Is there such a thing as a "policy-robust" subset of economics?
"Force = mass x acceleration"
You don't get to have an "opinion" about that, you either accept that its the best basis for everyday mechanics that we currently have, or you need to do some more reading.
I realise this is anything but a new or earth-shattering observation, but it seems to me that an effective political debate on policy X will neccessarily be built upon some agreed economic understanding. To take just one example (which I include only for illustrative purposes, I'm really more interested in the general principle than particular cases), I, perhaps naively, would have though that the proposition that "decreasing taxes can actually increase tax revenue" was one that was testable by data, not something that the "left" had one opinion for, and the "right" another. Or perhaps it is actually up for debate, *not* because the left and right have different opinions, but because proper academic studies have been attempted and have come up with different results.
So, my question is: is there a set of useful, non-trivial, economic "truths" that all reasonable people would (should?) stipulate to when discussing policy, or is the field too young/complex to provide that level of policy-debate support?
That would be great but I think (like most sociological problems) the difficulty in isolating variables would make it difficult to determine the actual causes of economic results. You might conduct experiments on a smaller scale, hoping the results scale up, but it's hard to know if it will.
For example, in college I concluded after living with 3 other roommates that communistic policies where population = 4 result in a brief initial phase of enthusiastic productivity followed by a protracted second phase where only one person does all the work to carry the other three who are (mostly) drunk. This leads to phase three where the productive one says "fuck it" and gives up allowing the community to collapse into anarchy, followed by phase 4 where the dorm charges us a clean-up bill for "dangerous substances" found in the fridge and shower drain."
I really must get that research published one day.
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That would be great but I think (like most sociological problems) the difficulty in isolating variables would make it difficult to determine the actual causes of economic results.
Let me check my understanding: in saying this, are you suggesting that our current level of understanding of economics is insufficient for it to offer much to policy-debate?
That would be great but I think (like most sociological problems) the difficulty in isolating variables would make it difficult to determine the actual causes of economic results. You might conduct experiments on a smaller scale, hoping the results scale up, but it's hard to know if it will.
For example, in college I concluded after living with 3 other roommates that communistic policies where population = 4 result in a brief initial phase of enthusiastic productivity followed by a protracted second phase where where only one person does all the work to carry the other three who are (mostly) drunk. This leads to phase three where the productive one says "fuck it" and gives up allowing the community to collapse into anarchy, followed by phase 4 where the dorm charges us a clean-up bill for "dangerous substances" found in the fridge and shower drain."
I really must get that researched published one day.
We should compare notes!!!
I did a very similar experiment when I was in college. However I was in an off-campus lab.
The experiment involved five adults and one child in a two-bedroom apartment. There were three mainstream jobs available, all done by one of the adults [myself]- menial tasks like waitressing and elder care, as well as projection drawings for local contractors [when I wasn't in architecture school].
The other four adults did environmental investment and commodities-trading.
They'd drive around Dutchess County, recycling beer cans and stealing scrap metal from empty lots, then trade them in for beverages and fuel. They did a great job of cleaning up the entire county, and miraculously had no accidents in the process.
The child belonged to the one other female in the apartment, and was the only reason I'd bring home groceries. I would not have done so otherwise. Since nobody else would cook, they tended to last until they became prepared meals- at which point they'd vanish.
I taught the boy how to make taffy and fed him vegetables, which his mother didn't seem to believe in. She was too busy conducting her own experiments into the effects of hashish, acid rock, and beer on the libido. Ultimately he got to go live with his dad, who's still a friend of mine.
The experiment collapsed on the night of my 21st birthday party, when I had to escape the [second-story] lab via a bedroom window before one of the other subjects managed to shove the dresser away from the door it was blocking.
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Reading the experimental evidence thus far presented, it's clear that Jen and Aimee are excellent field researchers in micro-economics. In fact, we all--almost--are, but national economics tend to be a mix of micro- and macro-economics. Why the twentieth century economists abandoned a truer name--political economy--to describe their field is beyond me. The political part of a search for a robust economic theory must be included and politics must be incorporated in all its good and evil forms.
Then, it is as if an F = ma experiment were going to be performed with magnetic materials and both electric, magnetic, and viscous forces allowed to act on the experimental mass, but the researcher insisting upon a theory that had an acceleration function a = k rather than a = a(t,x,y,z,B,E,mu,Re,M). The researcher now turns on the entire enormously expensive apparatus, including magnetic, electric, and the big hot air blower, the water hose, shakes and kicks the table, and with her other researchers, places bets on the results with each, all consisting of her life's savings and all her worldly goods, then invites everyone to kick and batter the research apparatus. All the while taking careful notes and beating with flails the technicians who'd assembled the apparatus. No one takes notes, the measurements are ignored, the one who times his/her kick best to get the result s/he had bet on has the greatest likelihood of taking credit for establishing a = k.
But, unknown to the research team, a coterie of clever pickpockets and cutpurses has slipped away with all the bet tokens and are even now redeeming them at the cashier's office.
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So, my question is: is there a set of useful, non-trivial, economic "truths" that all reasonable people would (should?) stipulate to when discussing policy, or is the field too young/complex to provide that level of policy-debate support?
No, because basically all econmies kinda sorta work, for someone. In fact, in Aimee's example the economy worked great for most of the people before it fell down. Yeah, poor Aimee had to do the work of four people but she did it, and three people got to not work at all.
These debates have to start with your own personal values - what are you willing to live with, in terms of human suffering? What will you require the weakest people in society to do, and how much will you give them to survive if they can do othing.
Then you have to figure out what to do about the greediest people, and how you will use their gred to benefit the most people.
Finally, you must decide how often and in what way you will revise the rules.
Aimee - did you all split the bill four ways, when you had to pay for not cleaning the place, or was their an unequal division of that too?
Let me check my understanding: in saying this, are you suggesting that our current level of understanding of economics is insufficient for it to offer much to policy-debate?
No I'm saying it offers nothing but debate. I don't think economics offers anything as solid as f=m*a. It's more like $ = culture * education *contentment * security * safety * PR spin * war * rush limbaugh * current fashion * tax rate. Only I'm sure it's much more complex than this, and we can never isolate variables and we can never establish a control group (we only have one Earth.)
3 users agreed. You should agree too, c'mon, you know you want to. (click it, click it now!)
A group of economists goes off backpacking into the woods. They have a map upon which they've all agreed and they all consult each other over it. Finally, standing on one tall hilltop, surveying the surroundings and studying the map, one says, <pointing toward the horizon> "According to this map, we're on that hilltop."
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No, because basically all econmies kinda sorta work, for someone. In fact, in Aimee's example the economy worked great for most of the people before it fell down. Yeah, poor Aimee had to do the work of four people but she did it, and three people got to not work at all.
These debates have to start with your own personal values - what are you willing to live with, in terms of human suffering? What will you require the weakest people in society to do, and how much will you give them to survive if they can do othing.
Then you have to figure out what to do about the greediest people, and how you will use their gred to benefit the most people.
Finally, you must decide how often and in what way you will revise the rules.
Aimee - did you all split the bill four ways, when you had to pay for not cleaning the place, or was their an unequal division of that too?
The bill was split automatically by the school.
But I think you've hit it. The question of "best economies" is more of a philosophic one akin to morality ("does the good of the many outweigh the good of the few" etc.)
I think Cale is wondering if there are any economic axioms that allow us to make reliable predictions. I think there are in highly isolated conditions. For example, all things being equal, Demand/Supply = Price. We can depend on that, but all things are rarely equal, so price is harder to predict than one thinks (which is why investing can be risky.)
I agree with Aimee that the variables are infinite...I dont think it has to be this way...but as presently construed...that appears to be the way it go's down.
This is where politics could apply some filtering, so that unwise choices are eliminated.
Unfortunately it seems that Politics is also an eye of the beholder deal.
I dunno ... yes there are a fuckton of variables but that's what computer models are for. We can, with a degree of accuracy, predict the weather. I know, we are not perfect at that, but we have developed complicated computer models which allow for some degree of prediction. I find it hard to believe that we don't also have something similar for economies, though perhaps these are hoarded more since they are so valuable.
But even then, it doesn't come down to simple axioms, but rather is a complex, convaluded, impossible to condense combination of millions of variables.
What about those programs which do thousands of stock trades per hour, moving money hither and thither based on a bunch of variable connections. Haven't they figured out some nugget of truth? Like if exxon gains two points on a friday while Shell holds even they Greyound is going to lose two points and Ted the homelss guy is going to fart on his hand and smell it?
So, my question is: is there a set of useful, non-trivial, economic "truths" that all reasonable people would (should?) stipulate to when discussing policy, or is the field too young/complex to provide that level of policy-debate support?
"Expenditures always expand to consume any increase in revenue".
I dunno ... yes there are a fuckton of variables but that's what computer models are for. We can, with a degree of accuracy, predict the weather. I know, we are not perfect at that, but we have developed complicated computer models which allow for some degree of prediction. I find it hard to believe that we don't also have something similar for economies, though perhaps these are hoarded more since they are so valuable.
But even then, it doesn't come down to simple axioms, but rather is a complex, convaluded, impossible to condense combination of millions of variables.
What about those programs which do thousands of stock trades per hour, moving money hither and thither based on a bunch of variable connections. Haven't they figured out some nugget of truth? Like if exxon gains two points on a friday while Shell holds even they Greyound is going to lose two points and Ted the homelss guy is going to fart on his hand and smell it?
I have a friend who manages systems for one of those trading companies. They haven't really "figured out" anything so much as they are positioned to get a tiny piece of millions of transactions. They're not exactly brokers. As it was explained to me, their systems automatically buy/sell stock in fractions of seconds at fractions of profitability such that stocks are always available for investors to buy (and a buyer is always available for them to sell). They make money whenever the market moves ...in any direction! They have formulas, sure enough, but not exactly for the kinds of problems we're describing here.
As for comparisons between weather and economics, I think that's probably as good a comparison as we can get, but I think economics is even more difficult to predict because of the chaos inherent in human decision-making.
On top of this chaos, there would be a kind of feedback effect from any sort of reliable market predictive system or formula. People would begin to react to what your system was predicting by buying or selling stocks, or making other economic decisions. These decisions would change all the variables used to make the prediction in the first place, thus invalidating the old prediction, and creating a new one (which people would, again, react to). This would give rise to a new effort to predict economic conditions using your economic prediction system as one of the many variables. This isn't something you have to worry about in weather (unless your weather prediction system is so huge it changes the weather!)
I dono, I never like to say never. Maybe it IS possible to get economics down to f=m*a, but I would have nothing of value to offer such a discussion. It seems as difficult a problem as I have ever seen.
I dono, I never like to say never. Maybe it IS possible to get economics down to f=m*a, but I would have nothing of value to offer such a discussion. It seems as difficult a problem as I have ever seen.
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"In 1973, Horst Rittel and Melvin Webber defined a wicked problem this way:
1. There is no definitive formulation of a wicked problem (defining wicked problems is itself a wicked problem).
2. Wicked problems have no stopping rule.
3. Solutions to wicked problems are not true-or-false, but better or worse.
4. There is no immediate and no ultimate test of a solution to a wicked problem.
5. Every solution to a wicked problem is a "one-shot operation"; because there is no opportunity to learn by trial and error, every attempt counts significantly.
6. Wicked problems do not have an enumerable (or an exhaustively describable) set of potential solutions, nor is there a well-described set of permissible operations that may be incorporated into the plan.
7. Every wicked problem is essentially unique.
8. Every wicked problem can be considered to be a symptom of another problem.
9. The existence of a discrepancy representing a wicked problem can be explained in numerous ways. The choice of explanation determines the nature of the problem's resolution.
10. The social planner who tackles a wicked problem has no right to be wrong (planners are liable for the consequences of the actions they generate)."
With that definition of wicked problem in mind, micro-economics is generally not full of wicked problems. Macro-economics is. The difference between the two is that micro-economics studies markets, markets of all sorts. In that field, the usual methods of science work well: the variables can be defined, measured, sometimes controlled, and results come quickly. The experiments either perform themselves--Walmart opens a new store in Tinytown, Midwesternstate, for example--or they can be performed in simple experiments in the laboratory, even. They don't take much time, though they do require money to support the researcher(s).
Macro-economics is the economics of nations that can print money subject to politics, control their economies by various means that are subject to politics, and as Orfeu's definition offers, the experiments are one-shot. "Let's stimulate the economy with beaucoups bux given to big banks, big manufacturers, the state governments, and the unemployed" "Hey, we think we're running out of money!" "Panick! End the Stimulus!" and no one can scientifically say that the Stimulus worked (unemployment could have been 20%!) or did not (See, it didn't work: we're at 9.2% unemployment.).
Things like the Laffer curve have been tested by nations who applied it wildly. It worked magnificently in Ireland to cut capital gains tax rates; tax receipts from capital gains went up. It has not worked so well to cut income taxes; tax receipts did not go up in the US from Bush's tax cuts. The difference is that capital gains are a choice: if you own capital, you can choose to sell or not, usually. However, you have little choice about your income, and you can't defer income, usually. And the Bush tax cuts showed that the wealthy--the Republicans' "job creators"--created very few jobs compared to the taxes lost from granting them a tax cut.
That the "wicked" problem has no stopping rule…for some reason…makes me think of our evolutionary history.
Particularly the part that Ice-Ages have played in forging Human Nature.
Some have argued..that we are more adapted to times of privation and want…and when we hit "relative" times of plenty…we…er…go nuts.
I am an early neolithic hunter-gatherer…wondering….. how much stuff I am gonna have to stash away, to get through the next winter???…my answer might be…"Dude…how the fuck should I know….I thought we had enough last winter…and half the tribe died of starvation/pneumonia…..All I know is…this summer..I am gonna start earlier….stash more…..and maybe hide a few provisions from the rest of the tribe, so that…at least my family will survive."
The stopping rule here would be scarcity….you could search for stuff to stash for winter as much as you liked…but there just wasn't that much stuff around.
Neolithic Dude's Rich ancestor…in 2011…might be asked…How much is enough??? ( ie what is your stopping rule)…and he says…" When I have bought my 5th $200 Million yacht…I am gonna stop".
Some might say….it is Rich Ancestor Dude's natural human nature forged by Ice Ages…war…pestilence….plague and famine…that makes him reluctant to change what has carried his genes this far. Which I totally get.
Others might aver…But Dude…I don't know if you have noticed…but we aint in an ice age anymore…chill with the panicky collecting everything on the face of the earth for the winter thing.
You want your genes to go even further.???
Adapt !!!
These are relatively times of plenty…yet we cling to a scarcity economy. There are those who would label this mal-adaptive.
Just about every TV Advert that tries to get you to buy something…. triggers our Neolithic hunter-gatherer…it works….of course it does….it is a big part of who we are.
My economic argument…would be something along the lines of…. Lets try to garner some some substantial agreement to the following notion.
A stopping rule for times of plenty, should be different than one for times of scarcity.
This doesn't sound too difficult on the face of it….But answering the question…"How much is enough?"…tends to be highly personal, and fraught with much disagreement.
Humans can be very adaptive…I like that about us.
And anyway modern life aint all bad…I hardly ever get mauled by a saber-toothed tiger these days.
Warning: this might be a bit rambling, and I won't be quoting specific replies as I should - I've had this blasted headache all day which is only now starting to settle down. But I'm loathe to abandon a thread of my own creation, and there has been lots of good discussion above.
In my OP I wasn't looking for an "economic theory of everything" that would enable us to predict the precise economic response to any set of of economic decisions we made (though I could see why people might have thought that, from my "F = ma" example). I was wondering if there were bits in isolation we understood. Some of Govi's examples about the Laffer curve seemed to suggest there are, but Govi is a known awful pinko commie - would a reasonable "right" economist agree with her conclusions about the Laffer curve and the Bush tax-cuts?
I agree with those who have pointed out the role of value-systems in making economic policy decisions. But I think that values apply *after* premises have been established. So, hypothetically, imagine that Mero and I were discussing two proposed change in economic policy, P1 and P2. And that it was known, stipulated to by all reasonable people, economic "truths" that policies P1 and P2 would have the following impacts:
a) Policy P1 generates wealth "X". P2 generates wealth 1.000001 * X (ie., only slightly more than P1).
b) In P1, the extra wealth is distributed evenly over all society.
c) In P2, everyone gets at least a tiny fraction of the additional wealth, but the vast majority of it goes to the already rich.
I, being the paragon of virtue that I am , argue option P1 should be preferred, because I *value* the additional wealth generated under P2 as insufficient to justify the the associated increase in the gap between rich and poor. Mero, being the moustache-twirling right-bastard of our play , has a *value* system in which economic disparity is not intrinsically "good" or "bad", so he goes with P2 to generate more wealth.
In short: you can't apply your values to a discussion of policy proposals, before you know (to some level of accuracy, which will usually be much lower than need in physics) what the impact of the proposals is going to be.
(In case it needs to be said: I'm using Mero for fun here, no snark is intended, nor would he necessarily reach the conclusion above.)
Finally, if a policy-robust subset of economics does *not* exist (which seems to be where part of this thread is heading), then why do economists get to play any role in policy debate? Viv recently posted an interesting link to comments from a nobel-prize wining economist about how to deal with the current crisis - why should we care what he has to say?
This user laughed so hard that they peed a little:
From the link in Envoy's post "Economists take GOP to task for hard-line tack":
Quote:
Some studies by both liberal and conservative economists .....
WTF is a "liberal economist"? Someone unable to separate their personal political beliefs from their field of study (which is, supposedly at least, a social-science)?
From the link in Envoy's post "Economists take GOP to task for hard-line tack":
WTF is a "liberal" or "conservative" economist? Someone unable to separate their personal political beliefs from their field of study (which is, supposedly at least, a social-science)?
/fify
None of that used to be an accepted status.
Economists either did the science, or not.
It is a recent development to attach party affiliation to job titles, and thereby ostracize those who do not feel the same way you do.
eta: viz the "global warming conspiracy", etc. This is pure political manipulation, shading science as opinion.
Sorry if I misunderstood. f=m*a seemed front-and-center to your initial question, and you are a mathematician, so I had assumed that was the level of "robustness" you were looking for.
Quote:
Originally Posted by Cale Vinson
why do economists get to play any role in policy debate?
Because a person can acquire a certain amount of expertise and familiarity with highly complex problems even if those problems elude a formal process or solution. For example, fashion and culture, are complex problems where the chaos of human whim makes it extremely difficult to predict the "next big thing". Yet those who've spent years in the industry might develop a finely honed instinct, or an "eye for fashion". These folks are considered experts, not because they possess any sort of robust models but because their experience makes them right more often than people with less experience in the industry (and to be sure, the experts in fashion or economics are not always right and in both cases the predictions of the experts themselves may influence their industries.)
But as I said before, never say never (especially when it comes to discoveries in math/science.)
From the link in Envoy's post "Economists take GOP to task for hard-line tack":
WTF is a "liberal economist"? Someone unable to separate their personal political beliefs from their field of study (which is, supposedly at least, a social-science)?
Well, Economic liberalism means capitalists, though I assume "liberal" has a different connotation in the states.
Economics has always been political. Any politician in the field shops around for economic theory and economists that support his or her belief. There are realms of economics that are relatively immune from that kind of thing: market economics.
Market economics are not perfectly immune because market economics includes labor economics. Market advocates in labor law politics argue that a union is a combination in restraint of the free market for labor. Other market advocates argue that the natural market for labor presents an unfair advantage to big employers in market power, that a union is a very good means for redressing that unfair advantage.
Engineering has some similarities to economics. When proposing a solution to a particular design problem, many solutions are offered. Some are clearly better than others, others not. The things that we eventually see built or manufactured are the products of hundreds to millions of compromises between engineers and the realities of materials, methods, and costs, usually with a large soupcon of the prejudices of the persons involved.
Personally, I have distrust of rational economics being plausible. As anyone who has looked at marketing or propoganda has seen, consumer/investor spending is highly fickle and easily influenced. Psychology is a better way to look at it. This is especially true for closed systems such as markets in which everyone is trying to beat everyone.
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Note that I'm not saying the application of science is inappropriate, only that the complexity of macroeconomics makes the science more closely resemble sociology or psychology than, say, physics or chemistry. This means (to me) that scientific methods can yield some "better practices" which may yield better results than other means of guiding economics (like political propaganda).
I think most of my arguing in this thread was motivated by a misunderstanding on my part when you included the force equation. If you had used, say, Maslow's hierarchy of needs for your example, I probably would have just hit the agree button and remained silent.
Last edited by Aimee Weber; 08-14-2011 at 12:01 AM.
I think it's both a soft science and a hard science. I still have my econometrics text and all the ANOVA in it still applies to economics. It's an F = ma of economics.
F = ma isn't all that cut and dried, either. Take cars, for example. The requirement for safety glass is a response to undesirable results of F = ma. Nothing in F = ma implies safety glass, but it's been in cars since before I was born, in America. For social and moral reasons having nothing to do with physics, we hated the outcome of the free body motions of a person in a collision, forward to and through ordinary glass.
Economics can be measured rather exactly, and its results predicted. However, the desirability of a particular outcome are more debatable. I think, with good historical statistical support, that more deficit spending by our American federal government is desirable. Coco thinks that the American federal government is too big and that deficit spending has undesirable outcomes: that our debt costs will go up, that the federal government will become bigger, and that soon the government will go bust when it cannot pay its debts.
The economics science remains the same. She can point at Greece. I can point at Japan. I can point to Keynes; she can say that his science doesn't apply when the debt is so terribly large.
We could have had a similar debate on safety glass. One person could say it adds too much cost to a car. The other could say that the social cost of the deaths that could otherwise be prevented by safety glass is too great. Another person could say that a car buyer, knowing the nature of ordinary glass and the fatalities that arise from it, should be free to decide whether or not to buy safety glass. Yet law requires it, which has little to do with F = ma, but everything to do with our values.
The things that we eventually see built or manufactured are the products of hundreds to millions of compromises between engineers and the realities of materials, methods, and costs, usually with a large soupcon of the prejudices of the persons involved.
Which reminds one of the old adage...get a committee to choose a colour scheme...and it always results in beige.
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Why are you people greefing me so? In regards to the "F = ma" would it really have been so hard to read what I meant rather than what I said? !!!!!!!!!111!!!!!!!
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These debates have to start with your own personal values - what are you willing to live with, in terms of human suffering? What will you require the weakest people in society to do, and how much will you give them to survive if they can do othing.
I agree.
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"Feet, what do I need you for when I have wings to fly?"
~Frida Kahlo
does the good of the many outweigh the good of the few
...ask Marie Antoinette and Tsar Nicholas...
But seriously- if white collar bandits cause the social system to collapse in on itself, and the ravening hordes then begin to loot, pillage and burn, and eventually turn their eyes to the gated "Hole in the Walls", break in, murder the bandits, and carry off the goods, does it not seem kind of a stupid exercise in shortsightedness? and/or poetic justice?
Seems to me that balance is the ideal that has gotten lost in the modern economic model.
Is there such a thing as a "policy-robust" subset of economics?
- would a reasonable "right" economist agree with her conclusions about the Laffer curve and the Bush tax-cuts?
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