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Thread: How To Fix The Economy

  1. #41
    Council Member Fuchs's Avatar
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    The variability of prices can also be explained with a bit market segmentation.

    Assume 100 demand and 100 supply. 90 of the demand and 90 of the supply are subject to long-term contracts. Demand rises by 5 (at the old price).

    This demand increase by 5 is not a 5% increase, but a 50% increase because the short-term market has only a volume of 10.

    The effect in this model is an out-of-proportion price spike that gradually subsides as long-term contracts end and their share is temporarily added to the market volume - till finally the demand hike by 5 is really just a 5% hike.

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    Quote Originally Posted by Fuchs View Post
    Did you want to entertain us by repeating nonsense about economic science that almost no actuale conomist agrees with?
    How many practicing alchemists conceded their trade was a bunch of nonsense? For economics to amount to science, it must make testable predictions that hold up under scrutiny. It doesn't. End of story.
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  3. #43
    Council Member slapout9's Avatar
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    Default James Galbraith World's Greatest Living Economist

    Presley, Your right it is not a science (it used to be known as a Discipline,whatever that means?) but some Economist can and do make predictable,testable arguments. This is a link to one below. We have 2 and only 2 ways to fix the Economy that is the whole tool set. As the link below will point out.

    http://prospect.org/cs/articles?arti...doesnt_matter#

  4. #44
    Council Member Fuchs's Avatar
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    Quote Originally Posted by Presley Cannady View Post
    How many practicing alchemists conceded their trade was a bunch of nonsense? For economics to amount to science, it must make testable predictions that hold up under scrutiny. It doesn't. End of story.
    Economists do scientific research because their methods are scientific (unlike alchemists' methods*). The scientific results are statements about probabilities, not about exact outcomes (even physics ceased in to claim that it can do more in many cases). These probabilities can be tested and be falsified if wrong.


    I do not expect everyone to be an economist to understand that economics is a science, but I expect at the very least that those who attempt to deny economics the status of a science do know what a science is.

    Furthermore, I expect that no activity that has encompassed two centuries and ten thousands of people be ignored, such as ignoring the huge activity in regard to making testable predictions and testing them.


    Scientific fields are commonly divided into two major groups: natural sciences, which study natural phenomena (including biological life), and social sciences, which study human behavior and societies. These groupings are empirical sciences, which means the knowledge must be based on observable phenomena and capable of being tested for its validity by other researchers working under the same conditions.
    http://en.wikipedia.org/wiki/Science...lassifications


    *: Guilt by association, a fairly dirty rhetorical trick. Well, at least it's more sophisticated than outright ignorance about the real world (of economic research).

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    Quote Originally Posted by Fuchs View Post
    Economists do scientific research because their methods are scientific (unlike alchemists' methods*).
    Alchemists employed formalism, observation and experiment--the three methods of scientific inquiry. What they did not do was produce testable predictions that hold up under scrutiny; electing instead to issue either blatantly incorrect forecasts or more often incomprehensibly qualified handwaving.

    The scientific results are statements about probabilities, not about exact outcomes (even physics ceased in to claim that it can do more in many cases).
    Natural scientists were deploying probability to the problems of fluids, thermodynamics and the subatomic when economists and social "scientists" were still hemming and hawing dialectics. What you have today is the sorry marriage between statisticians feeding results to mumblers squinting to something real in the numbers. It's slightly more elegant numerology.

    These probabilities can be tested and be falsified if wrong.
    1. Outside of a very few narrow areas, they can't. There's no laboratory to achieve the repetition necessary generate the sample space. The inspiring signal is of limited value beyond backcasting and useless in generating new, testable predictions.

    2. Even if 1) weren't the case, I'd love to see a SINGLE, verified economic forecast pegged within the 95 percent confidence interval that doesn't sweep the range of mutually exclusive possibilities with near uniform probability. Seriously, we ask less of meteorologists.

    And there's your challenge, Fuchs. Simply point me to 2) and you will have demonstrated economics has at least produced a single scientific result.
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  6. #46
    i pwnd ur ooda loop selil's Avatar
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    I love it when positivists or more specifically absolutists grab hold of the empirical method and what big "T" truths might exist.

    The expectation that economists have to explain "EVERYTHING" to be relevant towards "ANYTHING" is pretty defatigable. This is especially true when you bring in the tool of economists, which is statistics, which is a relevant sample, of a relevant population, giving a relative solution, to a falsifiable proposition (hypothesis).

    In other words. In forcing a discipline into a box they've never claimed you injure the relevant position by a claim they've never made. A handy logical straw man or circumlocution.

    I needn't remind this audience that empiricism is made up of many different schools of thought and have existed for much longer than the ad hominem of windowed time relating to recent political discourse. The Popper and Kuhn dichotomy means that science has just as many partisan ignominies as Fox and CNN do political pundits.

    Regardless of the witchcraft that economists might use. The enlightened scientific philosopher will understand that empiricism and epistemology exist as holistic set of principles with the swinging tides of rational thought pulling upon each thread. The scientific method is many tools not just one.
    Last edited by selil; 02-22-2011 at 10:22 PM.
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    Quote Originally Posted by selil View Post
    The expectation that economists have to explain "EVERYTHING" to be relevant towards "ANYTHING" is pretty defatigable.
    Oh, my bar is set far lower than that. I'm asking for economists to explain--or more accurately, correctly predict--ANYTHING about SOMETHING.

    Regardless of the witchcraft that economists might use. The enlightened scientific philosopher will understand that empiricism and epistemology exist as holistic set of principles with the swinging tides of rational thought pulling upon each thread. The scientific method is many tools not just one.
    No argument here. A number of veterans here eat modelers and number crunchers for breakfast, yet clearly we've confidence in their authority on what works and what doesn't. That said, an economist isn't a seasoned fighter dropping his experience on what and what doesn't work. Instead, he puts forward the pretense of theory, issuing lengthy "explanations" yet predicting nothing.
    Last edited by Presley Cannady; 02-22-2011 at 10:33 PM.
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  8. #48
    i pwnd ur ooda loop selil's Avatar
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    Quote Originally Posted by Presley Cannady View Post
    Oh, my bar is set far lower than that. I'm asking for economists to explain--or more accurately, correctly predict--ANYTHING about SOMETHING.
    My example is of ONE economist and ONE theory that I think explains quite well a lot of things. Vilfredo Pareto and the 80/20 rule or Pareto principle. Not only statistically relevant (think sigma) it is relevant to daily life and significant in explaining many things from software to kids grades.
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    Council Member Fuchs's Avatar
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    This is not a scientific debate, we don't have the time and resources for a prediction and waiting for it to happen.

    For all else, read a peer-reviewed economic science journal.

    There are thousands of relatively simple economic rules that easily meet highest empirical standards, especially under experimental or ceteris paribus conditions.

    Some of them have even the robustness of natural laws, such as the observation that deficits are not sustainable or the inevitability of market failures under certain conditions. There's for example not a single known commercial unemployment insurance in the world (due to two especially severe market failures, excluding con artist endeavours).
    Finally, there are even hundreds of management rules that can be proved (and were proved) with math just like math rules themselves, for example rules for optimising production under known conditions.


    Economic science is a science, it's understood and defined as such. Those who doubt it can feel free to prove it, but they are powerless feeble voices against the existing definition of the meaning, sound and graphic of the word "science".
    They can't argue that economic science is no science without ignoring the real-world business of ten thousands of economic researchers.

    This stupid questioning whether economic science is a true science always leaves an impression about the questioner on me that's probably beyond the forum etiquette. Those people simply do not grasp social sciences, and certainly don't seem to attempt it.


    Sure, some (or many) economists are no scientists at all, many have forgotten what they were taught about scientific work. There are lots of loudmouths who proclaim a lot of economic nonsense. Clueless people can see those loudmouths and make the mistake t believe that they were representative. Fact is, even natural sciences have such loudmouth (see cold fusion).
    There are furthermore more economists than natural scientists in contact with a wide public audience and it's especially easy to earn good money with being a loudmouth as economist in comparison with being one as physicist.



    This whole strain of the discussion is moot, and off-topic, of course. Even if economist s were not working scientifically, they would still be the best experts around for explaining "How to fix the economy".
    Economics-bashing is thus futile.

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    Quote Originally Posted by selil View Post
    My example is of ONE economist and ONE theory that I think explains quite well a lot of things. Vilfredo Pareto and the 80/20 rule or Pareto principle. Not only statistically relevant (think sigma) it is relevant to daily life and significant in explaining many things from software to kids grades.
    The Pareto "principle" was a crude, snapshot observation--which predicts nothing (even in "Pareto" distributed income clusters. The subsequent Pareto distribution, which by itself is nothing more than math, predicts nothing and is a special case of a family of related functions. Pareto didn't even derive it himself.
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    Quote Originally Posted by Fuchs View Post
    This is not a scientific debate, we don't have the time and resources for a prediction and waiting for it to happen.
    The topic is "how to fix the economy." Surely we should entertain the notion that the OP is nonsense. How do you fix something you no one knows how to fix?

    For all else, read a peer-reviewed economic science journal.
    As opposed to a peer-reviewed ufology or astrology journal? Peer review is but one tool for gatekeeping a body of knowledge, and not nearly the most important one.

    There are thousands of relatively simple economic rules that easily meet highest empirical standards, especially under experimental or ceteris paribus conditions.
    Then it should be simple to name one genuinely economic "rule" that holds under scrutiny, as opposed to listing off some rather simple observations as you do below.

    Some of them have even the robustness of natural laws, such as the observation that deficits are not sustainable or the inevitability of market failures under certain conditions.
    Neither one of those qualifies as testable statements. Both assert a point of divergence in the unbounded future, rendering it impossible to present evidence to the contrary gathered from past to present. The second suffers in that it doesn't even specify causation. Surely an asteroid strike would cause a market failure; is astronomy now the province of economics?

    There's for example not a single known commercial unemployment insurance in the world (due to two especially severe market failures, excluding con artist endeavours).
    Setting aside what is or isn't a con, surely you jest.

    Finally, there are even hundreds of management rules that can be proved (and were proved) with math just like math rules themselves, for example rules for optimising production under known conditions.
    Math is the formal expression of an idea. The difference between math expressing physical nonsense and physical reality are laws constraining its application. Without laws of thermodynamics, energy conditions for general relativity, or quantum inequalities, physics devolves into free for all. These laws actually produce testable results that coincide with measured reality. To date, the social sciences have produced no analogous constraints--either generally or conditionally.

    Economic science is a science, it's understood and defined as such. Those who doubt it can feel free to prove it...
    It's not the burden of the skeptic to "prove" economics is scientific anymore than it is the burden of any reasonable man to admit astrology absent evidence.

    They can't argue that economic science is no science without ignoring the real-world business of ten thousands of economic researchers.
    There are billions of men and women who work day in and day out on unscientific pursuits.

    This stupid questioning whether economic science is a true science always leaves an impression about the questioner on me that's probably beyond the forum etiquette. Those people simply do not grasp social sciences, and certainly don't seem to attempt it.
    Attempt what? Solving ordinary differential equations? Regression? Reducing sparse matrices? Crunching expected value and variance? These tools are used far more frequently and effectively outside of the social sciences than within. Hell, they're usually built, extended and maintained by people from the hard side of the tracks.

    What I find disappointing is that economists invest so much time learning the unholy mess of gadgetry they've accumulated that little is spent determining whether or not their toolkit applies to the problems they're trying to solve. Their first hint should've been the century and a half wasted formalizing any intuition they could lay their hands on while producing not one verifiable result. Their second should've been after even the fire marshal industry started to clean up its act.

    Sure, some (or many) economists are no scientists at all, many have forgotten what they were taught about scientific work. There are lots of loudmouths who proclaim a lot of economic nonsense. Clueless people can see those loudmouths and make the mistake t believe that they were representative. Fact is, even natural sciences have such loudmouth (see cold fusion).
    If your point is that scientists make mistakes, then you're understating it considerably. We can't even compare the body of rejected hypotheses to those that bear fruit. The point is that science provides the tools for rejecting those hypotheses in the first place and coming to agreement on those that work.

    This whole strain of the discussion is moot, and off-topic, of course. Even if economist s were not working scientifically, they would still be the best experts around for explaining "How to fix the economy".
    Economics-bashing is thus futile.
    I have to disagree, and I'll do so redirecting you to the question I presented at the beginning of this post. How do you fix the economy if no one knows how to fix it?

    My answer is when in doubt, unleash your countrymen to research and experiment freely. Should any policy or law erected on the alchemy of social science interfere, eject it. Then wait and see.
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  12. #52
    Council Member Fuchs's Avatar
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    I believe you that you have no clue how to fix the economy and you don't know who knows. I'm also confident that the latter is closely related to your cluelessness about how to identify people who know how to fix the economy, and likewise I'm confident that you have no clue about economic science.

    There's no one individual who knows everything about how to fix the economy because the topic is too big and complex, but there are many (actually many thousands) who have a good clue about many of the necessary measures (especially the big ones).
    Macroeconomics is too difficult and abstract for popular media, though. This leaves many people clueless about economics and allows for a huge collection about stupid ideas about economies. Financial market-oriented reporting of mass media adds to the cluelessness and confusion.


    I studied economic science for several years at a West German university, focused on macroeconomics, have a degree on it and I know enough economic theories* and papers to know that this stuff is science.

    I knew about how the Euro zone will run into the exact troubles of today before the € was introduced because economic scientists had worked on the necessary theories back in the early 90's (each one for every advantage or disadvantage of monetary unions), because my professors had told me about those theories and because the micro experiment of monetary union in re-unified Germany was already supporting those theories.
    Meanwhile the public - including those who disparage(d) economic science - had no clue about it.

    Making more use of economic science would improve policy a lot. (As of today, lawyers are more influential in policy than economists are - and it shows.)
    This reaches from big things like the current crisis or monetary unions down to negotiating simple treaties (the OECD standard form for double taxation treaties is distorted by lobbyists, for example - but only economists will be able to tell you what's the problem in it).


    You don't want to see economic theory as science and this keeps you from seeing it as such. I'm happy that most people in power seem to see it as a science and politicians make use of it at least when political gaming allows for it.


    Feel free to live on in a fantasy world where your re-defining of the world works. That doesn't help anyone in this world.


    *: There was a time when I learned one or two new theories per 90 minute lecture. Economic theories happen to explain one thing a piece.


    Oh, btw, I will tell the physicists that they shall never again call Newtonian Physics "science" because they're only "simple observations", and some guy on the internet meant that this doesn't count as science. Or I won't.

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    i pwnd ur ooda loop selil's Avatar
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    Quote Originally Posted by Presley Cannady View Post
    The Pareto "principle" was a crude, snapshot observation--which predicts nothing (even in "Pareto" distributed income clusters. The subsequent Pareto distribution, which by itself is nothing more than math, predicts nothing and is a special case of a family of related functions. Pareto didn't even derive it himself.
    Well I guess we're done here. Good luck with that.
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    Quote Originally Posted by Fuchs View Post
    I studied economic science for several years at a West German university, focused on macroeconomics, have a degree on it and I know enough economic theories* and papers to know that this stuff is science.
    Great, then it should be easy for you to point to a single economic relation or model that produces better forecasts than flipping a coin. Doesn't have to be general; conditional is fine, too.

    I knew about how the Euro zone will run into the exact troubles of today before the € was introduced because economic scientists had worked on the necessary theories back in the early 90's (each one for every advantage or disadvantage of monetary unions), because my professors had told me about those theories and because the micro experiment of monetary union in re-unified Germany was already supporting those theories.
    Meanwhile the public - including those who disparage(d) economic science - had no clue about it.
    At the very least, you should be able to describe the models and datasets you used so we can verify this prediction by backcast. That also would meet the challenge's criteria.

    Making more use of economic science would improve policy a lot. (As of today, lawyers are more influential in policy than economists are - and it shows.)
    Lawyers are pretty good because they play a game with rules of their own making. Economists don't have that luxury.

    Oh, btw, I will tell the physicists that they shall never again call Newtonian Physics "science" because they're only "simple observations", and some guy on the internet meant that this doesn't count as science. Or I won't.
    Feel free. Who's going to argue that mechanics isn't founded on some very simple observations defining the time, displacement and mass in a coordinate system? Once your formalism is in place, the actual science is the meaningful relations between these quantities--conservation of energy, momentum, and angular momentum and derivatives thereof.
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    Council Member Fuchs's Avatar
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    Quote Originally Posted by Presley Cannady View Post
    Great, then it should be easy for you to point to a single economic relation or model that produces better forecasts than flipping a coin. Doesn't have to be general; conditional is fine, too.
    Sure I can.
    It's pointless, though.

    I've discussed with/against people like you before. I do this only in order to keep maybe one or two readers here from falling for your nonsense.

    It would be entirely pointless to provide any more examples because you wouldn't take them seriously, but discuss on and on - no matter what kind of evidence I provide.


    In short: I don't take you seriously because of what you wrote so far.

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    Quote Originally Posted by Fuchs View Post
    Sure I can.
    It's pointless, though.

    I've discussed with/against people like you before. I do this only in order to keep maybe one or two readers here from falling for your nonsense.
    Let's assume my position is nonsense. Then wouldn't the easiest means to dispense with this back and forth be to point to

    It would be entirely pointless to provide any more examples...
    You haven't provided one, yet. All you've offered is:
    1. the unfalsifiable assertion that deficits are unsustainable on an arbitrarily long time scale.
    2. a point that market failures are inevitable; trivial in that the only evidence needed to sustain it is the observation that market failures have occurred, and...
    3. a demonstrably false claim that unemployment insurance is commercially sold nowhere in the world.

    ...because you wouldn't take them seriously, but discuss on and on - no matter what kind of evidence I provide.
    I've already cornered myself pretty well for your benefit. I'll accept any relation or model in the field of economics--or the whole of social sciences, for that matter--that generates falsifiable predictions with better accuracy than flipping a fair coin. Simple, no?
    Last edited by Presley Cannady; 02-23-2011 at 03:58 PM.
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    the Coin Toss Economic Theory......very valid concept I might add. In any Economic transaction there is always the rigged criminal element present, something that so called economic science could never grasp Link to "No Country For Old Men-Coin Toss Scene"


    http://www.youtube.com/watch?v=mhXJcfczNIc

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    Lots of ad hominem floating around in here. Still, here's my 2 cents: Economics, like most social sciences, is a descriptive science, not a predictive science.
    Supporting "time-limited, scope limited military actions" for 20 years.

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    Quote Originally Posted by Entropy View Post
    Lots of ad hominem floating around in here.
    I wouldn't say that. I'm denouncing an entire field with, as Fuchs points out, tens of thousands of lettered participants. Once all the arguments are laid out, the line of credulity between proto-/pseudoscience and the real deal is a question of credulity popularity. So surely my own credibility is germane.

    Still, here's my 2 cents: Economics, like most social sciences, is a descriptive science, not a predictive science.
    We can certainly define science in such a way that forecasting is irrelevant, but you'll still have a bright line between all the natural sciences (which are predictive--and successfully so at that) and everything else (including the social sciences, humanities, piano, history, and the culinary arts).

    That's not to say that "everything else" is useless. History, tradition and ritual, instinct, and the individual and popular accumulation of every day experience have shaped intuition for far longer than the natural sciences. However, the core business of economics is to make forecasts over future measures of income and wealth. And if we can't think of a single product of economic thought that generates better forecasts than a coin flip, then isn't it reasonable to ask how useful the field really is?
    Last edited by Presley Cannady; 02-23-2011 at 10:07 PM.
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    Quote Originally Posted by Presley Cannady View Post
    Then it should be simple to name one genuinely economic "rule" that holds under scrutiny, as opposed to listing off some rather simple observations as you do below.
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