Author Joris Luyendijk: Economics Is Not a Science (theguardian.com)

The Real Dr John writes: A Nobel prize in economics, awarded this year to Angus Deaton, implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modeling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths. In 1994 economists Myron Scholes and Robert Merton, with their work on derivatives, seemed to have hit on a formula that yielded a safe but lucrative trading strategy. In 1997 they were awarded the Nobel prize in economics. A year later, Long-Term Capital Management lost $4.6bn (£3bn) in less than four months; a bailout was required to avert the threat to the global financial system.

Comments

Weep for humanity.

[ColdWetDog]

It's the dismal science

Re: Weep for humanity.

[Anonymous Coward]

This times a million... Economics is much more akin to religion the science. Economist are like the high priests of ancient times. This is why is drives me absolutely insane when people spout drivel like deflation is bad (its bad for some actors but its a huge boon for the majority) the world is unfairly split between those who play by the rules and those who cheat (governments and banks who create money out of thin air and have to be supported by the rest of us)

Re: Weep for humanity.

[Hognoxious]

This times a million... Economics is much more akin to religion the[sic] science.

Hhh? It's the dismal science because of what it describes, not dismal at being science.

drivel like deflation is bad (its bad for some actors but its a huge boon for the majority)

Care to elaborate?

Re: Weep for humanity.

[ArmoredDragon]

This times a million... Economics is much more akin to religion the science. Economist are like the high priests of ancient times.

If this is the case, (economics being religious in nature) then the government would have no business setting rules and regulations that impact the US economy. Church and state first amendment issues aside, if the economy is really so unpredictable, then nothing they do can reliably influence it in the ways that they intend.

deflation is bad (its bad for some actors but its a huge boon for the majority)

Not at all. One thing that is constant in most economies is that the majority of people are borrowers.

Suppose you borrow some money to start a new business or buy a house, then suppose right afterwards that money you owe is now worth more than it was when you borrowed it. If it's worth more, then suddenly you're going to find that you're earning less (because after all, people value their money more so they pay less for the same service, whereas in the past they would have paid more for it.) Now guess what happens? You effectively owe more money than you originally borrowed, and we're not even counting interest yet. When we count interest, things get worse, because now the interest rate you've agreed to is suddenly more burdensome. Deflation is also bad for the lenders as well in many cases, because they often have borrowed money themselves.

In fact, the last time the US saw deflation was a period we now refer to as The Great Depression.

Re: Weep for humanity.

[Austerity Empowers]

Economics is a social "science". Because it involves money, it feels more quantitative and objective, like an actual science. But it is a social science, arbitrary numbers have been assigned to ill defined metrics, and a delusion is formed. Perhaps those arbitrary assignments are the result of a real competitive process, left to anneal for a period of time, but that's just a further level of self-deception. We cling to these things individually because it is the best we've got socially, but at no level in the universe can you establish the value of an orange at X resources/unit, it's therefore impossible to build any kind of universal truth around a system that is fundamentally based on that sort of value assignment.

So when the talking heads start talking about economics, and making predictions and saying the sky is falling if {such and such}, it is ok to laugh and walk away. We'll make it work or we won't and it'll change.

Re: Weep for humanity.

[Anonymous Coward]

It can't be a science.

Stars are not able to read new papers on their behaviour and adapt.

Market participants can.

Re: Weep for humanity.

[Archangel Michael]

Great Depression wasn't traditional deflation, but rather deflationary correction to over leveraging inflation during the 20's.

Deflation causes savings to skyrocket, where Inflation has the exact opposite, holding onto money is a net loss. Imagine people saving money while working hard when they can (20s-50) and never needing a pension if they did save money. It wouldn't matter if they earned interest or not, their wealth is growing just holding onto money.

There is a downside to deflation, and that is to the producers of the world, where costs are lost as you hold onto inventory (for long periods of time). However, we already see deflationary style micro economies such as Consumer Electronics, where old inventory is sold off at a loss.

However, a slightly deflationary currency is very good for workers, and not so good for Governments who lose control over the populace through inflationary monetary policies.

Re: Weep for humanity.

[khallow]

but at no level in the universe can you establish the value of an orange at X resources/unit

This is the only concrete assertion you made, and we already know it is false. Markets establish price for the orange (which a commonly accepted value for mass producers of oranges) and the producer of the orange already knows what inputs went into making that orange.

Re: Weep for humanity.

[ShanghaiBill]

Care to elaborate?

He is saying that it is only "science" if it is easy or if we already know all the answers. Since he doesn't understand economics, and is too lazy to learn, it can't be science.

Re: Weep for humanity.

[JesseMcDonald]

In fact, the last time the US saw deflation was a period we now refer to as The Great Depression.

But not because of the deflation. The cause of the Depression was a widespread credit contraction, following an illusory boom—actually malinvestment, encouraged and masked by inflation—which resulted in a "house of cards": lots of investment profit on paper with nothing real to back it up. When the bills came due and people tried to pull "their" money out, they suddenly discovered that they didn't have nearly as much money as they thought; their savings accounts consisted mostly of IOUs from bankrupt banks. That was the cause, both of the deflation and the Depression. Deflation was merely a side-effect.

In other cases where deflation has been observed internationally, it has not been correlated with anything like the American Great Depression.

Re: Weep for humanity.

[ShanghaiBill]

Imagine people saving money while working hard when they can (20s-50) and never needing a pension if they did save money.

That is imaginary, not real. Most people in their 20s-50s go deep in debt to buy a house, own a car, educate their kids, etc. Their wealth is in the assets they own, not cash under a mattress. They do NOT benefit from deflation.

Re: Weep for humanity.

[phalangion]

I think our coward is implying that deflation is good for the majority of people because their money held in-hand becomes worth more. Not saying that's a correct statement, only trying to understand what was being said.

Re: Weep for humanity.

[Anonymous Coward]

Is weather forecasting built on science? Yes
Is weather forecasting modelled with realistic models? Yes

If so is economic modelling built on realistic models? No (often no better than white noise)

So there is your problem.
eg:
https://www.youtube.com/watch?v=6r6gWW-xC-g
https://www.youtube.com/watch?v=vxbxXBrOPS8

Re: Weep for humanity.

[mrclevesque]

It's a social science to be exact

Re: Weep for humanity.

[TiggertheMad]

If this is the case, (economics being religious in nature) then the government would have no business setting rules and regulations that impact the US economy. Church and state first amendment issues aside, if the economy is really so unpredictable, then nothing they do can reliably influence it in the ways that they intend.

Religion is the belief in pixies, unicorns, zombie Jews, and other insane delusions. The only business the government has to be involved with religion is to insure that anybody can practice any idiotic belief they choose without censure, so long as it doesn't interfere with others.

Economics is the imperfect and messy business of observing how goods and services are exchanged, and manipulating the system to improve things for the greater good of society. While the government screws it up from time to time, the net result is much better than doing nothing at all. An analogy: You cannot reliably 100% cure cancer in a patient (now), but you get much better results by trying rather than sitting back and doing nothing.

Economics is better compared to psychology, which seems like pseudo-science at best. Both deal with unimaginably complex systems that would seem to be deterministic, but yet can be very unpredictable. Economics doesn't deserve to be called a science (in a strict dictionary sense of the word), but that doesn't mean that it isn't worth of serious study.

Your comment smacks of tea-bagger dogma, believing that no government regulation of the economy would be a good thing. We tried that in various fashions over the last oh, ten thousand years or so, and the outcome was generally bad. People make rules not because they like making rules, but to avoid repeats of disastrous events.

Re: Weep for humanity.

[thedonger]

Imagine people saving money while working hard when they can (20s-50) and never needing a pension if they did save money.

That is imaginary, not real. Most people in their 20s-50s go deep in debt to buy a house, own a car, educate their kids, etc. Their wealth is in the assets they own, not cash under a mattress. They do NOT benefit from deflation.

He is "imagining," not saying that is what happens. We go into debt because of the promise of a payout that will be far better than if we stuffed our deflationary mattresses. Which leads to his statement:

However, a slightly deflationary currency is very good for workers, and not so good for Governments who lose control over the populace through inflationary monetary policies.

Which, if I put on my tin foil hat, makes me believe that government -- not basic human greed -- propagated the Myth of Indefinite ROI after it worked so well for those who cashed in their equity in the 90s and early 00s.

Re: Weep for humanity.

[Anonymous Coward]

Care to elaborate?

He is saying that it is only "science" if it is easy or if we already know all the answers. Since he doesn't understand economics, and is too lazy to learn, it can't be science.

The fundamental for a "science" in the English language sense is that it should make statements which are potentially falsifiable. Experiment should rule. The problem with Economics is that the theory of Economics is affected by economics its self. For example, take the grandparent's statement

deflation is bad

This is actually true, at least now. If everybody knows there will be deflation then they know that if they hold on to their money it will be worth more in future. This encourages the flow of money to stop and gradually kills all economic activity. However, what if we go back to a world where nobody knows that deflation is bad, or even better, nobody is even aware that deflation is going on. In this case there will be no problem since nobody will realise that they should hold onto their money to take advantage of deflation.

More generally, if you come up with a theory to predict economic behavior perfectly then that theory will be used to make its self invalid!

Re: Weep for humanity.

[jcr]

If everybody knows there will be deflation then they know that if they hold on to their money it will be worth more in future.

That's what Krugman claims, but it's bullshit now, and it was bullshit when Keynes first decided to try to convince people that they were better off being robbed by central bankers diluting their money.

Here's the example that disproves the claim: Everyone knows that when it comes to electronics, next year's model is going to be better/faster/more bang for the buck than this years' model, but the electronics industry isn't starving to death because of everyone sitting on the sidelines and refusing to buy devices because they'll get more for their money in the future.

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)

-jcr

Re: Weep for humanity.

[jcr]

One thing that is constant in most economies is that the majority of people are borrowers.

This has not always been the case, and borrowing has been enormously increased by the practice of letting central banks conjure money out of thin air. There was a time when businesses routinely saved their own money to finance capital improvements instead of borrowing and paying interest.

-jcr

Re: Weep for humanity.

[jcr]

The cause of the Depression was a widespread credit contraction,

That was the cause of the crash. What turned the crash into the Great Depression was the insane anti-recovery policies of Hoover and Roosevelt that kept the economy in the shitter until 1946.

-jcr

Re: Weep for humanity.

[Austerity Empowers]

Markets establish price for the orange

You mean a competitive process that is left to anneal for a period of time?

producer of the orange already knows what inputs went into making that orange

He knows what he was able to invest that was sufficient to produce the orange. He does not have any idea, or concern, about whether his investment covered the costs from his suppliers (human, corporate or natural). Nor does he know for t>0 that his costs will be covered by the market price, it may happen he has to sell for a loss. He has some historic data about market prices for oranges that may or may not hold true leading him to believe that he can sell profitably (or he'd probably get out of the business), but at any time that can change arbitrarily. He will then be forced to sell for a loss.

All we know about economics for sure is right there. We look at markets of things based on sales prices, not any actual truth or concrete data.

Re: Weep for humanity.

[Anonymous Coward]

price != value

Re: Weep for humanity.

[Anonymous Coward]

Everyone knows that when it comes to electronics, next year's model is going to be better/faster/more bang for the buck than this years' model

But it won't be cheaper, and there's opportunity cost to time so, in the end, if you need a computer now you'll buy it now, otherwise you won't buy it because of what you said.

The same applies to money. Deflation incentivizes saving and disincentivizes investment. If people don't have that much money to begin with that might be OK, but when people begin to hoard money THEN you have a problem because it's a positive feedback: the more people hoards money, the greater the deflation; the greater the deflation, the higher is the return expected from investment. In the end, investment stops (if your money grows 20% annually just by sitting in a box, why risk it in a 4% business or bond?). Of course, basic spending has to keep going, but investment is essential to economy. If investment stops, economy stops. Want examples? The financial crisis of 2007-2008, that's what happens when the agents can't find financing (i.e.: banks or other agents investing in their business).

What people need to understand is that money has value when you spend it, and the only purpose of money is being spent: a dollar in a box is worth nothing, a dollar gains value when you exchange it by a loaf of bread. If there isn't enough money to finance the economic activity someone has to put more in the markets or business begin to close. If you make a type of money that punishes spending and stimulates hoarding, you are shooting yourself in a foot.

Re: Weep for humanity.

[fyngyrz]

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)

Precisely this. For my part, this fairly obvious fact is highly likely to account for why inflation is never allowed to stop. Cynical? You bet.

Re: Weep for humanity.

[JesseMcDonald]

No argument there. The credit contraction, made inevitable by the prior inflationary boom, caused both the deflation and the initial decline in the economy, but it was the policies instituted under Hoover and Roosevelt which prevented the sharp recovery that would otherwise have taken place, thus earning that period its label of "the Great Depression".

My point was simply that while the Great Depression did include quite a bit of deflation, there is no causative relationship between ordinary deflation, such as can be expected from increased productivity under a constant money supply, and events like the Great Depression.

Re: Weep for humanity.

[Anonymous Coward]

That's the same as saying nothing. That the money in your hand is worth more over time is the very definition of deflation. How that's a good thing, if you have a minimum reasoning ability and more than 12yo, that's what should be explained.

Re: Weep for humanity.

[Anonymous Coward]

If so is economic modelling built on realistic models? No (often no better than white noise)

If that were true, this guy wouldn't be a billionaire.

Re: Weep for humanity.

[Anonymous Coward]

Here's the example that disproves the claim: Everyone knows that when it comes to electronics, next year's model is going to be better/faster/more bang for the buck than this years' model, but the electronics industry isn't starving to death because of everyone sitting on the sidelines and refusing to buy devices because they'll get more for their money in the future.

It does no such thing, Yes, everyone does know, but some people need something now, and so buy it now. Pre-announcing has actually been shown to effect sales, just ask Adam Osbourne:

* https://en.wikipedia.org/wiki/Osborne_effect

Or perhaps ask Pebble and/or Motorola about their sales numbers when the Apple Watch was announced.

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)

Yeah, like people with mortgages. As for savers, have you looked at the savings rate over the last few decades (at least in North America)?

Re: Weep for humanity.

[Anonymous Coward]

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)

-jcr

Yep, which is why controlled inflation is good.

Saving your money is bad for the economy as it doesn't add value to the world. Borrowing money in order to do something that does add value by contrast is good.

Re: Weep for humanity.

[Anonymous Coward]

What is funny is the guys asymmetrical thinking; savers good, borrowers bad. Ignores that the reason to save is because theoretically some other sap has a more productive use for the money than you do. meaning borrowing and saving are two sides to the same coin (heh).

The crisis of 2008-onward is just as much that that lenders loaned money profligately as borrowers borrowed money profligately. In fact worse since most people that take on a mortgage are usually rank amateurs and bankers are supposed to professionals.

Re: Weep for humanity.

[Jane Q. Public]

Indeed... Inflation benefits the big banks, often Wall Street, and governments. It harms the vast majority.

You can see signs of this everywhere: from the completely bullshit way government calculates real inflation, to the Keynesian idea that a low amount of inflation is "healthy" or even necessary for the economy.

Austrian economists on the other hand (and monetarists too for that matter) have been astronomically more adept at predicting real events. Which means economics (or at least the neo-classicist and Keynesian versions of it) have predicted almost nothing over the last 120 years, give or take. In fact as often as not they have been wrong by 180 degrees.

And since the entire worth of a theory is how well it predicts, that is pretty much the bullet through the heart for "classical" or Keynesian economics.

One of the great failings of classical economics is the insistence on using Wall Street as an indicator of the health of "the economy". But it is very easy to show that Wall Street was doing very well right up to the very day before a big recession or crash hit. That was true in 1929, as well as in 2001 and 2008. And all the Keynesians and neo-classicists were yelling "Come on in! The water's fine!"

No, what today we call classical economics is long on theory but short on skill. If it's a "science", in an incredibly weak one.

I suggest that the Austrians and the Monetarists have a far better handle on it.

Re: Weep for humanity.

[KGIII]

I don't understand shit about economics but I've been poking at the stock market for the past four years with my own "play" portfolio. Really, a bit longer but the first couple of years I didn't really do anything except watch and poke at some numbers and look at trends and take some sample bites. Anyhow, I am averaging somewhere around 18% per year.

I'm not sure what this proves but I think it might suggest that economics might not be science. At least certain aspects of it. I understand models and large data sets - of that I'm reasonably sure. I'm so aware that I know how hard it is to get meaningful data the minute a human is entered into the mix. I modeled vehicular and pedestrian traffic - that's what my business was. Was it science? Sure. Somewhere between science, direct observation, crunching the numbers again, and then sacrificing a black chicken is where it lies.

You can predict and model all you want. It's great until someone decides to drive backwards down a one way street because they're drunk. And while that might seem trivial - it impacts the whole flow and everything around it and spreads out in a wave-like pattern. Now, as I said, I don't know shit about economics but it seems really likely that the same is true there. It seems even more likely when you compare the many failed predictions, proposed solutions, and lack of a definitive answer in all but the most contrived of situations.

Take this for what you will. I don't know shit from Shanola when it comes to economics but I do know how to gamble and play with numbers. I do know how to observe people and notice trends. But I don't know a damned thing about economics except that what I do ripples out and changes everything just like your actions.

Re: Weep for humanity.

[Jane Q. Public]

That is imaginary, not real. Most people in their 20s-50s go deep in debt to buy a house, own a car, educate their kids, etc. Their wealth is in the assets they own, not cash under a mattress. They do NOT benefit from deflation.

It's far from "imaginary". It's normal. It is the current "debt-based economy" which is abnormal.

Your great-grandparents (and maybe even grandparents) bought what they could with the cash in hand. They worked and saved, and paid cash.

Today, few people actually own property anymore. It belongs to the banks. How did that happen? Predatory lending. Over a period of 100+ years. More than that, really.

There was a day, not that long ago, when most American families had real savings. Now most of them have net debt.

Again, I ask: how did that happen? I leave it as an exercise for the reader.

When a cash surplus for the common man is normal, deflation is a good thing. Only when debt is king does it become a bad thing. And debt being king, all by itself, is a bad thing for most people.

Re: Weep for humanity.

[Jane Q. Public]

No argument there.

Yes, in fact Roosevelt's own Treasury Secretary, Henry Morgenthau, thought Roosevelt was completely insane. He wrote as much in his diary:

We have tried spending money. We are spending more than we have ever spent before and it does not work.

I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises.

I say after eight years of this Administration we have just as much unemployment as when we started. ⦠And an enormous debt to boot!

Sound familiar? It should. Because Roosevelt's interventionist polices have been copied by Obama. Now the Fed has nowhere to go. Interest rates are still at rock bottom, and 3 rounds of "Quantitative Easing" did not work. Worker participation rates are at an all-time low in recent decades.

Many modern economists believe that Roosevelt actually prolonged the Depression, by as much as 10 years. And just look around you today... a result of the same old non-working policies we should have ditched 80 years ago. It's pathetic.

Re: Weep for humanity.

[Immerman]

>But it won't be cheaper,
Of course it will. As a rule the longer you wait the more powerful hardware you can get for the same price, AND the cheaper the same hardware is. Go ahead and check the prices of last years phone models - after a few years they even start showing up in the $20--$100 prepaid rack.

>and there's opportunity cost to time
Of course there is. Just as there is with money. Deflation at 2% or whatever is great, but sitting on your money means you can't invest in things with a 5-10% expected return. And you can't eat the bread today that you wait to buy until next year.

Of course there is likely to be a chilling effect on overall economic growth - but there's precious little evidence that economic growth per-se is actually of any benefit to the rank-and-file. It's only useful to the masses when it's achieved by enriching the masses, which has not been the case for many decades in the US.

Re: Weep for humanity.

[Anonymous Coward]

And who are the savers? At least in the US, the "free market" has optimized the economy for zero percent savings rate. The average worker makes the exact amount of money they need to survive, and has no savings. The only people with significant money in "savings" are the upper-middle class and up. That's who would benefit from deflation the most. The powers that be try to keep deflation in check not because they inherently benefit from inflation, but because the status quo is already too close to a scenario involving torches and pitchforks.

Re: Weep for humanity.

[Jane Q. Public]

He does not have any idea, or concern, about whether his investment covered the costs from his suppliers (human, corporate or natural).

Of course he does. Because they are motivated by the same things with which he is concerned: making a profit.

Free markets develop price signals. This is true in both wholesale and retail markets... in fact whenever there is free trade. The producer does in fact know that the supplier's needs are met, because otherwise the supplier would have asked more for his goods. People just don't normally sell stuff for less than cost. That's an act of a company or corporation with a diverse package of goods. Not a seller of fertilizer.

Nor does he know for t>0 that his costs will be covered by the market price, it may happen he has to sell for a loss.

Not often, and again that's because of the nature of free markets. The market as a whole will not sell for a loss, that's not sane practice and most people aren't insane. The market finds a price which satisfies both the seller and the buyer, or the market ceases to exist.

He has some historic data about market prices for oranges that may or may not hold true leading him to believe that he can sell profitably (or he'd probably get out of the business), but at any time that can change arbitrarily. He will then be forced to sell for a loss.

Only in the very short term. Markets do not persist in that condition. And a smart trader plans for weak seasons. This is all baked into the price of the goods.

You neglect the very engine that drives free markets: the finding of a price point over time. Throwing in these abrupt disasters you imagine can indeed happen, but usually don't, and again the savvy player plans for bad weather. That's HOW they set the price.

Re: Weep for humanity.

[Anonymous Coward]

We simple havent observed any stars adapting yet.

Re: Weep for humanity.

[Austerity Empowers]

Free markets develop price signals. This is true in both wholesale and retail markets... in fact whenever there is free trade. The producer does in fact know that the supplier's needs are met, because otherwise the supplier would have asked more for his goods. People just don't normally sell stuff for less than cost. That's an act of a company or corporation with a diverse package of goods. Not a seller of fertilizer.

Not often, and again that's because of the nature of free markets. The market as a whole will not sell for a loss, that's not sane practice and most people aren't insane. The market finds a price which satisfies both the seller and the buyer, or the market ceases to exist.

Or the supplier was in a position to either sell for below cost, and cut his losses, or not sell at all and run out of money quickly. This can go on for extended periods of time (because of these rainy day funds) before someone is forced to relent. It is entirely possible for large players, or players on unequal footing (say they have influenced their government to totally ignore laws which increase their costs) to arbitrarily undercut fair competitors just to run them out of business and ultimately corner the market. This same tactic can be used to discourage competitors from entering in the first place.

Only in the very short term. Markets do not persist in that condition. And a smart trader plans for weak seasons. This is all baked into the price of the goods.

In many cases it can go on for long enough to run the supplier entirely out of business, and allow the price to be set by some other arbitrary force (say: how much do you have in your wallet?).

You neglect the very engine that drives free markets: the finding of a price point over time. Throwing in these abrupt disasters you imagine can indeed happen, but usually don't, and again the savvy player plans for bad weather. That's HOW they set the price.

I would argue these disasters have happened, are happening, and are eternal. Many things work properly, or else we'd be in absolute chaos, obviously. But from my standpoint is the theory is useless if it can't be used to make useful predictions. At any given time, someone is engaging in some sort of shennanigans in some financially significant part of the market.

If computers implemented a free market according to the simple algorithms that we feel they should be using, perhaps economics might have some universality to it (or at least to a universe of sane actors). But, economics is a SOCIAL science. Actors play a very significant role in how it plays out. While it seems like actors always act in their self-interest, that is not very helpful. One's greater self-interest might involve behaving in a way that appears locally irrational, but might make sense if all information necessary were known. In other cases they actually don't understand their own self-interests very well and are engaging in destructive behavior because they think it will produce some result they are looking for.

Re: Weep for humanity.

[Anonymous Coward]

There was a day, not that long ago, when most American families had real savings. Now most of them have net debt.

Again, I ask: how did that happen? I leave it as an exercise for the reader.

Overspending by people who don't know how to manage money, attributable to the shoddy state of financial literacy in this country?

Re: Weep for humanity.

[ArmoredDragon]

No, actually economies never grew to the scale of what we had today until people were able to borrow. What it comes down to is this: You as an individual likely have a very difficult time securing the capital needed to, for example, start a new business. So how do you do that? Simple, you borrow. Most businesses that exist today, even the most profitable ones, started out borrowing.

Prior to that, the method of securing capital was by waging war on your neighbor and keeping the spoils of war, and then using those spoils to build yet another more powerful army to do the same again to an even more powerful rival. That was called feudalism.

Re: Weep for humanity.

[Jane Q. Public]

Or the supplier was in a position to either sell for below cost, and cut his losses, or not sell at all and run out of money quickly. This can go on for extended periods of time (because of these rainy day funds) before someone is forced to relent. It is entirely possible for large players, or players on unequal footing (say they have influenced their government to totally ignore laws which increase their costs) to arbitrarily undercut fair competitors just to run them out of business and ultimately corner the market

That is where the role of government comes in. Even Adam Smith recognized this, and called for a robust body of antitrust laws, which prevent monopoly or oligopoly from happening.

And we have such laws. They haven't been enforced often under Bush then Obama, but we do have those laws.

So no, the situations you describe do not normally occur in free markets, because that is one of government's few legitimate roles in the economy: to keep people playing within the free-market rules.

"Dumping", as you describe, by selling goods below cost, is generally illegal in free-market countries.

Again I will admit that U.S. has been lax at enforcing anti-competitiveness laws; still the laws exist. It's a failure of government, not of the concept.

Re: Weep for humanity.

[ArmoredDragon]

IMO what really triggered the depression was the Smoot-Hawley tariff act. There have been stock market crashes worse than 1929 a few times before and since, and yet none of them resulted in anything like that.

The thing is, domestic production and imports rise and fall with one another. If you try to slow one down, you'll slow down the other. Naturally, when Smoot-Hawley hit, imports went way down, and likewise domestic production took a shit. When domestic production took a shit, the unemployment rate climbed to 20%.

Re: Weep for humanity.

[Anonymous Coward]

If this is the case, (economics being religious in nature) then the government would have no business setting rules and regulations that impact the US economy. Church and state first amendment issues aside, if the economy is really so unpredictable, then nothing they do can reliably influence it in the ways that they intend.

Religion is the belief in pixies, unicorns, zombie Jews, and other insane delusions. The only business the government has to be involved with religion is to insure that anybody can practice any idiotic belief they choose without censure, so long as it doesn't interfere with others.

A large amount of economics is based off of an underlying 'theory' which goes unquestioned and is protected from challenges--if this sacred theory predicts a series of events and said events don't come to fruition, it is blamed on things such as a 'failure of belief,' 'sabotage,' or 'not enough people clapping to show their belief.' This is, for example, painfully and bloodily illustrated by how things went in the USSR under Lenin and Stalin, when the Soviet Workers' Paradise failed to materialize like it ought.

Part of the reason some people don't think the government ought to be involved too much in economies is because it's like putting somebody in charge of managing a programming project who cannot tell a mouse from a microphone and who happens to have an even more spectacularly useless nephew needing a job--regardless of if the idea itself actually would work, these certainly aren't the people who could make it work.

Re: Weep for humanity.

[Anonymous Coward]

Two decades of deflation haven't benefited savers in Japan.

Deflation benefits - to a certain extent - the rich, which is why advocates for The Rich are always front and center in arguing against inflation. Inflation benefits - as you said - borrowers, profligate or otherwise.

Re: Weep for humanity.

[Anonymous Coward]

But the cost to produce an orange can stay the same, whilst the price attributed to it via the market varies.
That is the definition of you can't define the cost of an orange.

The amount of energy required to push a 1kg shit up a specific hill is always the same. The answers in physics never change. It is definable.
The models of climate science are wonky like economics, the difference being the reason they are wonky. In climate science they are wonky because they haven't gone to enough detail.
The models of economics can only gain the same accuracy by modelling every single human being, rather than modelling a set of different, but uniform in behaviour particles.

One has an infinite number of the same thing.
The other has an infinite number of unique things.

Re: Weep for humanity.

[ArmoredDragon]

Economics is the imperfect and messy business of observing how goods and services are exchanged, and manipulating the system to improve things for the greater good of society. While the government screws it up from time to time, the net result is much better than doing nothing at all.

We've seen the government screw up royally. Smoot-Hawley is a perfect examle; it's analogous to cutting off the patient's head to cure cancer.

Economics is better compared to psychology, which seems like pseudo-science at best. Both deal with unimaginably complex systems that would seem to be deterministic, but yet can be very unpredictable. Economics doesn't deserve to be called a science (in a strict dictionary sense of the word), but that doesn't mean that it isn't worth of serious study.

I'm inclined to say the same about climate science.

Re: Weep for humanity.

[khallow]

You mean a competitive process that is left to anneal for a period of time?

Annealing is an asymptotic process. While that goes on to an extent in most markets, it's not the primary purpose of them.

He knows what he was able to invest that was sufficient to produce the orange. He does not have any idea, or concern, about whether his investment covered the costs from his suppliers (human, corporate or natural).

Even if the above sentences were something we should care about, he could find out from the papers or gossip the above information. And he will care if a supplier changes their prices that they offer for one or more of his inputs.

Nor does he know for t>0 that his costs will be covered by the market price, it may happen he has to sell for a loss. He has some historic data about market prices for oranges that may or may not hold true leading him to believe that he can sell profitably (or he'd probably get out of the business), but at any time that can change arbitrarily. He will then be forced to sell for a loss.

You are using a sense of "know" that is completely irrelevant to the real world. Nor is it a standard we would use for the rest of the sciences. After all, maybe the sky gods are faking all of physics and we'll turn into a frictionless cloud of invisible pink unicorns tomorrow. You don't know otherwise.

All we know about economics for sure is right there. We look at markets of things based on sales prices, not any actual truth or concrete data.

The market is the sufficient standard of truth in this case. Use the right truth-seeking tool for the right job! Also sales prices are concrete data!

You wouldn't use pure philosophy to determine the mass of the electron, you'd use physical measurement and a sufficiently accurate model of the electron for your purposes (an application of "the" scientific method). Similarly, you don't use pure philosophy to determine the price or valuation of an orange, you use a market.

You asserted that at "no level in the universe" can you establish the value of an orange. Markets do that every day at the scale that matters.

Re: Weep for humanity.

[terjeber]

No, he says it isn't science because it doesn't employ the methodology of science. Economy, psychology and astrology are similar in that they can use words that make them sound scientific, but that doesn't make them science. I also doesn't make them invalid subject of an institution of education. A great many things taught at schools are not science.

Re: Weep for humanity.

[khallow]

So what? You have yet to demonstrate that this is relevant. It's worth noting here that the deliberately limited scope of economics (and the various tools, such as markets) tends to filter out most of that "uniqueness" and other complexity just like climate filters out short term weather.

Re: Weep for humanity.

[khallow]

Price is a value. There are other values too, but these don't tend to be readily available to a trader.

Re: Weep for humanity.

[Anonymous Coward]

Electronics are the exact opposite of deflation. Electronics deflation would mean that your 1990 PC would be worth more than a 2015 PC, and both would pale in comparison to ENIAC, which could only be owned by the richest person in the World. Real estate is a better example; owning it has historically been better than trading it for something else. Even if it sits vacant it's worth more in the future in most markets. And if real estate was the only currency the natural result would be a stagnant insular economy; people would hoard land and use it for personal industry but only trade it for other resources under duress.

Re: Weep for humanity.

[Anonymous Coward]

IMO what really triggered the depression was the Smoot-Hawley tariff act.

Smoot-Hawley was passed in the summer of 1930. The US economy was in contraction and the financial system was in free-fall for at least six months before Smoot-Hawley.

There have been stock market crashes worse than 1929 a few times before and since...

JFC, your ignorance of US economic history is stunning. The fact that you blather this bullshit without the slightest qualification should tell anyone reading your spew to mod you as +1 Funny.

Tell you what, why don't you list "a few times" the market crashed worse than 1929-1932 - where the market lost 90% of its fucking value. You fucking moron.

The thing is, domestic production and imports rise and fall with one another. If you try to slow one down, you'll slow down the other. Naturally, when Smoot-Hawley hit, imports went way down, and likewise domestic production took a shit. When domestic production took a shit, the unemployment rate climbed to 20%.

The thing is, you should really stop pontificating about subjects you quite obviously have NO knowledge of. Do you have the slightest clue about how bad you're embarrassing yourself? I'm guessing no, you don't have a clue. Best for you to just STFU.

Re: Weep for humanity.

[Anonymous Coward]

We've seen the government screw up royally. Smoot-Hawley is a perfect examle; it's analogous to cutting off the patient's head to cure cancer.

Ugh. Again with the Smoot-Hawley. All aboard the crazy train! Dumbass.

Re: Weep for humanity.

[Anonymous Coward]

You're confusing borrowing for the purpose of consumption (buying a car, house, etc) vs real investment, such as a farmer borrowing to buy seed or a combine. All of the "bad" borrowing that's being talked about here is the consumptive kind which merely pulls from the future, farther and farther. Once that type of borrowing reaches a critical point, it is going to fall apart, hard.

Re: Weep for humanity.

[Pfhorrest]

The reason to save is so that you don't need to borrow in the future. Not all savings are immediately lent out, and it's only because of inflation that anyone feels like they have to, because savings not invested somehow will be diminished by inflation. Inflation forces people to lend and rewards borrowers, encouraging a society of people constantly scrambling to service their debts, terrified of all their "savings" (that aren't actually set aside, but are being used riskily by others) vanishing with a fluctuation of the market, and a tiny fraction of people with absurdly huge and diversified assets (the big lenders and rentiers) reaping the benefits of all that debt-servicing by other people.

Of course deflation has its own problems too, causing those who have more to get more, more quickly, without having to do anything for anyone.

What we really want is a stable currency, with no inflation or deflation, where people can work, actually save when times are good instead of "investing" their earnings in risky ventures, and then "borrow" from themselves (spend from their own savings) in the future when times are lean.

Re: Weep for humanity.

[Anonymous Coward]

...and suppose the market is an actual fruit market. What is the orange 'worth' at 6.00 in the morning? What is it worth ten minutes before the market closes? What if it's arbitrarily decided to close the market an hour later today, what is the orange worth then? Even the simplest market is impossibly complex and, once your market is the world, suggesting you can scientifically analyse it and develop reliable predictions is laughable.

Re: Weep for humanity.

[Anonymous Coward]

Stars don't care about what's written on them. They're full of hot gas.

Re: Weep for humanity.

[Carewolf]

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)

Precisely this. For my part, this fairly obvious fact is highly likely to account for why inflation is never allowed to stop. Cynical? You bet.

You know 99% of people are not 1%ers right? That means they owe more than they own so benefitting from inflation and even the rich don't worry about inflation because they invest and investments follow inflation. Only idiots with money in mattresses are hurt by inflation.

Re: Weep for humanity.

[Anonymous Coward]

You should talk to farmers about this "fair price" finding.

Re: Weep for humanity.

[jcr]

Saving your money is bad for the economy

WRONG.

Misers are ideal neighbors. By sitting on their earnings, they don't have their money out there competing with yours.

-jcr

Re: Weep for humanity.

[jcr]

Henry Morgenthau, thought Roosevelt was completely insane.

And he was right. Roosevelt did almost as much damage to the USA as Diocletian did to the Roman empire.

-jcr

Re: Weep for humanity.

[jcr]

Smoot-Hawley was one of a series of idiotic schemes. I wouldn't say though, that it did as much damage as Roosevelt's wage and price controls.

-jcr

Re: Weep for humanity.

[Anonymous Coward]

Get your facts straight. They do not have the function of high priests. They act as the Oracle in ancient times.

Re: Weep for humanity.

[jandersen]

Economics fails to be a science, as you say, for many reasons - one being that it makes unrealistic assumptions about the market, such as the idea that infinite growth is possible; and another being that all decisions within economics must by their nature be political. 'Economic science' is simply politics trying to pass itself off as a science, therefore being 'objective' - the truth of it is that the objectivity of economics is limited by the political interests behind the scenes. If your aim is to push capitalism and make the rich richer, you probably don't want to choose a model that looks too much like Marxism, even if it arguably is quite a sensible model in many respects.

Re: Weep for humanity.

[Anonymous Coward]

Economics has a bad reputation because it was overtaken by socialists that only wanted to disguise their ideological bullshit with the legitimation of science. Socialists are scientifically illiterate and do not even believe in objective truth, the truth for them is a matter of opinion, and the only worthy opinion is the one that helps "the cause" at a given point, as it was accurately depicted on 1984 and reflects in all their "social" sciences. That's why they lack the distinct features of sciences, which are falsifiability, the ability to make accurate predictions, and the repeatability of experiments.

In fact, public education in the western world is failing catastrophically despite the huge amounts of money poured into it because it has been hijacked by socialists. Remove those people from the system and all the bullshit from their pedagogues, and students will be raised infinitely better than now. You know their ideology is not suited for an academic background when they openly despise meritocracy or taking exams as "elitism", "sexism" and all other labels they have purposely coined for anything that goes against "the cause", which as far as I understand means taking total control of a country so that they can parasitize the inhabitants forever.

Socialist economy is about looking for ways justifying pouring money on companies that are purposely unproductive, creating money out of thin air as a way to pay debts, stealing from others to serve better "the people", and other "measures" that even a toddler can see are stupid, cheating, and the fastest way to convince the rest of the world to actively avoid doing business with you. That's why socialist and communist countries ALWAYS go bankrupt at match speed.

Re: Weep for humanity.

[Alioth]

I think deflation is oversimplified. Deflation is just a symptom - what's the underlying cause? For example, we have some deflation now, but the underlying cause was a massive oversupply in raw materials, so for everyone (except the miners and oilies) deflation isn't a bad thing. We've not got deflation because people are hoarding money, but because there was a glut of raw materials. Temporarily, while this is going on, we have more spending power (and of course as demand starts to go up again, it corrects).

The positive feedback loop of deflation can't really grow much. We can't stop buying food, electricity, fuel or the other day to day stuff. Also I don't think inflation/deflation (disregarding extreme levels of either) really figures into people's day to day buying decisions. Deflation would have to be pretty damned high to exceed the opportunity cost of waiting to buy something, especially essential goods.

Re: Weep for humanity.

[Alioth]

Surely exactly the same thing applies to deflation? Deflation won't stop people buying something because they need it now, even though they know it might be cheaper in a year's time. So yes - it does disprove the claim (barring extreme levels of deflation). People aren't going to stop buying food or fuel or shelter because they either want it or need it now. The willingness for people to go into significant debt for things they don't really need shows that people don't really think about deflation, inflation or the value of money when they make a decision to buy something. If they did there wouldn't be so many people making minimum payments on their huge credit card debt.

Re: Weep for humanity.

[Anonymous Coward]

You obviously don't know the criteria for a science.

Re: Weep for humanity.

[Anonymous Coward]

No. Deflation destroys the rich and debtors. Those without debt or assets benefit.

Re: Weep for humanity.

[Stuarticus]

I think you will find money lending goes as far back as society.

Re: Weep for humanity.

[Stuarticus]

You're inclined to stick your head in the sand as well then I assume?

Re: Weep for humanity.

[Dog-Cow]

I have no debt that extends past the due date of my bi-monthly bills. I am hurt by inflation because my salary doesn't go up on a regular basis to account for it; thus I am effectively earning less each day. And believe me, I wish I had money to stuff into a mattress. I'm not quite at the "living from check to check" level, but I'd feel more comfortable if I were further away!

Re: Weep for humanity.

[cupnoodleboy]

To claim that well established economics theory is bullshit require strong evidence, but your example failed to supply the evidence for disproving the theory. If you have studied economics, you must have known the concept of elasticity of demand. To highlight the fault in your example, replace the word "electronics" with the word "food ". Certainly, even if everyone know the price of food would become lower one month later, no one can refuse to buy food for one month, since no one can stop eating for one month. This example only shows that the demand of food is mostly inelastic, and your original example only shows that demand of electronics is relatively inelastic. Very few people in developed nations can accept not carrying a mobile phone or not watching TV for a month or longer. But many goods and services in the economy have higher demand elasticity, so the effect of delaying purchase and holding on to the money is very real if there is an expectation of decrease in price.

Your opinion about who can benefit from inflation and who can benefit from deflation is also highly inaccurate. The use of the word "profligate" is especially misleading. The fact is, inflation benefits all borrowers, regardless of whether they borrow the money for building roads or for buying luxury. On the other hand, savers are not the group of people most benefited by deflation. Deflation is most beneficial to people who already have a lot of money, that is, the rich and the wealthy.

Your belief that central bankers want to "rob" people by diluting money is completely groundless, and this view sound like those flavoured by conspiracy theorists. History has shown that no central bank in modern industrial nations want to have high rate of inflation, and policies are enacted to control inflation rate if it becomes too high. Central banks prefer a small inflation rate because according to mainsteam economics theory, a small inflation rate facilitate lending and borrowing, which in turns encourage economics development. In rare histroical cases where there was a very high rate or hyperinflation, for example in Germany during early 1930s, the hyperinflation were always caused by failure of political leadership, not by central bankers.

Re: Weep for humanity.

[Anonymous Coward]

What a bunch of drivel. Not being in the 1% does not mean that they owe more than they own. It means they bring in less.

Investments may follow inflation, but rarely outpace it.

Re: Weep for humanity.

[cyber-vandal]

Sounds like economists.

Re: Weep for humanity.

[Thelasko]

Economics is a social "science".

Correct, economics is a social science. There is even some hard science under there as well (think manufacturing). Money and finance are tools humans have engineered to harness the fundamental principles of economics.

Don't be fooled into thinking economics wouldn't exist without money. It would still exist because there is efficiency to be gained by trading, and that's what economics is really focused on.

Re: Weep for humanity.

[gurps_npc]

Inflation has been stopped in Japan. In the US, it is currently at a very, very low level.

I would argue the opposite of what you seem to think is true - that the government is intentionally not giving us enough inflation.

Part of the issue is that the first quote, while true, is also incomplete and misleading. It leaves out investors and retired folk and implies that a category of 'savers' includes investors, when it really just includes people that invest in low risky set instrument securities (bonds, annuities). Inflation benefits governments, stock investors, and profligate borrowers. Deflation (and low inflation -= aka under 3% a year), benefits people that save cash and equivalents, and people on a fixed income.

This is a valid choice by government, as it encourages people to take real risks, funding real economic growth, rather than safe bets.

Re: Weep for humanity.

[Anonymous Coward]

this 1%/99% narrative erases the middle class, enabling you to ignore them in your analysis, casually refer to their assets as hidden in the mattresses, and say they deserve to lose everything

which is fine, I guess, because most people talking about the 1%/99% thing come from the children of the middle class

Re: Weep for humanity.

[Anonymous Coward]

You know 99% of people are not 1%ers right? That means they owe more than they own so benefitting from inflation

The idea that ordinary people benefit from inflation is a popular myth among the ignorant. It is also completely wrong. People confuses causes and effects, and forget that there is no free lunch.

Inflation does many very bad things that really hurt ordinary people, such as:
1. It prevents monetary policy from being effective as a tool to end recessions (meaning many people lose their jobs and can't get them back, part time workers lose working hours and have to work multiple jobs, meaning more time and expense for commuting and less time for their families), and
2. It keeps ordinary people from saving money to pay off their debts, educate their children, and save for retirement.
3. Capital that is being sucked up or negated to cancel inflation is not available to create new jobs.
4. Government income is effectively reduced, making less available for social programs that help the poor, and making the available dollars not go as far. The same applies to private charities, which are enormously important in countries such as the USA.
5. Retirement pensions fall behind the actual cost of living, greatly hurting the elderly.

Unfortunately, a lot of inflation is artificially generated by misguided social polices, such as minimum wage, and taxes on gas (often justified by claiming "it's for the environment", or "it's for the children"). There are much better ways to help the poor, or the environment, or the children, but the gullible and ignorant prefer simple-seeming solutions that have really bad long term consequences (typically they do far more harm than good to those the most in need of help) . Unscrupulous politicians get elected by selling these policies, pandering to the ignorant to get themselves in a position of power.

Monetary policy is typically used to hide this inflation (one of the reasons so-called liberal politicians tolerate monetary policy, since so many of the policies they sell to the public are inflationary), but of course that simply creates a host of new problems: if you do bad things to the economy, you can't simply sweep the consequences under the table and pretend they don't exist without creating huge long term problems. This should be obvious from the current recession: interest rates are at a historic low and the recession just keeps going, with artificial definitions of "unemployment" being used to hide how bad it really is.

Just as we have artificial definitions of unemployment, so to do we have special interest groups and certain politicians using artificial definitions of "inflation" to hide just how bad things are. The net effect of inflation is everything costs a lot more than the price the market would otherwise set. Basic services such as plumbing or auto repair - services that everybody needs - get priced higher, and only the rich don't need to care about this. The net effect is to consume savings that could otherwise be used to pay off debts and invest in one's future, or one's children's future. Reduced buying power also means less time to spend with one's children, since one must work additional hours.

In short, inflation is bad.

Re: Weep for humanity.

[fyngyrz]

Real costs for the same goods and services -- with the notable, but not very consequential, exception of electronics -- continue to rise at a rate that far exceeds the concurrent value of money. From hamburgers to heating to plumbing to taxes, it's all rising steeply. The value of money is not keeping pace. Nor is the amount of income keeping pace so that the amount of money could compensate for it's reduced buying power. The end result is poorer poor and poorer middle class, while the trickle-up continues at ever-increasing rates in every sector.

The system is badly broken, and it is heading towards a critical failure that will change society one way or another -- either it will be allowed to happen and the very nature of our streets and homes will change, or we'll save it by moving to something along the lines of Basic Income. But the sure thing is that we can't keep on going like we are. We fell off the cliff some time ago, and now the ground is coming up fast.

Re: Weep for humanity.

[Perky_Goth]

Yes, you could be doing as well as Europe right now! Get a grip.

A Nobel, eh?

[fustakrakich]

They should be handing them out to every scammer on the subway

It should be obvious

[The Real Dr John]

Economics is not a science. It is a study of human behavior like Psychology, and as the article points out, it has heavy political overtones. There was no Nobel Prize in Economics until 1969. Maybe it is time to retire that particular prize.

Re:It should be obvious

[schneidafunk]

Psychology is a science, although a fairly new one.

Re:It should be obvious

[Anonymous Coward]

Psychology is also heavily sample biased. From what i gather, a lot of psychology is done on adolescent/your adult college students required to take a psychology class...

Re:It should be obvious

[Anonymous Coward]

There was no Nobel Prize in Economics until 1969. Maybe it is time to retire that particular prize.

I blame these fucking Millennials. Watering down everything man man has fought for.

Shout out to Marie Currie!

Re:It should be obvious

[Anonymous Coward]

It's also not always easy, or ethical, to perform certain psychological tests.

For example, if I wanted to test that severe child abuse was linked to a certain behavior later in life, is it ethical for me to abuse a bunch of people then compare them to a control group later?

Same with economics. It can be difficult to perform a study, and in some circumstances it can be outright unethical because of the damage it would cause.

Re:It should be obvious

[jgtg32a]

Yup they call them WEIRD

Western
Educated
Industrialized
Rich
Democratic

Re:It should be obvious

[HornWumpus]

Economics is as much a science as psych or sociology.

Re:It should be obvious

[Anonymous Coward]

"It is a study of human behavior like Psychology"

Except when its not.

Science on reasoning:

https://www.youtube.com/watch?v=PYmi0DLzBdQ

Protectionism for the rich and big business by state intervention, radical market interference.

https://www.youtube.com/watch?v=WHj2GaPuEhY#t=349

Wikileaks

https://www.youtube.com/watch?v=ABDiHspTJww&feature=youtu.be

Re:It should be obvious

[roman_mir]

Maybe it is time to retire that particular prize.

100% Especially given that in order to get those prizes a person has to present complete lack of common sense and total misunderstanding of economic principles that guide markets but instead they have to prop up government ideas on how to run the world.

Federal reserve bank is a great example of complete lack of sound economic principles by the government and pseudo-government agencies like that one. Will they raise interest rates after 7 years of 0-0.25 rate range, will they not, will they decide at the last moment....

The reality is that 7 years of 0% interest rates have put the USA economy onto a stimulus that cannot be removed. The entire USA economy now depends on 0 (and even sub-0) rates of interest provided by the Fed, which would never be possible on sound money (gold). Nobody would lend you gold for nothing, however printed (electronically generated) money for nothing is no problem for governments.

Treasury is supposed to have treasure in it even to be called treasury, what if instead it has no treasure and only debt? Shouldn't it be called Debtory?

Debt ceiling that the Congress votes on.... what a joke! To believe that raising the real debt ceiling is up to Congress as opposed to the buyers of Treasuries is nonsense. To believe that getting another extension of limit on the credit card is 'paying our debts' is nonsense. Yet millions of people live by this nonsense ... as long as they can until they can no more, because the real creditors (those who manufacture stuff and give it to you for your fake money and fake IOUs) keep propping you up ... until they no longer do. China decoupled from the USD, as the USD was in the bubble, now as the USD will go down, Chinese Yuan will go up instead, China will not be there to save US dollar and will not buy US debt, it's selling it already.

There are people who understand economics and then there are hacks (like Krugman) who understand which way the bread is buttered.

Economics is not science, it is a set of rules that are very simple and that work over long and short time periods, but they do not fail to work.

Get rid of your manufacturing and you will lose your economy. Get away from real money and you will lose your manufacturing. Promise something for nothing and get elected that way and you will end up getting away from real money. It's not a secret in any way, it's very much common sense, it's just common sense is not that common.

Re:It should be obvious

[The Real Dr John]

If you broaden your definition of science to include all fields of human investigation, sure. But if you mean a science like biochemistry or physics, where you do controlled experiments, then no, it is not a hard science. Some people differentiate "hard" from "soft" sciences. OK, by that definition economics could be considered a soft science. But as the author of the article points out, there is much more political bias in "economics research" than in most sciences (where some bias is often unavoidable, but still can be manageable with proper controls). Really, economics is the study of trends in economic activity, but often strays into making pronouncements on political policy, which seems an awful lot more like politics than science.

Re:It should be obvious

[Anonymous Coward]

Psychology should not be considered a science in the same breath as *real* science.

Human Psychology is a moving target and is influenced by changes in genetics as well as changes in socialization of children / adults. Even a 1 day old child varies from all other one day old children and the difference begin to multiple from there on.

Real science is based on delivering results that have a hope of being repeatable. Psychology will never establish "laws" of behavior - especially if humans are made aware of such "laws".

Psychology may be useful as a tool - the same as options pricing models are useful to economists but neither can produce accurate predictions the way physics, chemistry, and the real science can.

Re:It should be obvious

[ArmoredDragon]

There's a lot of psychology that is repeatable, like this for example:

https://en.wikipedia.org/wiki/...

Re:It should be obvious

[phantomfive]

When I started reading psychology papers, I was shocked to discover that many studies are done with a sample size of less than 10.

Re:It should be obvious

[HornWumpus]

The Chinese currency peg wasn't to help us. It was to keep Chinese industry chugging along at 100% utilization. It was certainly an aggressive economic act. Printing dollars like mad was the only response available.

The Yuan strengthening is the correct market mechanism to bring trade into balance.

Go back and re-read 'Wealth of Nations'.

Re:It should be obvious

[khallow]

Economics is not a science. It is a study

A systematic, empirical study of a subject is a science by definition.

it has heavy political overtones

So does climatology and pharmacology.

human behavior

You forgot to wiggle your fingers mysteriously while you typed that. And I guess economic systems that don't have significant human involvement like HFT or the ecology of flowers and pollination can be safely ignored.

Re:It should be obvious

[Misagon]

And the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is not a Nobel Prize.

As the full title says, it was instigated not by Alfred Nobel but by Sveriges Riksbank - the Swedish Bank, the central bank of the Swedish currency.
And this was done in 1969, 68 years after the first Nobel Prizes in natural sciences and literature.

Re:It should be obvious

[KillAllNazis]

Depends on the economic system. What is taught as economics is largely a study on the given economic model. It gets circular and the premises of the model tend not to get challenged, and certain concepts get reified and detached from physical reality. Hence you get effects like Luddism where labour-saving technology (the point of technology is to reduce labour) to keep jobs. And you get laws against digital copying because of precepts of remuneration and management of scarcity by monetization even when no scarcity exists.

Re:It should be obvious

[darkHanzz]

A systematic, empirical study of a subject is a science by definition.

Nope, falsifiable experiments are. That's what allows use to make predictions.

Re:It should be obvious

[roman_mir]

The Chinese currency peg wasn't to help us.

- like I said, common sense is not that common. Obviously the Chinese currency peg was not meant to help the USA economy, but it did have the effect of propping up the USA economy by forcing the Chinese central bank to print the Yuan to buy the USA paper (bills, bonds, dollars) to keep the peg going.

Printing dollars like mad was the only response available.

- common sense is not that common. USA printing dollars has nothing to do with the Chinese, it started with the invention of the Federal reserve bank and the act of 1917, allowing the Fed to monetise USA Treasury debt. USA has been printing dollars for near a 100 years now, causing the depression that was resolved in 1921, causing the 1925-1929 bubble that led to the bubble bursting, causing the Great Depression that was the result of government propping up the economy after the bubble collapse, causing the 1971 default on the gold dollar, etc.

The Yuan strengthening is the correct market mechanism to bring trade into balance.

- The strength of Yuan will no longer depend on the weakness of the US dollar, now that the peg is removed.

Go back and re-read 'Wealth of Nations'.

- ha, get some common sense before telling others what to do.

Re:It should be obvious

[codeAlDente]

Yes, maybe someone will chime in with some findings from economics that are repeatable? The one that pops into my head is the collapse of fiat currency systems with a half-life of ~40 years.

Re:It should be obvious

[Anonymous Coward]

Economics is much more than the study of trends in economic activity. The error that many of the people here make is thinking about economics as just consisting of macroeconomics and perhaps some finance. People consider economics a failure because macroeconomists do a poor job at predicting the economy, but of all of the economic disciplines they have the most difficult problem due to the complexity of an entire economic system and the low number of observations available. Even if economists somehow were able to find some "true" economic model that drives economic systems, it is going to be subject to the outcomes of stochastic processes. Many other fields under the umbrella of economics have it much better with the availability of rich datasets and consequently do a much better at developing models that have true predictive power and enrich our understanding of behavior of individuals, firms, and groups. Why a central bank would elevate economics to the status of awarding a Nobel prize is because they recognize just how valuable the field is to their work. It's also worthwhile to point out that like in other sciences where errors are often made and eventually corrected by more research, economics eventually finds and corrects its errors through additional research.

Re:It should be obvious

[codeAlDente]

Astrology is a systematic, empirical study of the relationship between the alignment of planetary bodies and the observable traits and behavior of humans. But I wouldn't call astrology a science because its predictive power is limited.

Re:It should be obvious

[ITRambo]

All three of those are liberal arts that are subject to change as differing ideas are brought into the fold. There are no unwavering facts in the liberal arts, such as one plus one equals two, just observations and predictions based on observations. Hard science includes irrefutable facts along with solid theories, such as e=mc2.

Re:It should be obvious

[Anonymous Coward]

Nope, Economics is a religion.

Remove all knowledge of science and religion from the world, including economics.

Now start rediscovering everything. Science, math, etc (even psychology) will still look the same as it does today (at some point). Religion and economics won't. They may get close or they may be completely different as both would completely depend on people's beliefs. Economics, like religion is pure man made bullshit. It's not a science and it has nothing to discover. It's a bunch of bullshit rules we've put in place to keep the current system moving forward.

Re:It should be obvious

[khallow]

We routinely do falsifiable experiments in economics.

Re:It should be obvious

[khallow]

Astrology is a systematic, empirical study of the relationship between the alignment of planetary bodies and the observable traits and behavior of humans.

No, it's not.

Re:It should be obvious

[Anonymous Coward]

You guys complain about economics, psychology, and sociology?

Be thankful you haven't seen literary science, gender studies, political science, semiotics, argumentation studies, or critical thinking yet!

Re:It should be obvious

[khallow]

You ought to run that experiment and come back to us. My prediction is that economics will be a whole lot less random that you think.

It's a bunch of bullshit rules we've put in place to keep the current system moving forward.

In other words, it works.

Re:It should be obvious

[Anonymous Coward]

Economics is a huge field, encompassing mathematics, experimental science, and other methodologies.

Most papers in biology aren't reproducible, either. There's plenty of bad science and improper application of theory to go around in academia. Although I think economics is especially prone to bad methodologies and poor application, largely because it seems more accessible than it really is. Neither the public nor scholars are sufficiently skeptical and rigorous in their treatment of economics.

The irony is that this fact is reflected in how casually people dismiss the field of economics. Maybe if people understood the limitations to modern scholarship, and how much hype there is in many fields, economics wouldn't look so bad.

I would also point out that medicine as practiced by most physicians is not a science either. They use the fruits of science, but their field is based on an entirely different method of knowledge acquisition and application. Yet we don't regularly fault doctors for being "unscientific". Nonethleless there's plenty of science undergirding modern medicine, and plenty of physicians increasingly using scientific methodologies to improve their practice. Notably, these days most Nobel Prizes in Physiology or Medicine are awarded not to M.Ds, but to Ph.Ds for their discovery of physiological mechanisms.

LIkewise, the Nobel Prize in Economics (which we all understand is a recent creation not in Nobel's original trust) don't go out to random people. They tend to be awarded to economists who's theory was solidly grounded in mathematics, not for the punditry and application you are so often exposed to in the media. You should actually read the works. It's fascinating stuff. But it also shows how huge the gulf still is from theory to application. Not unlike as with physiology and medicine.

Also, you've failed to explain why human behavior, in both the particular and the aggregate, isn't governed by natural laws. Psychology has rightly earned a bad reputation for poor science. But the reason why Freud is so famous is because he was one of the first people to posit that human behavior was grounded in the physical world, is susceptible to rigorous description using scientific methodologies, generate theories based on those ideas, and create a protocol for applying them. Before Freud few people had done all of those things. Apparently not even you have made that _enormous_ leap in thinking.

Re:It should be obvious

[Anonymous Coward]

"We routinely do falsifiable experiments in economics."

What would falsify private property, copyright and patents? Nothing. They are a tautology.

Re:It should be obvious

[Anonymous Coward]

Yes it is. Psychology 101: Smart people do Smart things. Dumb people do Dumb things. Good people do Good things. Bad people do Bad things.

Re: It should be obvious

[Anonymous Coward]

Gold production can't expand as fast as the general economy. Inflation would be rampant.

Re:It should be obvious

[khallow]

What would falsify private property, copyright and patents?

They aren't theories and hence, it doesn't make sense to speak of falsifying them.

Re:It should be obvious

[Anonymous Coward]

Science is a method that can be applied to any field.

end of debate?

Re:It should be obvious

[The Real Dr John]

Khallow, your definition of science as any systematic study is incorrect, because to astrologists, they think they are doing a systematic study. As a scientist, I think a more rigorous definition would be a systematic study based on the scientific method which includes falsifiability as per Popper. How do you falsify a theory in economics? You can argue against the tenets put forward, but you can't do controlled experiments in an attempt to see if the null hypothesis is true or false.

Re:It should be obvious

[Anonymous Coward]

No, it's not.

Typical Leo!

ducks

Re:It should be obvious

[edremy]

Depends. I've seen attempts by astrologers to come up with a set of relationships that's both systematic and testable. I would argue that those attempts approach scientific hypotheses.

Now, they uniformly *fail* those tests, so even if they are potentially valid scientific hypotheses, they're wrong and thus can be discarded, but that doesn't make them non-scientific in the first place.

Re:It should be obvious

[Larry_Dillon]

It's funny that we give them the names "hard" and "soft" sciences when it's much harder to get repeatable results in soft sciences,

Re:It should be obvious

[khallow]

Khallow, your definition of science as any systematic study is incorrect, because to astrologists, they think they are doing a systematic study.

Why do astrologists' opinions invalidate the definition of science?

As a scientist, I think a more rigorous definition would be a systematic study based on the scientific method which includes falsifiability as per Popper.

Which is done in economics too.

How do you falsify a theory in economics?

The same way you invalidate it in any other science under the Popper scheme.

You can argue against the tenets put forward, but you can't do controlled experiments in an attempt to see if the null hypothesis is true or false.

Yes, you can. There's a lot of experiments in economic games, for example.

Re:It should be obvious

[khallow]

If a field makes assertions that are always falsified with a little effort, then that's a strong indication they aren't a science.

Re:It should be obvious

[jcr]

Printing dollars like mad was the only response available.

You're confusing who was responding to whom. The Fed has been on a money-shitting bender since Volcker left, and the Chinese (like pretty much every other country) were inflating their own money just to try to keep pace with the US dollar.

-jcr

Re:It should be obvious

[wabrandsma]

An interesting reaction to Joris Luyendijk in The Guardian, is from Noah Smith on his blog Lazy econ critiques:

It's Econ Nobel season, and so someone needs to do the job of standing up and repeating all the old disses. This year, it's Joris Luyendijk in The Guardian. [...] Anyway, this litany of critiques, repeated ad infinitum since the crisis, strikes me as mostly pretty lazy. There are good critiques out there. These are not they.
That said, I like Luyendijk's idea of adding a general social science prize to the Nobel roster. Nobels are silly anyway, so why not have one for every field? While we're at it, how about one in math and computer science, and one in psych/neuro/cognitive science? And one in visual arts? And one in writing snarky point-by-point rebuttals in blog posts?

Re:It should be obvious

[flink]

I would also point out that medicine as practiced by most physicians is not a science either. They use the fruits of science, but their field is based on an entirely different method of knowledge acquisition and application. Yet we don't regularly fault doctors for being "unscientific".

I always thought of my doctors as "meat mechanics": they listen to the engine and pound on things and to them to try to figure out what's wrong, and then take a stab at fixing the problem based on experience and various field repair manuals. Occasionally you'll require the intervention of an engineer (surgeon), but if I ever find myself talking to a scientist about the state of my health, I'll know I'm screwed.

Re:It should be obvious

[moeinvt]

I think you're misunderstanding the purpose of the Federal Reserve Bank. This institution exists only for the purpose of enriching, protecting and expanding the influence of the global banking cartel. The economic principles are very sound.

1. Create money out of thin air, loan it to a sovereign government and collect interest on the loan.
2. Ensure that member banks can never go bankrupt by serving as a lender of last resort.

The Federal Reserve was created by bankers for the exclusive benefit of bankers. Fed policy only seems insane or unsound if you assume that this monetary system was set up for the purpose of facilitating real economic activity without preference or bias.

They don't care if they ruin the USA economy and cause a crash of the dollar. It's all funny money that they conjured out of thin air anyway. What they really want is to make sure that they end up with all of the tangible assets which do have real value. Look at how much real estate they were able to steal in the wake of the 2008 crash.

Re:It should be obvious

[bluefoxlucid]

Sort of. I've taken a more scientific approach to economics in my theories of wealth, which are on the whole inviolable; I handwave away market dynamics a lot, since market dynamics tend to converge on correctness in the same way pressure systems converge on correctness--raising the pressure or temperature in one area of a pressure system doesn't instantly make the whole container follow the ideal gas law and experience the same pressure, but rather causes a lot of shifting. The difference is markets are *always* shifting, never static (the same can be said of pressure vessels, though).

Most economists are shopkeepers. Land theory of value, labor theory of value, subjective theory of value, what is all that shit? It's a bunch of talk about "blah blah labor blah blah work done blah blah THUS THE PRICE TAG IS THIS MANY DOLLARS". That's all they want to talk about: how many dollars something sells for. It's idiotic.

I started writing an economics theory of wealth, talking about productivity, labor time investment, how all that changes, and what it does to a society. It's about as valid as evolutionary biology, as a theory; obviously, my theories will be superseded by other theories, which will themselves be superseded, and extended, and otherwise adjusted or built upon. Still, I work on bare truths only violated by human effort, in the same way you can violate survival of the fittest--that is, survival of the biological variations and mutations which out-breed the others--by intent and animal husbandry (which we routinely do, redefining "fitness" as "useful to human purposes, but not particularly likely to survive in the wild").

The most basic, fundamental concept is simple: labor costs drop. Everything--fuel production, transportation, material production, equipment operation, work done--is labor-driven. A 100% self-maintaining, self-fueling, self-operating system uses zero labor; we don't have any of those yet. Thus we find ways to produce fuel and materials cheaply, to use cheaper fuels and materials, or to use less fuel and materials; and we find ways to directly employ less labor.

Hunter-gatherers worked 15-20 hours per week to feed every 1 person. Modern agricultural workers spend something like 27 hours per year (actually less) to feed every 1 person. That's a lot of free labor time to build rockets and send Buzz Aldrin to the moon.

Hunter-gatherers could also produce enough food for 135 million humans, total, in theory. As food became scarce, they'd have had to spend more time foraging to scrounge up enough food: instead of 20 hours for 1 person, those last people now require 30 hours to find enough food, then 40, then 60. That's what scarcity is: to produce more units of output, you need more than a proportional increase in labor--10% more output requires more than 10% more labor. Sometimes the labor is impossible: we can fly to the stars, but do we have the labor-hours to produce the materials, fuel, and food to operate a space mining initiative?

I've explained why we have welfare, why welfare systems became possible, what wealth is, what determines buying power and inflation and so forth, and even produced the theory of supply-and-demand and the theory of scarcity as mere consequences and observations of the economic theories I've developed--the most fundamental economic ideals of merchant-economists, that they can sell you crap for more money if you want it badly enough, are mere consequences to my mind. I can even tell you why diamonds are expensive.

Merchant-economists should be mindful of real economics; the problem is nobody has written a real theory of economics by this point in history. Economists are all wandering around in loincloths wearing body paint.

Re:It should be obvious

[Thud457]

notice that economists aren't even on the scale
oh god, I just ob xkcd'd. I feel so dirty...

Re:It should be obvious

[phantomfive]

But if you mean a science like biochemistry or physics, where you do controlled experiments, then no, it is not a hard science. Some people differentiate "hard" from "soft" sciences.

Where do you categorize astronomy in that way of looking at things?

Re: It should be obvious

[Anonymous Coward]

They are most definitely NOT liberal arts. The liberal arts include mathematics, literature, chemistry, history, physics, etc. Sociology, psychology, economics and their ilk are social sciences.

Re:It should be obvious

[HornWumpus]

They had to inflate with the dollar or their peg wouldn't work.

They set a peg, we cranked the printing presses up to 11, they also had to print as we had a shared monetary policy via their peg. These are moves/countermoves in economic war.

Re:It should be obvious

[HornWumpus]

Propping up our currency did not prop up our economy. It shit on our production/manufacturing while keeping Chinese goods cheap.

As you ironically say, 'common sense is not that common'.

Re: It should be obvious

[Anonymous Coward]

1+1 isn't always equal to 2. Consider 1.4+1.4=2.8. Then when you round to the nearest integer you're left with 1+1=3. For a less contrived example, consider the real numbers modulo 1 (the remainder when divided by 1). So our numbers are in the interval [0,1). Arithmetic done this way can't even talk about the number 1, since it's actually the number 0 mod 1.

Re: It should be obvious

[HornWumpus]

The 'liberal arts' definitely don't include any sciences. Note the word 'arts'...

Re:It should be obvious

[fyngyrz]

Psychology is a science, although a fairly new one.

Yes? Freud or Erikson? Psychosocial or psychosexual or psychoanalytic? Or primal screaming? Regression therapy and "repressed memories"? Momma's skirts and "everything is sex"? Standardized personality tests that are based on mid 20th century, middle-American groups of minimal sample size?

The only thing really "scientific" about psychology is its misuse of statistics to apply a behavioral theory that has some statistical traction, to the individual who may not fall into that theory's particular use of metaphor.

Psychology must start from this basis: Knowing how the mind works. But the fact is, we don't know how the mind works.

Ergo, psychology is something else. IMHO, that something else is significantly more akin to religion (by which I mean formalized superstition) than it is to a science that actually produces worthwhile conclusions.

Let's review science in a nutshell: Idea, prediction, test, data, peer review resulting in reliable, consensual, repeatable results... or right back to drawing board, folks.

Now psychology: a veritable cornucopia of ideas, consequent prediction failures, massively disjoint results, outliers and exceptions everywhere, fad driven and reminiscent of nothing so much as a pendulum that with a colony of rabid, highly kinetic squirrels nesting on the pendulum.

Science? No. The word we use for this kind of nonsense is "bunkum."

Re:It should be obvious

[Anonymous Coward]

People have been systematically trying to figure out the inner workings of the human mind since the ancient Buddhist and Greek philosophers. Sadly, modern psychological theories aren't objectively much better than what they had 2300 years ago. A modern counselling session probably has the same positive effects as a chat with the parish priest would have had 200 years ago. The only "new" thing we have is some psychoactive drugs, and they still aren't really sure how they work on a molecular level.

Re:It should be obvious

[fyngyrz]

If you broaden your definition of science to include all fields of human investigation, sure.

Science is a method. When the only results of the method you can generate iare cloudy statistical results that may, or may not, apply to any specific instance you actually need to, or are trying to, understand, then you have not done anything useful or new, scientifically speaking.

On the other hand, if you can convince some moneyed party to part with same in following your cloudy statistical results, why then you do have something useful. This is the basis for every psychology shingle ever hung out, and every economic theory more meta than the math for interest and debt put on the table (which is really more simple math than economics anyway.) But you still have not done worthy science.

Re:It should be obvious

[fyngyrz]

Why a central bank would elevate economics to the status of awarding a Nobel prize is because they recognize just how valuable the field is to their work.

  Why a central bank would elevate economics to the status of awarding a Nobel prize is because they recognize just how valuable the field is to defrauding the general public.

FTFY

Re:It should be obvious

[fyngyrz]

Yeah, but you have to say that very, very softly.

Re:It should be obvious

[Anonymous Coward]

Did you even read this? The very link you sent me has multiple conflicting, qualifying and doubtful statements.

You don't go to a page on hard sciences and see a debate about if the theory is even remotely true. Yet, there it is, right on the page used to "prove" the reliability of social sciences.

This theory is full of wishy-washy statements that make hardly any sense compared to measuring a chemical reaction or other physical process. "Hard" and "Soft" sciences are not even in the same ball park when comparing the level of repeatibility, and predictability.

Re:It should be obvious

[Anonymous Coward]

I don't know that modelling economic systems (simplified, abstracted, self-contained) is really an "experiment". You can only test your understanding of your own toy model. Fun in a SimCity kind of way maybe but largely a waste of time.

Re:It should be obvious

[Anonymous Coward]

Why? Nothing about the Method has a success rate requirement. I'd argue they are just bad at science.

Re:It should be obvious

[Jhon]

You would need to be crazy to agree to be part of a psychology study!

Re:It should be obvious

[Anonymous Coward]

Psychology is a science, although a fairly new one.

Psychology lacks any coherent set of theorems. It's not a science, unless you perhaps are looking at physiological psych or maybe cognitive psych. God knows, clinical psych is little more than phrenology with statistics appended.

Re:It should be obvious

[Anonymous Coward]

Surgeons are just mechanics with smaller tools and steadier hands. Engineers build from the ground up.

Re:It should be obvious

[phantomfive]

Every once in a while around here I see a poster saying:
"Depressed? Stanford will pay you to let us study your brain! You will not be harmed!"

Re:It should be obvious

[Anonymous Coward]

Astrology is a discredited science because it's underlying theories have failed to withstand scrutiny.

Much like Alchemy, Numerology, and most folk medicines. Or to a vastly lesser degree Newtonian Physics (which is known to be incomplete but is close enough for engineering in enough real world cases that it still gets used).

Re:It should be obvious

[roman_mir]

Propping up our currency did not prop up our economy. It shit on our production/manufacturing while keeping Chinese goods cheap.

- propping up USA currency provided USA with a way to buy cheap Chinese produced goods. No, it did not prop up your economy, it propped up your consumption and it destroyed your economy. However the Chinese did not do this in vacuum, USA got off the gold dollar (defaulted on the gold dollar in 1971) because it was printing so many dollars for decades prior to 1971 and it could not pay in gold for its past spending.

USA destroyed its economy by destroying its currency. At the point of currency default (1971) the expansion of the money supply was set in stone. That is what destroyed USA economy. Common sense is not that common. Once USA destroyed its own currency, manufacturing was going to leave one way or another, since no real savings can exist in that environment.

China gave you plenty of rope to hang yourself with, you took the rope, wrapped it around your neck and kicked the chair of sound money from underneath yourself. The rope was Chinese, but you put it onto your own neck and kicked the chair out yourself.

Re: It should be obvious

[dryeo]

liberal arts
noun
plural noun: liberal arts

        North American
        academic subjects such as literature, philosophy, mathematics, and social and physical sciences as distinct from professional and technical subjects.

2. : college or university studies (as language, philosophy, literature, abstract science) intended to provide chiefly general knowledge and to develop general intellectual capacities (as reason and judgment) as opposed to professional or vocational skills.

The liberal arts (Latin: artes liberales) are those subjects or skills that in classical antiquity were considered essential for a free person (Latin: liberal, "worthy of a free person") to know in order to take an active part in civic life, something that (for Ancient Greece) included participating in public debate, ...

Quotes from Google, Merriam-Webster and Wikipedia

Re:It should be obvious

[Anonymous Coward]

Psychology is (potentially) a science, if done right. Economists make provably false assumptions about human behaviour (eg people are rational agents), misapplies maths and then proclaims the results as universal truths.

Behavioural economics is getting closer to what might be considered a science, but mainstream (political) economics isn't even close.

Re:It should be obvious

[multimediavt]

Astrology is a systematic, empirical study of the relationship between the alignment of planetary bodies and the observable traits and behavior of humans.

No, it's not.

Correct, it is not. Astrology was a system established to explain human traits based on a quaint assumption that the stars, planets and comets had something to do with it. Astrology was a (misguided) way of explaining where human traits come from. Today, we know that some traits are inherited and some are learned from the environment/society we live in and are exposed to, thanks to real science and empirical study. Astrology is hokum, but it makes the less-scientifically minded folks think their being scientific; in an ancient Greek or Chinese way. Astrology is as much a science as reading tea leaves or goat entrails to predict the future.

Re:It should be obvious

[riker1384]

Tom Lehrer on the subject of sociology as a science: https://youtu.be/gfZWyUXn3So?t...

Re:It should be obvious

[KGIII]

I just sat here for five minutes, at least - real world minutes and not internet minutes, pondering the types of people who would respond to that advertisement. Wow... I have nothing to contribute except that. I hope they have a 1-800 number. I'd actually pay to be the person to answer that telephone.

Re: It should be obvious

[KGIII]

I'd actually pondered returning to academia to get my Philosopher of Mathematics doctorate. It's really the highest order you can have as a mathematician, I suppose. I sobered up... But I thought about it for a while.

Re: It should be obvious

[KGIII]

Those aren't 1. Rounding means you're using a substitute value. The integer given was one (1) and, really, 1+1=0. If you're given an integer then you use the integer. Otherwise you're doing estimates and not mathematics. I suppose you'll want to debate this? *sighs* I have the time but I'm not sure I have the interest. Put it this way, if you could prove otherwise you'd be the one getting the Nobel. 1 + 1 = 0 every single time. 1 !== 1.4. 1 == 1.

Re: It should be obvious

[KGIII]

That should be 1 + 1 = 2... *sighs* I'm not even drunk. I'm not even high. Well, not very. I do have a distraction though. So, I'll blame it on that. Damned females! They'll be the ruination of us men!

Re:It should be obvious

[KGIII]

To add to this, I really think we need to strictly define (and where that line is should be open to debate and subject to review) between the hard and soft sciences. Don't look to me for answers. I'm a maths geek. I'm not a scientist. I tell scientists that they're wrong. (No, I've never once told a scientist they were wrong based on math or anything really, I just like the saying.)

Re:It should be obvious

[KGIII]

And that is my favorite. How appropriate that I scroll down and read that comment after my last comment. Thanks. You win the Kewpie doll.

Re:It should be obvious

[KGIII]

I'll opine. It's fairly heavily wrapped with astrophysics. I'd call it a hard science. Lots of theory and lots that is falsifiable. Yeah, hard science. It is also really heavily intertwined with physics, as mentioned, and I don't really see how you can truly separate them so, yeah, hard science it is - for me. I'm not an authority, however.

Re:It should be obvious

[KGIII]

There's the old joke about the gynecologist who quit working as a doctor and went to school to become a mechanic. The final test comes and he's working for hours. He finally finishes and the instructor comes over and tells him that he has passed even though it took him an extra eight hours. The gynecologist cum mechanic asks why that's a problem. The instructor tells him that while he did a fine job that's the first time he's ever seen anyone do an engine swap through the exhaust pipe.

Re:It should be obvious

[phantomfive]

Since it entertained you that much, I uploaded a picture I took of one of them. They've been posting those for years, but some are more entertaining than others.
Every time I see them, I am reminded of the giant poster that came with Maniac Mansion.

Re:It should be obvious

[KGIII]

That is AWESOME! I wanna answer the phone! I soooo wanna answer the phone. I showed it to my company/companion/lady friend and she agrees. Answering the phone would be absolutely awesome if you did so with the right mindset. I'd pay them to let me answer the phone. They'd probably want to study me, though. :/

Also, I've never played or seen the game. I'm not really much of a gamer, I'm afraid. I absolutely want one of those signs. I'm on the road so I may well have to swoop into town and acquire one in the dead of night. That is awesome! 200 bucks doesn't seem like a lot of money though. I wonder how many hours it is? Also, free MRI? I wonder if you get to keep the records. I've seen a friend's MRI on DVD. It was good fun to play with and the software built in was cool. I had no idea what I was doing but I did fun things with it.

Yes, yes I am a five year old child. I'm just old for my age.

Re: It should be obvious

[dryeo]

And someone will tell you that philosophy has nothing to do with mathematics.
Always have found it interesting how language has changed over the years.

Re: It should be obvious

[KGIII]

Everything involves math. ;) But yeah, the term is fairly archaic but the field still deals with a lot of fundamentals and theoretical pursuits and does indeed involve naval gazing. After all, how many is one half of infinity? Of course, infinity is conceptual and does not reflect reality but even a theoretical should be quantifiable, no?

If you're at all familiar with the few non-insane posts I've made then you'll understand my bias towards math being the sum (heh, I made a funny) of all things. Also, pardon my light hearted discourse. I've reached a new and sudden realization and have achieved a greater state of mind because of it, thus I'm content which is, to my mind, even better than happiness.

An added bonus is that it involves a real, living, human, female who is many years my junior and quite attractive. That might be something maths can't quantify. Were I a philosopher of mathematics, I'd have a theory. Actually, I do, but I shan't ruin it for me nor bore you.

Re:It should be obvious

[Bengie]

What happens when gold is worth less than the value it represents? Go back a century and gold was everything, but that is no longer true.

Re:It should be obvious

[Anonymous Coward]

All of science has political overtones. Is ecology not a science because it has political overtones? What about pharmacology? Is engineering not scientific because politics is involved?

This bigotry about science needs to stop. And yes, anyone who dismisses the social sciences as not "real science" is a bigot.

Sorry to burst your bubble, but human behavior is a real phenomenon, just as real as nuclear physics or biochemistry. You can either ignore that and let ignorance fester, or you can quantify things and study it empirically. You can choose a demon haunted world, but I won't.

The problem isn't that it's not scientific, it's that it's fucking difficult, way more difficult I dare say than the natural sciences, because the systems are so complex.

Bashing economics because of the financial collapse is like saying physics isn't a real science because it failed to prevent Fukushima, or neuroscience isn't a real science because people did lobotomies.

It's also just as stupid as arguments about whether or not the study of algorithms is "real" computer science because it doesn't involve circuits. Why can't people get levels of analysis?

Re:It should be obvious

[khallow]

Nothing about the Method has a success rate requirement.

It's implied. We don't do the scientific method because we have too much time on our hands or we worship failure.

Re:It should be obvious

[khallow]

I don't know that modelling economic systems (simplified, abstracted, self-contained) is really an "experiment".

Of course it is. Just like it is in any other science where you can conduct such experiments. Abstraction and simplification are key tools in setting up experiments.

You can only test your understanding of your own toy model.

You can say the same of any scientific theory.

Re: It should be obvious

[colinwb]

No, you were not necessarily wrong the first time! In characteristic two rings or fields: 1+1=0

Re:It should be obvious

[dryeo]

The kernel of truth in astrology is that the season of your birth affects your life. This is true today, where studies show that those born closer to the beginning of the school year are more successful in life and was true in societies where food was more plentiful at certain times of the year.
Classic case of getting causation and correlation mixed up and chasing after the wrong thing.

Re: It should be obvious

[KGIII]

LOL Yeah yeah, I've seen it. How to put this... Hmm... Unlike the other guy, or sort of like them, you're now assuming there was more there and/or more orders of operation than the two listed integers. If you look at your example it is not, clearly, 1 + 1. It is 1+...+1.

In Slashdot terms...

1 + 1 != 1+...+1

1 + 1 == 2

*tada.wav*

Re:It should be obvious

[codeAlDente]

Not systematic or not empirical? There is a system by which Astrologers make predictions. These predictions can be validated against data. That is the empirical part. Astrologers themselves may not have done this to everyone's satisfaction, but the scientific world has now done this many times over. Major world bodies have concluded that these predictions are no better than chance. Predictive power distinguishes astrology from science, not methodology.

Re:It should be obvious

[khallow]

You answered your own question. It's also worth noting here that there isnt' one such system and none of these systems have predictive power.

I'll also point out that it's not systematic. They haven't checked if asteroids matter, for example, or the motion of the stars. Nor have they come up with any sort of causation by which subtle motions of objects in space can impact someone's entire life on Earth. And finally, it's worth noting that almost no one is actually doing any sort of study here. It's mostly collecting money from dupes and tailoring the usual vague stuff to a person's expectations.

While that is uncomfortably close to what a lot of nominal economists do, it's not science.

Re:It should be obvious

[phantomfive]

If you're going to say how great your theory is, you should at least link to it, so we can know what it says.

Re:It should be obvious

[rioki]

The issue is not that they are not science, but that they are darn hard to isolate. Neuroscience is quite straight forward, it's basically applied chemistry. Psychology becomes harder to isolate. Although it technically is just applied neuroscience, but unless you constantly take blood samples, monitor the brain waves and have an exact map of the brain, it will contain allot of fuzzy guess work. Sociology is get worse, since it is applied psychology to a large group of people. The key problem is that the system they are trying to describe is constantly changing. Even worse, policy makers are tying to influence the system based on the findings of sociology. Economy is basically just sociology centered around money. Here the feedback loop is even worse, people are constantly trying to influence the system. The key problem is if ever the system is sufficiently well described (it that is ever possible), this model becomes invalid the moment people try to game eh system using that model.

Re: It should be obvious

[rioki]

Were I a philosopher of mathematics, I'd have a theory

I think for a start you would have a hypothesis. *Flies away.*

Re:It should be obvious

[Anonymous Coward]

You can keep your definition of science and still apply it to psychology - just not ALL of psychology. Look at the difference between behavioral psych and cognitive psych, for instance.

Re:It should be obvious

[Anonymous Coward]

All three of those are liberal arts that are subject to change as differing ideas are brought into the fold. There are no unwavering facts in the liberal arts, such as one plus one equals two, just observations and predictions based on observations. Hard science includes irrefutable facts along with solid theories, such as e=mc2.

Did I miss the irony? Or not? One plus one equals two is not a fact, it's a convention. Math is almost not a science, it's more of a language, or a tool, for use with different things. You do realize "hard science" does exactly what you describe: "just observations and predictions based on observations". Theories such as e=mc2 are just approximate predictions based on previous observations and extrapolating from those. There are no irrefutable facts in science, that's religions playground.

Re:It should be obvious

[Anonymous Coward]

It is more than all the useful bits from astrology where moved to other science fields, so they are no longer astrology. It also happens all the time with AI.

Re:It should be obvious

[Anonymous Coward]

This will sound crazy to you, but religion actually teaches statements that are true, repeatable, falsifiable, and USEFUL. That is why religion has millions of followers and why it is has been so incredibly successful for millennia. Our current religions have been developed to better solve societies problems in the same fashion as genetic algorithms solve optimization problems, through adaptative evolution. In other words, we know it works, even though scientists cannot truly understand why it works. It is known that it has opportunity costs because it also has to be simple, but even the most atheistic sociologists AGREE that religion is a neat package that has everything that it is good for individuals and societies, and that if you got rid of religion you would have to replace it with basically the same thing, but assuredly worse, as reality has a lot of hidden variables that scientists would not even consider in their models.

Atheism, on the other hand, is heavily based on the same flawed ideology in which modern economics is based, marxism. Marxism has being scientifically proven that it does not work, in fact, the very concept of pseudo-science was created to explain why MARXISM and PSYCHOLOGY do not work. None of its statements have a solid scientific background, or either grounds on reality, and when the facts are checked, if has been empirically demonstrated that it outright contradicts real data, like a compass that points south. In other words, if you are a marxist you are scientifically GUARANTEED to be betting on the wrong horse.

A religious person points to the universe and says, "the underlying cause behind this, I call it God". Saying God does not exist is therefore stupid. It is denying reality. Atheists are logically negativist philosophers, solipsists, or postmodernists, which is probably the most anti-scientific stance a person can ever take, the most self-defeating stance a society can take. In fact, believing atheism is the best "religion" for a society is as moronic as believing anarchy is the best political organization for a society. It is like believing that purposely putting a blindfold on yourself, when travelling through a minefield, will give you an advantage over the people that are instead following signposts placed by people that passed through that same minefield before them.

Re:It should be obvious

[Anonymous Coward]

If it's harder to get repeatable results, it's easier to get away with bad results.

Re:It should be obvious

[sabbede]

Doesn't mean it isn't a science, just that it's hard to perform experiments.

Re:It should be obvious

[sabbede]

Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe. Human behavior is part of the universe. tf., Economics is a science.

Re:It should be obvious

[Anonymous Coward]

"Political Science" AIN'T a Science. Poly Sci belongs in the Psychology department.

Re: It should be obvious

[Hognoxious]

does indeed involve naval gazing.

But not as much as marine engineering or oceanography.

Re:It should be obvious

[bluefoxlucid]

Still writing the paper, though I did the definitions section to try and outline the basic concepts. It's going to need a lot of explanation to make sense, but you can read it if you like, such as it is and what there is of it.

I need to organize things between theoretical basis, extensive concepts, observations, and conjectures about policy. Obviously, demonstrating how wealth grows, how productivity increases wealth, and how scarcity comes into existence shows some basic functions of economics; while showing how these allow various forms of welfare and taxation systems, or how income inequality affects an economy, is more observation and conjecture. I also need to just write, instead of spending all my time studying for the CAPM and playing video games; but who cares? Nobody cares. I freaking solved poverty and all I get is people quickly talking over me to cover up any concern for the poor so they can bitch about the rich having too much and talk about how we should tax them to death and take their stuff, because nobody honestly gives a shit about anyone with less--only about people they can blame and attack, which tends to be people with more.

Re:It should be obvious

[schneidafunk]

Weird, what does being right-handed have to do with anything? Did you notice that was a requirement?

Re:It should be obvious

[The Real Dr John]

How do you test your theories in economics? You mean like imposing austerity in Greece to see how bad you can screw it up, and compare that with a country that does not implement austerity measures?

Re:It should be obvious

[HornWumpus]

The USA is still the worlds largest manufacturer. The dollar is still stronger than the Euro.

The fact is the Chinese economy was managed for one metric via the peg. 100% industrial utilization. We have yet to see how that will work out for them.

For a libertarian, you sure don't understand economics for shit. Think a managed economy built on almost slave labor won't have extreme distortions in favor of the rulers.

Re: It should be obvious

[HornWumpus]

What self serving obsolete definitions...

Especially the second, basically 'all things worth studying...'

Re:It should be obvious

[schneidafunk]

You are ranting nonsense and haven't looked at any new research obviously. Do yourself a favor and catch up on the last 30 years of peer reviewed research and not the pop-psych garbage you are referring to.

Re:It should be obvious

[codeAlDente]

Sure there isn't one such system, and sure these systems don't have predictive power. But the systems exist, and astrologers use systems to guide predictions. Thus I would call it systematic. Scientists in the same field and in the same lab have different individual systems for collecting and analyzing data. Their work is no less systematic. There are always more controls to do. Checking every variable under the sun is not possible. But your description of economics is spot on: it's mostly collecting money from dupes and tailoring the usual vague stuff to a person's expectations. Hey, it works. http://www.upi.com/Science_New... https://www.wsws.org/en/articl...

Re: It should be obvious

[KGIII]

D'oh! *sighs* I know better, too. I blame distractions. I was... Umm... Distracted. Yes, that's it. I've a new lady friend. My mind's a puddle of mud.

Re: It should be obvious

[KGIII]

Well I'm kind of hoping I'd go past that. However, I was using the term loosely. ;-) Fortunately, I'm not a philosopher of anything. I'm currently not even able to form much in the way of coherent sentences. The womenfolk are distracting.

Re:It should be obvious

[phantomfive]

I think it makes it easier to find regions of the brain, but I could be wrong

Re:It should be obvious

[phantomfive]

all I get is people quickly talking over me to cover up any concern for the poor so they can bitch about the rich having too much and talk about how we should tax them to death and take their stuff, because nobody honestly gives a shit about anyone with less--only about people they can blame and attack, which tends to be people with more.

Yeah, that's true, I actually noticed that.....a lot of the complaining about the 1% seems to be based in jealousy or something. If you start talking about actual inequality, and people who live on $3 a day, people get upset that you are changing the subject.

Re:It should be obvious

[khallow]

Existence of system != systematic. Especially, if they're not really adhering to the system. If I tell you I'm using some system developed by French dudes from 1321 and then I tell you what you want to hear, then I'm not really following the system.

Re:It should be obvious

[david_thornley]

It doesn't matter that much if the sample size is 10 or 1000 as long as the samples are selected - in this case, primarily freshman taking psychology courses. I don't know how statistically valid the 1948 "Dewey Beats Truman" poll was, but it was not based on a random sample or even corrected for that.

Re: It should be obvious

[david_thornley]

I once had a FORTRAN compiler in which you could make 1+1 .EQ. 3

Re:It should be obvious

[david_thornley]

You can't experiment in astronomy. You take what observations you can get (and try to extend them as much as possible), and go with them.

Science is falsifiable theories based on objective observations. Experiments are merely good places to collect relevant observations.

Re:It should be obvious

[phantomfive]

From what I read, they had under-sampled the female demographic, and that is why the polls were wrong.

Re:It should be obvious

[david_thornley]

Astrologers do not in general study astrology systematically. Astrology consists of things other people thought and wrote down, changed and reinterpreted, without any systematic study of validity. I'm confident that any systematic study will come to the conclusion that astrology doesn't work. The closest an astrologer could get to a systematic study would be a literature study.

You can't do controlled experiments in astronomy either, but you can collect observations that can falsify theories.

Re:It should be obvious

[david_thornley]

Astrologers is a collection of stuff people made up without empirical verification. It's systematic in the same way that a role-playing game is, and appears to have the same or worse relation to reality.

Re:It should be obvious

[david_thornley]

True, I am jealous of the 1%, because they pay proportionately lower taxes than I do.

Re:It should be obvious

[phantomfive]

Oh, what a pity.
If you aren't interested in helping people less fortunate than yourself, I have no sympathy for you.

Re:It should be obvious

[codeAlDente]

Not all scientists rigorously adhere to the scientific method. That doesn’t invalidate it as part of a systematic method of discovery. Scientific inquiry is systematic even if not all scientists always adhere to any specific system. Astrologers have believed in their predictions for centuries and have made many efforts to confirm these predictions with data. During that time, there were arguments about whether it was a science. The system to make and test predictions was there. It’s well documented. However the predictions were not successful as those of Brahe, Kepler, Copernicus, Newton, etc., probably because living breathing humans and their behavior are too complex and unpredictable to be shoehorned into some deterministic equation.

Re:It should be obvious

[Anonymous Coward]

Russ Roberts from EconTalk http://www.econtalk.org/ made a pretty strong case against economics as a science a couple of years ago, after the financial meltdown.

Someone else described it as a second-order complex system. Meaning that knowledge of how the system works becomes input to the system and changes its behavior.

Just the other day there was a TED talk by "the mathematician who cracked Wall Street". He said a functioning system quit working because too many people were doing it, so he had to find a more complex system no one else knew about, and then made billions with it.

Warren Buffet said if you take everyone in America and give them a coin and have them toss it, then have only the heads tossers do it the next day, and they day after that, etc. etc. etc. After twenty days you'll still have a few thousand people left who only ever tossed heads. Think about that, tossing twenty heads in a row. They'll write books about it, give talks on coin tossing techniques, be interviewed by admiring reporters...

If I understood it correctly (as a mere mortal layman) that's essentially what Russ Roberts, of George Mason University, an award winning economist, believes is happening with the economic theorists. Given a few million theories out there, some of them are going to hit the nail on the head... this time. Different ones will hit next time. But like the Wall Street Mathematician, we keep working and making more complex observations, because eventually we'll reach a level of complexity only the high priests will understand, and they won't tell, and then the second order chaotic system flattens out and becomes predictable.

So, carry on, and don't look behind the curtain.

Re:It should be obvious

[Anonymous Coward]

I propose concrete and squishy science as new terms!

Re:It should be obvious

[sabbede]

Well, you've hit on the obvious problem in testing macro-economic theory, but fortunately for the field that isn't all there is. Numerous experiments have been performed on small scale economic behavior, studying individual decision making, loss aversion, fairness and so on. Did you know that the old aphorism "a bird in the hand is worth two in the bush" has been experimentally verified by economists? Losses are "felt" twice as strongly as gains - people will treat the potential loss of one bird the same as they would the potential gain of two.

Neuroeconomics has made things even more interesting. For example, the use of fMRIs to observe the decision making process as it unfolds in the human brain.

And of course, much of economics is applied mathematics. Game Theory is a well-known example, and investigations into the sub-field of finance led to the discovery of e.

It's also important to note that just because a method for the experimental testing of certain hypotheses has yet to be worked out does not mean a field of study is not a science. If it were, how many other fields would cease to be sciences? Certainly many branches of physics, geology, meteorology, ecology, etc.

Re:It should be obvious

[david_thornley]

I do help people less fortunate than myself, which is completely irrelevant to the point I'm making. The fact that someone, somewhere, is poorer than I am, doesn't justify unfairness to me. The fact is that most people with a lot more income than me pay less tax on it, proportionately.

Re:It should be obvious

[david_thornley]

I believe part of it was a phone survey, back when phones were expensive.

Re:It should be obvious

[phantomfive]

I do help people less fortunate than myself, which is completely irrelevant to the point I'm making.

Of course it is. If you are just a jealous bastard, then you deserve any beatdown you get.

Re:It should be obvious

[roman_mir]

USA is a joke, not the world's largest manufacturer. WTF does USA manufacture? You should try and come up with examples beyond Boeing, Caterpillar and what? Bombs?

Dollar is going down, not up and the fact that the Chinese decoupled from USD as I mentioned a number of times is a great indicator that they will no longer prop up the US dollar and debt. There is nowhere for the USD to go but down, the entire USD bubble was predicated on a false expectation of the Fed raising interest rates, which they will not do, instead they will come out with QE4 and later QE5 and all the way into QE infinity until there is no more dollar.

The only thing that will stop this bleeding will be a dollar/bond collapse that will prevent USA from borrowing further. At that point it's either hyperinflation or back to sound money. As far as Euro concerned, it is going to beat USD in the coming months.

Chinese economy is becoming more and more free, this unpegging from the USD proves it. So called 'communist' China is now enjoying a much more free market capitalist economy than the so called 'capitalist' America. I understand economics much better when I am unconscious than when you use 100% of your little pathetic brain.

Re:It should be obvious

[KillAllNazis]

"But because mainstream neo-classical economists imagine the capitalist market system as given by the structure of reality like the law of gravitation - David Ricardo's very model for the labour market - they construe their study as 'value free'.
...
Order thus found, the extraction of money profit can be regularized in such a way that its operations are quantified, plotted on graphs and made into equations, thereby appearing to their designers as laws of Newtonian physics at work in the world." - John McMurtry, The Cancer Stage of Capitalism

Nobel prize - pah

[Anonymous Coward]

Not impressed. I guess I can get one for making my cat glow in the dark.

Prize isn't what it used to be so we could all care less

Re:Nobel prize - pah

[Anonymous Coward]

Not impressed. I guess I can get one for making my cat glow in the dark.

Citation: https://en.wikipedia.org/wiki/Green_fluorescent_protein

If an investment strategy requires a...

[voss]

nobel prize winner to explain it its probably doesnt work.

When an index fund beats actively managed funds 60-75% of the time it aint brain surgery.

Sound strategies like dollar cost averaging do work over the long run (15-20 years)

Re:If an investment strategy requires a...

[phantomfive]

Be careful not to confuse "economics" with "trading on the stock market." They're not the same.

Don't confuse "academic economists" with "political economists." Academic economists write papers; political economists write editorials and go on TV shows (although the same person can play each role at different times).

Re:If an investment strategy requires a...

[Impy the Impiuos Imp]

Once a get rich plan is published, no matter how mathematically and statistically sound it is, other people will try to game those using it. Hence the theory is no longer valid as it does not take into consideration general knowledge of its use and the distorting affect that has.

Witness a theoritical way of determining what stock will go up 10% in two days. People will quickly use it and pre-buy that stock, and it no longer will.

Re:If an investment strategy requires a...

[phantomfive]

Yes. Again, economics is not the same as "trading on the stock market." It's also not the same as "a plan to get rich."
In fact, explaining why the same get-rich-quick scheme will not work for everyone is economics. Because if everyone does the same thing, then the value of that thing will be very small (supply/demand).

Re:If an investment strategy requires a...

[aaaaaaargh!]

When an index fund beats actively managed funds 60-75% of the time it aint brain surgery.

It certainly isn't.

Re:If an investment strategy requires a...

[lgw]

That stuff you just wrote, about the timeliness of get-rich-quick plans? That stuff? That's called "economics", and you just dabbled in it.

There's plenty of economics, that describes events involving money and markets well, and is thus a useful tool. Can you call it a science if it's not predictive? Bit of a reach at best. But it's still something useful.

Re:If an investment strategy requires a...

[GuB-42]

Not all games are zero-sum.
Try to see the big picture instead of stupid "get rich quick" schemes.

Just look at economic crisis : nobody seem to profit from it, even the 1% don't get richer. So why does it happen? The workers can still work, the factories are still there, no major shortage in natural resources, ... that's pure economics. So if people can lose out of nothing, they should be able to win out of nothing too.

Re:If an investment strategy requires a...

[HiThere]

But it *is* predictive, about certain things, even though not predictive about others. E.g., it can predict that people will continue to get rich off of get rich quick schemes that don't work.

I suppose you could consider economics to be a sort of blend between statistics and psychology, and it doesn't work where the psychology is fuzzy, and its predictions are statistical in nature.

Mind you, if you consider it this way it become immediately obvious that most of what's sold as economics is a pack of lies. And actual economics is more restricted in domain that this definition implies, so it's not clear that many pure-economic theories *can* work. You don't just buy bread, you buy bread for a reason which is as much, or more, physiological as psychological. But psychology may determine which brand of bread you buy...so that could be economics.

Re:If an investment strategy requires a...

[HiThere]

That's not clear, but if it both requires a Nobel prize winner to explain, and he's still poor enough that the money in the prize is significant, in that case it probably doesn't work.

Re:If an investment strategy requires a...

[Anonymous Coward]

People think economics is markets, money, supply/demand. It's not. Economics is productivity, capital, labour.

Re:If an investment strategy requires a...

[Anonymous Coward]

People think economics is markets, money, supply/demand. It's not. Economics is productivity, capital, labour.

What you're talking about there is most likely macro economics. The larger scale things that we see. There are others in the thread above that seem to think that micro economic examples work to explain macro economic trends and it's just laughable how ignorant of the field most are. I mean, damn, most of you went to college, didn't you bother to take at least one course from the school of business? Economics would have been a good one to use one of those electives on.

It's a fuzzy science

[JustAnotherOldGuy]

It's a fuzzy science, similar to cooking.

Sometimes you try stuff, make predictions, and it turns out great.

Sometimes you try stuff, make predictions, and it's dreadful. Like my famous "Peanut Butter & Haggis" recipe, or pickle-flavored ice cream.

Re:It's a fuzzy science

[Ichijo]

Sometimes you try stuff, make predictions, and it's dreadful. Like my famous "Peanut Butter & Haggis" recipe

Just curious, what was your prediction on that one?

Re:It's a fuzzy science

[JustAnotherOldGuy]

Just curious, what was your prediction on that one?

Ahem, well, lets just say I didn't think it would be as bad as it was.

I'm surprised the EPA didn't show up to cordon off my house. But the Food Police did show up and arrest me for vandalism, though.

Re:It's a fuzzy science

[Moof123]

Your comparison is probably more apt than you think. Many foods are awful to the un-initiated, yet are beloved ethnic dishes for those who grew up on the stuff. Many economic theories are awful as well, but to the right inward looking political faction they become necessary doctrine.

Voodoo trickle down economics has had more holes shot in it than a rural stop sign, yet it is mandatory belief among the Chicago Business school crowd, and many republicans. They have a taste for it, and will never give it up. Data be damned. Meanwhile eggplant is still a thing, as is peanut butter and chocolate ice cream, lutefisk, kimchi, haggis, and the thousand year egg despite many valid data points indicating they are culinary follies.

On the whole I think that Economics, Psychology, and Sociology belong in a category other than "Science". Macro-economics suffers too much from a lack of proper experimentation, making too many important conclusions from sparsely available "natural" experiments and way too many "thought" experiments (see Russ Roberts and any number of his podcasts to see how hokey they are). Such tactics don't fly in real science. I don't want to dismiss these fields out of hand, as there is much value in studying and modeling the world around us, but they mostly cannot be built on a sturdy enough foundation to rise to the level of "science", and I think it does harm to the real sciences in the process.

Much of science itself is going through a bit of a repeatability crisis, yet still looks like it has far fewer floor sweepings going into the proverbial sausage compared to Economics, Sociology, and Psychology.

Re:It's a fuzzy science

[jd2112]

It's a fuzzy science, similar to cooking.

Sometimes you try stuff, make predictions, and it turns out great.

Sometimes you try stuff, make predictions, and it's dreadful. Like my famous "Peanut Butter & Haggis" recipe, or pickle-flavored ice cream.

Perhaps you just didn't market it right. I suggest advertising your pickle flavored ice cream in magazines for pregnant women or stoners.

Re:It's a fuzzy science

[dywolf]

key lime pie, only you replace the lime with jalapeno.

It's not even a real Nobel Prize

[Qzukk]

Nobel didn't originally accept economics as a science either, this economist won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, which was originally provided by the Swedish bank in 1968 through a perpetual endowment to the Nobel Foundation.

Re:It's not even a real Nobel Prize

[xpiotr]

As Dilbert so gently points out http://dilbert.com/strip/2015-...

Re: It's not even a real Nobel Prize

[Anonymous Coward]

Great. A financial institution successfully subverted Nobel's wishes by applying monetary pressure. Would make a great research project for an economist to study.

Re: It's not even a real Nobel Prize

[Anonymous Coward]

Great. You should be happy to be in the running for the Slashdot prize in Internet deushbaggery in memory of Alfred Nobel

Re:It's not even a real Nobel Prize

[AthanasiusKircher]

Nobel didn't originally accept economics as a science either

Two questions:

(1) Do you think Nobel thought Literature was a science?

(2) When John Harvard willed his library to the new college in Cambridge, it was basically a divinity school. That divinity college adopted his name. Does that mean that any person with a degree from Harvard other than divinity doesn't really have a "Harvard degree"?

Or...

Could it possibly be that people lump the economics prize together with the others because of the institution that awards it (under the same general nomination and selection criteria, with judges drawn from the same general pool of scholars -- i.e., the Royal Swedish Academy -- at the same ceremony)?

(P.S. I don't really care whether economics is considered a "science." I just think these arguments over whether this thing is "really a Nobel" are stupid and meaningless in terms of determining the legitimacy or "science-like character" of an entire field. I'm not willing to grant Alfred Nobel's random wishes in his will that kind of power over defining "science." Are you?)

Rocket analogy

[Noah Haders]

When a rocket blows up, it might be the engineers' fault, but you can't blame physics itself. It's not the fault of the field of economics that some bozo lost money and other bozos bailed them out.

Re:Rocket analogy

[Anonymous Coward]

However it is the fault of an overlooked factor that every educated person should be well aware of. Prediction effect. It's been a favorite in fiction for millennia, probably longer (I can recall some ancient Greek tragedies based on it).

Since I'm sure I'm not using the term someone else might've already written about, it is the problem of how the existence of a prediction will change the conditions that the prediction is based off of. In some forms, the prediction comes true as the protagonist tries to avoid it at all costs. In sciences we tend to face the opposite failure, where the model does a fine job of explaining things until someone attempts to act upon the insight provided by the prediction.

While I agree with your detailed analysis of the mental facilities of the investors who trusted that model, it does stand in stark contrast to the common Slashdot refrain of "appeal to PhD" on a number of subjects.

Re:Rocket analogy

[Anonymous Coward]

"It's not the fault of the field of economics that some bozo lost money and other bozos bailed them out."

Fancy. Just blame the field, not the people who work in the field.

So the field of economics has no equivalent of engineers who might be at fault, both in the loss of money thanks to their innovation in creating financial instruments that turned out to be worthless, and in urging for the bail out ("or the economy will collapse!").

Re:Rocket analogy

[Anonymous Coward]

The question is the underlying science (Economics) more like Physics or Alchemy. In the case of the latter, you can place some blame on the "science".

And the world responds...

[Anonymous Coward]

Author Joris Luyendijk: "Economics Is Not a Science"

World: NO SHIT, SHERLOCK!

Re:And the world responds...

[Anonymous Coward]

Author Joris Luyendijk: "Economics Is Not a Science"

World: NO SHIT, SHERLOCK!

In other news.. the sea does not exist! Republicans! Vote for Trump in 17!

Similarity to Quantum Mechanics

[Roger W Moore]

Well it does have a passing similarity to quantum mechanics in that the very act of making an observation of the financial system will change it because people try to use the observation to make money. The difference is that in quantum mechanics the effect of the observation is based on certain fundamental rules which cannot be changed and you can use these to calculate the probability distribution of outcomes. In economics it seems that there are no fundamental rules or at least if there are nobody has yet found them given the total inability of economics to predict the economy.

Re:Similarity to Quantum Mechanics

[desdinova 216]

somewhat like Schroedinger's Cat?

Re:Similarity to Quantum Mechanics

[phantomfive]

In economics it seems that there are no fundamental rules or at least if there are nobody has yet found them given the total inability of economics to predict the economy.

It only seems that way to you because you know nothing about economics. Take a class or something and stop being ignorant.

Re:Similarity to Quantum Mechanics

[Anonymous Coward]

In economics it seems that there are no fundamental rules - heres one anything involving human greed or status always descends into shit.

I dont think I am going to get a noble for that one though becuase I believe physicists call it entropy.

Re:Similarity to Quantum Mechanics

[Roger W Moore]

It only seems that way to you because you know nothing about economics.

Then why does economics fail to predict so many economic problems before they happen? You do not have to be a scientist to see that science can make predictions that work consistently. If economics is a science then it too should be capable of making clear predictions which work consistently. You do not need to be an economist to see that this is not the case.

Re:Similarity to Quantum Mechanics

[HiThere]

Study the iterated prisoner's dilemma. That can easily be mapped onto parts of economics. Cut away the parts that don't work and you have a sound piece of economics.

Just because there are hard problems that can't be solved doesn't mean that no problems can be solved. Unfortunately, in the case of economics it seems to repeately mean that the most important problems can't be solved.

Of course, we don't really know what problems economics could solve if it tried, because politics always gets mixed up in things, and that usually tries to run things for the benefit of a small group of people who maintain power by lying to everyone else. So economic theories are tested not because there's any reason to believe they are good things, but because the benefit those who are selling them, and benefit those who currently hold power. Often the theories that are tried bear little resemblance to the theories that are claimed to be being tried.

Re:Similarity to Quantum Mechanics

[phantomfive]

Then why does economics fail to predict so many economic problems before they happen?

We understand the physics behind weather, but who can predict how many hurricanes will happen next year?

Countries generally avoid the economic problems that can be easily predicted (for example, printing money freely like Zimbabwe did for a while, which we know will cause inflation) so we don't see those.

Re:Similarity to Quantum Mechanics

[Roger W Moore]

But we can determine the regions where hurricanes occur, when during the year they occur and how likely they are to occur. The result is that you can take measures to protect against like building houses strong enough to withstand them etc. In this sense it is like QM: you can get a probability distribution but not know exactly what will happen. You cannot do this with economics to a degree where anyone believes you are right with sufficient confidence to act on it.

Re:Similarity to Quantum Mechanics

[phantomfive]

You can predict plenty of stuff in economics. Seriously, open a book, you're talking like an ignoramus.

People who think economics is not a science...

[phantomfive]

People who think economics is not a science usually have no understanding of economics. The author, for example, uses examples of economists (and non-economists) who failed to predict what direction the market would go. This is like saying, "Physics is not science because we still don't have FTL travel. Fail."

Economics is a science, and it has a useful body of knowledge. MV = PQ is among the most tested theories in science. Gresham's law. The business cycle. All other things equal, an increase in supply will reduce prices. The biggest problem of economics isn't the lack of "hardness," it's the difficulty of running experiments (you can't re-run the depression six hundred times), so eliminating variables is difficult.

Anyone who thinks economics is the art of predicting the stock market, will be confused, like the author of this article.

Re:People who think economics is not a science...

[Anonymous Coward]

Other scientist also aren't out there predicting what you want your experiment to do and cashing in on sabotaging the goal.

Re:People who think economics is not a science...

[Anonymous Coward]

After the crash hit, Greenspan appeared before a congressional committee in the US to explain himself. âoeI made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,â said the man whom fellow economists used to celebrate as âoethe maestroâ.

Nobel Prizes in science: strictly a manâ(TM)s game?

In other words, Greenspan had been unable to imagine that bankers would run their own bank into the ground. "

The Greenspan and the author make the mistake in thinking that the bankers ran their own banks into the ground. The vast majority of bad loans would have never been made if the bankers didn't have the equivalent of a gun to their heads - The Community Reinvestment Act.

Re:People who think economics is not a science...

[Anonymous Coward]

"Economics is a science, and it has a useful body of knowledge."

Sure... it is... not.

Science on reasoning:

https://www.youtube.com/watch?v=PYmi0DLzBdQ

Protectionism for the rich and big business by state intervention, radical market interference.

https://www.youtube.com/watch?v=WHj2GaPuEhY#t=349

The Citibank memo

http://politicalgates.blogspot.ca/2011/12/citigroup-plutonomy-memos-two-bombshell.html

Wikileaks, parallel legal system for the corporate world to sue governments and the public.

https://www.youtube.com/watch?v=ABDiHspTJww&feature=youtu.be

Re:People who think economics is not a science...

[Anonymous Coward]

Economics is a science, and it has a useful body of knowledge. MV = PQ is among the most tested theories in science.

Your other points aside, MV=PQ is not a "tested theory", but rather an identity based on the mere definitions of the words, particularly the velocity V. You don't get much credit for that, in my book.

Re:People who think economics is not a science...

[khallow]

The vast majority of bad loans would have never been made if the bankers didn't have the equivalent of a gun to their heads - The Community Reinvestment Act.

It would have happened anyway. There was easy money to be made and enough leverage to move the Moon.

Re:People who think economics is not a science...

[phantomfive]

If you think "parallel legal systems", "protectionism for the rich," and general fears about the 1% are economics, then you don't know much about economics.

People like you would become smarter if you picked up an economics textbook.

Re:People who think economics is not a science...

[scamper_22]

Economics is a science in that respect.
You're also right that the repeatability of events make it very poor in practice. It should rightly be regarded within the restrictions of that as opposed to the 'conclusions' people draw from it relying on the success of the physical sciences.

People who study the Great Depression can be as brilliant and analytical is anyone else, but they ultimately have no way to prove that *the problem* was the money supply and if only they had increased it, it would have been avoided.

The laws governing it and pretty much everything related to it (sociology, politics...) are essentially man made. You can come up with all the analysis you want with respect to the business cycle and someone can validly say:

Well that's just your system. What if we brought in communism and simply gave everyone enough and made everyone work? An extreme example, but it applies to every minor law and social rule.

You'd have a whole new set of laws to work within.
The socio-political laws have just such a great impact. Not just communism. But every law, group of power...

Practically speaking, economics is a very hard science to practice due to all the variables and lack of repeatability. How can you rely on it to any degree as science if you cannot even follow the basics of the scientific method?

Combine this with the large degree of flexibilty in the very rules that bound the system and for all practical purposes, people are right to treat it very lighly as a science.

Re:People who think economics is not a science...

[phantomfive]

It's not sceince if you never do any experiments.

That's the same argument against climate science, right? "You can't run CO2 experiments on multiple earths, because we only have one of them."

The reality though, is that both climate science and economics do run experiments. They can't run every experiment they'd like to, but that's a problem with every field of science.

Re:People who think economics is not a science...

[Anonymous Coward]

Enjoy your six months trying to be a trader. I'm sure looking forward to those will make you feel smart.

Re:People who think economics is not a science...

[phantomfive]

Well that's just your system. What if we brought in communism and simply gave everyone enough and made everyone work? An extreme example, but it applies to every minor law and social rule. You'd have a whole new set of laws to work within. The socio-political laws have just such a great impact. Not just communism. But every law, group of power...

Your ignorance is hurting you here. Supply/demand doesn't disappear just because you've implemented communism, someone will have to manage that. MV=PQ doesn't disappear because of communism. Economics doesn't disappear because of communism. In fact, the only way to implement a command economy is to have a solid understanding of economics: without it, you will almost certainly fail.

Capitalism != Economics. Economics can explain a lot that happens under capitalsim, but it can also explain a lot that happens under communism.

Re:People who think economics is not a science...

[Anonymous Coward]

MV = PQ is among the most tested theories in science. Gresham's law.

LOL. The sheer arrogance in that statement disqualifies you from talking about anything scientific.

Gresham's "Law", previously known as Copernicus "Law", is an economic principle. To put it on equal footing with any of the laws of the physical sciences only shows your lack of understanding of said physical sciences. And economic ... let's say knowledge.

Anyone who thinks economics is the art of predicting the stock market.

Nice diversion/strawman. We were talking about the near collapse of the *banking* system, using bullshit products (CDS), packaging fraudulent mortgages. You know, the free unregulated money market. Of which Greenspan said to congress: "I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms".

Re:People who think economics is not a science...

[PvtVoid]

you can't re-run the depression six hundred times

Keep voting for Republicans, and you can!

Re:People who think economics is not a science...

[PvtVoid]

It's not sceince if you never do any experiments.

Tell that to an astronomer.

Re:People who think economics is not a science...

[Anonymous Coward]

"All other things equal, an increase in supply will reduce prices."

Law of supply and demand is very poor and contains internal mechanics that dont even survive proof by contradiction.
You cant construct macro-economic models from micro foundations (or at least there are no tools that can which are better than guesswork and white noise). For every point on a demand curve there is a completely different supply curve. Its very well critiqued and has been since

Increasing supply does not 'algorithmically' reduce prices it may/often does the opposite in the real world.
Its based on the assumption there is only one product to buy. In the real world there is 'preference', 'obsolescence' and a myriad of other factors. In effect more of something may make a consumer buy an entirely different product.

MV = PQ

Is very especially poor. Each term in the formula does not work with endogenously created money. (So in effect the practitioners of the formula ingore how broad money is created).

http://www.debtdeflation.com/blogs/2009/09/27/it%E2%80%99s-hard-being-a-bear-part-sixgood-alternative-theory/
http://bilbo.economicoutlook.net/blog/?p=31063

"The biggest problem of economics isn't the lack of "hardness," it's the difficulty of running experiments. It's the difficulty of running experiments (you can't re-run the depression six hundred times), so eliminating variables is difficult."

No its because the majority of economists try to understand a complex system with chaotic+emergent behavior using models with origins over 100 years old. Models which are not stock flow consistent (eg: dont even model the flow of money as it would move in the economy). The mathematical models are ‘algebraic’ rather than ‘differential.’ Moreover the goals of such models often chase equilibrium conditions which cant actually exist in te real world.

Critiques of economics practiced today come from many of the greatest mathematicians like E. N. Lorenz or Benoit Mandelbrot
https://www.youtube.com/watch?v=vxbxXBrOPS8

To juxtapose: Look at post-keynsian's. Largely ignored by mainstream econimists but had the theory and models which did predict collapse of the eurozone (no fiscal stability mechanism), GFC and continue to be very accurate about what will happen if certain policies or instabilities occur in an economy.

https://www.youtube.com/watch?v=6r6gWW-xC-g

ECONOMICS IS NOT A SCIENCE if it shed its groupthink+political bias you might get something half as good as weather forecasting.

Re:People who think economics is not a science...

[khallow]

1. It has not a single quantity that can be unambiguously defined.

People, materials, and the usual hard science parameters.

2. It has not a single quantity which two people in different places can measure, and get nearly the same result.

See above.

3. It has not a single law with predictive force.

Counterexample is the supply and demand model.

Re:People who think economics is not a science...

[Anonymous Coward]

"People like you would become smarter if you picked up an economics textbook."

I can tell you the facts and the figures and you won't reason to the right conclusion, it's science:

https://www.youtube.com/watch?v=PYmi0DLzBdQ

What about this? More evidence against your religion.

WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap

http://www.businessinsider.com/wikileaks-haiti-minimum-wage-the-nation-2011-6

So, no you just believe the propaganda, that's all economics is - propaganda for the masses. We can go back in time to when people lived in tribes, before such ideas and concepts were invented. That's the real world, aka just humans and nature. Everything else is a human invention. By reducing mankind (as a system) to its simplest state, we see the outgrowth of artificial structures as a result of one group of primates attacking another and forcefully imposing their culture upon them. AKA real science, to determine what is real and true you go back to the beginning before all these artificial structures were invented. Laws of nature don't need the NSA to protect them or former national security advisors worried about "radicals" and "heretics" (aka disbelievers in "economics").

Am I going to believe some podunk slashdot poster/puppet, or the former National security advisor of the United states?

The (mass surveillance) by the NSA/others and abuse by law enforcement is just more part and parcel of state suppression of dissent against corporate interests. They're worried that the more people are going to wake up and corporate centers like the US and canada may be among those who also awaken. See this vid with Zbigniew Brzezinski, former United States National Security Advisor.

https://www.youtube.com/watch?v=Ttv6n7PFniY&feature=youtu.be&t=11

Brezinski at a press conference

https://www.youtube.com/watch?v=0kmUS--QCYY

The real news:

http://therealnews.com/t2/

http://www.amazon.com/Democracy-Incorporated-Managed-Inverted-Totalitarianism/dp/069114589X

http://www.amazon.com/Shadow-Government-Surveillance-Security-Single-Superpower/dp/1608463656/

http://www.amazon.com/National-Security-Government-Michael-Glennon/dp/0190206446/

The Citibank memo

http://politicalgates.blogspot.ca/2011/12/citigroup-plutonomy-memos-two-bombshell.html

US distribution of wealth

https://imgur.com/a/FShfb

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Re:People who think economics is not a science...

[Anonymous Coward]

People who think economics is not a science usually have no understanding of economics. The author, for example, uses examples of economists (and non-economists) who failed to predict what direction the market would go. This is like saying, "Physics is not science because we still don't have FTL travel. Fail."

I think economics is more at a point where, using your physics analogy, they claim to have a solid model for the motion of the sun, moon and planets but were totally taken off guard and had no explanation for the recent lunar eclipse.

Re:People who think economics is not a science...

[Anonymous Coward]

"People who think economics is not a science usually have no understanding of economics."

No we know its bullshit...

I can tell you the facts and the figures and you won't reason to the right conclusion, it's science:

https://www.youtube.com/watch?v=PYmi0DLzBdQ

What about this? More evidence against your religion...

WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap

http://www.businessinsider.com/wikileaks-haiti-minimum-wage-the-nation-2011-6

Protectionism for the rich and big business by state intervention, radical market interference.

https://www.youtube.com/watch?v=WHj2GaPuEhY#t=349

Wikileaks

https://www.youtube.com/watch?v=ABDiHspTJww&feature=youtu.be

So, no you just believe the propaganda, that's all economics is - propaganda for the masses. We can go back in time to when people lived in tribes, before such ideas and concepts were invented. That's the real world, aka just humans and nature. Everything else is a human invention. By reducing mankind (as a system) to its simplest state, we see the outgrowth of artificial structures as a result of one group of primates attacking another and forcefully imposing their culture upon them. AKA real science, to determine what is real and true you go back to the beginning before all these artificial structures were invented. Laws of nature don't need the NSA to protect them or former national security advisors worried about "radicals" and "heretics" (aka disbelievers in "economics").

Am I going to believe some podunk slashdot poster/puppet, or the former National security advisor of the United states?

The (mass surveillance) by the NSA/others and abuse by law enforcement is just more part and parcel of state suppression of dissent against corporate interests. They're worried that the more people are going to wake up and corporate centers like the US and canada may be among those who also awaken. See this vid with Zbigniew Brzezinski, former United States National Security Advisor.

https://www.youtube.com/watch?v=Ttv6n7PFniY&feature=youtu.be&t=11

Brezinski at a press conference

https://www.youtube.com/watch?v=0kmUS--QCYY

The real news:

http://therealnews.com/t2/

http://www.amazon.com/Democracy-Incorporated-Managed-Inverted-Totalitarianism/dp/069114589X

http://www.amazon.com/Shadow-Government-Surveillance-Security-Single-Superpower/dp/1608463656/

http://www.amazon.com/National-Security-Government-Michael-Glennon/dp/0190206446/

The Citibank memo

http://politicalgates.blogspot.ca/2011/12/citigroup-plutonomy-memos-two-bombshell.html

US distribution of wealth

https://imgur.com/a/FShfb

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

The Centre for Investigative Journalism

http://www.tcij.org/

Some history on US imperialism by us corporations.

Re:People who think economics is not a science...

[Anonymous Coward]

> People who think economics is not a science usually have no understanding of economics.

I seem to be beyond "no understanding" (in your view, at least): as a physicist I always feel insulted when economics is called "science".

Or... perhaps "people" have a point and you're full of it?

Re:People who think economics is not a science...

[Anonymous Coward]

False equivalence, showing your bias. It's like saying "sometimes the apple doesn't fall". Of course, it does, and physics works.

Economics is a bunch of guessing and hoping. You can wish in one hand and crap in the other, and see who buys what.

Re:People who think economics is not a science...

[phantomfive]

You're confused. Economics is the study of economies. Even if the US is a complete totalitarian monarchy, it still has some kind of economy, and economics would study it.

Also, the guy in your first link doesn't know what "Reason" means.

Re:People who think economics is not a science...

[phantomfive]

I seem to be beyond "no understanding"

That can be cured, go take an economics class or read a book.

as a physicist I always feel insulted when economics is called "science".

That can be cured too....give up your stupid ego. Physicists don't know everything, or even most things.

Re:People who think economics is not a science...

[Anonymous Coward]

First, CRA loans had lower default rate than non-CRA loans.
Second, loans weren't the problem. It was the leverage.
Loans were packaged into investment vehicles and traded at 30x and higher leverage.
These products were also given unrealistically high credit ratings.
When some of the underlying assets (mortgages) didn't perform, those losses were amplified.
Meanwhile, there was a scramble to create more and more mortgage backed securities which drove lenders to lower their standards, creating a vicious cycle.

You're either naive or lying to blame this on CRA loans.
The government did not force the banks to package mortgages as investments. They did that by themselves.
The government did not force the banks to leverage. They did that by themselves.
If the government is to blame, it's for deregulating the banks and allowing them to do both of those things.

Re:People who think economics is not a science...

[Anonymous Coward]

The crash didn't happen because of bad mortgages. It happened because those bad mortgages were bundled into derivative instruments. Those derivatives caused the risk to explode exponentially.

So what you had were banks _lying_ about their default rates in many cases, the cost of those lies being exponentially inflated via the derivative products, and derivatives purchasers ignoring the obvious fact that the risk on the underlying mortgage securities would be strongly correlated if the housing market slowed down, not to mention popped.

But I guess we all know what your party affiliation is. That _particular_ explanation you gave is non-sense perpetuated by GOP strategists. Democrats have their own false narrative. (Although I don't mean to equivocate. The Democrat's narrative is significantly less false than the GOP's.)

If you think using tax policy in to shape the mortgage industry is so wrong, then how about you support a political candidate willing to get rid of the home mortgage interest deduction. But I doubt you will because 1) no mainstream candidate would dare do such a thing and 2) the effect of such policies, while significant, are hardly so great as to be the primary cause of booms and busts.

Re:People who think economics is not a science...

[Rob Riggs]

Anyone pitching anything but the Gramm–Leach–Bliley Act as the root cause of our economic trouble is fronting for one party or the other and in order to obfuscate the truth. Glass-Steagall kept us out of trouble for 70 years. It took less than a decade to find every moral hazard which that act opened up. There are a lot of powerful interests doing their utmost to have you look everywhere but there. That's because the fix is rather self-evident.

Re:People who think economics is not a science...

[Anonymous Coward]

Economics is a science, and it has a useful body of knowledge. MV = PQ is among the most tested theories in science. Gresham's law. The business cycle. All other things equal, an increase in supply will reduce prices. The biggest problem of economics isn't the lack of "hardness," it's the difficulty of running experiments (you can't re-run the depression six hundred times), so eliminating variables is difficult.

See also IS-LM:

* https://en.wikipedia.org/wiki/IS–LM_model

Those who followed IS-LM correctly predicted that, with interest rates at ~0% in the US, there would be no inflation with the printing of money by the Fed. This could also be observed in Japan where the money supply has expanded quite a lot at times, and they barely have any inflation (and have had long deflationary periods).

They also predicted that the ECB should not have raises rates a few years ago, because that would kill growth... and it did. So they had to cut it again. There was also a Scandinavian country (Finland?) that did the same thing: raise rates too soon.

Then there's the idea that by cutting spending governments could grow the economy (expansionist austerity), which the Keynesian said was bullshit... and it turns out that the countries that cut the most had the worst growth (even negative).

So if you have the correct model/s, you can make correct predictions. It's just people's political pre-conceived notions ("guberment bad") cloud things and people can't admit they're wrong.

Re:People who think economics is not a science...

[Anonymous Coward]

but it can also explain a lot that happens under communism.

In fact you could make the case it is a perfect monopoly system where every business is a monopoly. In fact most monopolies are not natural ones. They are born of gov interference (either bought or by force).

Re:People who think economics is not a science...

[Anonymous Coward]

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today."
- Lawrence J. Peter

Re:People who think economics is not a science...

[Anonymous Coward]

Astrophysics and Geology suffer from that same problem, but nobody questions their validity as sciences. It is actually a pretty common scenario but it's perfectly workable.

Re:People who think economics is not a science...

[Anonymous Coward]

If MV = PQ is so well tested, why are there still Keynsians?

Re:People who think economics is not a science...

[phantomfive]

If MV = PQ is so well tested, why are there still Keynsians?

There aren't, there are neo-Keynsians.
The Keynsians say, "In the short term (so short that we can't measure it accurately), increasing inflation might still improve employment."

In other words, the dispute isn't about whether the equation will become balanced, but how long it will take for it to become so.

Re:People who think economics is not a science...

[Anonymous Coward]

I understand a fair bit of economics, I've studied it at university, and I don't think economics is a science. I was intrigued to see the author's reference to the difficulty in getting Economics History courses up. Is this really true, I studied economic history and I just assumed people still did, or is it just spreadsheets these days? Incidentally, if economics can't be used to predict the stock market, it's not a very useful 'science' is it? I mean, the NASA guys and gals could predict the spacecraft would arrive at Pluto, and guess what, it did!

Re:People who think economics is not a science...

[Hognoxious]

So how come the commercial sector, which was never in scope of the CRA, was in as a bad a state as residential?

Re:People who think economics is not a science...

[bluegutang]

The other problem is that once you come up with an economic theory, people will learn about it and incorporate it into their decisions. Suddenly, people and their choices are not the same as what you analyzed.

Re:People who think economics is not a science...

[Anonymous Coward]

"All other things equal, an increase in supply will reduce prices. "

All other things are not equal, and economics fails to take that into account.

Re:People who think economics is not a science...

[sabbede]

Really? In no other field do scientists ever skew their results for financial gain?

Re:People who think economics is not a science...

[phantomfive]

That's a problem with predicting the market for sure, but it's not a problem with economics.

Re:People who think economics is not a science...

[phantomfive]

All other things are not equal, and economics fails to take that into account.

Economics doesn't fail to take that into account. YOU think it does, because you get your information about economics from dubious sources.

I don't understand.

[Anonymous Coward]

Any chance you could dumb this down into a car analogy for me?

Re:I don't understand.

[phantomfive]

Any chance you could dumb this down into a car analogy for me?

An physicist builds you a car: real nice thing with gold plated windows. During the night, the car gets stripped. Rims stolen, battery ripped out and lying on the street, headlights bashed in, the entire top turned into a convertible. The engine was stolen for scrap metal. In the morning, you walk outside, and while you're calling the police, someone shoots you. When the police come, they steal your wallet. The police and the vandals walk off together for drinks and donuts.

It was a really nice car.

Re:I don't understand.

[Anonymous Coward]

When an auto manufacturer sells cars that no one wants, and no one buys them, and the government bails out the auto manufacturers.
Don't blame the media who told you this story for not telling it to you sooner.

Re:I don't understand.

[phantomfive]

The police hire another "physicist" who claims the car was built to be stripped in the first place. People who know nothing about physics get confused and change the channel. Some of them vote in the next election.

Re:I don't understand.

[khallow]

If a dump truck rear ends your shitty Pinto and you die in a ball of fire, it may be the fault of you or the other driver, or the fault of the engineers, but it's not the fault of physics.

uh, it obviously depends on definition of science

[Anonymous Coward]

nt.

Lol! This reminds me

[Anonymous Coward]

Of how a kid learning to play a musical instrument blames his/her inability to play on their being something wrong with their instrument rather than them not having gained a proficiency or competency in the skill of playing.

Just because someone has made bad predictions, or has a bias against funding for economic studies or is involved in another field competing for research funding (more likely!) it does not follow that economics is not a science.. don't be fucking ridiculous.

Re:Lol! This reminds me

[Anonymous Coward]

Your analogy reminds me of a dentist riding a bull... because it's a terrible analogy.

Re:Lol! This reminds me

[Anonymous Coward]

Your analogy reminds me of a dentist riding a bull... because it's a terrible analogy.

How is it a terrible analogy exactly ? because you didn't come up with it or because you're too dumb to make the same connection or because I got modded up despite posting as AC and you didn't?

Come on asshole, speak up!

Oh you're just being an idiot and didn't have an 'actual' point to make other than the fact that you're a dimwitted asshole?
Message received..you might want to pull the dildo out of your ass and open a book..

Does this author actually 'get' what science is?

[qeveren]

"Constructing inherently imperfect theories" is essentially the definition of science.

Re:Does this author actually 'get' what science is

[vvaduva]

No, It's clear that he doesn't. That's a terrible write up.

Micro vs Macro

[Anonymous Coward]

Q: what's the difference between micro-economists and macro-economists?
A: micro-economists are wrong about specific things, while macro-economists are wrong about things in general.

Re:Micro vs Macro

[guacamole]

Sounds like your knowledge of economics hasn't gone beyond that of reciting of stereotypical jokes.

Not sure anyone is claiming it is

[g01d4]

There's the assertion that economics is granted a prize because the Nobel committee (or whoever) consider it a hard science like the other science prizes. That ain't necessarily so. Economics may have been selected as a representative of the so called softer sciences (it includes many of them after all) rather as the literature prize can be considered representative of the arts.

Re:Not sure anyone is claiming it is

[CanadianMacFan]

I didn't get the connection between the Nobel prize and it having to be a science. Does that mean Literature and Peace are now sciences?

What most people are forgetting is that is a social science. The leave out the social part. It's going to be different than chemistry and physics. Mind you most of the stuff I hear from economists is either obvious or seems like they pulled it out of their ass.

Re:Not sure anyone is claiming it is

[tnk1]

No, it is a prize because it is an important field of study.

And no, it's not anti-scientific. Economics can and does have scientific principles applied to it. You can apply the scientific method to economics as much as anything else.

The real problem with economics is the sheer number of variables. It is the study of very, very complex behavior. There is no reason to believe that economics could not become a harder science. The problem is that it is more like weather modeling than physics. You would need the capability to model an incredible amount of variables to make adequate predictions.

Some economists break things down as much as they can to discover smaller, more predictable mechanisms. Others try and use modelling methods to find more general trends. Without a grasp of all of the variables, and the ability to do that computation, however, the predictive capacity of economics is much lower than other sciences. That doesn't mean it isn't done scientifically.

On the other hand, there are people who are in the economic astrology business. They use their magical swami hat to generate theories out of thin air based on their personal beliefs about the market and politics. Those people are in more abundance in economics because economics is not a harder science due to lower predictive capability, but there have also been "magical" thinkers in physics and other harder sciences as well.

I think it is silly, in any event, to malign any award for being "not really a Nobel". The Economics Nobel is a high award for economics, but that's all. I don't think anyone is suggesting that this means that the winner has "outscienced" the winner of the Chemistry award.

Re:Not sure anyone is claiming it is

[Bender0x7D1]

Does that mean Literature and Peace are now sciences?

I believe Peace is one of the hard sciences.

Re:Not sure anyone is claiming it is

[sabbede]

The difference between social and "hard" sciences really just boils down to the difficulty in performing experiments.

Economics as she is played

[zorro-z]

Economics seems to exist to give jobs to the otherwise unemployable. After all, the entire field seems to specialise in predicting the past, yet managing to get it wrong anyhow. I say "predicting the past" b/c economists have a horrid track record of predicting the future.

But, then again, economics has gotta be a great field for job security. When's the last time you heard of an unemployed economist?

Re:Economics as she is played

[CanadianMacFan]

Economists definition of a recession: When the neighbour is unemployed.
Economists definition of a depression: When they are unemployed.

Re:Economics as she is played

[guacamole]

If you think that economics is the science of predicting the future, you're mistaken. It's only very small part of it.

Re:Economics as she is played

[zorro-z]

Whether or not it's a science, economics is horrid at predicting the future. Case in point: all the economists who insisted that the Clinton tax hikes in the '90s would cause a recession, or all the economists- probably the same ones, really- who insisted that Obama's policies would result in a spike in inflation. In both cases, the exact opposite occurred: the economy boomed in the '90s, and inflation has remained a non-issue since Obama took office.

Economics is an attempt to explain, well, how economies work. If economics were any good at this, then one would expect that economists would be able to use their theories to predict how a given policy would play out in the economy. And, in a huge percentage of cases, they fail miserably at this. To be honest, beyond supply and demand, I'm not entirely what economic theories can been shown to actually have any predictive value.

Re:Economics as she is played

[Anonymous Coward]

That's a strawman, which you've copied from the the media.

Economists as a group did not predict the Clinton tax hikes could cause a recession, and economists as a group didn't predict that quantitative easing under Bush and Obama would spike inflation. Rather, a small minority of economists made those predictions. Indeed, _most_ economists have argued that quantitive easing would _not_ lead to inflation. It's this strong balance of opinion, after all, which convinced the Federal Reserve to initiate and continue the program.

There's a minority of scientists who dispute anthropogenic global warming, too. And like the economists above, the scientists disputing global warming tend to to cluster in scientific fields far removed from climatology.

Like scientists, you shouldn't trust economists who make overly specific predictions about future events governed by complex feedback loops.

But, hey, by all means continue permitting pop culture to drive your perception of the world you live in. It certainly makes it easier to be critical, which is always fun.

Wedge Argument in New Clothes

[Anonymous Coward]

This is just a disguised wedge argument against social sciences. It has to start with the emotionally easiest target.

yeah

[Ryanrule]

Oblig Dilbert. https://www.youtube.com/watch?...

Human Action

[little1973]

by Ludwig von Mises. It's a hard read but worth it.

From wikipedia:
Mises came to be regarded by many as the archetypal 'unscientific' economist.

I think there is no higher praise calling an economist 'unscientific' knowing the questionable practices his 'scientific' colleagues do.

Re:Human Action

[Anonymous Coward]

What are the questionable practices that his scientific colleagues do?

Re:Human Action

[HiThere]

Well, one that was in the news just yesterday is not validating the excel spreadsheet that was used to run the economics model.

Re:Human Action

[Anonymous Coward]

You're referring to the Reinhart and Rogoff mistake. That was a stupid error, not a deliberate practice, and most certainly not a systematic practice used by economic researchers. Indeed, the process worked because it was an economist (a grad student I think), who found the error by not being able to reproduce their results and digging deeper to find out why. Economists care a lot about reproducibility and most findings are not generally considered to be true until multiple studies find similar results. How can Mises' philosophical musings be reproduced or tested?

Re:Human Action

[HiThere]

You don't need to believe that most of the mistakes are malicious to believe that there are a lot of mistakes. The very idea that their model would be developed and presented as an Excel spreadsheet says to me that they don't have a reasonable mathematical model. Excel was intentionally designed to hide the complexities that are used in a way that inherently makes it difficult to validate. You should never trust ANY model that is implemented in Excel (or any other spreadsheet, as far as I know) until it has been validated extensively. Spreadsheets aren't designed like Mathematica or R or any decent programming language. They are designed to hide your mistakes. They call it "being user friendly". (Perhaps I'm being a touch too cynical, but I may also be cutting them too much slack.)

P.S.: I'd say the same thing about MSAccess, but I haven't as much as looked at it in the last two decades. The last time I used it became the last time when I proved that it was making a simple arithmetic error. I had thought it was one of the periodic code corruption problems that MSAccess was subject to, but it was much worse than that. Perhaps in the last couple of decades they've fixed the thing.

Re:Human Action

[donkwich]

Are they as questionable as praxeology?

Re:Does this author actually 'get' what science is

[HornWumpus]

Except is isn't. That covers all forms of theorizing.

Science is all about testing the theory. Theologians have theories, but they are as far from scientists as it's possible to be. Even further than economists.

Wrong implication

[Anonymous Coward]

The existence of the economics prize doesn't imply economics is a science, anymore than the peace prize implies peace is a science.

economics as a science

[Anonymous Coward]

Economics is as much a science as psych or sociology.

Exactly!

Not quite true

[Anonymous Coward]

Economics is a "soft" science. Our understanding is so limited we should ban governments from even looking at the data points.

It's crap

[Anonymous Coward]

It isn't only not a science, it is even a piss poor model that unnecessarily stresses most people into an early grave.

Economics is Psychology - Apollo Dividend?

[aisnota]

Note, economics is a perception racket, pure and simple!

The way you improve an economy would always lead to improving perceptions. So if you wonder why with all the power we have today, the economy looks so dour?

PERCEPTION!

War sometimes stirs the economy, it forces activities and people into action, conscription of assets, people and lands. Bad for economics in most cases, but one that forces movement, kind of like a laxative does for the alimentary canal. Works but far from optimal is the word there.

The ApolloDividend found on Twitter seems to have one way out of the morass.

Science can't be wrong?

[JoeyRox]

If that's the measure by what represents science then we're in trouble.

Art

[BenBoy]

Economics/Econometrics is a science, it's swindling that's an art.

Two Economists...

[Anonymous Coward]

...are walking down the street. One of them spots a $20 bill lying in the gutter.

She says, "Hey look, a $20 bill!"

The other says, "Impossible. If it were there, somebody would have picked it up already."

Re:Why all this sudden hate for the econ Nobel?

[khallow]

Why would Republicans discredit their primary justification for doing anything? I'd say if such a thing is happening, it's either a convenient Emmaneul Goldstein moment (with a unifying moment for the unclued) or a ploy by a party that routinely headbutts economics.

Having said that, I'm not seeing the alleged extra hate this year.

What world do you all live in?

[Anonymous Coward]

"the human world operates much like the physical world"

What the heck is the implication here? The human world is somehow a separate thing from the physical world?

Peace isn't a science either

[Anonymous Coward]

Helping to understand the underlying principals of economics is good. Understanding the underlying principals of world peace is also good. Neither are sciences, but they both have their place in the Nobel awards.

Re:Peace isn't a science either

[Anonymous Coward]

You should start by understanding the difference between "principals" and "principles".

Man, the internet's been shit since they allowed niggers on.

Re:Peace isn't a science either

[Anonymous Coward]

You should start by understanding the difference between "principals" and "principles".

Man, the internet's been shit since they allowed niggers on.

Well its an improvement to all the racist nazi idiots like you.

What a BS article

[TheSync]

The Black-Scholes Model is about one risky asset, (such as stock), and one riskless asset (such as cash). It also depends on asset returns to be normally distributed.

I don't know what model LTCM was using in their Fixed Income Arbitrage, but it was unlikely to be the Black-Scholes Model, and anyway also a big part of the LTCM downturn was when Russian government defaulted on their domestic local currency bonds, more of a "Black Swan" than a "Normal Distribution."

It has been written "Despite the presence of Nobel laureates closely identified with option theory it seems LTCM relied too much on theoretical market-risk models and not enough on stress-testing, gap risk and liquidity risk. There was an assumption that the portfolio was sufficiently diversified across world markets to produce low correlation. But in most markets LTCM was replicating basically the same credit spread trade. In August and September 1998 credit spreads widened in practically every market at the same time."

Re:What a BS article

[bstarrfield]

LTCM was founded by the authors of Black-Scholes, and they were using the model to make a fortune until reality happened and their beautiful model fell apart.

LTCM's fracas

[Anonymous Coward]

After the LTCM's fracas, I wonder if Merton and Scholes still dare show their faces in public? I mean, I don't think you can wipe so much egg off your face no matter how many showers you take.

Economics is not a science...

[Anonymous Coward]

See the science on reasoning:

https://www.youtube.com/watch?v=PYmi0DLzBdQ

WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap

http://www.businessinsider.com/wikileaks-haiti-minimum-wage-the-nation-2011-6

Wikileaks

https://www.youtube.com/watch?v=ABDiHspTJww&feature=youtu.be

The Citibank memo

http://politicalgates.blogspot.ca/2011/12/citigroup-plutonomy-memos-two-bombshell.html

US distribution of wealth

https://imgur.com/a/FShfb

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

I'm shocked!

[gestalt_n_pepper]

NOT!

The ability to create self consistent mathematical models is not science. Science requires rigorous comparison of such models (a.k.a. "theories") against REALITY for verification. Most textbook economics would fail this test miserably. While certainly difficult, this is not impossible, particularly as computer systems dealing with complex systems have been available for decades. What's required is the will to do so - something that isn't present in our overpriced, overbribed, higher "education" system.

LOW inflation is better in the long run

[Bruce66423]

The argument for this is that it enables relative prices to shift without running into the sticky price problem; workers are very unwilling to accept lower wages, but if inflation is 2% - which is the consensus target of our Central Banks overlords - firms in declining industries are less likely to have to get into a fight with their employees as their wages are slowly nibbled away.

A more complex issue is the degree to which some inflation means that the central banks have some room to crash interest rates down to when a crisis strikes. The current quantitative easing comedy is caused by the fact that it is very hard to set interest rates at less than 0%. So if interest rates are 2.5% - the historic average - plus 2% inflation - that gives 4.5% worth to cut when a crisis strikes. Our present crisis is being stretched out because it's been so hard to get central banks - especially the Germans - to accept the need for QE.

Economic theory is sound, speculation isn't

[Kjella]

There's a massive bulk of economic theory that explains the applied math of running a business. Can you figure out if $1000 now is more or less than $1100 five years from now given an inflation rate of 2%? The relations between price, quantity, marginal costs and profit are also quite sound. The thing is though, all this information is allegedly available and equal for all, so if everyone agreed to the same model there'd be no profit to be made. Sure, the future would be unknown but it would be like a lottery ticket being scratched, everybody knows at all times the exact value of all the possible outcomes so everybody prices in the same expected value of the future. If you can find a way to make arbitrage, you've found a flaw in the way the market works. For example if you discovered you could make money selling products in one currency and buying them in another, or transporting goods from one market to sell in another for more than the transport and insurance costs.

Speculation is all about betting on these flaws, but sometimes the market has priced in risks you haven't imagined. Or there are forces that only become dominant at a certain size. In this particular case it was more like you create a theory of chemistry and when the market goes to an extreme you have nuclear fusion instead. That doesn't make chemistry wrong, but at certain times it's irrelevant and you can't rely on it to always produce correct answers. Oh and just to put a nail in that coffin, no scientific theory is proven to be universally valid since there's still the future and it hasn't happened yet. There's no absolute guarantee gravity will work the same five minutes from now, if it suddenly starts behaving different it just will. In that case reality will be right and the formula wrong, no matter how correct and comprehensive it might have looked.

Sounds like a natural system to me

[ceoyoyo]

You can model it's current behaviour, but if you poke it too hard you'll disturb it and the rules will change.

Economic models often work reasonably well so long as the conditions remain the same. When you can't help yourself and you found a company that trades tens of billions with the hope of making OMG MORE BILLIONS, you disturb the system. Same as if you hook a generator up to that pendulum, or catch all the fish.

You don't know how lucky you are

[Bruce66423]

One of the problems with economics is that it gets blamed when things go wrong - but it doesn't get the credit for the good things that are right. It's achievements in terms of steady generally economic growth since 1945 which is vastly better than the horrible cycles of boom and bust that markets the 150 years before that are forgotten when we hit what was a relatively mild bump in the road. Noone with small deposits lost their money in banks for example - a concept totally new to the world since economics became influential. Is it perfect? Of course not. But unlike medicine - which sometimes suffers the same problem as with anti-vaccers - its achievements are less immediately obvious.

From Alfred Nobel's will

[fejikso]

The spirit of the Nobel Prize can be extracted from Alfred Nobel's will:
"The whole of my remaining realizable estate shall be dealt with in the following way: the capital, invested in safe securities by my executors, shall constitute a fund, the interest on which shall be annually distributed in the form of prizes to those who, during the preceding year, shall have conferred the greatest benefit to mankind."

Economic forces are probably one of the major ones that modify the quality of life of every human being in this planet, and have a definite impact on poverty, hunger, health and global peace. I'm a mathematician myself; I know what a "hard" science is and by that logic, mathematics should have its Nobel Prize as well. And I agree, Economics is less hard than most economists pretend it to be. But in any case, that's not what is in question. The fact that Economics is a major agent in the way we understand "human laws" and its effect on humankind, it warrants its place in the Nobel Prizes, I firmly believe.

Schooling. With the fishes.

[fyngyrz]

Psychology 102:

Smart people also do Dumb things.
Dumb people also do Good things.
Good people also do Bad things.
Bad people also do Smart things.

Psychology 103:

Smart people also do Good things.
Dumb people also do Bad things.
Good people also do Smart things.
Bad people also do Dumb things.

Psychology 104:

Smart people also do Bad things.
Dumb people also do Smart things.
Good people also do Dumb things.
Bad people also do Good things.

Second year:

Psychology 201:

How to use statistics to imply anything

Psychology 202:

The zen of tiny sample sizes

Psychology 203:

Regression therapy, or, How to make someone think they remember something that never happened

Psychology 204:

The more letters you have, the more authoritative you can pretend you are. So come back for a baccalaureate!

Congratulations! You are now the proud owner of an Associate's Degree in Psychology!

When a theory influences the subject

[Aviation Pete]

how can that be science? By definition, experiments cannot be repeated and theories cannot be proven. As soon as somebody in economics comes up with a new theory, the subjects of his studies change their behavior to alter the dynamics of the economy, invalidating the theory in the process. It should be obvious that such a system cannot be the basis of science. If those self-styled scientists would try to include the behavior-altering effects of their work, the system in turn will find ways of exploiting the new finding and to circumvent it.

In the end, it is science-envy by a faculty which does interesting and valuable work, but which is not science. Economists, get over it already.

Re:When a theory influences the subject

[Anonymous Coward]

How can quantum mechanics be a science? Every time we try to measure a particle, it moves. By definition, experiments can not be repeated and theories can not be proven. It should be obvious that such a system cannot be the basis of science.

It's always interesting how the attacks on economics increase in an election year, usually attacks made by those whose pet theories of how the world should work are debunked by economists (mostly those from the political left, but there's some on the right as well).

Testing theory against reality can be done ...

[kiatoa]

by careful inspection. At least this can be done to a degree. For an example of where this was done well with Economics (at least done well in my opinion) see Henry George's book Progress and Poverty. For the time starved listen to the free audio book on you daily commute. http://hgchicago.org/links/pro... or the unabridged version: https://librivox.org/progress-...

George Bernard Shaw on economists:

[globaljustin]

"If you laid them end to end, they would still never reach a conclusion"

Here is my Nobel prise winning theory

[EmperorOfCanada]

The mathematics of economics appear to be very similar to the mathematics of weather. There are elements that are predictable do to natural climatic conditions. Some elements are driven by distant events such as the formation of hurricanes. There are even black swan events such as volcanoes.

Thus it is very tempting to begin to look at people in a very statistical way just like the weather. In Canada is is probably a good idea to buy a snow shovel in the fall and a bathing suit in the spring. Not always, but a good plan.

Economists can very easily see that most people spend their time living most of their lives in a very simple statistical ebb and flow. Except there is one huge problem with this:
Assholes. Unlike the weather, the world is filled with assholes. This is where economists such as Milton Friedman get it exactly wrong. He seems to think that people will all work together in harmony in an invisible hand sort of way making the world a better place. Except that this is where you get complete assholes such as the people who put melamine into milk to improve its apparent protein levels. Why did they put melamine in milk, because they had previously been watering it down so the milk companies started testing for nitrogen as a way to test for protein. Assholes.

If you haven't dealt with people on Wall Street before then you simply can't take to heart the levels that genuine psychopaths will stoop in order to make a buck. People often think of not playing fair in ways such as deflategate or someone putting their toe over the line when serving at tennis. No, on Wall Street they will happily destroy an entire country and all it's industries so that they can make a few million dollars. They will guide regulations so as to ban competition. They will pay off politicians to empty the government treasuries in their favour.

Think about the rolling brownouts and massive increases in power costs in California, all so that Enron could make a tiny amount of money (vs the costs). By some estimates California lost over 40 billion dollars because of those exploits.

So unlike the weather and the nice pretty mathematics that surround it, economics forgets that these asshole hailstorms will take out all the car windows a week after the asshole tornado targeted the competing glass factory.

Some economists are pointing to game theory to explain even the assholes. But again, here they get it wrong. Take the prisoner's dilemma. But there are all kinds of other players in that game. First there is the DA who will hide exonerating evidence to make a name for himself. Then there is the prisoner who has the other prisoner shanked so that there is now only one player in the game. There is the corrupt police chief who arrested the two prisoners in the first place because he is in the pocket of a competing crime boss. Then there is the private prison system that has pushed the laws and courts so that the bail for the two prisoners is so high they can't afford it and the courts so overbooked that they will then spend months or maybe years in a private jail awaiting trial.

So if you want to win a Nobel in economics and actually come up with a system that has at least weather level predictive abilities then figure out how to model the impact of psychopathic assholes.

Should Be Art

[JimSadler]

Economics should be an art but in this world economics is a mess. If the goal of economies is the fair distribution of wealth then economics is a total failure.

It *is* a science, but a hard one

[Tablizer]

Economics is a science, or at least would be if done right.

Science is about predicting, modeling, and understanding the real world. Economics is the real world.

The "problem" is that it's a messy science with lot of variables, including human behavior. It's also difficult to get something close to controlled studies, as each situation is a different combo of factors. But this is also true of cosmology where we can't reboot the universe to try different things: we have to observe just the one we got.

Just because it's a difficult science does NOT make it a non-science. Nobody said science has to be easy to be science.

economics is not the study of the human world

[Goldsmith]

As the author of TFA points out, there are other academic disciplines that study the role of humans in economics and finance. Economics itself is not the study of the human world, it is a study of markets and distributions of resources. It's the assumption that economics has anything to say about REAL markets and resources that is hubris.

This is like a physicist trying to tell you how to drive your car using vector diagrams and inertia calculations. Just because someone may understand the underlying rules governing a system doesn't mean they understand the system.

We need economics to be approached as a hard science. We also need to keep economists away from policy and management roles unless they've shown a talent for good policy and management.

Economics is a science, but it is also chaotic.

[master_p]

Just like Physics cannot predict the weather in the long term, because the weather is a chaotic system, Economics cannot predict the state of the market, not because it does not have theorems or its theorems are not correct, but because there are too many variables and the outcome cannot be predicted.

Perpetual motion

[jandersen]

...a formula that yielded a safe but lucrative trading strategy.

That sentence in itself is probably hint that economics is not based on science, but faith. So, in essence, we can all make money off each other, sort of? If I make $100 by lending you money and you make $100 off me in the same way - who got richer?

Re:Why all this sudden hate for the econ Nobel?

[NostalgiaForInfinity]

Why would Republicans discredit their primary justification for doing anything?

It is progressives and socialists that believe that economics is sufficiently scientific that the government can use it to run and control the economy effectively; they use economic theory as the justification for everything from Keynesian stimulus programs to reforming health care and making climate predictions.

Free market advocates say that economics is so broken that using it as the basis of government policy is the equivalent as mandating the use of faith healing in health care.

correct, now act accordingly!

[NostalgiaForInfinity]

A year later, Long-Term Capital Management lost $4.6bn (£3bn) in less than four months; a bailout was required to avert the threat to the global financial system.

The problem with Long Term Capital Management wasn't that they used bad economic models; people lose money all the time for all sorts of reasons. The problem with Long Term Capital Management was that the government decided to bail them out, based on the views of economists. Bailouts, tax policies, stimulus programs, health care reform, carbon taxes, environmental regulation, etc. have all been justified by economic theories. If you want to see the kind of hubris economists suffer from, just listen to Krugman.

Yes, economics "is not a science" (i.e., it does not make reliable, specific predictions). That is exactly why government should refrain from interfering in free markets, because those interventions are based on detailed specific and economic predictions and models that are not reliable or scientific.

Re:correct, now act accordingly!

[RespekMyAthorati]

Too bad "free markets" are as much of an economic fantasy as any of the other things you mentioned.
There has never actually been a free market and there never will be.

Re:correct, now act accordingly!

[NostalgiaForInfinity]

Too bad "free markets" are as much of an economic fantasy as any of the other things you mentioned.

If you think it's an "economic fantasy", you evidently don't understand what a free market is. A free market has nothing to do with economic theory or beliefs. A free market is simply a market in which market participants set conditions and prices without government interference. A "free market" a single national entity, it can exist for specific goods or services. Free markets have been the norm historically, and they are widespread around the world today for many goods and services, including in the US.

Only a guess

[Anonymous Coward]

One consequence of the fact that "economics is not a science" is that nobody can tell you with absolute certainty what caused, is causing, or will cause economic change. You speak as if you are 100% sure what caused the great depression, but your guess is only that -- a guess. Even if your guess aligns with the guesses of 10 top economists, you could ALL be wrong, because in economics, nothing can be proven with 100% certainty. That is, after all, why economics is not a science. Right?

Well, how would you like if it your "science"

[groblewis]

basically disallowed the possibility of ever conducting a controlled experiment? Economists scour the world for "natural experiments" and are beside themselves with glee when they find one. (Best example I can think of: when one state raised its minimum wage and a similar, neighboring state didn't. What was the impact on employment? Spoiler: little or none.) Economics brought much of its trouble on itself by trying to come up with equations to describe how economies work. In order to make the math work, they had to make some ludicrous assumptions, like the mythical "rational man", and the whole concept of "equilibrium". More recent work in behavioral economics and Beinhocker's Complexity Economics has let some of the air out of these cheats, but the old joke still holds: "That's all well and good in practice, but let's see how it works in theory!" Many of the more math-oriented economists studiously ignore any connection between their models and the real world.

Re:Why all this sudden hate for the econ Nobel?

[khallow]

It is progressives and socialists that believe that economics is sufficiently scientific that the government can use it to run and control the economy effectively; they use economic theory as the justification for everything from Keynesian stimulus programs to reforming health care and making climate predictions.

Then they probably aren't the problem party either.

Free market advocates say that economics is so broken that using it as the basis of government policy is the equivalent as mandating the use of faith healing in health care.

Well, there we go. That's a party that might do it. Note they aren't Republican either.

Why emotions are more persuasive than logic

[mundlapati]

People do not listen to facts. You need an emotional angle.
http://qz.com/521628/keep-losi...

now there's some phrasing...

[Anonymous Coward]

"gynecologist cum mechanic"