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Brad DeLong explains economics
December 12, 2010 7:40 AM   Subscribe

What Do Econ 1 Students Need to Remember Most from the Course?
What Do Econ 1 Students Need to Remember Second Most from the Course?

BONUS
Battered but Not and Beaten (pdf) - "I try to piece together how exactly we got here."
posted by kliuless (101 comments total) 25 users marked this as a favorite

 
So, we need a major war (or something) to jump start our lagging economy?
posted by caddis at 7:50 AM on December 12, 2010


From an outsider's perspective it's not clear that economics even works as a science or discipline. The whole point of, for example, physics is that it allows you to not only explain behavior but also to make reliable predictions of behavior. But even very basic questions in economics like "Does raising the minimum wage increase unemployment?" or "Does lowering taxes ultimately boost revenue due to increased market activity?" seem to be completely in the realm of opinion and speculation.
posted by LastOfHisKind at 7:52 AM on December 12, 2010 [21 favorites]


From his second post, it sounds like pretty much all markets go wrong then. Shame.
posted by memebake at 8:00 AM on December 12, 2010


From his second post, it sounds like pretty much all markets go wrong then. Shame.

I think it shows that Markets only go wrong when people are involved. When only rational being driven by the rules of the Market rather than by a desire to maximize gain for the individual are involved, Markets work perfectly!
posted by GenjiandProust at 8:09 AM on December 12, 2010 [3 favorites]


A lot of what he writes is nice and clear. But this?

It solves the problem of distribution--of determining who is going to get to use newly-produced commodities. The owner has an incentive to choose the person willing to pay the highest price--and the person willing to pay the highest price is, in some sense, the person who values it the most, to whom it is scarcest.

This is the rankest, stinkiest, steamingest pile of unmitigated privileged first world white guy bullshit I have ever seen in any writing on economics anywhere. I can't recall ever having seen "in some sense" stretched to cover quite this much weasel.
posted by flabdablet at 8:15 AM on December 12, 2010 [11 favorites]


The only thing I took away from Economics class was, "Wow, they just made this shit up."
posted by cmoj at 8:16 AM on December 12, 2010 [16 favorites]


Yeah, so all the stuff that makes the market "go wrong" in the second link happens all the time. Instead of a-wishin' and a-hopin' that the government will "put its thumb on the scales" or "structure political-economic institutions" to minimize these problems — especially when firms have the incentive to undermine or capture those institutions for their own benefit — shouldn't our economic theory and policies just take psychological foibles, socio-economic differences between people, and perverse incentives into account?

I understand the behavioralists are making some headway, but cmonnnnn alreadyyyy.
posted by Grimp0teuthis at 8:17 AM on December 12, 2010 [2 favorites]


the rich are much more willing to pay them the poor, and those without wealth or income have no willingness to pay at all

There he goes again. Maybe it's just semantics - but I find myself actually offended by this writer's conflation of the concepts of willingness and ability, and I don't as a rule offend very easily.
posted by flabdablet at 8:17 AM on December 12, 2010 [5 favorites]


It's important to note (at least, I think it is) that he is using phrases like "willingness to pay" in the sense that most economists or armchair economists do. He is stating the problem with 'willingness to pay' as a metric because someone with no money has no willingness to pay in the economic sense. They do not exist and have no influence on the market, no matter how much they need or desire a product.

He's pointing out that the phrase 'willingness to pay' has a secret assumption built into it that confuses ability with willingness, not arguing that the two are the same.
posted by verb at 8:24 AM on December 12, 2010 [16 favorites]


the rich are much more willing to pay them the poor, and those without wealth or income have no willingness to pay at all

There he goes again. Maybe it's just semantics - but I find myself actually offended by this writer's conflation of the concepts of willingness and ability, and I don't as a rule offend very easily.


The evidence suggests you offend pretty easily.

The author is trying to boil down the way the economists understand the world to a bunch of first year undergraduates. He is not saying it is supposed to work that way, he is saying that given our imperfect understanding of human behavior and societal organization, this is how we think the market supplies good that poor people need.

What would you write? You shouldn't learn economics? You should wait an learn some other social science that will be invented in 30 years? You should be taking social justice courses whose insights you cannot understand without a common grounding how economists describe the world?

On a more substantive note, he does not mention externalities for reasons that escape me.
posted by shothotbot at 8:31 AM on December 12, 2010 [7 favorites]


Karl Polanyi, a nation turns its weary eyes to you.
posted by Abiezer at 8:42 AM on December 12, 2010 [2 favorites]


this thread is amazing. One person wants economics to be physics, the other sociology. But both think it's a crock of shit.
posted by JPD at 8:47 AM on December 12, 2010 [13 favorites]


"Wow, they just made this shit up."

And where do they get the word "rival" to refer to something that can only be used by one person at a time? Pretty far from the original meaning of people who lived across the river from each other and shared it.
posted by Obscure Reference at 8:48 AM on December 12, 2010


Rule 1) The "market" is magic!
Rule 2) Rule 1 is false.
Rule 3) Ignore Rule 2. Keep ramming home Rule 1.
posted by Trochanter at 8:50 AM on December 12, 2010 [10 favorites]


It is really really really amusing that you guys seem to think Brad DeLong is a freshwater "free-markets in everything" guy. He's actually one of the more prominent (along with the even better known Stiglitz and Krugman) saltwater government needs to intervene in markets and the economy guys.
posted by JPD at 8:59 AM on December 12, 2010 [7 favorites]


I too think that this is mostly DeLong explaining to his intro class how economists view the way capitalist economies work, or the consensus of how they view it. Assuming that it's the way that he himself feels about the correct economic policy, say, that the US government should employ during a recession (just a for instance) is just ridiculous if you've ever read his blog (as JPD says, on preview).

Economics may piss you off (it sure did me when I took it, for all kinds of reasons) but it's not a crock of shit.
posted by blucevalo at 9:06 AM on December 12, 2010 [1 favorite]


flabdablet : This is the rankest, stinkiest, steamingest pile of unmitigated privileged first world white guy bullshit I have ever seen in any writing on economics anywhere.

You should have read the second link before saying that. He flatly states that disparities in wealth completely screw the pooch when it comes to market economics - "The market judges value by willingness to pay, and the rich are much more willing to pay them the poor, and those without wealth or income have no willingness to pay at all."

Of course, in the second link he also pretty much destroys (intentionally) the validity of every premise laid out in the first link, making most of this a moot point... Basically, the system works only between purely rational actors, and even then it has degenerate cases. Toss humans into the mix, and it all goes to hell.


flabdablet : There he goes again. Maybe it's just semantics - but I find myself actually offended by this writer's conflation of the concepts of willingness and ability, and I don't as a rule offend very easily.

We've had this discussion on MeFi before (not you and I personally, but it comes up occasionally). Unless talking about the bare minimum amount of food required to keep you alive, and the bare minimum shelter required to keep you from freezing to death in the winter - Your "willingness" does correspond to your "ability" to pay for a given scarce resource.

We don't "need" TVs, houses (beyond a heatable mud hut), internet access, cars, unpatched clothes, spices and sugar and meat better than squirrel. We want those things, and even the poorest amongst us in the modern Western world can afford most of them to some degree.

So while it might offend you to consider not having things we take for granted, go back to TFA's very first sentence, "Economics deals with those things that we want but that are scarce." We have, largely, made our fundamental requirements for survival not scarce, simple as that. We've moved our goals from mere survival, to comforts.
posted by pla at 9:08 AM on December 12, 2010 [3 favorites]


From an outsider's perspective it's not clear that economics even works as a science or discipline. The whole point of, for example, physics is that it allows you to not only explain behavior but also to make reliable predictions of behavior. But even very basic questions in economics like "Does raising the minimum wage increase unemployment?" or "Does lowering taxes ultimately boost revenue due to increased market activity?" seem to be completely in the realm of opinion and speculation.

To be fair, economists are trying to model something that's attached to large number of complex political and social phenomena. A physicist would be hard pressed to explain the motion of a planchette on a Ouija board that was being controlled by three teenage girls.
posted by justkevin at 9:08 AM on December 12, 2010 [5 favorites]


Making claims about "deep human propensities" and the beliefs of dogs can't escape a certain whiff of the shit bucket.
posted by Abiezer at 9:11 AM on December 12, 2010


Econ students who take away the full contents of two essays are doing significantly better than the average econ student.
posted by l33tpolicywonk at 9:16 AM on December 12, 2010 [1 favorite]


The whole point of, for example, physics is that it allows you to not only explain behavior but also to make reliable predictions of behavior.

(1) No, the whole point of physics is to come up with theories about physics, derive testable hypotheses from those theories, confront those theories with empirical data from the real world.

(2) Okay, physics, you're so damn smart: I'm going to take this pool cue and thwock the cue ball but good into the eight-ball. Tell me where it's going to end up, after seven or eight collisions, within 1mm. Alternately, tell me what the temperature and cloud cover will be here in Buffalo on April 23 of next year, within 1C and 1 percentage point respectively.

Alternately, no, that's not what science is about at all. It's a nice consequence of scientific investigation, but you could develop entirely satisfactory systems of prediction that were not remotely scientific. Noncopernican astronomers did this very well.

And the areas where physics tends to do very well at prediction are overwhelmingly those cases that have been pre-simplified by the universe or by construction to the point that they are toy examples. An interplanetary trajectory is simple; there's little to consider but the mass of earth, the mass of the other planet, and the mass of the sun. Setting off a nuke is likewise pretty simple because nothing in the universe farther than a meter or so away has any consequences for the warhead.

Economics, and social sciences in general, don't deal with simple things like that. They don't deal with dumb matter, they deal with human mentalities. Often, they don't even deal with single mentalities but what happens when those mentalities, constrained by the physical universe, start interacting with each other and trying to coerce and otherwise induce desired behavior from each other. Almost everything economics and other social sciences do aren't the equivalent of trying to predict where the space capsule is going to go, they're more the equivalent of trying to figure out weather.
posted by ROU_Xenophobe at 9:22 AM on December 12, 2010 [23 favorites]


what do econ 1 students need to remember most from real life?

the house always wins - always - unless someone burns it down, in which case no one wins

there is no such thing as an honest mark

the tragedy of the commons is not what killed the commons

most scarcity is manufactured, not extant

economics, or markets alone, will never be the basis of a successful society

the invisible hand of the market, the worth of money and the value of labor are social constructs based on faith, not science

lies are much more profitable than gold

they'll screw this into your heart and soul, bind your hands with it, and devise blinders for your eyes - they teach this to your children while they watch tv in your house, when they see billboards on the roads - they lieth and they maketh profit rise - they write ownership upon the doorposts of thy house and upon thy gates, that the debts and the debts of thy children - and their commodification - may be multiplied
posted by pyramid termite at 9:26 AM on December 12, 2010 [15 favorites]


There he goes again. Maybe it's just semantics - but I find myself actually offended by this writer's conflation of the concepts of willingness and ability, and I don't as a rule offend very easily.

Knowing Brad in other contexts, I can tell you with 100% certainty that you are misreading what he has written and imputing motives he does not have. Verb is right that he's writing that people with no income have no "willingness" to pay precisely to be snarky about that construction.
posted by ROU_Xenophobe at 9:26 AM on December 12, 2010


Alternately, no, that's not what science is about at all. It's a nice consequence of scientific investigation, but you could develop entirely satisfactory systems of prediction that were not remotely scientific. Noncopernican astronomers did this very well.

And with that in mind, I think it's not entirely wrong to say that modern economics more resembles Ptolemaic astronomy than the current astronomy.
posted by TypographicalError at 9:32 AM on December 12, 2010 [2 favorites]


Yeah, I sense some misdirected bile here (and that is coming from me, so, ya know...) -- I would recommend reading both posts before drawing conclusions about the ideological intentions of the author.
posted by joe lisboa at 9:49 AM on December 12, 2010


If two systems produce equally-good predictions (i.e., their testable hypotheses are in line with observed behavior), I don't think that you can say that one is "more correct" than the other.

There is a sort of philosophical tarpit here, but ultimately even physics doesn't and shouldn't be making 'objective truth' claims. It's a system of theories backed up by experimental observation which have a demonstrated utility in understanding (and predicting) the world we live in. It is extremely likely that some of those theories are gross oversimplifications (e.g. non-quantum mechanics), but the fact that they are "wrong" from some perspectives doesn't mean that they're not useful.

Economics, sociology, psychology ... they all may or may not meet the same criteria, but they're certainly eligible to try. The trick, and this is true with physics as well, is to avoid extending a theory beyond the domain where it has been tested against observations.

Also, Ptolemaic astronomy, that whipping-boy of bad science, is still occasionally useful. I took a seminar on stellar terrestrial navigation from a well-regarded astronomer, and the first thing we did was throw out the last 500 years of cosmology and revert to a geocentric model for a while. Some things are easier and work equally well. I can only imagine what the people who used the room next thought of the diagrams on the chalkboard.
posted by Kadin2048 at 10:06 AM on December 12, 2010 [4 favorites]


You guys have jobs, right? Jobs that give you money to buy computers and Internet access? Congrats, you understand a bit about economics, and wishing it were otherwise doesn't make it different.

But seriously, there's a reason they call economics the dismal science. It's like math, psychology, anthropology and poli sic meeting at a four-way stop sign.
posted by Cool Papa Bell at 10:09 AM on December 12, 2010 [4 favorites]


The piece really does manage to capture everything that's wrong with modern economics. What's so striking is that economists really do believe that markets are unhistorical, that they are these strange, abstract, and perfect entities that can't be located in space+time, are not subject to cause and effect, are axiomatically "ideal," -- and yet they "work" on real-word entities. From a philosophical perspective, to say that this is nonsense is a disservice is nonsense. It's not even wrong and it precisely highlights the tremendous "break" that economics introduces into Western thought. It's like some joker left the door unlocked and allowed God and supply and demand (two entities that are "independent" of one another and yet produce and consume each other -- really!) and all sorts of other stupid superstitions back into the party.

(1) No, the whole point of physics is to come up with theories about physics, derive testable hypotheses from those theories, confront those theories with empirical data from the real world.

Nobody really believes that this is the way science "works" in the real world anymore. See Popper. For that matter, see the entire philosophy of science. Science, in the current understanding, is taken to be a historical exercise. The "laws" of science are not, as Kant believed, some unchanging, incorrigible "fact" that just "happens" in the world. They are the result of real people doing real things in real places together. Because of this it's possible for science to be internally divergent, that is real scientists disagree with each other and yet when this happens it's not a epistemological problem for science as such. That is, just because Einstein disagreed with Newton didn't make what Newton did "not science". But note that Marx, in his extraordinary attempt to introduce historical forces into economics, is really regarded as "not" an economist by many Western economists.

The whole thing is just so strange.
posted by nixerman at 10:10 AM on December 12, 2010 [2 favorites]


To be fair, economists are trying to model something that's attached to large number of complex political and social phenomena. A physicist would be hard pressed to explain the motion of a planchette on a Ouija board that was being controlled by three teenage girls.

To be fair, physicists aren't using their explanation of the motion of a planchette on a Ouija board controlled by 3 girls to structure society and justify inequality.
posted by Hoopo at 10:10 AM on December 12, 2010 [4 favorites]


What's so striking is that economists really do believe that markets are unhistorical, that they are these strange, abstract, and perfect entities that can't be located in space+time, are not subject to cause and effect, are axiomatically "ideal," -- and yet they "work" on real-word entities. From a philosophical perspective, to say that this is nonsense is a disservice is nonsense.

one of the authors specialties is economic history, so I don't think in this case what you say is true.
posted by JPD at 10:15 AM on December 12, 2010


We have, largely, made our fundamental requirements for survival not scarce, simple as that. We've moved our goals from mere survival, to comforts.

I dunno, according to this, in 2009, 14.3% of the US population was living in poverty, which generally means lacking some of those fundamental requirements.

If you set the bar so low that anything above the bare minimum of food and not freezing to death are comforts, then, you have a point. Unfortunately, that point doesn't have much to do with how people actually live in the world, and pretending it does uses an intellectual exercise to hand-wave away enormous misery.

And, since most people include, say, not dying of cholera as one of the "fundamental requirements," there are many parts of the world where people are considerably worse off than that 14.3% of Americans. So this stuff is scarcer than you seem to think.
posted by GenjiandProust at 10:16 AM on December 12, 2010 [5 favorites]


But even very basic questions in economics like "Does raising the minimum wage increase unemployment?" or "Does lowering taxes ultimately boost revenue due to increased market activity?" seem to be completely in the realm of opinion and speculation.

These questions are in the realm of opinion and speculation only in the same sense that global warming is in the realm of opinion and speculation -- that is, if you look hard enough you can find somebody willing to say just about anything.
posted by JackFlash at 10:18 AM on December 12, 2010 [1 favorite]


Economics isn't a science; it's a religion.
posted by Despondent_Monkey at 10:28 AM on December 12, 2010 [3 favorites]


Nobody really believes that this is the way science "works" in the real world anymore. See Popper. For that matter, see the entire philosophy of science.

I don't believe this story at all anymore. This idea of "changing paradigms" is just a yarn that gets spun around very complicated, erratic developments. It is a story to explain the chaotic picture to the layman. But if you look at the detail, then these so-called "new paradigms" have been there all along, as unresolved questions, heated debates, and scribbles in the margin. Much more stays the same than it does change, and on the whole the room for coherent, meaningful dissent is reduced. God was slaughtered by Newton - Einstein didn't revive him or slay him "in a different paradigm"
posted by eeeeeez at 10:33 AM on December 12, 2010 [2 favorites]


JackFlash, that does not appear to be the case
posted by Hoopo at 10:33 AM on December 12, 2010


It is really really really amusing that you guys seem to think Brad DeLong is a freshwater "free-markets in everything" guy. He's actually one of the more prominent (along with the even better known Stiglitz and Krugman) saltwater government needs to intervene in markets and the economy guys.

what's interesting to me about Krugman et al, is that if you just looked at the politics (tv with the sound off) you'd think these guys were a bunch of raving marxists, when actually they all stand firmly in the mainstream to conservative i.e. neoclassical side of economics ideology spectrum.

as with all academic subjects, the strength of a philosophy is probably measured by the diversity of results it gives you: being a neoclassical economist doesn't prevent you from advocating for keynesian fiscal policy. but the other side of that is that it is difficult to honestly advocate for any policy based solely on economic arguments, not that anyone does anyway. the idea that economic policy can be relegated to the calculations of trained technocrats (i.e. economists) is a way to push hard decisions behind closed doors and to hide political philosophy behind jargon. the career of alan greenspan is an example of this.
posted by ennui.bz at 11:10 AM on December 12, 2010 [1 favorite]


I don't believe this story at all anymore. This idea of "changing paradigms" is just a yarn that gets spun around very complicated, erratic developments. It is a story to explain the chaotic picture to the layman. But if you look at the detail, then these so-called "new paradigms" have been there all along, as unresolved questions, heated debates, and scribbles in the margin. Much more stays the same than it does change, and on the whole the room for coherent, meaningful dissent is reduced. God was slaughtered by Newton - Einstein didn't revive him or slay him "in a different paradigm"

Well, the idea of citing Popper as a representative of current thinking on history-and-philosophy-of-science type issues is pretty ridiculous. But this response doesn't make any sense to me at all. (Newton slayed God? What the fuck?)
posted by nasreddin at 11:15 AM on December 12, 2010 [1 favorite]


Do the economists that are described in Hoopo's link have an explanation for why Henry Ford paying his workers more than anyone else made him fabulously wealthy and ushered in a golden age for the United States that lasted right until a bunch of schmucks ran the whole thing aground with highly leveraged poorly regulated trading of the bubble de jour?

Or do they believe that was caused by elves or sun spots or something?
posted by Kid Charlemagne at 11:20 AM on December 12, 2010 [2 favorites]


what's interesting to me about Krugman et al, is that if you just looked at the politics (tv with the sound off) you'd think these guys were a bunch of raving marxists, when actually they all stand firmly in the mainstream to conservative i.e. neoclassical side of economics ideology spectrum.


even more amazingly Krugman has started to refer to himself as a heterodox economist, when his ideas were the very epitome of orthodoxy when I was in school 10 years a go.
posted by JPD at 11:21 AM on December 12, 2010 [2 favorites]


Sorry, nixerman, that was unnecessarily hostile--your general point about science being considered a historical process is still very true, although I'd hardly cite Popper as an example of this position.
posted by nasreddin at 11:28 AM on December 12, 2010


EPONYSTERICAL!
posted by stratastar at 11:28 AM on December 12, 2010


(1) No, the whole point of physics is to come up with theories about physics, derive testable hypotheses from those theories, confront those theories with empirical data from the real world.

Nobody really believes that this is the way science "works" in the real world anymore. See Popper. For that matter, see the entire philosophy of science. Science, in the current understanding, is taken to be a historical exercise.


Speaking as a scientist, pretty much everyone who practices science (doing it, rather than talking about it) actually does believe this. Not sure the good Sir Popper would disagree either -- his articulation of the scientific enterprise as being driven by falsification seems consistent with the above statement, and is one of the few (oh, so very few!) contributions of philosophers of science to have been productively and enthusiastically taken up by working scientists. By "productively", I mean that this clarification of a certain aspect of the scientific enterprise explicitly as well as indirectly influences how people think about how they approach the questions they're interested in, the way they structure the papers they publish, the way grants are awarded, and lots more besides.

The simplification of what physics is that you objected to is actually a pretty reasonable first-order summary. The point being that the success of physics-as-a-science is not about its predictive power. Atmospheric physics is a pretty good example: its a very mature, and very successful branch of physics. But even though we have an astonishingly thorough understanding of how the atmosphere works, we're pretty limited in our ability to predict its behaviour, especially in that thorny middle time scale between 48 hours out and decadal-scale climatic averages!
posted by bumpkin at 11:32 AM on December 12, 2010 [5 favorites]


Keep it as an active process running on your wetware always.

This sentence alone is enough to put me off anything else Delong has to say.
posted by yellowcandy at 11:39 AM on December 12, 2010 [1 favorite]


The problem with economics as a science has little to do with economics itself, and more to do with the fact that what is accepted as true in economics has an impact on people's financial well being, so that there is far more interest in promoting economics that protects the interests of the powerful than there is interest in promoting economics that is accurate. This is something you see in physics and biology as well, but not nearly to the extent you see it in economics.
posted by empath at 11:50 AM on December 12, 2010 [2 favorites]


Speaking as a scientist, pretty much everyone who practices science (doing it, rather than talking about it) actually does believe this. Not sure the good Sir Popper would disagree either -- his articulation of the scientific enterprise as being driven by falsification seems consistent with the above statement, and is one of the few (oh, so very few!) contributions of philosophers of science to have been productively and enthusiastically taken up by working scientists. By "productively", I mean that this clarification of a certain aspect of the scientific enterprise explicitly as well as indirectly influences how people think about how they approach the questions they're interested in, the way they structure the papers they publish, the way grants are awarded, and lots more besides.

Scientists often assume that what they think and say about what they're doing ought to trump anything historians or philosophers of science have to say about it. That's not true, and there are plenty of examples of things demonstrated convincingly by HPOS people that working scientists have failed to recognize or admit. (Although Kuhn was actually a physicist before he wrote The Structure of Scientific Revolutions.) That doesn't mean you're ignorant or naive, it just means our fields govern different aspects of the world. As far as falsificationism is concerned, there are now enough counterexamples to it that it can be regarded as effectively refuted.

Bruno Latour's Science in Action and Steven Shapin and Simon Schaffer's Leviathan and the Air-Pump are good books to look at if you're interested in more contemporary approaches, although they're getting on in years too.
posted by nasreddin at 11:51 AM on December 12, 2010 [2 favorites]


The other problem with economics as it applies to prediction is that markets are fucking complicated. Nobody complains that meteorology isn't a science because it can't predict whether it's going to rain in New York City 3 months from now.
posted by empath at 11:52 AM on December 12, 2010


Much more stays the same than it does change, and on the whole the room for coherent, meaningful dissent is reduced.

I think this idea of science as teleological, as progressive, as if one day science will "end" and we'll literally run out of hypotheses to falsify/Gods to kill -- is a deeply strange and problematic idea. But it's beside the point and I mean to derail the thread. All I meant to say that is only that I find it surprising that people take economists seriously at all. As far as I know there are only three types of people who talk seriously about unhistorical entities: psychologists, philosophers, and economists.

Psychologists are probably all crooks but if you press them they will tell you that they are not making statements about the world but about psychological representations about the world, that their goal is not to understand the world but to understand the understanding of the world. Let's just say the jury is still out on whether this is really a kind of knowledge or not.

As for philosophers -- who cares? One point in defense of philosophers is that they are always ready and willing to engage in serious dialogue to elucidate their statements but at the end of the day but it's not the end of the world when philosophers disagree, it's not even the end of lunch.

But economists do get away with all sorts of nonsense, stuff that wouldn't ever be tolerated anywhere else, and yet people just accept it.

Economics isn't a science; it's a religion.

I might not go so far but there are some suspicious similarities. It does look like a bunch of made-up facts about a bunch of made-up entities that are then used to explain who wins and loses. The only thing it's missing is an apocalyptic vision though perhaps that's communism.
posted by nixerman at 11:52 AM on December 12, 2010 [1 favorite]


Do the economists that are described in Hoopo's link....?

Um...which ones? It's a survey of the opinions of American economists on minimum wages, so I guess some of them might agree with you. What I was getting at is that there is nowhere near the level of consensus regarding the effects of minimum wage on unemployment that there is regarding climate change. To be honest I'm not sure what you're getting at with the Henry Ford example.
posted by Hoopo at 12:04 PM on December 12, 2010


I think science is actually about prediction. It's true meteorology is not advanced enough to be able to let us predict the particular weather 58 days from now, but it can and does predict various relationships between elements of the atmospheric system... to the extent, and only to the extent, that it can predict new information (be it relationships or particular values for certain variables) does a theory have scientific value.

And because meteorology cannot predict the exact weather, well, that delineates the limits of its scientific knowledge. It has achieved some prediction but not all the possible predictive abilities.
posted by shivohum at 12:05 PM on December 12, 2010


I think one thing that differentiates economics from some of the other social sciences, is that it doesn't really spend that much time examining itself as a discipline.

Students are taught theories of economics, math, methods; but none of the types of inward looking types of philosophy of science that cause other fields to splinter methodologically (see the recent imbroglio between cultural anthropologists and their "scientific brethren"). The economists who do look at this stuff are largely ignored because most other economists do not have the language, or background to go meta on their own field. Part of this is the way that economics graduate school is really set up differently than many other fields: PhD candidates are routinely eliminated after each year, top graduating candidates get assistant professorships based on ONE paper; they are hired on their potential (and ranking of school), not their proven ability to do research.

Nevermind that the outside world enshrines economics as a field, it's no wonder that economists can often get away with expounding their intuitions, on topics (see almost all popular blogging of Stiglitz and Krugman for example). And those intuitions will get entertained, and reified in a way that other writing doesn't.
posted by stratastar at 12:10 PM on December 12, 2010


Metafilter: I'm not a/an ______ but here is my opinion as to what that entire discipline is about and why it is clearly wrong and all of the thousands of very smart people toiling away in that discipline are ignorant simpletons for not realizing so.
posted by proj at 12:17 PM on December 12, 2010 [15 favorites]


The "Bonus" article was very good. It got a bit boring in the middle talking about the various actions Government and The Fed had but didn't use, but the last 1/3rd was amazing, discussing the Obama Government's failure to make Macroeconomic stabilization priority #1 for the first 2 years despite the overwhelming political benefit (not to mention, you know, actual national benefit) it would have brought.

And then he dissects the psychology of the Tea Party's by citing Nietzsche.

And the reason that crackpot conservative (politically) economists with a political ax to grind make the rest of them look like idiots.

And then he ends with "The future is bleak" we're all fucked.

Great read.
posted by DetonatedManiac at 12:27 PM on December 12, 2010


What a shill for the market. As though societies haven't functioned decently without private ownership and markets. Lack of imagination is the curse of economists.
posted by outlandishmarxist at 12:42 PM on December 12, 2010


Hoopo, don't confuse the science with the policy. The scientific consensus is pretty clear that the minimum wage level (at least at current levels) has very little to do with the unemployment rate and that other macroeconomic factors are much more important. What your link shows is that there is considerable disagreement on what the policy should be just as there is disagreement on whether there should be social security or private accounts. That is a political or philosophical disagreement. The science is not generally in dispute.
posted by JackFlash at 12:45 PM on December 12, 2010


Just so we are clear, Econ 1 is not the car from Ghostbusters, right?
posted by djduckie at 12:59 PM on December 12, 2010 [2 favorites]


Minimum wages are necessarily policy, aren't they? How can you have a science of minimum wage divorced from the implications of minimum wage policies?

Also, between JackFlash and Kid Charlemagne, I feel like I'm discussing economics with classic rock radio.
posted by Hoopo at 1:22 PM on December 12, 2010


From an outsider's perspective it's not clear that economics even works as a science or discipline.

I DONT KNOW NUTHIN BOUT THEM THAR VAXINASHUNS ITS BLACK MAGIC FER SHURE
posted by obiwanwasabi at 2:50 PM on December 12, 2010 [3 favorites]


As though societies haven't functioned decently without private ownership and markets. Lack of imagination is the curse of economists

Name one that wasn't predicated on an underclass who's relative lifestyle wasn't much much much worse than in a functioning market economy.
2) Read both articles - he's pretty clearly not a "markets in everything"
posted by JPD at 2:57 PM on December 12, 2010 [2 favorites]


The other problem with economics as it applies to prediction is that markets are fucking complicated. Nobody complains that meteorology isn't a science because it can't predict whether it's going to rain in New York City 3 months from now.

It's not the complexity. A moon shot is pretty complex, as was the building of the large hadron collider. But what do these two systems, weather and markets, have in common, boys and girls? That's right, they are chaotic systems. They exhibit non-linear dynamics, so they are only predictable for short periods of time. To predict over the long term, you need to know the exact starting conditions. To ten decimal places, you ask? Ho, no, try an infinite number. What makes them chaotic is that small errors in the initial conditions can lead eventually to huge errors in later conditions. This is not a problem with the science, it is a problem with measurement and specification. Irrational numbers are more common than rational numbers, and it is very difficult to write down an irrational number for the purposes of computation. (Go ahead, try and write down π in a computable format. It's annoying, I tell you.) So that simple 50-digit approximation for the irrational number still leaves ∞ - 50 decimal places of error. And that's where the fun starts. Very simple systems can exhibit this behavior with many fewer variables than seen in weather econometric models. So no matter how hard we try on either problem, we will never be able to make accurate long-term forecasts. Sorry.
posted by Mental Wimp at 3:09 PM on December 12, 2010 [1 favorite]


"...weather and econometric..."
posted by Mental Wimp at 3:10 PM on December 12, 2010


A lot of people in this thread don't seem to understand - or care to understand - what economics is. I thoroughly recommend if you're in doubt, listening to Delong's Econ 101 course (and the notes are here). It might broaden your horizons a little. I'm not saying economics is the be all and end all, but it is an incredibly important discipline with much insight to offer contemporary society.
posted by smoke at 3:14 PM on December 12, 2010


Oh, and that "free market"? Well, you see, econometrics are pretty complicated, and some people with a shitload of money can purchase math whizzes and computers by the gross to do some pretty heavy duty short-term modeling that kind of blows the rest of us out of the water in that realm. So let the market run free and those guys will end up with every penny. Not just most, but every last cent.

But if they did that, people would come after them with pitchforks and torches, so let's just say they will take everything they can and leave the rest of us with just enough to not feel like picking up the implements of the townspeople. What would that look like, you ask? Well, the rich would accumulate all the additional wealth that was generated, and the working class would hold about even or go down slightly in income and wealth, just to the point of intolerance and then hold there.

Are we there yet?
posted by Mental Wimp at 3:18 PM on December 12, 2010 [1 favorite]


Brad DeLong crouches in the basement.
posted by lukemeister at 3:35 PM on December 12, 2010


A lot of people in this thread don't seem to understand - or care to understand - what economics is

You know what? This is exactly right in my case. I've taken and passed Econ 101 at university, but simply through memorizing and spitting stuff back because the theory often makes little or no sense to me at all. It appears to me like it's trying to explain of human behavior w/r/t production and consumption, but the theories very often don't seem to correspond to observable human behavior w/r/t production and consumption--and this is not considered a reason to re-evaluate the theories. Things are built on assumptions that some like myself find contentious, and we're asked to just accept the conclusions drawn from them. I apologize for being vague but I have been trying very hard for a very long time to understand and whenever I get into a discussion with someone who does "get it," words and concepts I understand suddenly take on new meaning or else we get gems like these:

I DONT KNOW NUTHIN BOUT THEM THAR VAXINASHUNS ITS BLACK MAGIC FER SHURE

I mean, this stuff should be explainable in a way more people can grasp, it's not like economists are spending years in a lab toiling over beakers full of supply and demand over bunsen burners. Surely we're able to observe the same real-world phenomena economists are without much in the way of specialized equipment--the raw data is available to us too, and it seems to me there's a lot more room for debate on how to interpret it than those shouting the loudest about "LABOUR LAWS AND TAXES ARE BAD YOU SOCIALIST DUMMY YOU JUST DONT GET IT" let on
posted by Hoopo at 3:51 PM on December 12, 2010


Huh. The main thing I remember from my first economics class — admittedly, because the teacher stressed, "If you only remember one thing from this class, let it be this" — was to ask for an annual cost-of-living adjustment.

Seems like pretty helpful advice.
posted by DoctorFedora at 3:52 PM on December 12, 2010


Newton slayed God? What the fuck?

God breathes miracles and Newton cut off his air supply. Perhaps Einstein tightened the noose, but any way he was already dead.

A "paradigm shift" would be a theory that not only has equal or better resolving power, but also revives God.

But it just don't happen. The Man he stay dead.
posted by eeeeeez at 4:00 PM on December 12, 2010


it seems to me there's a lot more room for debate on how to interpret it than those shouting the loudest about "LABOUR LAWS AND TAXES ARE BAD YOU SOCIALIST DUMMY YOU JUST DONT GET IT" let on

Conflating shit like that with economics as a field of study is part of the problem. Saying "LABOUR LAWS AND TAXES ARE BAD YOU SOCIALIST DUMMY YOU JUST DONT GET II" = economics is like saying that acupuncture = all medicine with needles. Try that line out on Krugman, John Quiggin, De Long himself, and countless others and see how far it gets you. This would involve clicking on some links, and R'ing some FA's, however.

There's no need to throw the baby out with the bathwater, here. Yes, economics can be confusing and complicated. Yes. it's often used by people on the right as a bludgeon for their suspect ideas. No, this does not render the entire discipline, for goodness' sake moribund and shiftless. Indeed, a little more economic fluency would help a lot of us on the left.

Though the US is somewhat of an exception to this, in Australia our economists in government and reserve banking couldn't give a shit about left or right; they are interested first and foremost in economic stability, and will pursue whatever relatively conservative macroeconomic means they think will keep growth, inflation and unemployment at acceptable levels. Because when the economy is going badly, people are suffering for it - and surely that's something both left and right can agree is a bad thing? And their interventions, and indeed the entire edifice of govt itself - whatever you think of economic controversies - is something that would be impossible to effect without that basic competence and fluency.
posted by smoke at 4:10 PM on December 12, 2010 [4 favorites]


Scientists often assume that what they think and say about what they're doing ought to trump anything historians or philosophers of science have to say about it. That's not true, and there are plenty of examples of things demonstrated convincingly by HPOS people that working scientists have failed to recognize or admit. (Although Kuhn was actually a physicist before he wrote The Structure of Scientific Revolutions.) That doesn't mean you're ignorant or naive, it just means our fields govern different aspects of the world.

There's a pithy joke that a scientist knows as much about science as a fish knows about hydrodynamics. I don't believe that because I'm a scientist, somehow what I say about what we're doing "trumps" some well-intentioned soul toiling away in the humanities. As it turns out, I did a a degree in history and philosophy of science. I was considering doing post-graduate work, when my undergraduate thesis advisor convinced me that if I really wanted to understand how science worked, I should do some. Not just take courses, or read papers, but actually do it. As much as you might think scientists are a fairly arrogant and naive lot, the same generalization is often made about philosophers.

As far as falsificationism is concerned, there are now enough counterexamples to it that it can be regarded as effectively refuted.

You mean its been falsified? Look, I'm not saying that falsification is the only way that science proceeds, but rather that the Sir Popper's clarification was a very useful contribution, and rare in that it has been embraced consciously and explicitly by scientists by-the-by whereas most philosophy of science has little impact and has been safely ignored, at no cost to the scientific enterprise. Its clear that a lot of science is done that cannot be construed as the falsification of hypotheses. Papers get published for a variety of reasons: novel observations or datasets, qualititative speculation or interpretation of observations, quantitative modeling that allow sensitivity analyses of a small part of parameter space, purely theoretical development of mathematical frameworks, description of "natural experiments", statistical analysis of controlled experiments -- this just from the top of my head, thinking about the last dozen or so papers I've read. Saying that "such and such a paper or contribution does not represent falsification" tells us neither that the paper is bad and unscientific, but neither does it tell us that falsification does not occupy a central role within the scientific enterprise. (I'm not trying to strawman you here, I'm sure you mean something more sophisticated than this, and I look forward to picking up the references you mention).

I think science is actually about prediction. It's true meteorology is not advanced enough to be able to let us predict the particular weather 58 days from now, but it can and does predict various relationships between elements of the atmospheric system... to the extent, and only to the extent, that it can predict new information (be it relationships or particular values for certain variables) does a theory have scientific value.

Oh goodness, no! I'm a geologist, and believe me, most -- no all -- of the science I have done on the history and dynamics of mountain ranges has zero, zilch, nada, squat to do with prediction. It would be great if it were, though, since even if someone were to find out that I was wrong, oh, 5 million years down that road, I wouldn't be around to get my knickers all bunched up about it.

(To be fair, that was a few years ago and these days, I am in the business of making predictions and testing hypotheses, but that's because I work for evil, nasty big oil, and there are enormously large amounts of money riding on our interpretations. )
posted by bumpkin at 4:40 PM on December 12, 2010 [2 favorites]


Name one that wasn't predicated on an underclass who's relative lifestyle wasn't much much much worse than in a functioning market economy.
Neolithic Anatolia; lasted for almost two millennia. I'm quite familiar with DeLong and don't think he's a swivel-eyed loon, but he does promote an ill-founded view of the market in human history, as you appear to be doing yourself.
posted by Abiezer at 4:51 PM on December 12, 2010


This would involve clicking on some links, and R'ing some FA's, however.

Well, I did, so I hope we're on the same page here because I agree with what you're saying about the entire field of economics not being synonymous with right-wing free-market capitalist thought. I'm mostly just frustrated and confused about a couple of responses I found kind of enigmatic up thread and I don't want to derail further.

At any rate, I don't like that a thread about Econ 1 should be a place where a self-identified "outsider" who explains a problem they have with economics is shouted down. There are certainly a few bad faith snarky economics disses in here though, so fair enough I guess. But then, I always leave these discussions unsatisfied because as much as it bothers me I will apparently always be one of those people that can't ever get past some problems I have with basic first-day-of-Econ101-class concepts.
posted by Hoopo at 4:54 PM on December 12, 2010


Third, the market will go wrong if market agents do not take the prices at which they buy and sell as given but rather have some control over the prices at which they transact. The belief that the market is efficient hinges on the absence of market power...
Am I being completely dense or is this is opposite of what he means to say? If the agents that comprise the market have no influence over prices, then how can prices change?
posted by Western Infidels at 5:22 PM on December 12, 2010


Am I being completely dense or is this is opposite of what he means to say? If the agents that comprise the market have no influence over prices, then how can prices change?

dense. In a fair market agents have no influence over prices. Price is determined purely by the interplay between marginal cost and demand elasticity
posted by JPD at 5:43 PM on December 12, 2010


Hoopo, I think we're definitely on the same page; I too have many problems with the way economics is sometimes talked about in "basic first-day-of-Econ101-classes".

But this said, I'd hate to assess any other field by what's discussed in a few classes for kids fresh out of high school - that's a tough metric, man.

I do agree with you that the field of economics has a high proportion of right-wing ideologues, but De Long ain't it; he's one of the good guys, and I sincerely recommend listening to his lectures - he does pretty good justice to complicated and complex ideas.

Certainly, you can criticise the discipline of economics for its focus on the tenets of capitalism to the exclusion others, but we do - whether we like it or not - live in a capitalist world, and just as most political theory is focused on democracy in one way or another, so too is economics focused on the dominant system of its field.
posted by smoke at 5:50 PM on December 12, 2010


In a fair market agents have no influence over prices. Price is determined purely by the interplay between marginal cost and demand elasticity
"Demand elasticity" somehow doesn't involve any "agents?"
posted by Western Infidels at 5:56 PM on December 12, 2010 [1 favorite]


WI, he's talking about aggregate behavior in a theoretically 'fair' market. If anybody tries to charge more or less than the 'fair' price, they will either not sell anything or will sell out immediately to someone who will resell at the 'fair' price for a profit, thus having no effect on the market.

Obviously, real markets are not fair and it's easy for large buyers or sellers to impact prices.
posted by empath at 6:00 PM on December 12, 2010


Oh goodness, no! I'm a geologist, and believe me, most -- no all -- of the science I have done on the history and dynamics of mountain ranges has zero, zilch, nada, squat to do with prediction.

Well how were you testing your theories then? Wasn't it because your theories predicted results x, y, z which, when you went and looked for evidence disconfirming x, y, and z, you failed to find it?

Or am I missing something? If you could provide a prediction-less example, that would be great. Again, by prediction I don't necessarily mean that you know, say, exactly what's under this mountain. Prediction can equally well be about sets of relationships between groups of things, even if you can't apply it so well to the particular case.
posted by shivohum at 6:06 PM on December 12, 2010


"Demand elasticity" somehow doesn't involve any "agents?"

not in this context it doesn't. The point is neither agent has any input into what the item is going price at. Either you want it or you don't at a given cost level, and if you don't want it at the price that clears the market the supplier can't reduce his price, because he's already pricing at marginal cost.

This BTW could be an issue of semantics not a fundamental disagreement about microeconomics. In the context of the statement "influence over prices" is an implication that the market clearing price is not reflective of marginal cost for that level of demand.
posted by JPD at 6:08 PM on December 12, 2010 [1 favorite]


Knowing Brad in other contexts, I can tell you with 100% certainty that you are misreading what he has written and imputing motives he does not have. Verb is right that he's writing that people with no income have no "willingness" to pay precisely to be snarky about that construction.

I am willing to believe - in fact, I would like to believe - that the linked articles should be read as if the speaker had one eyebrow raised at all times. Because when I read them straight, they get me right in the grar bone.
posted by flabdablet at 6:30 PM on December 12, 2010


neolithic anatolia? A quarter step above hunting and gathering is your argument?
posted by JPD at 6:44 PM on December 12, 2010 [1 favorite]


It is when his is "deep human propensities" and the beliefs of dogs. And also why my first response was to mention the debates around the work of Polanyi; of course by the time you get to modernity the market is triumphing everywhere, but that still doesn't jistify the bollocks De Long wrote.
posted by Abiezer at 6:55 PM on December 12, 2010


Doesn't the fact the society evolved to markets (in some form) argue for his view point? What is so offensive about the statement "humans naturally favor a market, but markets are rarely fair, so a strong society will regulate its markets to keep them fair"? Isn't that fact that you have to go back to neolithic anatolia to find a society w.o labor specialization, and that at some point even that society embraced that in some form, an argument that markets are natural? How do you reject the idea that humans don't naturally flock to some sort of market?

Honest question. The dog thing is just a lazy attempt at saying humans are different. Getting hung up on it would seem not worthwhile.
posted by JPD at 7:24 PM on December 12, 2010


Just re-reading the Polyani piece and the issue at hand is conflating markets with profit and gain. A fair market doesn't create profits by definition, it maximizes resources. The idea that markets were an early modern construct is wrong. The second you have labor specialization you have markets. Also to bring that piece up to date a bit - while it was true that in 1957 the idea of humans acting purely out of self interest WAS accepted as reality by economists that has not been the case for decades.
posted by JPD at 7:32 PM on December 12, 2010


No; the entire point is that it wasn't a simple case of evolution. I mentioned southern Anatolia merely because it was a human society that lasted for almost two millennia with no sign of developing a market in the sense of the classical economists. Such societies are legion in the pre-modern world. In more recent times it's a more complex picture but still nowhere near the straightforward steady progress of our inner need to engage in market relations that is implied.
How the market came to prevail is of course hotly debated, but anyone familiar with the Polanyi debates or the work of world systems theorists like Arrighi can't help but despair when modern behaviours or dynamics are back-projected onto a human history they don't fit. This is when you've stepped outside of economic analysis of what we have now and are making ideological claims about the market that the history doesn't support. Polanyi's work was heavily critiqued but there's been a return to it because, IMO, he's fundamentally right about substantivism.
posted by Abiezer at 7:34 PM on December 12, 2010


what modern behaviors and dynamics are being projected? The only behavior you need to exist for markets to occur is labor specialization.
posted by JPD at 7:38 PM on December 12, 2010


Commodity exchange as a category separate from a larger social whole springs to mind, but perhaps I'd best go read the piece again to make sure my initial tut-tutting is justified!
posted by Abiezer at 7:41 PM on December 12, 2010


On second look, that does indeed seem to be the basic horrible error; the other dodgy claims largely flow from that.
posted by Abiezer at 7:47 PM on December 12, 2010


Commodity exchange as a category separate from a larger social whole springs to mind

I'm not quite sure what you mean by this? In an informal market like what would have originally existed this could hardly be the case. Only as the market evolves does this become a reality.


(BTW I'm not so sure that there aren't a lot of mainstream economists who wouldn't agree with at least some of the things you are saying) Certainly the existence on non-utility maximizing societies is a reasonable concept, but the argument would be that they eventually fail precisely because they didn't maximize and their neighbors did. But I'm not sure this runs counter to your argument.
posted by JPD at 7:49 PM on December 12, 2010


Well, I take DeLong's short passage there ending with Adam Smith and our propensity to truck and barter etc. as extending commodity exchange in the modern sense back to a time (he goes for East African primates; at least I made it into the neolithic!) when that simply wasn't so. So really just a reaction to that tendency in much modern economics (as written for lay audiences; as you say, in serious studies certainly not so simplistic) to take what we have now as inevitable and rooted in some aspect of human nature that could only allow things to be so - a deterministic view that I think writers like Polanyi and Arrighi have shown to be false, as the rise of the modern was often imposed by force and contested.
So in short, it's just that I'd prefer writers like DeLong to be more cautious or narrow in their claims, as inadvertently or otherwise I think over-emphasis on market exchange as the quintessence of human relations serves modern agendas I don't like.
posted by Abiezer at 8:12 PM on December 12, 2010


When critiquing an economist talking about markets in societies you wouldn't normally think of as having them, you do need to be careful that you're not just attacking straw men.

The standard picture of hunter-gatherer society as one based squarely on sharing is actually perfectly compatible with the idea of trading in scarce, rival goods if the resources so shared were in fact plentiful simply because the number of people consuming them was small. As De Long points out early in the first linked article, plentiful goods are not what economics is about.

Also, there are more kinds of currency than money. I think it's reasonable to argue that a skilled hunter who always brings back his kills and shares them freely with the rest of his group is in effect trading his hunting skills for respect from his peers.

It seems to me that the reason explicitly transaction-based exchanges are more dominant now than they once was is that more basic resources are scarce and/or difficult for their consumers to obtain unaided now, mainly because there are more people now. The more people there are, the more efficient their supply lines need to be to keep them all alive; and because practice makes perfect and time is a limited resource, the single most powerful efficiency improvement measure is specialization. In a society composed of massive numbers of specialists, I'd expect that transaction-based trading would pretty much have to end up being the norm. But I'd love to see counterexamples if you have them.
posted by flabdablet at 6:09 AM on December 13, 2010 [2 favorites]


There he goes again. Maybe it's just semantics - but I find myself actually offended by this writer's conflation of the concepts of willingness and ability, and I don't as a rule offend very easily.

Knowing Brad in other contexts, I can tell you with 100% certainty that you are misreading what he has written and imputing motives he does not have. Verb is right that he's writing that people with no income have no "willingness" to pay precisely to be snarky about that construction.

I am willing to believe - in fact, I would like to believe - that the linked articles should be read as if the speaker had one eyebrow raised at all times. Because when I read them straight, they get me right in the grar bone.


Flabdablet, you really have misinterpreted what DeLong is saying, but not because we're supposed to read both posts in their entirety as if Delong "had one eyebrow raised"! Just look again at the entire paragraph that contains the passage you quoted (not just the part you quoted):
First, the market will go wrong if the wealth distribution is wrong. The market judges value by willingness to pay, and the rich are much more willing to pay them the poor, and those without wealth or income have no willingness to pay at all. If your wealth and income are zero, then the market literally does not care whether you live or die--it is of no interest to it at all.
See, he's explaining how the market can "go wrong." The idea that people show "willingness to pay" through how much they actually is a way the market "goes wrong," because this is skewed by the unequal distribution of wealth. DeLong is straightforwardly critical of this. He's making the same point you were making. And you don't need to read all his words as meaning the opposite of what they say. But you do need to understand DeLong's basic goal in writing the post. Fortunately, he clearly prefaces the discussion with:
I count seven ways that market economies can and do go badly wrong:
So if you think his points in that post are arguments for free-market economies, you've misread him.

(It's telling that flabdablet's misinterpretation got 5 favorites, while the much-needed correction got 0. It's more invigorating to condemn than to clarify.)
posted by John Cohen at 7:36 AM on December 13, 2010 [1 favorite]


Sorry, left out a word here:

The idea that people show "willingness to pay" through how much they actually

Should have said "how much they actually pay."

(Mods, how's that edit function coming along?)
posted by John Cohen at 7:38 AM on December 13, 2010


you do need to be careful that you're not just attacking straw men.
And so do you; your bit about hunter gathers and sharing has got fuck all to do with the work of Polanyi or Arrighi.
posted by Abiezer at 8:46 AM on December 13, 2010


(2) Okay, physics, you're so damn smart: I'm going to take this pool cue and thwock the cue ball but good into the eight-ball. Tell me where it's going to end up, after seven or eight collisions, within 1mm. Alternately, tell me what the temperature and cloud cover will be here in Buffalo on April 23 of next year, within 1C and 1 percentage point respectively.


This is a frustrating and vaguely disingenuous argument.

To your first point: it is absolutely possible to calculate the exact position of that mythical eight-ball, to within whatever arbitrary level of precision you want. To do so, we just need inputs (coefficient of friction on every surface, exact vector and mass of the cue stick, local air temperature and humidity, etc.), with even more digits of precision than your desired output, because the margins of error are multiplicative. Then we just need to crunch a handful of differential equations. No one ever does this, of course, because it's not especially useful outside of the final exam. But note that this isn't an impossible exercise, just an implausible one.

To your second point: again, this would be possible only with sufficiently precise inputs. To the spirit of the argument, though: yes, in this case, the inputs are probably too numerous and/or difficult to gather, and thus can be functionally described as not existing. The difference here, critically, is twofold. First, no meteorologist (or physicist, for that matter) worth his salt would ever promise to predict the weather in Buffalo with that kind of precision more than 30 minutes from now. Second, if someone did promise to predict next year's daily cloud cover, no one would take him seriously, as the prospect is self-evidently ridiculous. And the prognostication would certainly never be given any weight in policy making--every other meteorologist on the president's board would be too busy clamoring to point out that a rogue colleague was trying to transmute lead into gold.

Physical science and economics operate on entirely different ethos, one of which is fundamentally more scientific, and it's bizarre to me that anyone would argue otherwise. That doesn't unilaterally discount the worthiness of economics, but it does mean that we get to question the accuracy of predictions made using methods that by definition aren't accurate.
posted by Mayor West at 9:02 AM on December 13, 2010


That's come off as more fighty than it was supposed to. Musn't come in from the pub and comment. Will drone on about substantivism and why I think the problem is the isolation of 'economic' behaviour from the rest of social activity (what Polanyi calls its embededness IIRC) in the morning if you're interested.
posted by Abiezer at 9:02 AM on December 13, 2010


I think one reason people think economics is dicier than some of the other sciences is that it's hard to do experiments. In other disciplines this is true as well, but whereas in, say, climatology you can fall back on modelling, and in that field of study, you would have at least something meaningful to begin your model with. You can experimentally determine that such and such a number of calories raises the temperature of such a mixture of gases a repeatably determinable amount. You then have something to build a model around, which I don't see in economics.

So, you can't experiment and you can't model. All you can do is construct narratives about past events.

All that would be okay though, if everything were done in good faith, but what I think I'm seeing is that pretty much the entire discipline is run by laissez faire ideologues who sat at Milton Friedman's feet in Chicago.

I have downloaded and am going to listen to Mr. De Long's course because I do want to educate myself in this stuff. I've been trying for some time to do that, but in other web courses I've found I'll listen for a while and then start to notice that, woven among the principles and formulae are a large number of what sound like Republican talking points. Then I'll look up the credentials of the professor and find, deep in the fine print, that he's affiliated with the Hoover Institute, or the Cato Institute or both.
posted by Trochanter at 10:22 AM on December 13, 2010 [1 favorite]


All that would be okay though, if everything were done in good faith, but what I think I'm seeing is that pretty much the entire discipline is run by laissez faire ideologues who sat at Milton Friedman's feet in Chicago.

Actually, things are much worse than that. Friedman was an advocate of using monetary policy to prevent a depression just as the Fed is attempting now. Today's right wing Chicago School economists even reject the ideas of their own founder, Milton Friedman, as too leftist.
posted by JackFlash at 11:26 AM on December 13, 2010


All that would be okay though, if everything were done in good faith, but what I think I'm seeing is that pretty much the entire discipline is run by laissez faire ideologues who sat at Milton Friedman's feet in Chicago.

What gives you that impression? It's my impression that it's MIT guys (e.g., Dornbusch and Fischer) whose disciples dominate most top economics departments.

Do the economists that are described in Hoopo's link have an explanation for why Henry Ford paying his workers more than anyone else made him fabulously wealthy and ushered in a golden age for the United States that lasted right until a bunch of schmucks ran the whole thing aground with highly leveraged poorly regulated trading of the bubble de jour?

Or do they believe that was caused by elves or sun spots or something?


Delong talks about both of those things in his other course that's available online, Econ 113. I haven't listened to this course, but I bet he covers it here, too. Just out of curiosity, have you read any of these economists that you're dismissing out of hand?
posted by suncoursing at 2:33 PM on December 13, 2010 [2 favorites]


What gives you that impression?

Maybe it's that the disciples of the Chicago School are more interested in doing evangelical work than the MIT people. I really don't know. I don't think I'm way off base in my perceptions. I'm fully prepared to believe that there are better economists out there than those who get trotted out in front of the cameras to explain why what's good for GM is good for America; why too-big-to-fail isn't too-big-to-exist; why the repeal of anti-trust legislation is a no brainer because this tendency towards monopolization I'm seeing everywhere is some sort of Marxist mirage...

Stuff like that.
posted by Trochanter at 3:55 PM on December 13, 2010


to get a sense of where economics is i'd check out:
If cows were money (a response to Brad DeLong) [+ Sunday Morning Monetary Theology]

&

Model Complexity and Prediction Error in Macroeconomic Forecasting (or, Statistical Learning Theory to the Rescue!)
also re: economic history, here's delong's (in progress) Economic History of the Twentieth Century [old draft] + his extensive postings on eh.net, cf. The End of Influence

oh and fwiw in Dani Rodrik on Globalisation...
On to your last choice, Karl Polanyi’s 1944 book, The Great Transformation.

The Great Transformation is the sort of book that you will only get after reading it three times. Well, that’s what happened to me. It’s one of these books that have the greatest reputation, but are in some sense hardest to read. But it’s worth reading. It’s really a history of the spread of markets, the spread of the gold standard. It makes a rather important point, especially if you have spent a lot of time studying economics. You tend to think of economics, or the economy, as an independent sphere of society, that economies tend to be self-standing and self-supporting, almost independent from the rest of society. Then you start to say ‘Politicians shouldn’t interfere in the economy, because it worsens resource allocation’, and things like that. What Polanyi’s work underscores is that this is never how an economy has actually worked historically. To use his terms, the economy has always been embedded in society, and that when we try to disembed it from society and treat it like an independent institution – ie not dependent on societies, values and other institutions – then we’re really going to run into trouble, political conflict, social and economic instability and some kind of backlash. I think the big lesson from Polanyi’s work is that, as we keep rethinking the institutions of economic globalisation, we need to ensure that those mechanisms are fundamentally responsive to the values and demands of society and that if we lose track of that, then we risk another set of instabilities and an eventual collapse of globalisation.

Do you want to give a specific example where this is particularly relevant right now?

I think the financial crisis we just went through is a very good illustration. For too long we lived off this fiction that financial markets could exist independently, that they could regulate themselves, and in this fashion they could be a foundation of wealth and well-being. What we found is that actually financial markets, left to themselves, are a very dangerous weapon. They need to be built on top of some very strong regulations and the moment you start talking about regulations then of course you have to ask: what are regulations for? That requires figuring out all sorts of questions. What are society’s values? How much income inequality is desirable or feasible? What should earning differentials be, how much is OK? How much should financiers/bankers earn that is OK? What role should finance play – supporting the real economy, as opposed to the real economy supporting finance? What is the right trade-off between financial innovation and financial stability? The more we allow finance to innovate, the less stability you’re potentially going to have because of the risks that are generated. And each society may have different answers to these questions, and that has very important implications, going forward, as to how much financial globalisation we’re going to have.

I would say that we are making a very big mistake to assume that we can go back to a world of extreme financial globalisation, because that’s inevitably going to leave the regulatory underpinnings of the system very weak; it’s going to set us up for another financial crisis in the future. I’d much rather see us being much less ambitious on financial globalisation and have much more sound regulation at the domestic, national level. So I think Polanyi’s book has very real implications for how we think about the future of financial globalisation.
the whole interview is worth reading btw, placing the process of globalisation in historical and political context relevant to our times, particularly in how it fractures the polity when a majority doesn't benefit. (he also makes a compelling case for allowing greater global labor mobility to complement trade and financial globalization, except that of course would mean having to deal with more foreigners, yet one can DREAM.) [dean baker's 'modest proposal' for Making Peace in the US-China Trade War is also insightful + amusing -- if only we could have more paid vacation (we could ;) on The Way Forward™]
posted by kliuless at 7:21 AM on December 14, 2010 [2 favorites]


In his NYT piece, "When Zombies Win," Paul Krugman wonders why, given a twenty years long demonstration of the failures of the laissez faire philoshopy, that ideology has a firmer than ever grip on the people who govern us.
posted by Trochanter at 9:55 AM on December 20, 2010


as is CRS' wont: manual trackback

also btw...

Delong Smackdown Watch: Cosma Shalizi Wages the War of All Against All Against Me
DeLong Smackdown Watch: Yes, I Have Been Making This Same Mistake Since I Was 18 Edition

Econ 1: Fall 2010: U.C. Berkeley: September 29 Economic Growth Lecture
Econ 1: U.C. Berkeley: Fall 2010: Transcript of J. Bradford DeLong September 22 "Inflation Economics" Lecture
Economics 1: U.C. Berkeley: Fall 2010: September 27 Government Deficits and Debts Lecture
posted by kliuless at 4:44 PM on January 9, 2011


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