6 ms·

If you're talking Austrian economists, who are the primary proponent of the "fed is the bad buy, bring back the gold standard" argument, they explicitly reject

If you're talking Austrian economists, who are the primary proponent of the "fed is the bad buy, bring back the gold standard" argument, they explicitly reject any attempt at modeling or mathematical analysis. They are only interested in arguments based on "self evident" axioms. I've read many of the books you're talking about, and there's a reason they are "unpopular" and “discredited".

tobmlt 6y ago
There is no need to throw out the baby with the bathwater here. Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. And sure, I suppose I do care about avoiding mathematical naval gazing, or statistical hackery. But those are side-issues.
- BirdieNZ 6y ago
  But where's your evidence? For any economic school of thought to be a good approximation of truth, it needs to be able to make models that both describe what has happened, and predict what will happen. Any economist that can't do that is ultimately a quack. Where are the Austrian models that describe and predict accurately?
  - tobmlt 6y ago
    I think local predictions are hard for any school to make accurately in economics, but broad swath stuff is doable. So, to have a decent shot at a good theory, you need to figure out what the most important drivers are in your situation of interest. In business cycle theory, I think it is the action of the interest rate over time which is the most important thing that gets short shrift in the main, and which drives the dynamics I speak about above. I can make a regression say anything, but I predict the fed continues to operate, and the status quo of wealth flow from poor to rich continues. Now it can be modified by laws, and certainly will change with time, but the dynamics are there. You can superimpose other things on top and the results will vary. You can then make a model that focuses on one thing or another, and evaluate it statistically, and again, results will vary. This is some of how we ended up with a pluralist economics today. I wrote up some other stuff about my anecdotal experience with modeling and searching for "good governance" in grad school, and how I disagreed with methodology of the papers I was reading, before abandoning the enterprise for a return to physical engineering, but I guess this is my chief point. Methodology designs in what you want to see. Economics is not a controlled science (I mean mostly the studies can have no actual control group), and therein festers a great rub. Good fun learning the statistical analysis methods though.
- learc83 6y ago
  >Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. The people who wrote those books that you said would support your argument certainly do. >I’ll be happy to get my (Of course discredited) books out and recite the counter case about the Great Depression if anybody really wants me to later >I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. Are you basing this belief on anything other than gut feelings and the work of Austrian economists who's books you've read? von Mises is an absolute crackpot, but he does a very good job of making you "feel" that his arguments are valid. >And sure, I suppose I do care about avoiding mathematical naval gazing, or statistical hackery. That's different than the Austrian position that mathematical analysis is impossible and harmful. Without accepting the basic premise of Austrian economics that "no measurement is possible" and everything can be derived from the first principle of "humans acting with purpose", the rest of their "proofs" are worthless. You can't just accept (and cite) their arguments while also acknowledging the fundamental flaws with the axioms they use to reach their conclusions.
brobdingnagians 6y ago
I think their main point is that mathematical models, without connection to reality and logically tracing out the fundamentals of how and why people act, are dangerous in isolation. Statistics is useful, but statistics can lie. Having a conceptual framework of why people do things is valuable. Then add the mathematical models on top.
- notahacker 6y ago
  Sure, but having a conceptual framework of why people do things, with models on top [theoretical and empirical] is how mainstream economics works. Pointing out conceptual flaws in each others' models and how that leads to prediction error is how economists debate. The Austrian School on the other hand, is centred on Mises, whose magnum opus insisted that all his conclusions were logically deduced from the premise "humans act with purpose" and therefore unfalsifiable, stated that "no measurement is possible" in the field of economic activity (!) and who later described econometrics as "childish play with figures". That's a very different position from the many other mainstream and non-mainstream economists who simply think other economists' models are insufficiently connected to reality .
  - dnautics 6y ago
    The problem is that mainstream economics fails to accept that the choice of metric to perform their analyses encodes biases. Ivory tower economists don't really grok what affects the working class. (I can't say I totally do myself, but at least I drove for Lyft full time for a year and a half). Mainstream economics says that monetary intervention is necessary to "stabilize" the economy, as measured by metric X Y or Z. Who benefits from that stability? I would say mostly the upper echelon status quo. And what is the social cost of the stability? Mainstream economics also measures the widening wealth gap but it's incredibly infuriating that they can't fucking put two and two together and understand that the gap is the social cost of their stability measures. Especially so since there is a clear straight line mechanism for that to be the case.
    - notahacker 6y ago

tobmlt 6y ago

There is no need to throw out the baby with the bathwater here. Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. And sure, I suppose I do care about avoiding mathematical naval gazing, or statistical hackery. But those are side-issues.

BirdieNZ 6y ago
But where's your evidence? For any economic school of thought to be a good approximation of truth, it needs to be able to make models that both describe what has happened, and predict what will happen. Any economist that can't do that is ultimately a quack. Where are the Austrian models that describe and predict accurately?
- tobmlt 6y ago
  I think local predictions are hard for any school to make accurately in economics, but broad swath stuff is doable. So, to have a decent shot at a good theory, you need to figure out what the most important drivers are in your situation of interest. In business cycle theory, I think it is the action of the interest rate over time which is the most important thing that gets short shrift in the main, and which drives the dynamics I speak about above. I can make a regression say anything, but I predict the fed continues to operate, and the status quo of wealth flow from poor to rich continues. Now it can be modified by laws, and certainly will change with time, but the dynamics are there. You can superimpose other things on top and the results will vary. You can then make a model that focuses on one thing or another, and evaluate it statistically, and again, results will vary. This is some of how we ended up with a pluralist economics today. I wrote up some other stuff about my anecdotal experience with modeling and searching for "good governance" in grad school, and how I disagreed with methodology of the papers I was reading, before abandoning the enterprise for a return to physical engineering, but I guess this is my chief point. Methodology designs in what you want to see. Economics is not a controlled science (I mean mostly the studies can have no actual control group), and therein festers a great rub. Good fun learning the statistical analysis methods though.
learc83 6y ago
>Who cares about gold? Who cares about avoiding math? Not me. I guess I am no Austrian for those reasons. The people who wrote those books that you said would support your argument certainly do. >I’ll be happy to get my (Of course discredited) books out and recite the counter case about the Great Depression if anybody really wants me to later >I do care, however, about restraining the inflationary tendencies of governments because I believe they are an engine of wealth redistribution from the poor to the rich and powerful. Are you basing this belief on anything other than gut feelings and the work of Austrian economists who's books you've read? von Mises is an absolute crackpot, but he does a very good job of making you "feel" that his arguments are valid. >And sure, I suppose I do care about avoiding mathematical naval gazing, or statistical hackery. That's different than the Austrian position that mathematical analysis is impossible and harmful. Without accepting the basic premise of Austrian economics that "no measurement is possible" and everything can be derived from the first principle of "humans acting with purpose", the rest of their "proofs" are worthless. You can't just accept (and cite) their arguments while also acknowledging the fundamental flaws with the axioms they use to reach their conclusions.

brobdingnagians 6y ago

I think their main point is that mathematical models, without connection to reality and logically tracing out the fundamentals of how and why people act, are dangerous in isolation. Statistics is useful, but statistics can lie. Having a conceptual framework of why people do things is valuable. Then add the mathematical models on top.

notahacker 6y ago
Sure, but having a conceptual framework of why people do things, with models on top [theoretical and empirical] is how mainstream economics works. Pointing out conceptual flaws in each others' models and how that leads to prediction error is how economists debate. The Austrian School on the other hand, is centred on Mises, whose magnum opus insisted that all his conclusions were logically deduced from the premise "humans act with purpose" and therefore unfalsifiable, stated that "no measurement is possible" in the field of economic activity (!) and who later described econometrics as "childish play with figures". That's a very different position from the many other mainstream and non-mainstream economists who simply think other economists' models are insufficiently connected to reality .
- dnautics 6y ago
  The problem is that mainstream economics fails to accept that the choice of metric to perform their analyses encodes biases. Ivory tower economists don't really grok what affects the working class. (I can't say I totally do myself, but at least I drove for Lyft full time for a year and a half). Mainstream economics says that monetary intervention is necessary to "stabilize" the economy, as measured by metric X Y or Z. Who benefits from that stability? I would say mostly the upper echelon status quo. And what is the social cost of the stability? Mainstream economics also measures the widening wealth gap but it's incredibly infuriating that they can't fucking put two and two together and understand that the gap is the social cost of their stability measures. Especially so since there is a clear straight line mechanism for that to be the case.
  - notahacker 6y ago