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Baffled by the Economy
Why being a macroeconomist means never having to say you're sorry
President Obama and his critics have a major disagreement. He says his accelerated economic stimulus efforts will create 600,000 jobs by the end of the summer. Senate Republican Leader Mitch McConnell of Kentucky, however, doubts "the spending binge we're on is going to produce much good." Both can't be right. But neither has to fear being proved wrong.
Why not? Because there is no persuasive way of determining the effect of implementing the president's policies. No matter what happens, each side can claim vindication.
If the economy improves and unemployment drops, Obama can take credit. If it fails to improve and unemployment rises, though, he can say he averted an even worse showing. Republicans will take the opposite tack—attributing any improvement to the natural resilience of the economy and blaming the administration if things get worse. And neither side will really know who's right.
I have long been a believer in the value of economics in understanding the world. But the chief effect of the current crisis is to raise the possibility that economists—at least those macroeconomists, who study the broad economy—don't have a blessed clue.
Take Princeton's Paul Krugman, the 2008 Nobel laureate. In February, he said the administration's stimulus plan was too small to be very effective. On March 31, he scorned talk of improvement in the economy: "So far, there's nothing pointing to a fundamental turnaround this year, or next, or for that matter as far as the eye can see." But this week, he said, "I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer."
How we moved so quickly from "this solution won't work" and "no recovery in this decade" to "maybe it's already started" is one of those mysteries that may never be explained. And Krugman left himself plenty of wiggle room by not predicting the recession will end soon, but saying only that he "would not be surprised" if it does.
In any event, the sudden change of forecast will not damage his standing. Macroeconomists are expected to be smart, learned, and articulate in explaining and predicting the course of the economy. But these days, at least, no one really expects them to be right.
That includes them, I suspect. They realize that the economy is a big, complex organism about which they can make only educated guesses. They know there is no consensus in the profession on how to extricate ourselves from this mess.
Krugman exhibits great confidence in his own brainpower. But I doubt he would bet even 1 percent of his $1.4 million Nobel Prize award on his ability to predict the date this recession will end.
So why should we listen to what macroeconomists say? Some economists think that often we shouldn't. Russell Roberts, a scholar at George Mason University and the Hoover Institution, told me, "I think some of macro is useful—what causes inflation, for example. I just don't believe we're very good at testing theories at the macro level in a convincing way." Many times, he says, all macroeconomists can do is concoct stories that explain events after the fact.
Microeconomists, by contrast, make predictions about the effect of policies on individual markets, and those predictions are easier to confirm or refute. They virtually all agree, for example, that price controls lead to shortages, and governments occasionally take the trouble to prove them right.
But macroeconomists can almost always claim to be right, no matter what happens. If they recommend Policy X and the economy weakens, they can say it prevented a complete disaster. If they say Policy X will hurt and things improve, they can say without it, we'd be even better off. Being a macroeconomist means never having to say you're sorry.
That doesn't mean we should disregard what they say. As University of Chicago economist John Cochrane says, "If you want to know if you have cancer, you talk to a doctor, not a psychiatrist. If you're interested in macroeconomics, why would you not talk to people who spend their lives thinking about it, and writing about it, subject to the harsh discipline of peer-reviewed journals?" But he thinks they should admit the limits of their knowledge.
Right now, though, the limits loom large. The knowledge? Not so
much.
COPYRIGHT 2009 CREATORS SYNDICATE, INC.
|6.11.09 @ 8:23AM|#
http://www.youtube.com/watch?v=VVp8UGjECt4
This is amusing. I hope the link works, my html is a bit
rusty...
Freddie|6.11.09 @ 8:42AM|#
Seems to me that some of these macroeconomists are very well
versed in "fed-speak". The government can't possibly make up for
all of de-leveraging that has been taking place. So, what exactly
is their motivation (the economists)? Listening to themselves talk?
Sounds like another profession.
thew83
Can't show you here but go to
Visit
W3Schools! Scroll to "The href Attribute" Substitute URL and
text to be diplayed.
ed|6.11.09 @ 8:44AM|#
Being a Macroeconomist Means Never Having to Say You're
Sorry...
...or, It's Easy to Bullshit Americans.
|6.11.09 @ 8:48AM|#
thew83
Can't show you here but go to
Visit W3Schools! Scroll to "The href Attribute" Substitute URL and
text to be diplayed.
Thank you.
Lester Hunt|6.11.09 @ 9:00AM|#
One thing recent events have shown me is that I had drastically underestimated the extend to which macro is motivated by politics. "Stimulus" spending will go forward regardless of the facts because, fact is, it gets votes.
|6.11.09 @ 9:21AM|#
< jack > Has there been a Miranda-for-terror-suspects
thread? I searched for "Miranda" on the main H&R page, but
often the pithy headlines foil me.
< / jack >
|6.11.09 @ 9:32AM|#
The government can't possibly make up for all of
de-leveraging that has been taking place.
Because of the AIG bailout, there has been a lot less deleveraging
than people think. Enormous amounts of the leverage behind the
credit bubble existed in the OTC derivatives market. That leverage
hasn't gone away so much as it has been transferred from the
private sector to the public sector.
Scarcity|6.11.09 @ 9:35AM|#
"If you want to know if you have cancer, you talk to a doctor,
not a psychiatrist."
Perhaps the quoted scholar meant psychologist. A psychiatrist is an
MD.
Scarcity|6.11.09 @ 9:36AM|#
Not that I recommend seeing a psychiatrist if you think you have cancer.
creech|6.11.09 @ 9:50AM|#
Hey, as long as pols are going to get away with making untestable claims, we might as well get Bill Redpath to claim that the mere presence of a Libertarian candidate for President on the ballot since 1972 has "saved" every job in America!
|6.11.09 @ 10:04AM|#
This article explains why I like Austrian economics.
Austrian economics is the anti macro discipline.a
It is explicitly against trying to model "an economy" to make it
look like an engineering diagram.
All macro is reduced to its micro roots. No aggregates, no
econometric computer models, no inputs and outputs measured like a
Rachel Ray recipe.
Austrian economics is the study of individual human action.
Neu Mejican|6.11.09 @ 10:18AM|#
libertree,
Correct me if I am wrong here, but it sounds like you are saying
that Austrian economics is, essentially, a collection of just-so
stories that replaces study with proclamation.
Seward|6.11.09 @ 10:36AM|#
Neu Mejican,
The main argument that Hayek had with the modern mathematical
modeling so prominent in economics after the 1930s was that it was
essentially build on a model resembling 19th century physics. Ir is
argued still today economics as a discipline is basically still in
the throws of 19th century positivism. Which is just bizarre once
one thinks about what Kuhn, Popper, etc. have said about science.
Indeed, I think this basically means that economics isn't a science
at all.
Seward|6.11.09 @ 10:40AM|#
Neu Mejican,
Anyway, libertytree is right in much as libertytree states that
Austrian economics views the locus of study as properly with the
individual.
Neu Mejican|6.11.09 @ 10:46AM|#
Seward,
Thanks for a serious response.
The problem I have with that position is this...
"properly with the individual"
Understanding the individual does not shed light, necessarily, on
the system in which that individual is embedded.
I don't get a sense that reductionist approaches have made much
progress in understanding the complexity of the economy.
Neu Mejican|6.11.09 @ 10:51AM|#
In other words,
A study of the individual and their behavior is "psychology" not
economics.
Attempting to reduce the system to the psychology of the individual
doesn't get you very far.
So is Austrian economics essentially Freudian economics?
bobbyjoe|6.11.09 @ 10:58AM|#
"If you took all the economists in the world and lined them up end to end, they still wouldn't reach a conclusion."
Seward|6.11.09 @ 11:01AM|#
Neu Mejican,
Understanding the individual does not shed light, necessarily,
on the system in which that individual is embedded.
There is no institution or system; there is only the individuals
that make it up. Or to borrow an example from someone else, the
Congress is not an entity, it is made up of a bunch of discrete
individuals pursuing their own individual wants, etc. Austrians
don't assume that society, institutions, etc. have a personality;
that is a moronic concept which 19th century sociologists thought
up.
As for psychology...
No.
The behavior of individuals in the marketplace; their interactions
with one another. Now the "psychology" of groups ("animal spirits")
is what Keynesians are all about.
Anyway, there is no possible way I could encapsulate the field of
Austrian economics in a few blog posts. One place to start would be
the FEE lectures you can find on iTunes.
Seward|6.11.09 @ 11:03AM|#
One thing that is cool about Austrian economics is that it is a field on the rise. It had a nadir from the 1930s to the 1960s and since Hayek won his Nobel it has had a renaissance.
Neu Mejican|6.11.09 @ 11:04AM|#
Seward,
There is no institution or system; there is only the
individuals that make it up.
There is no [brain, body, solar system]; there is on the [neurons,
organ, objects] that make it up.
engineer|6.11.09 @ 11:07AM|#
"So is Austrian economics essentially Freudian economics?"
No,but that could be entertaining.
Freudian economist:"The recession happened because we're all in
love with our parents."
Neu Mejican|6.11.09 @ 11:08AM|#
Seward,
Clearly there are both systems and the elements that make up those
systems. Understanding the elements is important, but denying the
existence of the system because it is hard to understand is not a
serious position, imho.
Neu Mejican|6.11.09 @ 11:10AM|#
Austrians don't assume that society, institutions, etc. have
a personality; that is a moronic concept which 19th century
sociologists thought up.
A strawman.
You don't really think that is what the macroeconomists are
modeling do you?
|6.11.09 @ 11:11AM|#
But macroeconomists can almost always claim to be right, no
matter what happens.
Similarly, any engineer can claim to be competent if that
engineer's buildings never fall down and the engineer remains in
good standing among his colleagues.
Even if an engineer's building happens to collapse and kill
thousands of people BECAUSE A 747 CRASHES INTO IT,
that engineer will probably still get a pass from other engineers.
This is despite the fact that planes have crashed into buildings at
least as often as the US economy has had NBER-defined
recessions.
Macroeconomists should put more effort into admitting the
limitations of their prognostications when giving advice, but
people asking for advice should by default be skeptical of any
human being's ability to predict the future.
engineer|6.11.09 @ 11:13AM|#
"There is no institution or system"
I'll have to call BS on that one. Emergent behaviors can occur in
systems of discrete individuals. In an economy, panic and
uncertainty can be self-reinforcing, as people avoid spending and
investment that they would make in the absence of those factors
(all other things being equal).
Neu Mejican|6.11.09 @ 11:16AM|#
engineer...
Beyond BS...
It does, however, reinforce my original impression...
Proclamations replace study...belief replaces understanding.
Seward|6.11.09 @ 11:21AM|#
Neu Mejican,
Actually, that is exactly how macro works.
engineer,
In an economy, panic and uncertainty can be
self-reinforcing...
Sure, but it is still individuals interacting with one another, not
individuals interacting with some abstract thing called
society.
engineer|6.11.09 @ 11:23AM|#
Can't post quickly. keyboard screwed up.
Not endorsing Obama policy. Plenty of proclamations replacing study
there. And it's damn costly too.
Chris Martin|6.11.09 @ 11:24AM|#
The Hayekian point on the inability of government to replicate
the knowledge of the market is made in this Onion-style parody
entitled "Obama Appoints Russian Mystic Rasputin "Psychic Economic
Adviser to the Czars":
http://optoons.blogspot.com/2009/06/obama-appoints-russian-mystic-rasputin.html
Seward|6.11.09 @ 11:24AM|#
Neu Mejican,
Clearly there are both systems and the elements that make up
those systems. Understanding the elements is important, but denying
the existence of the system because it is hard to understand is not
a serious position, imho.
One isn't denying the existence of the system. One is denying that
the system has a personality. I pretty much said exactly the same
thing above.
Or let's put it this way: people can exist without the system, the
system cannot exist without the people.
engineer|6.11.09 @ 11:25AM|#
"Sure, but it is still individuals interacting with one another,
not individuals interacting with some abstract thing called
society."
Point was recession can perpetuate thru positive feedback. THink
that was sorta NM's argument too.
|6.11.09 @ 11:27AM|#
Here's what I found to be a nice explanation of Austrian
macroeconomics and business cycle theory. It's a set of powerpoint
presentations by a Professor Garrison that's fairly intuitive (or
at least doesn't skip anything too large in its lines of reasoning)
and draws direct comparisons with more conventional macro
theory.
The presentations are linked on this page:
AUSTRIAN
BUSINESS CYCLE THEORY IN POWERPOINT
Seward|6.11.09 @ 11:30AM|#
engineer,
Well, even if that is the case, and it is a highly problematic
notion IMHO, all that would mean is the study of the individual
interactions via that positive feedback.
Seward|6.11.09 @ 11:32AM|#
some fed,
Well, yeah, but we are more directly talking about methodology.
Seward|6.11.09 @ 11:34AM|#
And without further delay (and since I am discussing this in a
rather muddled way), here is Rothbard on praxeology:
http://mises.org/rothbard/praxeology.pdf
A T|6.11.09 @ 11:37AM|#
At least Austrians don't have these wild claims that they can
cure and manage the economy. Even if they are wrong, they can't do
too much damage.
Also, lay of the engineers. They are quite humble about their
achievements. That's why you have disclaimers on board airplanes
(emergency instructions) because they admit it COULD go down.
Seward|6.11.09 @ 11:38AM|#
Neu Mejican,
BTW, why would you have any sort of impression about Austrian
economics based on what two blog commentators say about it?
robc|6.11.09 @ 11:38AM|#
NM,
There is no [brain, body, solar system]; there is on the
[neurons, organ, objects] that make it up.
That would be a good analogy IF neurons to brains was like people
to society. However, while neurons can be treated individually,
they also, as a group, have a self awareness at the higher (brain)
level. Decision making happens at the brain level, and it isnt just
neurons voting.
The same doesnt apply to individuals/society. There is no
self-awareness to society. Society doesnt act as one unit. A brain
that was split and pulling in different directions like society is
would be insane, most likely. For society, that is normal, because
society really is the sum of independent individual actions.
The brain is not just the sum of independend neuron actions.
I will call on Descartes here:
"Cogito ergo sum" works for the person, but not for society.
Gilbert Martin|6.11.09 @ 11:43AM|#
"Why not? Because, writes Steve Chapman, there is no persuasive
way of determining the effect of implementing the president's
policies. No matter what happens, each side can claim
vindication."
Of course in any LEGITIMATE debate, no one has to prove a negative.
The burden of proof always rests on the side claiming the
affirmative - in this case a claim that the "stimulus" has improved
the economy.
Seward|6.11.09 @ 11:46AM|#
robc,
Yeah, that was in the range of what I was trying to get at during
this low blood sugar moment. Thanks.
libertarian democrat|6.11.09 @ 11:50AM|#
I know this has been covered, but I seriously wonder about any
educated person that doesn't realize that psychiatrists are
physicians (many - probably most - of whom have spent time treating
cancer as 3rd and 4th year med students and during their medical
internship prior to their psychiatry residency), and that many
psychiatrists (such as those in consult liaison or neuropsychiatry)
may have more experience working with oncologists and cancer
patients than many other medical specialties.
Shorter: What a fucking moron.
engineer|6.11.09 @ 11:50AM|#
"At least Austrians don't have these wild claims that they can
cure and manage the economy. Even if they are wrong, they can't do
too much damage."
Agreed. First real fed attempt to manage economy=federal reserve
policy.Love where that got us.
engineer|6.11.09 @ 11:56AM|#
Panics prior to the crash of '29: Fairly mild. Some distortion thru fractional-reserve banking, but never an all-out catastrophe causing decade-long depression. Major change? Fed policy encouraged inflationary distortion during boom (lower interest rates + lower reserve ratios) and deflation in the bust (raised reserve reqs and interest rates)
|6.11.09 @ 11:57AM|#
You'll have to understand the perspective of your opponents
better if we're to convince anyone.
Austrians do too have wild claims (wild as viewed by their
opponents) that they can cure and manage the economy. Popular
Austrian policy recommendations of ending regulation and the
monopoly on the money supply are just as radical to most people as
Keynesian advocacy for borrowing and spending trillions.
Sure, you and I see laissez-faire as benign, but most people see
laissez-faire as dangerously leaving their livelihoods to
chance.
I assure you that Krugman, at least, is quite convinced that
Austrians would destroy civilization if given the chance to enact a
program.
|6.11.09 @ 11:57AM|#
since Hayek won his Nobel it has had a
renaissance.
That, together with having predicted the collapse of the Soviet
Union, and the fact that the Austrians were warning everyone about
the last three bubbles while we were still in the expansion phase,
while all the Keynesian clowns were pretending that inflation is
just fine and dandy.
-jcr
|6.11.09 @ 11:57AM|#
"Clearly there are both systems and the elements that make up
those systems. Understanding the elements is important, but denying
the existence of the system because it is hard to understand is not
a serious position, imho."
Hard for whom? God?
It's not just hard for people to understand, it's impossible.
Seward|6.11.09 @ 11:57AM|#
engineer,
Well, Austrians place the locus of the boom and bust cycle on the
inflationary and deflationary policies of central
banks/governments.
Anyway, time for lunch; I need it.
|6.11.09 @ 11:59AM|#
Austrians do too have wild claims (wild as viewed by their
opponents) that they can cure and manage the economy
NO, NO, NO!
No Austrian economist will ever make such a claim.
Austrians say that the economy will cure itself if the
government just quits fucking with it.
-jcr
Neu Mejican|6.11.09 @ 12:04PM|#
Seward,
I was commenting on the characterization of Austrian economics
being presented.
It's superiority is being touted based on its superior BELIEFS
about the nature of the problem that circumscribes the problem
space. If the proper unit of study is the individual because the
institutions don't exist, have no reality, etc...Austrians have
nothing to say about the economy.
You've now moved the goal post to "interactions between
individuals" so the analogy is the study of synapse rather than
neuron, but you still have the same problem. (with the addition of
the problem of deciding how many individuals interacting it takes
before you have moved from a proper problem space into a study of a
non-existent "institution.").
That would be a good analogy IF neurons to brains was like people to society. However, while neurons can be treated individually, they also, as a group, have a self awareness at the higher (brain) level. Decision making happens at the brain level, and it isnt just neurons voting.
The same doesnt apply to individuals/society. There is no self-awareness to society. Society doesnt act as one unit. A brain that was split and pulling in different directions like society is would be insane, most likely. For society, that is normal, because society really is the sum of independent individual actions.
The brain is not just the sum of independend neuron actions.
This is a nice set of beliefs you have. It is, however, not a
scientific position. Ignorning for now the clear misrepresentations
of brain function that are foundational to your description, let's
stay at the level of speculation you have set up here: IF societies
were self-aware, do you think that they individual units (people)
would be aware of that awareness? Neurons are the elements in a
self-aware system...but they do not themselves have awareness of
the brains awareness.
Now, to the larger issue. The conflation between "self-aware
people" and "the society" or "the economy" is not one that I
introduced into the discussion. That is your characterization of
emergent phenomena in complex systems. And it is, I would say, a
strawman...
Neu Mejican|6.11.09 @ 12:10PM|#
One isn't denying the existence of the system. One is
denying that the system has a personality.
To the tape: "There is no institution or system; there is only the
individuals that make it up."
The Personality claim is both separate and tangential.
Neu Mejican|6.11.09 @ 12:12PM|#
Robbie Clark,
[sigh]
Yes, man's hubris is unending and destructive.
We should not try to understand the mind of god for we are not
worthy.
Neu Mejican|6.11.09 @ 12:23PM|#
robc,
I want to clarify a bit...
If societies are self-aware...how would the individual units
(people) determine this?
It is clear that they would not have direct access to the awareness
of the larger structure, so there would need to be some inferential
process implemented to identify that feature of the larger
system.
Seward|6.11.09 @ 12:24PM|#
Neu Mejican,
It's superiority is being touted based on its superior BELIEFS
about the nature of the problem that circumscribes the problem
space.
So now are you "commenting on the characterization of Austrian
economics being presented?"
If the proper unit of study is the individual because the
institutions don't exist, have no reality, etc...Austrians have
nothing to say about the economy.
They have no reality as entities with personalities of their own.
This is the third time I have stated this. Shall we go for a
fourth?
You've now moved the goal post to "interactions between
individuals" so the analogy is the study of synapse rather than
neuron, but you still have the same problem.
That was always the goal post. Look, I'm sorry that I don't relay
to you every unstated assumption, but people familiar with Austrian
economics know what it means when they make this point.
Anyway, individual humans aren't anything like synapses, they have,
for one thing, agency, which synapses lack. Now philosophers for
many centuries (this includes Hobbes) have tried to compare society
to the human body, but it is an analogy which easily breaks down in
part because of the agency issue. Kant recognized this when he
argued that people should not be the means of actions, but the
ends. Sadly, modern governments, including the U.S. government,
still use individuals as the means of actions.
Anyway, as I hinted at earlier, if you are really interested in
Austrian economics then a good place to start are the FEE lectures
on iTunes.
Neu Mejican|6.11.09 @ 12:26PM|#
The brain is not just the sum of independend neuron
actions.
Yet humans are independent actors able to extract themselves
completely from the influences of their context?
That's not your point, I assume.
Could you clarify?
Seward|6.11.09 @ 12:27PM|#
Neu Mejican,
To the actual tape:
There is no institution or system; there is only the
individuals that make it up. Or to borrow an example from someone
else, the Congress is not an entity, it is made up of a bunch of
discrete individuals pursuing their own individual wants, etc.
Austrians don't assume that society, institutions, etc. have a
personality; that is a moronic concept which 19th century
sociologists thought up.
You have to read the sentence in the context of the entire
paragraph to understand what I am getting at. Anyway, have a good
lunch.
|6.11.09 @ 12:27PM|#
I think this basically means that economics isn't a science
at all.
Economics is a science, but Keynesians aren't economists.
Keynes is to economics as Lysenko is to Biology.
-jcr
Neu Mejican|6.11.09 @ 12:34PM|#
Seward,
So now are you "commenting on the characterization of Austrian
economics being presented?"
From the beginning, that was what I was doing...that was the point
of the phrase "but it sounds like you are saying that"
Anyway, individual humans aren't anything like synapses, they have, for one thing, agency, which synapses lack. Now philosophers for many centuries (this includes Hobbes) have tried to compare society to the human body, but it is an analogy which easily breaks down in part because of the agency issue.
Yes, like all analogies, it breaks down at some point. The issue of
agency is certainly a factor that needs to be considered in
understanding the larger system. And the issue of whether or not
the larger system HAS agency is one that would need to be proven,
not proclaimed. It would also require that you are very careful in
your definition of "agency." Standard definitions of the term fit
comfortably into a description of features of an institution.
Institutions act.
Indeed the complaint the Austrians are being said to make is that
they do not approve of the actions of institutions in the
economy.
Neu Mejican|6.11.09 @ 12:39PM|#
Seward,
I read the sentence in the context you placed it.
I rejected both substantial points.
1) Institutions do not exist...only collections of individuals
exist.
2) Austrians are different than other economist because they do not
assume that societies have "personalities."
The first is a claim about the proper scope of the problem. It
claims that the study of institutional behavior is not the proper
level of analysis, because the institution is just an epiphenomena
of the individuals and their interaction.
The second is a statement about the beliefs of those that do see
the institutional level as an appropriate unit of study...and it is
a misrepresentation of what is being studied.
Neu Mejican|6.11.09 @ 12:45PM|#
Seward,
Anyway, individual humans aren't anything like synapses, they
have, for one thing, agency, which synapses lack.
I would just like to point out that this mixes the metaphors quite
completely.
Synapse = interaction between neurons.
Interactions don't have agency whether between neurons or humans in
the sense your are using agency...only entities have agency in this
sense.
The debate is about whether collections of individual humans have
status as an entity allowing the claim that the collection
possesses the trait "agency."
Barry Loberfeld|6.11.09 @ 12:48PM|#
Emma: Look, you know what blows all this talk
out of the water? There have been a number of studies that found
that they raised the minimum wage and it wasn't followed
by any mass unemployment like predicted.
Adam: I'm not saying an increase in the minimum
wage would destroy all or even a majority of low-end jobs, though
it might a significant minority. Again, an increase in the cost of
living is the main result of the increase in the cost of labor. But
the bigger point here is, empirical studies prove nothing -- not in
economics.
Emma: Theorizing around a table is science, but
actually measuring the real-world impact of those theories
isn't?
Adam: Couldn't have said it better myself!
John: Adam, seriously. What do you mean?
Adam: Science is about nothing if not
controls. But the economy isn't a laboratory, and it
doesn't allow for controls. Do you realize just how many factors
other than the wage increase were responsible for the
employment rate? We would have to keep all those factors as a
constant in order to isolate and gauge the effects of the wage
increase. But that's exactly what we can't do with the real world.
These "studies" aren't tests that prove or disprove a hypothesis.
At best, they're surveys. Presenting them as experiments
demonstrates only the inability to distinguish correlation from
causation -- the post hoc ergo propter hoc fallacy.
Emma: So what are we supposed to do with the
actual data -- dismiss it completely because it contradicts your
theory?
Adam: No, not at all. We evaluate it in light
of the theory. It simply means that the depressing effect of
the wage increase was obviously overcome by the uplifting effect of
other, beneficial factors. Of course we should also keep in mind
the many below-minimum-wage workers of the "underground" -- off the
books -- economy, who aren't measured by these studies. Their wages
purchase, among other things, the labor of workers in the
conventional economy, who are measured.
John: It seems to me that since you have theory as
the basis of everything, we have to ask what is the basis of this
theory.
READ THE
REST
Chad|6.11.09 @ 12:48PM|#
Hurry for Chapman! It is nice to see someone pointing out what I
have said a thousand times. Trying to connect short and medium-term
economic fluctuations to particular policy decisions is simply
bogus. Before any boom, you can always find some policy change that
you liked - and assert causation. Look at the time before any bust,
and it is certain you can always find some policies you don't like
- allowing you to assert causation.
Reality is far more complex. The economy bounces up and down
regardless of what left and right do with the 1-2% of GDP they are
squabbling about.
robc|6.11.09 @ 1:04PM|#
NM,
I thought about this over lunch, figuring it would be the response,
and a reasonable one, in fact.
If societies are self-aware...how would the individual units
(people) determine this?
Society would let us know.
It is clear that they would not have direct access to the
awareness of the larger structure
That is not even remotely clear. In fact, I accept that as an
anti-premise.
, so there would need to be some inferential process
implemented to identify that feature of the larger
system.
Not necessarily.
The analogy earlier breaks down because neurons are not self-aware
themselves. While there is no guarantee that a "self-aware" society
would communicate that awareness down to the individual, it is also
not obvious that it wouldnt.
Consider God. Some claim he has made us aware of his existence,
others disagree. While that is slightly different, as we are not
subsets of God (IMO, others disagree on this too), but as an
analogy, I think it works.
Neu Mejican|6.11.09 @ 1:10PM|#
It is clear that they would not have direct access to the awareness of the larger structure
That is not even remotely clear.
I am trying to imagine why not.
If the processing by the system were to lead to self-awareness, for
the individual units to have direct access to that total experience
would require that each unit has similar processing capacity and
input to the whole system.
Any access to the awareness of the system by the units would have
to be indirect, via inference, or, as you posit, because the system
has boiled down the information and presented it in a form that the
unit can understand (that would be indirect access, I believe).
robc|6.11.09 @ 1:14PM|#
NM,
I think we are arguing different things here - "direct access to
the awareness" means "aware that it is aware", nothing more. I
think you mean more by that.
Its a 1 or 0, Do I know that society is aware? I see no reason we
wouldnt have access to that bit (literally) of info.
robc|6.11.09 @ 1:15PM|#
that would be indirect access, I believe
Society (or God) coming to me and saying I EXIST!!!!, is pretty
damn direct access, IMO.
Neu Mejican|6.11.09 @ 1:54PM|#
robc,
I, indeed, mean more by "direct" than you do.
Your awareness via a system of communication is not direct, in the
sense that I am using it.
You have secondary access to their self-awareness via your sense
organs in the scenario you describe.
Sean W. Malone|6.11.09 @ 2:02PM|#
NM:
If you want to learn about Austrian Econ - of which I have long
been a student and a fan - I suggest you actually take the time to
read Ludwig von Mises' "Human Action" for a better understanding of
what Seward and some others have been saying on here.
At the very least you will come to understand why they strongly
believe that logical/empirical positivism applied to economics is
the wrong tool for understanding.
It's hard to explain in a paragraph or two, but it starts to some
degree with the assumption that all humans act independently based
on their own values. Now, you want to reject this because you think
that "society" has a mind of its own, but first off - you're
basically operating under a fallacy in even thinking that... Humans
act and are influenced by each other's actions - so when you
observe a societal shift towards one idea or another, you ascribe
that as the cause of individual shifts in behavior -
rather than recognizing that your observation was a result of
individual shifts. But secondly - you labor under the delusion that
you can reduce human behavior to polylogism and group-think. This
then simultaneously assumes that the world is fundamentally a
different place for people in different groups (race, ethnicity,
culture, class, etc.) and that an economist could create a
simplistic model to reflect what group he was observing. That's
damned ridiculous.
The thing that gets lost in the shuffle here is that the Austrians
have diverged so much from the mainstream because of severe
differences in their underlying methodological concepts.
This is compounded by the problem of Keynesians saying that they
reject "testing" as if their conclusions are based on nothing but
whatever they feel like at the time. This couldn't be further from
the truth. The school of thought rests on a series of axioms which
have been observed over time... For example; Incentives matter.
Individuals act, and "action is the purposeful employment of means
to achieve ends in accord with the actor's values."
Also, that values are ordinal and not cardinal... AND that
the specific values of individuals change ALL THE TIME.
The point is - NONE of that can really be effectively modeled
mathematically, and it certainly can't be "tested" in the sense
that you can do a chemistry experiment. If the axioms are correct,
then it's up to the economists to debate logic and expose/eliminate
flaws in reasoning in order to determine whether theories are right
or wrong.
This sounds "un-scientific" to those used to positivistic sciences
like physics or chemistry, but it's really just a deductive
process, and it's allowed the Austrians to consistently
and very specifically predict events again & again & again
which the mainstream neo-classicists have not only utterly failed
to recognize, but have actively predicted the opposite. (I
would link you there, but it seems that a cursory observation of
the failures that are running the Federal Reserve & advising
Obama will suffice.) So really, I would think you'd like to judge
the success or failure of a scientist by his ability to be correct
in his hypothesis consistently, yes? If so then the Austrians win
hands down.
Anyway: Here are a few Austrian-related links.
Science is as Science
Does
and...
The
Epistemological Roots of Monism: Fallacies of Positivism by
Ludwig von Mises in "The Ultimate Foundation of Economic
Science"
Sorry for the long post everyone... but this is a complicated
one.
A T|6.11.09 @ 2:03PM|#
That control and laissez-faire are both wild, or extremes of
policy, only works if you put the center somewhere between them.
That is only consistent with the modern political delimitation.
There's a site somewhere about cheating, and it says something like
"outrage at the act of cheating and leniency are both extremes of
human nature..". This kind of "finding the middle ground" is too
much an attempt to compromise with everybody's feelings. It may
feel good, but it ain't right.
Now back to the economy: controlist policies sound all nice and
dandy but can have horrendous effects, all through the ages.
Liberty, on the other hand, does not promise heaven, but the
possibility of getting somewhere near. Nicholas Taleb had a nice
point: he said he didn't like free markets because he thought Adam
Smith was right over Keynes, but because under a free system
individuals might just stumble upon success, with not just personal
but public good consequences. If they fail, or if they are outright
malevolent, their power is limited by the power of all the other
free players. In a controlled environment, if the master keeper
fails, even in minuscule details, the effects are broad and hard to
counter. He can always claim, life is complex, don't expect
miracles.
A T|6.11.09 @ 2:05PM|#
Also, Chad; the economy is a big engine. You throw a wrench into an engine (effective of 1-2% of GDP) and the engine can break.
Seward|6.11.09 @ 2:40PM|#
Neu Mejican,
Yes, like all analogies, it breaks down at some
point.
It breaks down fairly viciously actually, since that sort of
reasoning lies behind most forms of state sponsored
barbarism.
The issue of agency is certainly a factor that needs to be
considered in understanding the larger system.
Agency is really the only factor to be considered actually.
Standard definitions of the term fit comfortably into a
description of features of an institution.
"Standard definitions" (whoever determines that) vary wildly
actually, and so some fit within the notion that there is
collective decision making and others do not.
Institutions act.
No, people within institutions act. All actions come from people;
individuals, whether working by themselves, or in concert with
others.
Indeed the complaint the Austrians are being said to make is that
they do not approve of the actions of institutions in the
economy.
No, that is not the case. The basic problem here is that
The first is a claim about the proper scope of the problem. It
claims that the study of institutional behavior is not the proper
level of analysis, because the institution is just an epiphenomena
of the individuals and their interaction.
The second is a statement about the beliefs of those that do see
the institutional level as an appropriate unit of study...and it is
a misrepresentation of what is being studied.
Dude, that's not what I was thinking when I wrote what I wrote. So
is who is the better judge here of what I was thinking? Myself, or
you? I am. We can of course go round and round this, but you are
going to have take my word for it.
Paul|6.11.09 @ 2:55PM|#
1930s was that it was essentially build on a model
resembling 19th century physics. Ir is argued still today economics
as a discipline is basically still in the throws of 19th century
positivism
We're looking for our keys over here, because this is where the
light is.
Sheesh.
Seward|6.11.09 @ 3:00PM|#
Neu Mejican,
Interactions don't have agency whether between neurons or
humans in the sense your are using agency...
Synapses are actually more than interactions; they are physical
processes that have physical stuff associated with them. Wikipedia
calls them "junctions." In the world of human beings these are
middle men, traders, etc.
Sean W. Malone|6.11.09 @ 3:19PM|#
Yeah.... I reallllly don't get why anyone would think that
neurons and organs:person is an appropriate analogy to individual
people:society.
The analogy breaks down instantaneously. Neurons don't make their
own decisions. People do. You have to understand the
difference.
Neu Mejican|6.11.09 @ 3:19PM|#
Synapses are actually more than interactions; they are
physical processes that have physical stuff associated with
them.
What?!!!!...interactions are physical processes that have physical
stuff associated with them as well.
If we go down this road I have to point out that synapses are a
location where interaction occur. What they clearly are not are
"entities" that make the exchange. Your middle man analogy is inapt
in the extreme...perhaps the synapse is the store or market.
No, people within institutions act. All actions come from
people; individuals, whether working by themselves, or in concert
with others.
This, by the way, can be summarized as institutions are just
"epiphenomena of the individuals and their interaction."
Neu Mejican|6.11.09 @ 3:27PM|#
Sean W.
A more detailed characterization, for sure. But, unless I am
misunderstanding you, you are maintaining the strawman...
You just describe it in greater detail.
Now, you want to reject this because you think that "society"
has a mind of its own, but first off - you're basically operating
under a fallacy in even thinking that... Humans act and are
influenced by each other's actions - so when you observe a societal
shift towards one idea or another, you ascribe that as the cause of
individual shifts in behavior - rather than recognizing that your
observation was a result of individual shifts.
I am assuming that "you" is not referring to me, but to some
generic "you" who thinks this...
Neu Mejican|6.11.09 @ 3:30PM|#
The analogy breaks down instantaneously. Neurons don't make
their own decisions. People do. You have to understand the
difference.
Hmmm...
Not clear at this point if ya'll understand the analogy AT ALL. Or
perhaps you are not understanding the function of analogy in
discourse.
Neu Mejican|6.11.09 @ 3:39PM|#
This exchange, btw, has been a nice example of polysemy's effect
on communication.
Synapse = location where neuron's interact (noun).
Synapse = the interaction of neurons (verb)
Sean W. Malone|6.11.09 @ 3:46PM|#
What strawman am I maintaining again? And yes, I was referring to a generic "you". Not indicting anyone specifically... Well, indicting the vast bulk of mainstream economists - Paul Krugman, etc.
Seward|6.11.09 @ 3:48PM|#
Neu Mejican,
What?!!!!...interactions are physical processes that have
physical stuff associated with them as well.
The wikipedia article pretty clearly describes them as a thing.
Interaction implies in my mind that you are talking about a
process, and not a thing.
I understand the analogy. I think that the analogy is inapt and is
not terribly useful.
Anyway, even a store is more than just an "interaction." A store
exists because of the agency of individuals working by themselves
or in concert. So individual agency is present whether the synapse
is a store or a middle man.
Seward|6.11.09 @ 3:52PM|#
Neu Mejican,
This exchange, btw, has been a nice example of polysemy's
effect on communication.
Roughly 99% of blog arguments concern honest misunderstandings of
some variety or another. This is why I avoid claiming that someone
is "moving goalposts" or being "duplicitous."
Sean W. Malone|6.11.09 @ 3:54PM|#
Your analogy is crap NM, and you've used it before. PEOPLE ACT
on their own volition. People are autonomous decision-makers. Our
organs aren't.
Of course I understand what you're trying to get at it,
but as I said, your analogy breaks down before I even consider it a
useful analogy. If you don't recognize the difference between human
beings who think, make decisions and are independent actors and
component parts of chemicals or cells or atoms... I mean seriously.
There's no comparison there. And as Seward (i think) said; that
kind of thinking - the idea that we're all just part of a system
that can be managed and controlled and that we are the
neurons to a giant "brain" that is government or a king pulling the
strings of society..... c'mon.
neu mejican|6.11.09 @ 3:56PM|#
Sean W.
This is the strawman
you think that "society" has a mind of its own
Neu Mejican|6.11.09 @ 3:59PM|#
People are autonomous decision-makers.
This is not, strictly, true...in the context of the analogy. That
is why I believe you don't understand the analogy.
Neu Mejican|6.11.09 @ 4:04PM|#
Oops,
People are autonomous decision-makers. Our organs
aren't.
THIS is not strictly true in the context of the analogy (brain =
society).
I believe the misunderstand comes from the brain end.
Sean W. Malone|6.11.09 @ 4:07PM|#
And the above is really not a straw-man, it *is* what Keynesians
believe fundamentally. It's exactly why neo-classical
"Macroeconomists" can't predict a damn thing right. When you reduce
an incredibly complex system made up of individual (yes...
individual) actors, each with independent and constantly changing
values making their own unique choices into an "aggregate" - you
necessarily fail to make allowances for the complexity of the thing
you're studying AND worse, fail to understand why (in this
case) the market does what it does.
It's subsequently why they fail. And since they really are
operating under the assumption that society has a unified mind, and
have to in order to create mathematical models that are
actually manageable (300,000,000 variables is just too many, isn't
it?), then I'm really not using a straw-man at all.
Sean W. Malone|6.11.09 @ 4:22PM|#
NM, organs aren't autonomous decision-makers like humans,
neither are neurons, neither are mitochondria. The parts are not
equal to the whole here, but that analogy just doesn't scale
upward.
I am not to society what a neuron is to my brain because I make
my own decisions, and my neurons don't in any comparable
way.
That said, on the flip side of this, let's say for example that my
neurons were independent actors that had their own decision-making
processes and it was a good analogy. Even so, I don't
dictate what my neurons do specifically. I don't direct my body
processes, I would then be just as much a beneficiary of
spontaneous order as society would be - and there's still no
evidence to suggest that I would be better off if I started trying
to send out relays to tell my heart to speed up or slow down or
anything else that happens automatically as a result of that order.
So even if you'd created a good/functional analogy - which
I don't think you did - how does that change things? It's still a
bad advocate for controlling anything, and the overall libertarian
position still makes more sense.
Neu Mejican|6.11.09 @ 5:54PM|#
Sean,
So even if you'd created a good/functional analogy - which I
don't think you did - how does that change things? It's still a bad
advocate for controlling anything, and the overall libertarian
position still makes more sense.
You will note that I have not taken a position on the benefits (or
lack therof) of control in the economy.
This has been a discussion about the underlying assumptions and
methodological issues.
The comment that started this said that Austrian economics was
superior BECAUSE it was reductionist...because it rejects the
CONCEPT of macro and reduces it instead to "its micro roots."
Seward and now you have both supported this view with more detailed
statements, but that does not change the basic flaw in reasoning.
An axiomatic rejection of the existence of the macro level does not
lead to better understanding of the questions that emerge when one
acknowledges the emergent macro level phenomena.
While it is valid to say that an understanding of the individual is
essential to understanding the economy, and while it is certainly
valid to say that a well developed theoretical framework for how
the individual units function is essential to understanding the
larger system...the claims that I am seeing here are not that
circumspect. They are, rather, grand claims that aggregate behavior
is not worthy of study and can not shed light on the workings of
the economy.
But, it seems, macro level methods are proper for macro level
questions. They are inappropriate for certain questions, but that
does not warrant the whole sale rejection of macro level economics
as an area of study.
Seward|6.11.09 @ 6:00PM|#
Sean W. Malone,
You are correct, it isn't a strawman. One of things I quickly
figured out in the one macro class that I took was that essentially
the micro world doesn't exist in neo-classical economics.
Seward|6.11.09 @ 6:03PM|#
Neu Mejican,
An axiomatic rejection of the existence of the macro
level...
No one here of course has done this.
Sean W. Malone|6.11.09 @ 6:20PM|#
The Austrians really reject the idea that the economy at a
larger scale operates on different principles. It doesn't. At the
root of every economic action is a human. Whether or not it's a
human dealing with one other human, or 10 dealing with 1000, the
root is always human action... They're not rejecting the
"existence" of a macro level, but they're rejecting the idea that
bad mathematical models and lumping millions of people into a group
as if it is an entity of it's own is a good way to understand
economics at all.
It's not a flaw in their reasoning to reject the method of the
empirical positivists... That much can be made perfectly clear by
their consistent accuracy and their opponents' consistent
failure.
Neu Mejican|6.11.09 @ 6:25PM|#
Seward,
Hmmm...I guess we are dealing with another failure of language
then.
Sure, but it is still individuals interacting with one another,
not individuals interacting with some abstract thing called
society.
Are you not questioning the status of "society" here?
Seward|6.11.09 @ 6:37PM|#
Neu Mejican,
I guess I'll be a jerk, but I am getting sucked into this new
version (2000) of On the Beach.
Neu Mejican|6.11.09 @ 6:52PM|#
Seward,
Not sure how that makes you a jerk.
Sean,
It has not, really, come up yet, but I seem to recall that
Austrians were pretty adamant that prediction was not a meaningful
goal of economics.
And to clear things up here...(correct me if I am wrong):
Rather than "rejecting the reality" of the macro level...the
Austrian position is closer to saying that the aggregate level is
without independent meaning...is uninterpretable without the
micro-level.
And this issue of mind is, I believe, a misconstrual of the idea
that aggregate level behaviors are "unintended consequences."
But that is really a tangent to the issue of whether or not
institutions have agency.
Neu Mejican|6.11.09 @ 6:56PM|#
Macroeconomic claims that aggregate behavior can be meaningfully interpreted without reference to the underlying psychology of the individual actors DOES NOT reduce to a belief that the aggregate behavior causes the individual behavior. It also does not reduce to a belief that they describe the "mind" of society.
Sean W. Malone|6.11.09 @ 8:03PM|#
It has not, really, come up yet, but I seem to recall that Austrians were pretty adamant that prediction was not a meaningful goal of economics.
Correct-ish... They're not into making predictions based on models,
etc. because human actions change, but they're very big on
saying things like "If you impose price controls, shortages will
ensue" or "If you (Federal Reserve) dump trillions of dollars into
an economy, you will experience an unsustainable boom and
eventually - assuming the money remains in the system (which is
almost always does) inflation will be the inevitable result."
They're really not opposed to predicting though, just not based on
econometric modeling... See:
And this issue of mind is, I believe, a misconstrual of the idea
that aggregate level behaviors are "unintended consequences."
I think that's a more accurate description, yes. Humans act as
individuals, and then when you look at the big picture, whatever is
a result is whatever you get from all of those actions. It doesn't
necessarily have a pattern or operate in a truly
predictable way as an independent entity. Individuals react in
predictable ways given certain incentives, but the circumstances of
each individual are rather different and hard to lump
together.
**Disclaimer: I'm not, obviously, a professional economist. It's
better to read Hayek on the limits of knowledge, Mises on human
action, Rothbard on history, Reisman on capital theory, etc..... Or
Tom DiLorenzo, Bob Murphy, Tom Woods & Walter Block for the
"younger" generation.
Sean W. Malone|6.11.09 @ 8:04PM|#
Oh lord.... That was an epic fail, wasn't it?
That was to be:
"See: Peter Schiff"
I won't bother re-linking ;)
Sean W. Malone|6.11.09 @ 8:09PM|#
Nah, screw it - I need to redo it, I accidentally hit submit
instead of preview and that was just a mess... Round 2:
It has not, really, come up yet, but I seem to recall that Austrians were pretty adamant that prediction was not a meaningful goal of economics.
Correct-ish... They're not into making predictions based on models,
etc. because human actions change, but they're very big on saying
things like "If you impose price controls, shortages will ensue" or
"If you (Federal Reserve) dump trillions of dollars into an
economy, you will experience an unsustainable boom and eventually -
assuming the money remains in the system (which is almost always
does) inflation will be the inevitable result."
They're really not opposed to predicting though, just not based on
econometric modeling... See: Peter Schiff
And this issue of mind is, I believe, a misconstrual of the idea that aggregate level behaviors are "unintended consequences."
I think that's a more accurate description, yes. Humans act as
individuals, and then when you look at the big picture, whatever is
a result is whatever you get from all of those actions. It doesn't
necessarily have a pattern or operate in a truly predictable way as
an independent entity. Individuals react in predictable ways given
certain incentives, but the circumstances of each individual are
rather different and hard to lump together.
**Disclaimer: I'm not, obviously, a professional
economist. It's better to read Hayek on the limits of knowledge,
Mises on human action, Rothbard on history, Reisman on capital
theory, etc..... Or Tom DiLorenzo, Bob Murphy, Tom Woods &
Walter Block for the "younger" generation.
THERE. Good god, that first one was pitiful. Apologies.
Sean W. Malone|6.11.09 @ 8:14PM|#
Also - again, the models are horrendous most of the time, because I mean... even if you were able to reduce human behavior into only *one* variable and lump everyone into a group that all acted and thought and did the same things... there are still hundreds of variables that they necessarily leave out of any econometric model. Then of course, they usually "correct" the models as real data comes in and contradicts what their model predicted anyway... It's really a mess what most of these guys are doing if you ask me.
Neu Mejican|6.12.09 @ 10:17AM|#
I think that's a more accurate description, yes. Humans act
as individuals, and then when you look at the big picture, whatever
is a result is whatever you get from all of those actions. It
doesn't necessarily have a pattern or operate in a truly
predictable way as an independent entity. Individuals react in
predictable ways given certain incentives, but the circumstances of
each individual are rather different and hard to lump
together.
Individuals are predictable, but averaging this predictable
behavior results in chaos?
No. You are operating with a basic misunderstanding here. I am
pretty sure the Austrian position is not this
misinformed.
Sean W. Malone|6.12.09 @ 12:50PM|#
Individuals react in predictable ways based on incentives and
their values - BUT NM, you have no way of knowing what
everyone's values are!
You really miss the point there. If you look at specific cases, you
can get a good idea of what people might do, *if* you implement
this or that policy based on the incentives it creates, you cannot
however predict all human behavior in all cases. How did you miss
that?
I really don't get what's so hard to understand about all this...
You cannot lump millions of people who all have a DIFFERENT value
system, and a DIFFERENT set of individual incentives operating in
their lives into one giant "aggregate"! This isn't all that
complicated. People are obviously somewhat predictable and respond
in similar ways to various incentives, but the mistake, and a
gigantic one at a that, is assuming you can know what everyone is
thinking all the time, or that you have more knowledge as a
researcher than they do.
Ugh... Seriously, go read Hayek. At some point it gets annoying
trying to tell someone that they are not smart enough to know
everything there is to know about 300,000,000 people. That should
be self-evident. You, Obama, Krugman... Nobody, has more knowledge
than the combined and dispersed knowledge of everyone living in
even a small town, much less than that of the entire US. When you
make an econometric model that combines all people and squishes
them into a mathematical model that treats them as one unified
variable, your model is fucking retarded. That's the bottom line.
But the more I keep trying to explain to you that you are incapable
of knowing, much less predicting, the behavior of groups - because
groups *don't* act independently - the less you seem to understand,
and honestly that's fine.
I'll keep listening to economists who've accurately predicted
economic events, who can clearly explain why they're happening in
logically & historically non-contradictive ways and as a
result, I will continue to not be surprised when Paul Krugman is
wrong again & again & again.
Neu Mejican|6.13.09 @ 2:47AM|#
Sean,
Really, I understand what you are saying...and I disagree with your
conclusions because they seem to be based on a basic
misunderstanding of the underlying principles involved in
aggregation and the kind of information it provides.
You are essentially saying (to use an analogy again) that poetry is
the wrong approach because it doesn't result in a good dance. The
two approaches/perspectives we have been discussing tell you
qualitatively different things about the economy.
The whole "Nobody, has more knowledge than the combined and
dispersed knowledge of everyone living in even a small town, much
less than that of the entire US" carnard is a malarky. No one is
claiming that their economic model gives them this KIND of
knowledge, let alone a greater AMOUNT of knowledge.
But the more I keep trying to explain to you that you are
incapable of knowing, much less predicting, the behavior of groups
- because groups *don't* act independently - the less you seem to
understand
Actually, the more you explain, the more clear it becomes that you
don't know what you are talking about.
Sean W. Malone|6.13.09 @ 3:36AM|#
Right. Because I'm not speaking in terms you understand. Sorry
about that NM. It's happened before.
As I said from the beginning. GO READ HAYEK & MISES. If you
don't like the way I'm explaining this, go to the source. It's
clear enough to me and it was, I think, clear enough to Seward -
and my understanding is good enough that I have had an article
published by the Ludwig von Mises Institute, so ya know...
I think I'll take their assessment of my understanding over
yours.
God damn you turn in to a cock easily when you don't understand
what people are talking about. I can never tell if it's willful or
not man.
And YES, for the record, the fundamental purpose of econometrics
and of central planning is predicated on EXACTLY the idea
that those economists & politicians know more & know better
than millions of people about their own lives. That much should be
completely obvious, because if they didn't, then planning for all
those people wouldn't even be considered.
Sean W. Malone|6.13.09 @ 3:46AM|#
One more thing while I'm at it.
If you want to learn about what I'm talking about, I've linked you
a couple times already to the books & essays that are
supporting what I've been talking about. I can't re-write them,
because A. it's not my job, and B. FA Hayek did a hell of a lot
better than I would ever do.
The fact that you're still whining to me about not explaining
things to your satisfaction is absurd.
AGAIN... GO READ THE SOURCE MATERIAL!
The excessively stupid part is that you're basically arguing in
favor of the ideas of people who have actually failed to predict
anything in real life, and whose reasoning has obvious holes -
holes so glaring it's incredibly easy for me, a
non-economist to pick apart Paul Krugman articles for logical
fallacies and fundamentally bad assumptions (when it's not just
simply dishonest... which also happens). Frankly, when a
nobel-prize winning economist's reasoning is as horrendous as
Krugman's, everyone should really stop and start asking more
questions about methodology.
The alternative, what I'm advocating here, is for you to listen to
the people who actually have been and are
consistently right, in the real world about what is going to
happen, why and how the system works.
How silly of me to think that actually being quantifiably right
over & over may correlate strongly to having better ideas than
the guys who are always wrong.
Neu Mejican|6.14.09 @ 4:07PM|#
Sean,
For the record. I have read Hayek and Mises et. al.
I am talking specifically about your characterization of the
multivariate techniques used in macroeconomics and the proper
interpretation of them.
This...is the strawman.
And YES, for the record, the fundamental purpose of
econometrics and of central planning is predicated on EXACTLY the
idea that those economists & politicians know more & know
better than millions of people about their own lives.
The fact that you BELIEVE this to be true, does not make it
true.
Neu Mejican|6.14.09 @ 4:09PM|#
The fact that you're still whining to me about not
explaining things to your satisfaction is absurd.
I will remind you that I have been asking you to explain YOUR
thinking...YOUR understanding of these issues, YOUR reasoning for
favoring the Austrian position.
How that is whining, I am not sure.
Neu Mejican|6.14.09 @ 4:19PM|#
The alternative, what I'm advocating here, is for you to
listen to the people who actually have been and are consistently
right, in the real world about what is going to happen, why and how
the system works.
You keep saying this.
It lacks veracity.
Neu Mejican|6.14.09 @ 4:26PM|#
In case you actually read this.
Let's flesh out the problem with your strawman.
Hayek's point about the the amount of distributed knowledge in the
system being larger than the aggregated knowledge that managers
have access to is true.
However, providing managers with MORE knowledge is not what the
aggregation process is attempting to do. It is attempting to
provide a different type of knowledge that may be useful for
different types of decisions than are being made by the individuals
in the dispersed interactions that make up the system.
So, the key phrase becomes..."know better than millions of people
about their own lives."
The aggregated knowledge is about the aggregated population NOT the
lives of the individuals. Likewise management is NOT about managing
the lives of the individual, per se, but managing the impact that
the dispersed actions have on the system as a whole.
The qualitative difference between the activities at the system
level and the activities of the individuals hold across all
domains: goals, purpose, knowledge type, etc...
Hayek's critique is an important one.
Your characterization of it HERE is a strawman.
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