Posted on 07/03/2010 6:43:19 AM PDT by 1rudeboy
In this essay, I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contibute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public.The following is a letter to open-minded consumers of the economics blogosphere. In the wake of the recent financial crisis, bloggers seem unable to resist commentating routinely about economic events. It may always have been thus, but in recent times, the manifold dimensions of the financial crisis and associated recession have given fillip to something bigger than a cottage industry. Examples include Matt Yglesias, John Stossel, Robert Samuelson, and Robert Reich. In what follows I will argue that it is exceedingly unlikely that these authors have anything interesting to say about economic policy. This sounds mean-spirited, but it’s not meant to be, and I’ll explain why.
Before I continue, here’s who I am: The relevant fact is that I work as a rank-and-file PhD economist operating within a central banking system. I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems. It is precisely from this low-level vantage point that I am totally puzzled by the willingness of many who fearlessly and breathlessly opine about economics, especially macroeconomic policy. Deficits, short-term interest rate targets, sovereign debt are all chewed over with a level of self-assuredness that only someone who doesn’t know more could. The list of those exhibiting this zest also includes, in addition to those mentioned above, some who might know better. They are the patron saints of the “Macroeconomic Policy is Easy: Only Idiots Don’t Think So” movement: Paul Krugman and Brad Delong. Either of these men will assure their readers that it’s all really very simple (and may even be found in Keynes’ writings). Lastly, before you dismiss me as a right- or left-winger, I am not. I’m simply less comfortable with ex cathedra pronouncements and speculations than the people I have named. [footnote omitted]
The main problem is that economics, and certainly macroeconomics is not, by any reasonable measure, simple. Macroeconomics is most narrowly concerned with the tracing of individual actions into aggregate outcomes, and most fatally attractive to bloggers: vice versa. What makes macroeconomics very complicated is that economic actors... act. Firms think about how to make profits, households think about how to budget their resources. And both sets of actors forecast. They must. One has to take a view on one’s future income, health, and familial obligations to think about what to set aside for retirement, how much life insurance to buy, and so on. Of course, all parties may be terrible at forecasting, that’s certainly a possibility, but that’s not the issue. Even if one wanted to think of all economic actors as foolish and purposeless organisms making utterly random choices, one must accept that their decisions will still affect, and be affected by what others do. The finitude of resources ensures this “accounting” reality.
[excerpted]
"So you think this is not "crystal ball stuff," yet you expect him to look into a crystal ball. "
Your reading comprehension is worse than a -1. This professional research economist is pimping his vetted, internally coherent models and his ability to understand them. Notice he avoids mentioning his models' adherence to reality, because then one might notice that his models suck.
I made the comment, because Mr. Athreya's propaganda piece is as empty and worthless as the models and certs he's pimping were in predicting the housing crises. Yes the piece is nothing more than propaganda, in the form of an appeal to authority. It is w/o any data all and he's simply promoting the propaganda technique itself.
The only sense that economics is not simple is that is an extensive field of knowledge. The KISS principle still applies everywhere in economics, as it does everywhere else in reality, except that it's notably disguised in a mire of complexity in the con's game. The idea that econ is a complex, chaotic dynamical system whose dynamics can't be formulated and conveyed to the ignorant is bogus, else no one would known anything about it. Chaos is simple and deterministic and is never an incomprehensible, "random" process. An example of chaos is the 3 body problem. How many physical interactions involving 3 bodies are incomprehensible and have "random, unpredictable outcomes"?
The article is just the same attempt to get the public to swallow "appeal to authority" as a valid logical operation. It's pushed by unions, such as the AMA, electrical, steelworkers, and now the national brotherhood of clown econocrats.
If anyone wants to believe this crap, that one needs a pocketful of creds to understand anything, they will be welcomed by their clown masters and their ignorant and lazy fellows. If anyone desires to remain free, they'll reject this bogus logical operation and anyone that attempts to gain an absolute power over their own thoughts, decisions and activities with such a tool.
"I’ve never done that, and this is my job."
Nevertheless, it's simply an excuse. A major event occurred which was in the sphere of this bozo's professed expertise and it took him by surprise. Nevertheless, he wants the whole world to give him and his self anointed pool of experts sole speaking, writing and operational license.
In this essay, I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contibute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public. [emphasis added]I don't know why you persist in trying to pound a square peg into a round hole.
That's your characterization, but it's w/o merit.
"In this essay, I argue that neither non-economist bloggers, nor economists who portray economics —especially macroeconomic policy— as a simple enterprise with clear conclusions, are likely to contibute any insight to discussion of economics and, as a result, should be ignored by an open-minded lay public. [emphasis added]"
Mr. Athreya lists 3 groups of folks that he would like everyone to ignore. You left out the non-economist, which is the most numerous class of person Athreya desires to stiffe. The other group contains those that are economists, so the word simple as used here does not mean their knowledge is limited in scope. It's definitive conclusion and the fact that the KISS principle applies everywhere in real economies, that he objects to.
Regardless of Athreya's implied claim, that economics is a complex, chaotic dynamical system that can not be understood to provide clear conclusions and predictions, it is and can be. That's because fundamentally all real systems are logical and just as the 3 body problem always provides clear, consise predictive outcomes, so too econ.
"fail.
Yeah, cute phrase, but empty. In God's vested and internally consistent models we trust, all others must provide evidence that their claims are logical and are completely consistent with reality.
What a bunch of BS. If that is so, then why can't economists agree whether we are entering a period of inflation or deflation? Athreya observes that, "it depends." You expect him to predict one or the other, and then hold him to his prediction.
OK We've got low interest rates, but where's the inflation?
The Fed tripled their balance sheet, didn’t all your prices triple?
The equations for 3 orbiting masses are so complex and riddled with clarifying assumptions that there's nothing clear, concise, or predictive about them. Just like economics.
But hey, a little uncertainty never stopped anyone from either looking hard at reality and creating wealth, or ignoring reality and writing op-ed pieces.
Son a gun, they did-- hey, why in the hell am I always the last guy to hear about this stuff!!!
Depends on the knowledge and understanding of the practiitoner.
"Just like economics.
It all depends on the skill of the folks involved. Hence, "...a little uncertainty never stopped anyone from either looking hard at reality and creating wealth." They can also use it productively to gauge the effects of various variables for the purposes of protecting rights, or for providing monetary input, as the Fed does.
with different distances
and then start talking relativity not to mention tidal effects, but this is really what life's all about. There's always a lot to it and at some point that we've got to stop measuring/calculating and go with what we got.
We all have to pick the point that suits our own needs, and when it comes to econ my needs mean I've got to know what's going on well enough to make a profit; which is why for me the urban legends I tried listing in post 72 just don't cut it.
I take it back. He does have a point. For the short term, anyway.
Thanks for the ping/post and your work, teacher. Thanks to all posters. Very interesting thread.
What I posted is one of the thoughts that comes from Austrian economic theory. We are in a deflationary spiral and it is only going to get worse with the coming credit collapse.
That's been my big worry too but to be honest I just haven't seen it. I mean, we can look at the cpi, the gdp inflator, or whatever and all we see is nothing in particular. Sure we got all sorts of problems, but inflation/deflation isn't one of them.
Look at the total credit outstanding. That it is contracting is a very strong indicator. True mark to market on the real value of debt banks hold will show a serious decline as well.
>>Rub some dirt on it, Bill.
How ‘bout if I just rub your nose in it instead, Punk?
Anytime. Just let me know the next time you are around Chicago.
Bon Apetit.
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