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> the economy would run better (i.e. free market) without their "help". As if boom and bust business cycles aren't a thing in free markets. Or monopolies. Or m

• roenxi 9y ago
  If putting economists in charge somehow curtails monopolies, externalised costs, tragedies of the commons and boom and bust business cycles then someone really should sit down and get that news out there. Nothing I've heard suggests economists outperform a healthy democratic process. Monetary policy is one that is more up for debate - it seems reasonable that it can have a positive effect on gdp, but something has decoupled GDP from measures that actually effect people. I think that something is monetary policy, and note in passing that GDP was, prior to 1970, a much better proxy for energy/capita than it is now [1]. I watch the US economy with curiosity and note, for example, that core inflation, the central plank of US monetary policy, excludes basically anything I spend money on. [1] EDIT: https://wilcoxen.maxwell.insightworks.com/pages/804.html https://wilcoxen.maxwell.insightworks.com/pages/804.html
  • guelo 9y ago
    In healthy democracies politicians seek advice from economists for their policy proposals.
    • coldtea 9y ago
      Or, usually, just seek the "expert" support from economists for validating policies that promote their and their backers interests...
      • maigret 9y ago
        So then, there must be a visible, provable correlation between economist activities and inequality.
        • TheOtherHobbes 9y ago
          Yes. https://img.4plebs.org/boards/pol/image/1429/19/1429195124610.gif https://img.4plebs.org/boards/pol/image/1429/19/142919512461... The late 1970s were when neoliberal economic fundamentalism took over public policy. The graph shows the effect on equality.
          • amateurpolymath 9y ago
            I don't see this as evidence that economists => inequality. Even if we accept the notion that economists are directly responsible for growing inequality, it's worth remembering that there are disagreements within their ranks. I would argue this is when most economists lost influence in Washington, while a few like Art Laffer gained massive influence. The New Deal era prior to this was largely motivated by the work of noted economist John Maynard Keynes. Although the causality is debated, the New Deal was followed by recovery and economic growth. Economists gained influence in the public sphere because of the effectiveness, real or imagined, or "Keynesian" economic policy. These folks had lost sway in Washington by the early 70s due to the stagflation crisis[1] and the collapse of the "New Deal coalition" after the tumultuous 1968 presidential election. The late 1970s was dominated by the ideas of economists like Art Laffer, who took an uncontroversial economic idea "tax revenue is maximized at some point between 0% and 100%" and turned it into "the tax revenue maximizing rate must be lower than our current rate" without presenting sufficient evidence for his claim. This was a convenient for some in Washington who already believed this to be true, and thus the "Laffer curve" was born. The following era of deregulation and lower taxes on the wealthy likely played a large role in increasing income inequality. [1] The causes of stagflation are still debated, but I am convinced this was directly caused by the OPEC oil cartel using it's market power to quickly inflate the price of oil by 400%, creating a massive supply shock that started the stagflation spiral.
            • coldtea 9y ago
              >I don't see this as evidence that economists => inequality. Even if we accept the notion that economists are directly responsible for growing inequality, it's worth remembering that there are disagreements within their ranks. It's not "economists => inequality" it's neoliberal economists (almost all of them today) => inequality"
  • euyyn 9y ago
    > If putting economists in charge somehow curtails monopolies, externalised costs, tragedies of the commons and boom and bust business cycles then someone really should sit down and get that news out there. Nothing I've heard suggests economists outperform a healthy democratic process. You think those concepts came out of democracy popping a macroeconomics book out of a vote?
  • afpx 9y ago
    Could you explain more what your second paragraph means? I think I’m missing some background information. But, I’m really interested in what you have to say. As for your last paragraph, which things in the personal consumption expenditures (PCE) index don’t you buy? I just just read though the list of items in the PCE, and it seems like stuff we all buy. https://www.bea.gov/about/pdf/1106_ACM_PCE.pdf https://www.bea.gov/about/pdf/1106_ACM_PCE.pdf Also, I’m not clear on how this is much different from what economists attempt to do: create models and test them with data.
    • roenxi 9y ago
      First I’ll address inflation measures as they apply to me, then I’ll just air some fringe views that hopefully you will enjoy reading. EDIT And thirdly I'll extensively change what was written because I'm pretty sure it misrepresented the monetarist theory of inflation. I’m happy to be corrected on this, but ‘inflation’ in the US is usually the CPI-U series; less Food and Energy when the Federal Reserve sets monetary policy; not the PCE with which I am unfamiliar. I got weights from [1], which suggest 25% weighting to a theoretical owners rent component which in reality I don’t pay because I don’t have a mortgage. Obviously the index can't apply to everyone, happens not to apply to me. I would love to see a comparison of CPI weights vs average expenditure, which might make me feel a lot better, but I don't know where to find that info. As for elaborating on the monetary policy part, I broadly subscribe to the idea that a 10% increase in the amount money should link to a comparable reduction in the value of a unit of currency. That is basically using a personal inflation rate that is the rate of increase in the M2. The core inflation rate is <3%, the inflation rate that I expect is 5%. This means either I am wrong (popular view) or that the inflation rate is measuring something that isn't very interesting. I favour 2 with the caveat of accepting inflation in asset prices as inflation which seems to be the big break with mainstream thought. The big downside of this is all the usual stats become questionable – particularly ‘real GDP growth’, which I mentally downgrade by 2%. A lot of monetarist inflation types end up looking to measures like energy/capita, which is theoretically a measure of real wealth that can be used without relying on understanding inflation calculations. I like that measure for my own reasons. [1] https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm
  • amateurpolymath 9y ago
    In the US, our democratic process has delegated all these roles to regulatory agencies that are staffed with economists. The FTC, FCC, Justice Dept., etc. all employ many PhD economists. Whether their bosses and the politicians listen to their recommendations is another matter.
• LyndsySimon 9y ago
  > That's just run of the mill anti-intellectualism. Respectfully, you just dismissed an entire school of economic thought out of hand.
  • nickbauman 9y ago
    Which school in particular?
    • Robotbeat 9y ago
      Von Mises, which is notoriously anti-empirical (which is close to, but not quite the same as, anti-intellectualism).
    • ric2b 9y ago
      Austrian
• padobson 9y ago
  Or monetary policy. There are laissez faire arguments to counter every example you provided, but calling monetary policy laissez faire is oxymoronic or, if you prefer, anti-intellectual.
  • WalterBright 9y ago
    There was no monetary policy in the US prior to 1914.
• exolymph 9y ago
  Even prominent libertarian economists like Russ Roberts are in favor of some regulation. There are definitely those with more radical positions, but rarely very mainstream.
• bluGill 9y ago
  Free markets do not claim that. Those against free markets try to twist free market to claim them. Free markets to claim that boom and bust cycles are smaller, that monopolies are harder to maintain. Monetary policy is by definition not part of a free market (though many people try things that look like monetary policy if they have power the market isn't free). External costs/tragedy of the commons is something free market doesn't do well, which is why free market advocates have complex ideas that boil down to internalizing those costs.
• quantdev 9y ago
  Actually, it's not clear if boom and busts are "a thing" in free markets. We've had far worse booms and busts, and at a higher pace, ever since the Federal Reserve was created and has artificially modified the interest rate. The Fed lowers the interest rate because they have an incentive for the economy to perform well, because they want to look good (Alan Greenspan admitted he kept interest rates lower longer than he thought necessary because he wanted to retire on a high economy). This makes money cheap, so to speak, which creates incentive for everyone to borrow. Individually, this makes sense, but together, this ends in 2009-style. On top of that, many monopolies are created via regulations and laws. The fact that you're not even able to discuss these concepts or to realize that economists are incentivized to believe exactly the opposite of what I've said, because they financially benefit as central planners, mean that you are anti-intellectual, not the OP.
  • Nomentatus 9y ago
    My understanding of economic history, including the 1870s (but many other busts, too), is quite different. Can you cite a source? I happen to be reading "A History of The World Economy", by James Foreman-Pack. It contradicts you at every turn (Chapter 6 esp) and notes there was a time when the U.S. was the odd man out, lacking a national bank and suffered more severe downturns than other nations, amongst other things.
    • WalterBright 9y ago
      "And the Reserve System, established in response to monetary instability, had the power to exercise deliberate control over the stock of money and so could take advantage of this possibility to promote monetary stability. That conjecture is not in accord with what actually happened. As is clear to the naked eye in Chart 1, the stock of money shows larger fluctuations after 1914 than before 1914 and this is true even if the large wartime increases in the stock of money are excluded. The blind, undesigned, and quasi-automatic working of the gold Standard turned out to produce a greater measure of predictability and regularity--per-haps because its discipline was impersonal and inescapable--than did deliberate and conscious control exercised within institutional arrangements intended to promote monetary stability." Friedman's "Monetary History of the United States" pg 9-10
• JackFr 9y ago
  "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account." -- The Fatal Conceit, Friedrich Hayek