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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: 3, Interesting) by Thexalon on Wednesday August 30 2017, @04:40PM (2 children)

    by Thexalon (636) on Wednesday August 30 2017, @04:40PM (#561563)

    Actually, if you would read the books before burning them you would know that Mises fully explains the boom bust cycle as a product of government policy, i.e meddling. It allows banks to create money (credit expansion) through fractional reserve banking, this distorts the signals in the economy leading to malinvestment, a bubble blows somewhere and eventually pops. Rinse and repeat.

    Which is demonstrably untrue, since speculative bubbles occurred centuries before the development of anything remotely similar to modern central banking. Are you seriously claiming that all the well-documented economic crises prior to the 20th century (e.g. Dutch tulip mania) couldn't happen?

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  • (Score: 1, Informative) by Anonymous Coward on Wednesday August 30 2017, @05:35PM (1 child)

    by Anonymous Coward on Wednesday August 30 2017, @05:35PM (#561599)

    The Dutch Tulip Mania, was NOT an economic crisis.

    Speculative bubbles occur because of miscalculation. Miscalculation is amplified by central banking.

    You are straw manning by making the demonstrably false claim that all bubbles are caused by central banking. That is your claim. That you supplied. And then refute.

    • (Score: 1) by khallow on Thursday August 31 2017, @12:51AM

      by khallow (3766) Subscriber Badge on Thursday August 31 2017, @12:51AM (#561884) Journal

      The Dutch Tulip Mania, was NOT an economic crisis.

      Let's not argue No True Scotsman semantics here. Maybe the mania part wasn't an economic crisis, but the resulting crash to reality sure was.

      Speculative bubbles occur because of miscalculation. Miscalculation is amplified by central banking.

      In other words, speculative bubbles do not occur because of central banking. They are just made more exciting by central banking.

      You are straw manning by making the demonstrably false claim that all bubbles are caused by central banking. That is your claim. That you supplied. And then refute.

      Let us keep in mind that the earlier statement was:

      Actually, if you would read the books before burning them you would know that Mises fully explains the boom bust cycle as a product of government policy, i.e meddling.

      So the grandparent most certainly was not constructing a straw man but instead responding to a real claim.

      Further, universal claims are disproven via counterexamples. This is typical logic and reasoning.