Saturday, January 31, 2015

The problem with Economists

I see 2 main problems with economists.

Amoral Science

One problem is that their field, like any other science, is amoral.  It is concerned with understanding how things work, but it won't tell you what is right and what is wrong.  This helps us understand cause and effect without bias, leading to more reliable knowledge, but doesn't tell us what to do.

Neutrality is important when acquiring knowledge, but the application of knowledge requires extreme prejudice and bias.  We need to decide what is right and what is wrong and actively support one side or the other.

Esoteric Shit

Economists study a lot of stuff, and it's stuff that is important in their field, but it takes true mastery to recognize the manifestation of simple principles in complex models.  This means while things may have complicated explanations they have simple explanations as well that are no less true.

If you read an earlier post I made, I talked about how in physics, analyzing the path of a projectile can be pretty complicated.  However, the most important information in many scenarios can be expressed with a simple, intuitive statement: "What goes up, must come down."

It's important that economists learn express their most important ideas in terms of simple principles, because they need to be able to engage with the public and policymakers on a level playing field.  We need many people actively involved in creating and negotiating our policies, including people without relevant advanced degrees.  If we can't make valid arguments about economic policies, then we are stuck with whatever the PhDs decide to tell us.

I like to think about the political and economic tumult in this country as a simple problem manifested on a grand scale.  The problem is this: who should take responsibility for what, and what will they do about it?  In a sense, it's simply a large scale version of what college roommates might experience trying to live together in an apartment.  Each person has different ideas of what needs to be done and how to do it, but each person needs to participate as well.  Sometimes there isn't a wrong way or a right way, but differing ideas create conflict anyway.

I  was trying to read Krugman's blog, he seems a smart fellow.  What am I saying?  He is smart and well qualified.  The little I could understand, he explains well with sound thinking.  He's a PhD in econ, and I'm an math undergrad dropout.

So what do I take issue with?

Krugman has the right answers if you want to understand how the federal gov't can take responsibility for our financial problems and fix them.  We need people like him.  The federal gov't can play an important role in how the economy functions.

What I am more interested in is what individuals can and need to do.  He's in the right position to do his job, and I'm in the right position to do mine.

One thought experiment that I use when reading economic shit is this: If people were immortal, and only consumed stuff for pleasure, how would that change this economic analysis?  In many cases it would not.  Measuring production and consumption usually doesn't care what or why.

Converting the words of people like Krugman about interest rates and quantitative easing into real world terms of mouths and food is a tricky exercise.  From reading his blog I'm convinced that he cares about the real world effects of economic policy and is willing to take a moral stand on issues.  I respect him even when I disagree.