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"This is economics 101" is exactly the problem: we're dealing with an economic system that isn't working. Questioning economics 101 is precisely what's needed,
by cperciva 10y ago
"This is economics 101" is exactly the problem: we're dealing with an economic system that isn't working. Questioning economics 101 is precisely what's needed, and I'd argue that while your arguments are sound, they've been treated as absolutes, which they're not.
This makes as much sense as saying "You say that my magical spacecraft won't work due to the laws of physics, but physics is exactly the problem: We can't travel to Alpha Centauri yet. Questioning the laws of physics is precisely what's needed...".
You don't get to ignore facts simply because they're inconvenient.
- thesagan 10y agoBegging the question; economics is not a physical science where you can run A/B tests on an economy and find results. It's a social study, mostly. As someone who studied it for years, institutionally and on my own, I can tell you that economists do not agree on any basic laws except that people have a long list of wants and that not all of them can be satisfied. Many economists are questioning their 101s lately. Look closely in the various journals and you'll see evidence of that, both explicitly and implicitly.
- cperciva 10y ago"Trade and exploiting comparative advantages yields greater utility" is about as hard a law as any.
- daptaq 10y agoNot if you ask marxist-economists...
- cperciva 10y agoAnd if you ask biblical literalists, they'll tell you that there was no big bang but the world was instead created in six days. There are always some people with counterfactual beliefs.
- VodkaHaze 10y agoYes, and we should ask Lysenkoists about effective growing of crops. Marx contributed massively to sociology. He contributed nothing of note to economics that's really relevant to this day (not that his effort was not commendable). Sticking to orthodox marxist economics in 2016 is more dogma than science.
- thesagan 10y agoMarx's contributions to sociology are definitely relevant today, even if they're not in vogue. Even if they're wrong. This is human behavior we're talking about, and people have memories that they act upon.
- icantdrive55 10y agoMarx was an Economist. I forget the exact amount of pages he wrote on sociology, history, or philosophy; I believe it was ten pages of this thoughts. And that's what people remember. He wrote 10,000 pages of economic theory. I can't say they are wrong, or right--I haven't read his complete work. I doubt Russia bothered to read, and implement his theories to the tee. I don't think we can honestly evaluate wether he might be wrong, or right. (I wonder if his plan might work if they could ever take nepotism, and corruption out of the equation. It seems like nepotism, and corruption taint every economic theory?)
- youdontknowtho 10y agoThat wasn't the point. The point is that the "laws" of economics are the same rigorous laws of physics. Markets aren't forces of nature. That's propaganda.
- cwyers 10y agoCiting economic theory that has been discredited as evidence that economics is not a science makes about as much sense as citing Ptolemy's Geocentric model as evidence that astronomy isn't a science.
- 10y ago
- thesagan 10y agoIf the law stands in isolation. But there are more questions that arise. To whom? For how long? In which way? Etc. etc. The side effects must be investigated because that's largely where we are in the public discourse right now. We're in a big adjustment period. We're learning about consequences; good and bad. Reminds me of Keyne's famous long-run quote.
- Avshalom 10y agoBeing a happy Subaru owner I'm rather glad Japan ignored comparative advantage.
- pdonis 10y ago> I'm rather glad Japan ignored comparative advantage. They did? How so?
- lomnakkus 10y agoCaveat: The interests must align[1]. (See: Principal Agent Problem.) [1] Which they, in actual fact, very seldom do.
- Pyxl101 10y agoCan you give one (preferably two) specific examples of respected economists who are questioning 101 level econ principles? I've studied economics at the college level. I follow economics news and am not aware of economists questioning 101 level principles. Many of these are relatively simple and intuitively obvious ones (once you wrap your head around them), much like 101 level maths. Consequently I am inclined to disbelieve the claim that economists are questioning econ 101 principles, unless you can provide some examples. More than one example would be most convincing since you're claiming this is a general trend. Journal article links would be appreciated.
- cdavid 10y ago(I am not an economist, never took a class in economics, but am interested in the field and like to read about it, so talke all of this w/ a grain of salt) It is not so much about questioning economics 101 principles as much as questioning their validity in the various economies. Taking the example of comparative advantage and more general trade theory, there are well known, respected economists (e.g. D. Rodrik) who have argued against the scope of their validity. There also seems to be a debate about how 101 is taught in schools, see e.g. [1]. [1] https://www.washingtonpost.com/posteverything/wp/2016/05/13/even-economists-love-to-hate-basic-economics-lately-they-shouldnt/?utm_term=.a6a85f49ea8d https://www.washingtonpost.com/posteverything/wp/2016/05/13/...
- thesagan 10y agoYou're right, it's a larger question of validity in these nuances. I knew I'd get in trouble saying "101", but I hope people will read that in a sympathetic light. (Ha!)
- thesagan 10y agoPlease accept my apologies: I'm taking a Mary Poppins approach by "not explaining anything." We're all capable of looking for examples that'll confirm our own suspicions; an attempt at confirming or disconfirming what I've blurted out above can be an exercise for the diligent reader. I want to push back on the idea that economics is a way to divinate the truth of how to generate and share happiness. It's a piece of the puzzle, but a very small one.
- WalterBright 10y agoMost (all?) bad economic policies come from denial of economics 101. For example, fixed currency exchange rates. And, of course, wage and price controls.
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- srtjstjsj 10y agoNo, economic policies come from observation that policies are sociological. Economics tells us what is, not what is desirable. Policies are applied economics, intended to distribute value in unnatural but desirable ways. Price controls and other "bad" economic policies are akin to a rocket ship's gravity controls that generate huge amounts of entropy to lift a metal box off the ground: They sacrifice some measure of global optimality in exchange for local improvements.
- BurningFrog 10y ago> economics is not a physical science where you can run A/B tests on an economy and find results The is broadly true of Macro Economics. This might even be impossible as a science, since the object of study (world economy and markets) is aware of its findings, and adapts around them. Micro Economics, or "Price Theory" as it maybe should be called, is OTOH a very powerful science that gives deep and counter intuitive insights into how the world works. It is also largely ignore by decision makers :)
- tomp 10y agoAre you sure about microeconomics? AFAIK, only recently have economists started to use behavioral economics (psychology & game theory) to logically explain empirical behaviours that were previously thought of as irrational. It doesn't really seem to be a solved problem.
- BurningFrog 10y agoI'm not a real economist, just a really interested amateur. My impression is that "behavioral" economics is a promising field that can help explain some unusual phenomena. But it doesn't change the solid core of the science. I think it gets talked about like that sometimes by people who don't like the implications of the established science. Much like what happens with Climate Change and Evolution when any seemingly contradictory study appears.
- thesagan 10y agoI love you. :) Seriously, though, your econ mind is on the same track as mine. "Economics" is a pretty broad brush, and it's difficult engaging in meaningful discussion. You make a great point: The "economic system" is conscious and reacts/adapts to internal and external changes, which changes the rules, and the meta rules, and the meta meta meta....
- thesagan 10y agoCan't edit my original comment – sorry about the 'I love you', that's a bit over the top. I might've had a drink earlier. ;)
- matthewmacleod 10y agoThat's a bit of a silly comparison. 'Economics 101' is not a hard-and-fast set of physical rules; if it were, we'd probably be doing a much better job of managing it!
- ux-app 10y agoeconomics isn't hard science
- hermitdev 10y agoAnd economics often operates under the assumption that all actors act rationally and with perfect and complete information, which of course we know is not true. (editted for clarity, grammar and spelling)
- pg314 10y agoFor those interested to read more: it's called the homo economicus [1]. [1] https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus
- snrplfth 10y agoEssentially zero actual economists assert or believe that actual humans in actual economies are, or behave like, homo economicus. Essentially all are aware that it is a limited model, which attempts to approach certain important features of reality, but cannot always do so due to limits on information, comprehension, and subjective values. Meteorology is still a valid field of science even if its models are limited and incomplete. Likewise with economics. "Economists think homo economicus is literally true" is a ludicrous strawman.
- lucideer 10y agoI said nothing about ignoring economics 101. I'm talking about application of principles in moderation, accounting for nuance, and it's again been framed as an extreme absolute. That said, as other commenters have pointed it, it is a little rich comparing economics to physics
- psyc 10y agoTo me, your analogy actually helps the parent comment's argument.
- pg314 10y agoSome of the basic premises of a lot of economic theories are questionable. E.g. the homo economicus in many economic theories is a fiction.