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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 da

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
    > 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? The people who lose absolutely everything they've ever worked for in the event of a sustained recession. They tend not to be rich, nor comfortable with the rival Austrian solution of waiting it out because if wages drop low enough the rich might eventually deign to act by unburying their gold and investing in capital formation and job creation again. > 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 It's incredibly frustrating when the school of economics most founded by a man who stormed out of a meeting of the right wing Mont Pelerin society screaming "you're all a bunch of socialists" for discussing possible solutions to income equality masquerades as egalitarian. Other economists can and do discuss causes of and solutions to inequality, including establishing the fact "the rich get richer" was a truism when gold standards were everywhere. Austrian economics doesn't even acknowledge the possibility of "social cost", rejects the possibility of making meaningful claims about some people needing a dollar more than others and wants to set a floor on how much of the future economy the 1% control by ensuring their 'sound money' is still good for that share of future economic growth even if they impede that growth by withdrawing it from circulation. But yes, it's very good at scapegoating the Fed as the root of all evil as its oil baron funded adherents join often successful lobbying efforts against every single policy that might make working class people's lives less uncomfortable.
    - dnautics 6y ago
      You don't have to be an austrian to acknowledge that some of what they say is sensible. Discarding a theory in toto because it's adherents are odious is exactly the sort of hubristic political bullshit that results in you fucking everyone over.
      - notahacker 6y ago
        Sure, but you don't have to take any notice whatsoever of Austrian economics to critique the biases encoded in an economic model (indeed not being overtly hostile to the concept of economic modelling per se leads to much more parsimonious critiques of models and explicit identification of second order effects). I'm not really sure that Austrian economics has much to say that is sensible beyond illustrating basic microeconomic concepts and noting that inflation can [sometimes] be bad, business cycles are a thing and the predictive power of equilibrium models is limited, and you get all that in a mainstream undergrad textbook. Not being an Austrian helps you conclude that their arguments that economics isn't quantitative, positivism isn't useful and reducing income inequality is actually a goal a government might wish to consider wrong though. :)

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
  > 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? The people who lose absolutely everything they've ever worked for in the event of a sustained recession. They tend not to be rich, nor comfortable with the rival Austrian solution of waiting it out because if wages drop low enough the rich might eventually deign to act by unburying their gold and investing in capital formation and job creation again. > 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 It's incredibly frustrating when the school of economics most founded by a man who stormed out of a meeting of the right wing Mont Pelerin society screaming "you're all a bunch of socialists" for discussing possible solutions to income equality masquerades as egalitarian. Other economists can and do discuss causes of and solutions to inequality, including establishing the fact "the rich get richer" was a truism when gold standards were everywhere. Austrian economics doesn't even acknowledge the possibility of "social cost", rejects the possibility of making meaningful claims about some people needing a dollar more than others and wants to set a floor on how much of the future economy the 1% control by ensuring their 'sound money' is still good for that share of future economic growth even if they impede that growth by withdrawing it from circulation. But yes, it's very good at scapegoating the Fed as the root of all evil as its oil baron funded adherents join often successful lobbying efforts against every single policy that might make working class people's lives less uncomfortable.
  - dnautics 6y ago
    You don't have to be an austrian to acknowledge that some of what they say is sensible. Discarding a theory in toto because it's adherents are odious is exactly the sort of hubristic political bullshit that results in you fucking everyone over.
    - notahacker 6y ago
      Sure, but you don't have to take any notice whatsoever of Austrian economics to critique the biases encoded in an economic model (indeed not being overtly hostile to the concept of economic modelling per se leads to much more parsimonious critiques of models and explicit identification of second order effects). I'm not really sure that Austrian economics has much to say that is sensible beyond illustrating basic microeconomic concepts and noting that inflation can [sometimes] be bad, business cycles are a thing and the predictive power of equilibrium models is limited, and you get all that in a mainstream undergrad textbook. Not being an Austrian helps you conclude that their arguments that economics isn't quantitative, positivism isn't useful and reducing income inequality is actually a goal a government might wish to consider wrong though. :)