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Ah, so we don't really disagree at all---or, at least not much. It's my fault for using a bad analogy, and you hit on a better one. You're right, the axioms, wh
by mhartl 17y ago
Ah, so we don't really disagree at all---or, at least not much. It's my fault for using a bad analogy, and you hit on a better one. You're right, the axioms, whether in economics or physics, must come from the empirical world. Given the axioms, you can then prove theorems, but of course the axioms might need tweaking---which can dramatically change the theorems. What I see in economics are cases where people implicitly accept particular axioms, and yet reject many of the consequences (i.e., theorems). It's as if they agree that Newton's law of gravitation is correct, but don't believe that two-body orbits are closed.
Though complex in general, there are aspects of human behavior that are consistent and quite simple, and serve as a solid foundation for a study of human action. (You probably recognize this as the Austrian approach of praxeology.) When I read the Austrian argument that any fixed amount of money-stuff (e.g., gold) is sufficient for exchange, I understand the axioms, follows the steps, and accept the conclusion. When I read the Keynesian arguments for the benefits of monetary expansion and "fiscal stimulus", I see---great clouds of fog. Their arguments are often too vague to untangle, but I can see that their conclusions (a) appear to be based on the same axioms I accept and (b) disagree with a theorem. Something doesn't add up.
In sum, the value of empiricism lies in finding the right axioms. If you discover "empirical evidence" that a theorem is wrong, you must either propose a change in the axioms or find a flaw in the proof. Contemporary economists often appear to do neither.
(The Card & Krueger example is again instructive. If you raise the price of labor, people buy less of it, so minimum wage hikes must increase unemployment. And yet, from a contemporary NY Times article (http://bit.ly/5afSyk http://bit.ly/5afSyk), we find this:
They [Card & Krueger] surveyed 400 fast food restaurants and found that
those in New Jersey actually added 2.5 workers after the minimum wage went
up. In Pennsylvania restaurants, meanwhile, payrolls shrank.
Why should bosses hire more workers if it's more expensive to do so? The
two economists speculate that any fast-food restaurant typically operates
with a couple of vacancies it can't fill because it doesn't pay enough.
"If you raise the minimum a little," said Professor Card, "teens who are
sitting [at] home go out looking for jobs."
Apparently, these restaurant managers are too stupid to realize they're allowed to pay above the current minimum wage, thereby getting those lazy teens off their couches to fill the vacancies without a minimum wage hike. Truly, it boggles the mind.)
- philwelch 17y ago"In sum, the value of empiricism lies in finding the right axioms. If you discover "empirical evidence" that a theorem is wrong, you must either propose a change in the axioms or find a flaw in the proof. Contemporary economists often appear to do neither." That's not how the real sciences work, though--physics doesn't operate through axioms and theorems, it establishes a few theories and as long as they hold within experimental error, they don't complain too much. When they stop holding, we either postulate extra "stuff" we don't directly observe (most of the outlying planets as well as the Kuiper belt were discovered by measuring their gravitational effects on planets we could directly observe) or use a more refined theory on the edge cases (Mercury's orbit). But all the while physics gathers more and more empirical data, and spends a lot of time trying to make sense of it. "When I read the Austrian argument that any fixed amount of money-stuff (e.g., gold) is sufficient for exchange, I understand the axioms, follows the steps, and accept the conclusion. When I read the Keynesian arguments for the benefits of monetary expansion and "fiscal stimulus", I see---great clouds of fog." The other problem I find is that most armchair Austrians take their entire economic understanding from an 80 year old dispute and have no conception of what's happened in the field ever since. Keynes is a dead old man and the field of economics has moved on from his work. Incidentally, even if you just take the approach of pure reason, it's still pretty fucking easy to debunk the idea of the gold standard. "Apparently, these restaurant managers are too stupid to realize they're allowed to pay above the current minimum wage, thereby getting those lazy teens off their couches to fill the vacancies without a minimum wage hike. Truly, it boggles the mind.)" And here you see one of the biggest problems with the field of economics in general, a problem that's only been tackled in recent decades--modeling how actual human beings behave in the real world rather than supposing that each economic actor is fully informed, perfectly rational, and perfectly self-interested. How many 16 year old kids would know whether or not Burger King paid above minimum wage? Of course Burger King only pays minimum wage. It's a cultural expectation. The same thinking applies to the manager--is a fast food manager really going to be fully informed, perfectly rational, and perfectly self-interested? For the most part, his job consists of executing a manual written at the corporate headquarters in a different state which dictates that crew are paid local minimum wage, and quite frankly, the corporate overhead of rewriting the corporate manual to allow wage adjustments to recruit people to work at a fucking Jack in the Box isn't justified.