When the Navy comes into port, the price of hookers goes up.Originally Posted by Presley Cannady
When the Navy comes into port, the price of hookers goes up.
More generally, this would mean that higher demand means higher prices.
I didn't use this as an argument because it's in fact too complicated for a discussion in a military/security policy forum. The reason are the Giffen goods.
Higher demand with constant supply, to pick nits. Giffen goods would be an outlier to the opposite conclusion: that increased prices reduce demand.
Most of the general rules have exceptions, but these are typically explainable and to some extent predictable.
Much of the observed erratic nature of economic science is not a consequence of deficiencies in the tools, but rather of the way the tools are applied: as with many other disciplines (notably history) if you torture the data enough they will tell you whatever you want to hear. Because the tools of economics are used as a basis for decisions that have immediate impacts on all manner of vested interests, there's a huge incentive to torture the data, something a chemist or physicist doesn't have to deal with.
One of the great challenges of democracy, whether established or emerging, is the difficulty of developing and implementing sound long-term economic policies - often incomprehensible to the electorate and unpopular in the short run - without getting thrown out of office. Any realistic plan to "fix the economy" is going to make a lot of people hate whoever implements the plan.
Dayuhan,
Maybe you can explain why there is no leading theory in economics unlike, for instance, evolution or plate tectonics. There are several competing schools and none of them seem to have a lock on predictive accuracy.
Supporting "time-limited, scope limited military actions" for 20 years.
The reason is mostly the limited data sets for econometric analysis (squeezing the value of certain variables out of data sets). Take economic crisis as an example. Major economic models (such as used in central banks) can have in excess of 2,000 variables, but they still lack the data input for crisis situations because there's not enough data to discern the values of many variables.
It's rarely possible to observe a specific variable directly because it's so difficult to set up clean experiments. Instead, economists need to use huge datasets to find the value through empirical analysis (and this requires huge datasets from similar situations).
Consequently, such models fare poorly in regard to simulation of crisis situations.
Many other times there's not so much several competing theories as several adding theories. There are about seven theories about the optimal currency area, each one about one aspect of the topic (some aspects favour bigger, others favour smaller common currency areas). An economist needs to know all or almost all of these, for missing one may lead to entirely wrong conclusions.
There's furthermore the problem that economic theory is a very wide field. Two nobel prize winners can discuss a single topic and disagree (happens actually quite often, see Krugman vs. Stieglitz). Afterwards, it's usually easy to point out why one has argued one way and the other one a different way: Their background (research on certain fields) usually leads to a bias in such discussions (the contributions from different research fields are often competing and it takes a neutral synthesis and good econometric data to find a complete picture).
You've answered your own question.
PH Cannady
Correlate Systems
Predictive Economic Models
John Kenneth Galbraith(father of James Galbraith) had the last predictive model that described what was happening in the 1970's condensed version is this......you have 3 choices Inflation, Deflation or Wage and Price Control.
Incidentally James Galbraith's latest book "The Predator State" supports a lot of what Presley is saying, in fact he has given several speeches on the failure of economics. It is largely due to Criminal Political Influence.
That is also what a great many Americans are upset about.
It is that and not wealth disparity, failure to tax the rich or any of that foolishness -- it is that Politicians and their Buds are getting wealthy (as they always have...) due to that influence...
From an interview in 1999: "But I don't make predictions. I long ago discovered that my wrong predictions are wonderfully remembered, and my right ones are quickly forgotten. So I rely on the history of capitalism."
Galbraith eschewed modeling even before he soured on forecasting, so at best the only thing he's ever done is "explained" things that happens. Even with the trappings of math, economists are essentially historians flipping coins.
I agree with a number of Galbraith's conclusions regarding the state of the field, but very little about why economics is a failure. Fundamentally, I have no reason to believe economics could have ever succeeded--corrupt machinations or not. Certainly, it will never succeed with the mathematical toolkit economists presently bring to bear.Incidentally James Galbraith's latest book "The Predator State" supports a lot of what Presley is saying, in fact he has given several speeches on the failure of economics. It is largely due to Criminal Political Influence.
PH Cannady
Correlate Systems
Interesting question... are theories like plate tectonics or evolution considered "leading" by geologists or biologists, or are they seen as such by those outside the profession because they are accessible and (in their elementary versions) relatively comprehensible? I'm not sure why economics doesn't have one, but I'm also not sure why it should.
Certainly there's a lack of predictive accuracy in economics, but that's true of many disciplines as well, particularly when you take them past the undergrad level and apply them to real world conditions. A geologist can tell you where earthquakes are likely to occur, but not when they will occur or how severe they will be. A meteorologist can tell me roughly how many typhoons are likely to emerge from the north Pacific, and can predict a general course for any given storm, but there's a wide margin of variance and they can't tell me how much rain a given storm is going to drop or where exactly it will go. We know the weather forecast is uncertain, but we don't ignore it.
I'm not an economist by trade and I've plenty of criticisms of the trade, excessive reliance on mathematical models and excessive disregard for non-quantifiable factors being prominent among them. At the same time, I recognize that they do provide a very useful and very important set of tools... wouldn't want to approach a complicated job with only those tools, but I wouldn't want to leave them behind either.
Worshiping economists and slavishly obeying their every word would be a huge mistake. Dismissing them and ignoring everything they say would be an equally huge mistake.
A great deal of what passes for economic discourse in the popular realm is contaminated with ideology and vested interest to a point that renders it meaningless.
I wouldn't bet any money on a popular revolt happening in the US any time soon. I'd likely bet against it, were I inclined toward betting.
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