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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: 1, Interesting) by Anonymous Coward on Wednesday August 30 2017, @08:29AM (3 children)

    by Anonymous Coward on Wednesday August 30 2017, @08:29AM (#561392)

    So let's use a car analogy. Imagine you were driving a car. You have some numbers available, the speed of the car, the rpm, which gear it is in, which direction the steering wheel is pointing. You even have control over some of those levers, like the accelerator, brakes, and steering wheel.

    Now imagine you could not see out of the window. Now drive somewhere. This is mainstream economics. They have numbers. In fact that speedometer is mm accurate per ms. However they are unable to predict the unintended consequences of their actions. Punching the gas might accelerate the economy, for a while, in the wrong direction, until the crash.

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  • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @10:22AM (1 child)

    by Anonymous Coward on Wednesday August 30 2017, @10:22AM (#561415)

    IMHO that is a poor analogy. All the things your are measuring have nothing to do with location, you can't make facts (or even predictions) for the location based on that.

    I could agree that economics is trying to do that, but that's also why the predictions fail more often (Even modern politics are based on false economic theories and numbers,
    that's why politicians are digging their own graves these days).

    My point is that they have to start from bottom up fundamentals (factual numbers) and develop models, theories and facts based from that. Use a small remote village as model system, or develop
    a computational model to run simulations, which can later be tested with real live model systems.

    • (Score: 0) by Anonymous Coward on Wednesday August 30 2017, @10:41AM

      by Anonymous Coward on Wednesday August 30 2017, @10:41AM (#561420)

      In other words, it's a perfect analogy for mainstream economics...

  • (Score: 1) by khallow on Wednesday August 30 2017, @11:40AM

    by khallow (3766) Subscriber Badge on Wednesday August 30 2017, @11:40AM (#561437) Journal

    However they are unable to predict the unintended consequences of their actions.

    I disagree. I think that economists are quite capable of predicting unintended consequences, particularly when there are historical examples of those unintended consequences. But "economists can predict" != "economists do predict". Conflicts of interest, not blind spots in the data, are the primary reason that such predictions don't happen.