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Macroeconomics isn't so much a religion as it is a pantheon of religions. Religion and spirituality are really separate things. Jainism, Buddhism, Daoism, and C

Macroeconomics isn't so much a religion as it is a pantheon of religions. Religion and spirituality are really separate things. Jainism, Buddhism, Daoism, and Confucianism are religions, but they worship no deities. Religions just try to explain how the world works and how to make the existence of its members better. Communism, Keynesianism, and Nazism do the same thing. Few Western economists think they know all the answers. Saying economists are wrong to try to estimate what the economy will do if some policy is enacted is like saying that biologists shouldn't try to estimate what will happen to a human body if a certain drug is administered. Of course, no one will know for sure how someone will react to the drug as there are a million different factors that influence such things. But, it's best to do your best to try to figure out if something is going to be poisonous based on all the things you know about the human body and chemistry before you give it to the patient, right? Economics is hard because you can't do repeated trials. Most economists acknowledge this, and they understand the pitfalls of their craft. There are plenty of instances of individual economists making outrageous predictions about the future that proved comically false. But these are the exception, not the rule. The problem we have now is that politicians think they do have all the answers. The Republican party has decided all that is needed for economic growth is lower taxes (not low taxes, mind you--lowER taxes). The Democrats, likewise, think all you need to do is throw money at a problem, or regulate it, and it will be fixed. They KNOW the solution and they won't consider any other solution because they already have the answer. I wish just one politician would say "I don't know" and would ask economists what is likely to work under the circumstances.

soVeryTired 9y ago
Few Western economists think they know all the answers... But they do think they know the methodology that will get them the right answers eventually. It boils down to 1/ Write down a model, which is unknown up to a vector of parameters 2/ Use economic theory (e.g. assumptions about rationality) to restrict the parameter space 3/ Use data to estimate the model 4/ Draw conclusions from the estimates In principle, that's OK. But the analysis can go very wrong at any one of those steps. There are also many, many ways to understand complex phenomena that don't go via steps 1-4. Attempting to use that methodology in fields such as biology, psychology, or anthropology would often yield lousy results (though not always). It's not at all clear that it's the definitive method through which to understand the economy.
xaa 9y ago
Biologist here. Biologists don't try to predict whether a drug will have side effects before giving it to humans. They simply give it to mice. If we do have some strong reason to suspect it might be harmful to humans, we might do a primate trial, but usually not as those are expensive. People do make statements like "Drug X has target Y, so its side effects should be limited to A, B, and C", but no one takes those claims seriously. It's too hard to predict what a drug will do, and in fact drugs are frequently used in practice without any knowledge of mechanism of action. The point is that biology is fundamentally empirical here, because in complex systems it seems that rationalism/theory is not that useful. > Economics is hard because you can't do repeated trials. Yes. The problem is that they pretend they can predict results of interventions when they demonstrably cannot. Economists are simply used to justify policy decisions made on some other basis.

soVeryTired 9y ago

Few Western economists think they know all the answers... But they do think they know the methodology that will get them the right answers eventually. It boils down to 1/ Write down a model, which is unknown up to a vector of parameters 2/ Use economic theory (e.g. assumptions about rationality) to restrict the parameter space 3/ Use data to estimate the model 4/ Draw conclusions from the estimates In principle, that's OK. But the analysis can go very wrong at any one of those steps. There are also many, many ways to understand complex phenomena that don't go via steps 1-4. Attempting to use that methodology in fields such as biology, psychology, or anthropology would often yield lousy results (though not always). It's not at all clear that it's the definitive method through which to understand the economy.

xaa 9y ago

Biologist here. Biologists don't try to predict whether a drug will have side effects before giving it to humans. They simply give it to mice. If we do have some strong reason to suspect it might be harmful to humans, we might do a primate trial, but usually not as those are expensive. People do make statements like "Drug X has target Y, so its side effects should be limited to A, B, and C", but no one takes those claims seriously. It's too hard to predict what a drug will do, and in fact drugs are frequently used in practice without any knowledge of mechanism of action. The point is that biology is fundamentally empirical here, because in complex systems it seems that rationalism/theory is not that useful. > Economics is hard because you can't do repeated trials. Yes. The problem is that they pretend they can predict results of interventions when they demonstrably cannot. Economists are simply used to justify policy decisions made on some other basis.