How To Fix The Economy

[slapout9]

Not really. Galbraith is convinced that econometrics will ultimately fail because of nebulous unpredictability in human affairs. I'm convinced econometrics fails because Galbraith and the like seem to content to tackle their field with barely the math an undergrad might pick up in his first two years.

He is convinced our economic models will fail because of Criminality!!!!!he believes the best economist to explain the current situation besides himself is Thorsten Veblen.(brief synopsis: Veblen believed whenever you have unregulated free markets sooner or later they will all be taken over by crooks)

I don't see how anyone can tackle the last two pillars without math. A qualitative science isn't a very useful one.

You can't tackle the last two without math but it is the math of engineering not econometrics. You don't need advanced math for economics....6th grade arithmetic is all you need.

[Fuchs]

Having studied economics for five years on a West German university I can assure you that economists know pretty much all the crap that happens and have their appropriate terms and models for it.

"Crooks", for example, are usually a symptom of the principal-agent problem and the three market failures of information asymmetry, power asymmetry and externalities.
We know our stuff - much better than laymen.



Qualitative argumentation is useful for understanding, quantitative modelling is usually necessary for validation and prediction.
Qualitative argumentation without quantitative backup is usually little more than a fairy tale or ideology.


Econometrics are necessary to find the values of the variables in models, and without these values you know nothing. In fact, a single wrong value can ruin the result of a model with dozens of variables completely.
You can guess values, of course - just as you can throw a spear blindly into a lake for fishing.


I actually wrote my macroeconomic dissertation for the diploma without a single formula, and got away with a 1.3 grade. The reason why I was able to get away without quantification was that the topics hadn't been researched well and wasn't in the stage of econometric research yet. The researchers were still discussing the basics of the topics.
Correspondingly, I was not able to give a definitive answer to any question that arose.

[Ken White]

He is convinced our economic models will fail because of Criminality!!!!!he believes the best economist to explain the current situation besides himself is Thorsten Veblen.(brief synopsis: Veblen believed whenever you have unregulated free markets sooner or later they will all be taken over by crooks)

However, they fail to consider that so too will regulated markets also be taken over by crooks -- as will centralized economies. Instead of moaning about those facts, just accept 'em as a part of the human condition and insert checks and balances to counter quite normal and always present human greed. The human condition is inherently unstable -- that is not going to change, perfect security and / or stability will never be attained as long as animals are involved...

[slapout9]

The human condition is inherently unstable -- that is not going to change, perfect security and / or stability will never be attained as long as animals are involved...

I agree we will never have perfect security/stability BUT we can do a whole lot better than what we are doing now.

[Ken White]

I agree we will never have perfect security/stability BUT we can do a whole lot better than what we are doing now.

Not in dollars, we have more of those than we probably need (not that we spend them sensibly...) but in freedom and self reliance? We've already cur both those things in half compared to, say 1950. Certainly many things are better now than they were then were -- but many are decidedly worse particularly with respect to those two issues...

That address stability which we can improve upon little if at all. It's a people thing...

[GPaulus]

Dayuhan,

Plate tectonics, as a theory, is well enough established that almost all geologists subscribe to it.

I think we are too quick to accept a theory when it passes our paradigm test but as Aristotle has so wonderfully explained, "It is the mark of an educated mind to be able to entertain a thought without accepting it."

We are a long way from proving plate techtonics just as we are a long way from accepting all of Adam Smith's formulation of economics in "An Inquiry into the Nature and Causes of the Wealth of Nations."

Here is an article I wrote on plate theory that I think may be closer to the truth. There is a lot we simply don't understand yet about the earth, earthquakes, tremors and vocanoes. I think it is a mistake to even say "Plate Techtonics is well known. The Earth's crust is like a giant jigsaw puzzle, broken into several pieces known as tectonic plates that constantly bump and grind or slide past each other." It is much more complicated then simply that. The stress imposed by "earth tides," created by the moon earth interactions causes the crust to bend and deflect twice each day. We see this in the form of high and low water tides, but the earth's crust deflection is what actually causes the water tide to occur. This deflection is like bending a steel rod back and forth--eventually it crazes, cracks and weakens the crust--allowing the continent to collapse, slip and the liquid magma to move. The cracking appears to the observer along natural boundaries as a plate and thus plate techtonics. The moon and earth interaction causes the crust to crack but that has little to do with plate techtonics, the suttle difference has little to do with the plate except that where there are active vocanoes, you have a active fault boundary along the cracking. Vocanoes occur on islands and near ocean coastlines because of the heavy weight (pressure) of the water. This pressure causes a hydraulic effect on the magma forcing it up along weaken fissures (tidal fatigue cracking). Once the pressure becomes great enough and the earth's crust weak enough, a volcano grows and finally erupts. The eruption diplaces the incompressible magma and it releases. The void left from the magma release over time, causes the continent to collapse downward due to gravity. The collapsing is felt as a quake. Our scientists call it a fault line using the plate techtonic theory but it is not really the plates sliding as they posit.

It is a "continental collapse" (as I call it) phenomena and it is why our oceans are becoming deeper. Once, the earth was nearly covered by shallows seas but now the oceans are much deeper and there is a greater land mass exposed. When the earth had shallow seas, most of the continents were under water and the water level was hundreds of feet higher in elevation as evidenced by the finding of sealife fossils high in the mountains. The deepening of the oceans began 580MM years ago just prior to the "Cambrian explosion period" (and continues today). It exposed large amounts of land and allowed many species to propagate.The resulting affect causes volcanoes, earth tremors and earthquakes. In summary, plate techtonics has as many flaws as economic theory....

[Ken White]

Out of curiosity, are you discussing tectonics or tech tonics?