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Yes, economics has not been very successful at making predictions with pinpoint accuracy, and yes, people might place too much faith in economic theory. But th

Yes, economics has not been very successful at making predictions with pinpoint accuracy, and yes, people might place too much faith in economic theory. But the stark reality is that the existence of economics as an academic discipline is inevitable. Policymakers worldwide make decisions that impact billions of people and involve trillions of dollars, and it simply either isn't palatable to the public ear to proclaim they're going by intuition alone, or involve proposals so complex that our intuition just can't evaluate them - they need an academic foundation to stand on. And that's where economists come in - they might quibble over more esoteric topics, or waver in giving specific recommendations, but there are areas where they can say what definitely won't work in the long run - for e.g. when foreign aid might work instead of foreign trade, currency manipulation, regulation of monopolies, use of state subsidies, impacts of tariffs etc. The academic consensus in areas like these are a lot stronger than the media make it seem.

nafey 9y ago
The libertarian counter argument to this is that public servants/bureaucrats shouldn't be in the business of investing trillions of dollars. The market gets to decide which investments get made and the investor takes the fall for bad decision instead of sucking on taxpayer's teats for a bailout.
- em500 9y ago
  In most Western countries, the amount controlled by public servants/bureaucrats is decided by governments and parliaments elected about every four years. If libertarians believe that amount is too high, they need to do a better job convincing voters to elect parties that decrease public spending.
- stephen_g 9y ago
  The problem with that line of economic thinking is that it all hangs on the efficient market hypothesis, which has proved to be nowhere near as robust as most libertarians claim. You are also assuming that taxes actually pay for things, which isn't really how modern monetary systems work (Governments who have their own central banks actually spend money into existence and taxes destroy money). So Governments do have an important issue to play being the monopoly issuer of money.
  - logicchains 9y ago
    >The problem with that line of economic thinking is that it all hangs on the efficient market hypothesis, which has proved to be nowhere near as robust as most libertarians claim. It does not hinge on the efficient market hypothesis: at its most basic it's just built on the idea that in the general case people are more careful with their own money than they are with other peoples', which is an observation I don't think many people would disagree with. It can be also built on the assertion that people are more able to invest in things how they want if they can spend that money directly than if they have to do it through the incredibly indirect method of voting for a political party and then somehow transferring money to the government to invest, which doesn't seem particularly controversial. >You are also assuming that taxes actually pay for things, which isn't really how modern monetary systems work (Governments who have their own central banks actually spend money into existence and taxes destroy money). So Governments do have an important issue to play being the monopoly issuer of money. From an economic perspective there's not a huge difference between taxes and creating money in this sense: both involve a transfer of wealth from citizens to government. Wealth (or more abstractly, utility) is the fundamental unit of economics, not money.
    - TheOtherHobbes 9y ago
      Considering the investment and banking industries are built on the claim that finance is more more careful with other people's money than its own, I'm not sure what you're basing that on. Of course you're correct in that it demonstrably isn't. But does that make your point about the politics of finance right, or wrong?
- BoiledCabbage 9y ago
  Seeing "Free market solves all" believers (which libertarians are a subset) on hacker news still to me is amazing. It seems like it requires such double think. The free-market concentrates wealth/power to those that have wealth/power. It always has, and always will. There is no "fair competition". If anywhere hacker news is blatant about sharing this truth. Every business plan lools for its "moat". It's way to ensure it doesn't have to compete. Half the startup exit strategies aren't to make a long term business, but to get bought out by a huge company and let them own the product. Ie concentrate more power in one of the aleeady most powerful companies. Amazon, Google, Facebook... on a daily basis we sit and watch these companies expand at will taking over markets and now industries and forcing out and effectively preventing any legit competition. Fundamentally how can people believe that the "free-market" is actually a balancing fair effect while watching this data day in and day out. The positive impact free-market is an idealism that doesn't exist. It's the exact same thing with communism, but a different group who is mixing up their ideologically perfect idea with reality. Yes communism probably would be great if the world worked that way, but it doesn't. And yes libertarianism would be great if the world worked that way, but it doesn't. Communist refuse to believe their ideology is flawed regardless of how much evidence there is to the contrary, libertarians do the exact same but with a different religion.
  - pitaj 9y ago
    You just made a list of assertions based on the popularity of a certain viewpoint on HN, which does have a left leaning bias. It all depends on what you want to optimize for. If you optimize for equality, go with communism, and everyone will be equally poor. If you want wealth, go with a free market, and billions of people will be elevated out of poverty. Freer markets lead to more economic growth and therefore more with for everyone, not just the rich. Free markets aren't about fair, they're about progress. Yes, every business wants a moat. The main source of this moat? Government interventions with regulations, bailouts, prohibitions, etc
    - maxxxxx 9y ago
      "Yes, every business wants a moat. The main source of this moat? Government interventions with regulations, bailouts, prohibitions, etc " Libertarians never can describe what a free market really is. Is anti-theft law a government regulation? Seems to me that pure anarchy is the only real free market.
p4bl0 9y ago
You seem to be saying that the existence of economics as an academic discipline implies that economics theory must be based on (pseudo-)mathematical models. I don't know in the US but in France we have two families of economists in academia: orthodox and heterodox. The orthodox family is the one of the economists who thinks that their field is a hard science with laws comparable to that of physics. It is the mainstream family. It may be further simplification of the reality but I think almost all of them of them could be considered rightists politically. Sadly, they are currently taking over the entire field by making it very hard to get an academic position in economics if you are not on their team. Heterodox economists are the ones who believe their field is more like a social science. They have a variety of point of views depending on their approach (sociological, anthropological, historical, philosophical, etc.). They are often categorized as more leftists relatively to orthodox (again, I may be oversimplifying here). Many of them are "refugees" in other academic field such as sociology (e.g., Frédéric Lordon or Bernard Friot). Anyway, my point is that economics could very well be an academic discipline without being a religion. EDIT: the Austrian School of Economics that fiatjaf mentions in another comment is an example of what is called heterodox economics.
crdoconnor 9y ago
"it simply either isn't palatable to the public ear to proclaim they're going by intuition alone, or involve proposals so complex that our intuition just can't evaluate them - they need an academic foundation to stand on." Complex proposals that the public can't evaluate are more typically a way of pulling the wool over the public's eyes. If the public were against "economic intuition" on principle then Trump would likely have lost Michigan on the basis of his opposition to the TPP, which most economists supported.

nafey 9y ago

The libertarian counter argument to this is that public servants/bureaucrats shouldn't be in the business of investing trillions of dollars. The market gets to decide which investments get made and the investor takes the fall for bad decision instead of sucking on taxpayer's teats for a bailout.

em500 9y ago
In most Western countries, the amount controlled by public servants/bureaucrats is decided by governments and parliaments elected about every four years. If libertarians believe that amount is too high, they need to do a better job convincing voters to elect parties that decrease public spending.
stephen_g 9y ago
The problem with that line of economic thinking is that it all hangs on the efficient market hypothesis, which has proved to be nowhere near as robust as most libertarians claim. You are also assuming that taxes actually pay for things, which isn't really how modern monetary systems work (Governments who have their own central banks actually spend money into existence and taxes destroy money). So Governments do have an important issue to play being the monopoly issuer of money.
- logicchains 9y ago
  >The problem with that line of economic thinking is that it all hangs on the efficient market hypothesis, which has proved to be nowhere near as robust as most libertarians claim. It does not hinge on the efficient market hypothesis: at its most basic it's just built on the idea that in the general case people are more careful with their own money than they are with other peoples', which is an observation I don't think many people would disagree with. It can be also built on the assertion that people are more able to invest in things how they want if they can spend that money directly than if they have to do it through the incredibly indirect method of voting for a political party and then somehow transferring money to the government to invest, which doesn't seem particularly controversial. >You are also assuming that taxes actually pay for things, which isn't really how modern monetary systems work (Governments who have their own central banks actually spend money into existence and taxes destroy money). So Governments do have an important issue to play being the monopoly issuer of money. From an economic perspective there's not a huge difference between taxes and creating money in this sense: both involve a transfer of wealth from citizens to government. Wealth (or more abstractly, utility) is the fundamental unit of economics, not money.
  - TheOtherHobbes 9y ago
    Considering the investment and banking industries are built on the claim that finance is more more careful with other people's money than its own, I'm not sure what you're basing that on. Of course you're correct in that it demonstrably isn't. But does that make your point about the politics of finance right, or wrong?
BoiledCabbage 9y ago
Seeing "Free market solves all" believers (which libertarians are a subset) on hacker news still to me is amazing. It seems like it requires such double think. The free-market concentrates wealth/power to those that have wealth/power. It always has, and always will. There is no "fair competition". If anywhere hacker news is blatant about sharing this truth. Every business plan lools for its "moat". It's way to ensure it doesn't have to compete. Half the startup exit strategies aren't to make a long term business, but to get bought out by a huge company and let them own the product. Ie concentrate more power in one of the aleeady most powerful companies. Amazon, Google, Facebook... on a daily basis we sit and watch these companies expand at will taking over markets and now industries and forcing out and effectively preventing any legit competition. Fundamentally how can people believe that the "free-market" is actually a balancing fair effect while watching this data day in and day out. The positive impact free-market is an idealism that doesn't exist. It's the exact same thing with communism, but a different group who is mixing up their ideologically perfect idea with reality. Yes communism probably would be great if the world worked that way, but it doesn't. And yes libertarianism would be great if the world worked that way, but it doesn't. Communist refuse to believe their ideology is flawed regardless of how much evidence there is to the contrary, libertarians do the exact same but with a different religion.
- pitaj 9y ago
  You just made a list of assertions based on the popularity of a certain viewpoint on HN, which does have a left leaning bias. It all depends on what you want to optimize for. If you optimize for equality, go with communism, and everyone will be equally poor. If you want wealth, go with a free market, and billions of people will be elevated out of poverty. Freer markets lead to more economic growth and therefore more with for everyone, not just the rich. Free markets aren't about fair, they're about progress. Yes, every business wants a moat. The main source of this moat? Government interventions with regulations, bailouts, prohibitions, etc
  - maxxxxx 9y ago
    "Yes, every business wants a moat. The main source of this moat? Government interventions with regulations, bailouts, prohibitions, etc " Libertarians never can describe what a free market really is. Is anti-theft law a government regulation? Seems to me that pure anarchy is the only real free market.

p4bl0 9y ago

You seem to be saying that the existence of economics as an academic discipline implies that economics theory must be based on (pseudo-)mathematical models. I don't know in the US but in France we have two families of economists in academia: orthodox and heterodox. The orthodox family is the one of the economists who thinks that their field is a hard science with laws comparable to that of physics. It is the mainstream family. It may be further simplification of the reality but I think almost all of them of them could be considered rightists politically. Sadly, they are currently taking over the entire field by making it very hard to get an academic position in economics if you are not on their team. Heterodox economists are the ones who believe their field is more like a social science. They have a variety of point of views depending on their approach (sociological, anthropological, historical, philosophical, etc.). They are often categorized as more leftists relatively to orthodox (again, I may be oversimplifying here). Many of them are "refugees" in other academic field such as sociology (e.g., Frédéric Lordon or Bernard Friot). Anyway, my point is that economics could very well be an academic discipline without being a religion. EDIT: the Austrian School of Economics that fiatjaf mentions in another comment is an example of what is called heterodox economics.

crdoconnor 9y ago

"it simply either isn't palatable to the public ear to proclaim they're going by intuition alone, or involve proposals so complex that our intuition just can't evaluate them - they need an academic foundation to stand on." Complex proposals that the public can't evaluate are more typically a way of pulling the wool over the public's eyes. If the public were against "economic intuition" on principle then Trump would likely have lost Michigan on the basis of his opposition to the TPP, which most economists supported.