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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
(Score: 0) by Anonymous Coward on Wednesday August 30 2017, @02:50PM (2 children)
Sounds like you might enjoy reading about the Austrian Business Cycle Theory (aka. ABCT).
It predicts that fiat money will result in boom bust cycles. Look it up it will answer all your questions about booms and busts. It is also fairly self-contained and you don't have to swallow the Austrian Kool-Aid to get value out of it.
This article might not say that there is a better explanation for what is going on, it only says that the mainstream are astrologers and about as accurate, because of the unreliable predictions that the mainstream make.
It is not economics that is bad, it is believing that you can do meaningful predictions about what interfering in the market will do that is false.
They do say that that we don't know, and that we can never ever know, as a matter of epistemology.
You are crafting a straw man by asserting that all regulations and regulators are bad. The articles merely argues that regulations should not be based on the work of astrologers.
The argument, (not presented in this paper), is that economic calculation is impossible. Thus central planning is impossible. The individual humans concerned know better then the bureaucrats. Assuming that humans are selfish, then it stands to reason that we should not place humans in positions where they are responsible for making decisions which place their personal interests against the interests of large numbers of other people.
Power corrupts, and absolute power corrupts absolutely.
Thus by reducing the power to the lowest common denominator, we create a society where the powerful are not permitted to exert their aggression against others.
This is a very different sort of economics to the one that seeks to reach an arbitrary 2% inflation rate, based on a made up measure, by manipulating interest rates.
(Score: 1) by khallow on Thursday August 31 2017, @12:55AM (1 child)
Ok. Consider this thought experiment. We're trying to figure out the consequences of interfering in the market in a certain way. So... we just do it and see what happens. What you are claiming is that somehow we can't then in near identical circumstances make predictions based on what happened before. Sorry I don't buy that economics is that unpredictable.
(Score: 2) by maxwell demon on Thursday August 31 2017, @06:05AM
Actually if economics is just unpredictable, then it is also unpredictable what meddling with it through regulations will do. But that means that it does not matter whether there are regulations or not, because if the regulations had any predictable effect, that would contradict unpredictability. Therefore it is logically inconsistent to claim at the same time that economics is unpredictable, and that regulations are always harmful.
The Tao of math: The numbers you can count are not the real numbers.