economists are trying to use empiricism dressed in maths and failing. The Austrians don't believe that economics should be based on reason. This is an epistemological difference.

          Wow. The first sentence is wrong. There is a remarkable success in economics, including I might add real world support of some of the concepts introduced by Austrian economics. What is missed here is that economics like some other fields (climate research and nutrition science, to name a couple of examples) has high levels of conflict of interest, particularly of the financial and ideological sorts. So there is a lot of noise, ulterior motives, and other shenanigans diluting what would otherwise be mundane observation and theory building, like say geology or astronomy.

          And if you're not basing economics on reason (which I'll note here I strongly dispute as a viewpoint of Austrian economists), then you're not basing it on anything at all. Reason is the key difference between pursuit of knowledge and ignorance. Absence of reason is not a epistemological difference. Instead, it is the difference between thinking at a high, complex level and not.

    • (Score: 2) by crafoo on Wednesday August 30 2017, @05:08PM (1 child)

      by crafoo (6639) on Wednesday August 30 2017, @05:08PM (#561582)

      "their proofs do not require experiments"
      Oh, so their proofs are complete horseshit? Glad we agree.

      • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @05:31PM

        by Anonymous Coward on Wednesday August 30 2017, @05:31PM (#561593)

        Sorry mate. Neither do all the proofs in trigonometry nor maths.

        Is geometry horeshit? By your understanding, apparently so...