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Economist here. The premise misses the "why". Up until the early 80s, macro was seen like an airplane control system where you could inject things here or ther

by tomrod 5y ago

Economist here. The premise misses the "why". Up until the early 80s, macro was seen like an airplane control system where you could inject things here or there and make things work. Then Bob Lucas came out with his critique for rational expectations, and since most economics (sans early Keynesian and MMT) have grounded decision and policy making in microeconomic foundations. Why? Because people make rational decisions across the distribution. This led to Huggett and Aiyigari models, as well as tweaks on computational/agent-based models to account for microeconomic foundations. It was a necessary evolution. The critique in this article connects disparate things and misses much of the bigger picture.

deleted 5y ago
[deleted]
CPLX 5y ago
I also have a degree in economics and I was raised by two professors of economics and in my young life was surrounded by Nobel laureates in economics and have been involved in policy related things my whole life so I feel like I have some loose context to make this next statement. The entire modern economics profession is irredeemably corrupt and has led to unfathomable amounts of human misery due to blind allegiance to beautiful models against all obvious evidence that they had no actual relationship to how the world works. This was especially true in Microeconomics and doubly true when it comes to talking about Lucas and Sargent and the nonsense that is Rational Expectations, as well as of course EMH and other related delusions. Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Just saying.
- yanderekko 5y ago
  >Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Ah, the Khmer Rouge strategy. I wonder how that worked out.. It's not a coincidence that the "Nirvana fallacy" concept was coined by an economist.
  - CPLX 5y ago
    - jancsika 5y ago
      Oh my-- I wish there were a button here called "flag if no follow up" In other words-- you have got to make your case for Larry Summers causing more human suffering, or at least link to someone who has written that polemic. Perhaps to improve UX there should be a 10 minute countdown to the flag being triggered. :)
      - CPLX 5y ago
        Well where should we start. How about right here in the present where he's responsible for the current war in Ukraine. First Google result: https://cepr.net/can-we-blame-larry-summers-for-the-collapse-of-russia/ https://cepr.net/can-we-blame-larry-summers-for-the-collapse... There's more. Lots more. It's so much worse than you think.
        yanderekko 5y ago
        Even if one conceded (and it's conceding a lot) that Summers was involved in bad things, one needs to consider the counterfactual. In a world where Summers had died in childhood, are we imagining that the USSR would not have collapsed? Where this collapse would've lead to some sort of social democratic paradise? Or what? I mean, people aren't seriously arguing this, are they?
        CPLX 5y ago
        People are arguing that our post-Soviet policy was fucking insane and that Summers was a chief architect of it. It was wholesale looting that set world stability back for generations and it was justified on principles of mainstream neoliberal economics and implemented by that community's (at the time) golden child. It was one of several fundamentally catastrophic decisions of economic policy made in the 1990's that have their roots very firmly in academic economic orthodoxy. If anything I'm understating how bad it was and how much needless human misery was unleashed from this community of sociopaths.
- sokoloff 5y ago
  I have probably 5-10% of the economics education you have, but am surprised that you’d single out micro as being the part of economics that disconnects with observed reality. (My perception is that micro matches well at least some of the time with observation, and beats the economics average.)
  - CPLX 5y ago
    Fair enough. I amend my statement to admit that both sides of the profession are equally fucking corrupt.
    - deleted 5y ago
      [deleted]
- throwaway73838 5y ago
  THANK YOU. Finally someone who gets it. We are being taken for a ride, by people who prey on and actively promote ignorance. Economics is an incredibly simple discipline for anyone with more than half a brain, and an interest in learning something new. Unfortunately, we’re essentially living in the dark ages.
- tomrod 5y ago
  Respectfully, I don't agree with your opinion on the economics profession. Perhaps having generationally fresh eyes (I come from a humble background), rather than it being ever present in my formative years generates the difference in perspective. In my view, the economics academic profession is no more or less corrupt than other academics, and I can't hazard to judge the industry side beyond my own experience.
  - giraffe_lady 5y ago
    I think they mean corrupt as in necessarily compromised by knowingly adding so much misery to the world. Not the other more common sense of like, participating in graft, bribes etc. I don't think there's any reason to think economists do more of that than the average.
    - tomrod 5y ago
      That's not a common usage of "corrupt", I think?
  - imtringued 5y ago
    You're right. Nutritional science of the 70s is so corrupt it is almost funny if it hadn't doomed millions into obesity.
  - Gibbon1 5y ago
    I read a paper that investigated the attempts by the fossil fuel companies to head off efforts to stop global warming. By corrupting not just climate scientist profession but also economists. The former was almost impossible. Economists however took the bribes.
- SantalBlush 5y ago
  >Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Just saying. Economic policy will be made, whether we like it or not. This policy must be based on some type of model, whether that model is simple or complex. So here's the question: do you have a falsifiable, demonstrably better model than one of those used in mainstream economics? If so, you can simply show it to us. If not, then we're sticking with one of the models used in mainstream econ. This goes for every single complaint about economics being "corrupt". Show us your better model. If you can't, well then, it doesn't matter.
  - giraffe_lady 5y ago
    "The need for a status quo is so powerful that we must preserve the status quo at all costs" is there more to it than that because I really can't find anything else here. The current approach is abhorrent because of its effects on human lives today and needs to be ended for that reason. No one here is the author of the future and it's not their responsibility to present a vision of it that you will accept before you acknowledge horrors that exist now.
    - CPLX 5y ago
      What this guy said.
    - SantalBlush 5y ago
      If the current approach is ended, it will be replaced with something, even if that is a laissez-faire "we don't know, so just let it sort itself out" approach. Will that something result in fewer horrors than those that exist now? The onus is definitely on the persons wanting change to make an actual case for that change. So yes, it is their responsibility to present a vision of their alternative future that I will accept.
      - CPLX 5y ago
        > The onus is definitely on the persons wanting change to make an actual case for that change No it's not. The onus is on the people who created policies that lead to massive inequality and human misery to explain why we shouldn't string them up as an example to others.
- notahacker 5y ago
  I also have a degree in economics and think if you average out the two opinions upthread you get closer to the truth :) (No but seriously, rational expectations works pretty well in the limited sense of showing that economic models making other assumptions about how human behaviour expect humans to persistently make systematic errors that there's usually no justification for. It's of no value in understanding human behaviour and rather limited value in predictive modelling, especially when it emerges as the assumption that expectations are always correct in their priors, as opposed to the assumption that they eventually adapt to making random rather than systematic error. Similarly the New Keynesian paradigm is pretty good at showing that even in idealised market conditions it only takes one bit of friction to create a situation where economic stimulus results in less economic pain than letting the economy sort itself out, but if you're actually trying to predict the size of the stimulus required by estimating menu costs you're doing it wrong. Since the New Keynesians managed to adapt their models to the Lucas critique whilst having quite different policy preferences to Lucas himself, it's also pretty clear that the allegiance to models isn't blind and economists are perfectly capable of formulating different proposals for better and for worse despite rather than because of modelling orthodoxy)
  - tomrod 5y ago
    Hear hear!
- specialist 5y ago
  I know almost nothing about economics. Yet I was flabberghasted when I read that some very influentual economists explicitly reject empiricism. Um, ok. Does that mean they're arguing about how things should be, if only everyone was rational like them? Versus, oh I don't know, getting all scientific, and try to understand how things really are, be able to make predictions, and then maybe test one's theories. Just a thought. Is that the kind of corruption you're talking about?
AtlasBarfed 5y ago
Aaaand not a mention of global warming. Just abstract "environmental regulation". And it seems to only care about 1970s era regulation. An article bemoaning the flawed state of modern economics also reflects the fundamental flaw of the culture of economics-the-study: not a flying fuck is given about existential environmental dangers and the very very real role economics-the-institution played in downplaying, avoiding, exacerbating, and denying their existence. This despite an ever growing flood of REAL science that backs it up. The non-science of economics was in denial the whole time. I was hoping this article reflected progress. Instead, it is the same old crap.
- huitzitziltzin 5y ago
  Take my intro micro class, or literally any intro micro class, and you will be treated to a chapter on externalities the leading example of which is unpriced carbon emissions which cause global warming. If you can find me an intro micro class at any university in the United States which doesn’t cover externalities and use global warming as an example I’ll give you a dollar. This is literally the fourth or fifth thing we teach students in their first class in the field. Your comment is uninformed.
  - AtlasBarfed 5y ago
    Okay, how about a central banker or think tank economist mentioning global warming at all? THOSE are the economists that matter, the ones that make policy. But they don't want to ruffle the feathers of the masters, they want the gravy train of getting paid to rubberstamp right wing laissez faire U of Chicago cult dogma. Here's another fun one. Let's look at the not-really-a-Nobel-prize winners in Economics: https://en.wikipedia.org/wiki/List_of_Nobel_Memorial_Prize_laureates_in_Economics https://en.wikipedia.org/wiki/List_of_Nobel_Memorial_Prize_l... Hmmmmmmmmmm. Any mention of environmentalism or issues with economic models resulting in exigent danger to the human race? Nope, just a bunch of rich old white guys rewarding price theory and trade models. Your "science" is corrupt to the foundations. I hope I am wrong, because your "science" has been used to marginalize the findings of REAL science for 50 years now.

by tomrod 5y ago

deleted 5y ago

[deleted]

CPLX 5y ago

I also have a degree in economics and I was raised by two professors of economics and in my young life was surrounded by Nobel laureates in economics and have been involved in policy related things my whole life so I feel like I have some loose context to make this next statement. The entire modern economics profession is irredeemably corrupt and has led to unfathomable amounts of human misery due to blind allegiance to beautiful models against all obvious evidence that they had no actual relationship to how the world works. This was especially true in Microeconomics and doubly true when it comes to talking about Lucas and Sargent and the nonsense that is Rational Expectations, as well as of course EMH and other related delusions. Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Just saying.

yanderekko 5y ago
>Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Ah, the Khmer Rouge strategy. I wonder how that worked out.. It's not a coincidence that the "Nirvana fallacy" concept was coined by an economist.
- CPLX 5y ago
  - jancsika 5y ago
    Oh my-- I wish there were a button here called "flag if no follow up" In other words-- you have got to make your case for Larry Summers causing more human suffering, or at least link to someone who has written that polemic. Perhaps to improve UX there should be a 10 minute countdown to the flag being triggered. :)
    - CPLX 5y ago
      Well where should we start. How about right here in the present where he's responsible for the current war in Ukraine. First Google result: https://cepr.net/can-we-blame-larry-summers-for-the-collapse-of-russia/ https://cepr.net/can-we-blame-larry-summers-for-the-collapse... There's more. Lots more. It's so much worse than you think.
      - yanderekko 5y ago
        Even if one conceded (and it's conceding a lot) that Summers was involved in bad things, one needs to consider the counterfactual. In a world where Summers had died in childhood, are we imagining that the USSR would not have collapsed? Where this collapse would've lead to some sort of social democratic paradise? Or what? I mean, people aren't seriously arguing this, are they?
        CPLX 5y ago
        People are arguing that our post-Soviet policy was fucking insane and that Summers was a chief architect of it. It was wholesale looting that set world stability back for generations and it was justified on principles of mainstream neoliberal economics and implemented by that community's (at the time) golden child. It was one of several fundamentally catastrophic decisions of economic policy made in the 1990's that have their roots very firmly in academic economic orthodoxy. If anything I'm understating how bad it was and how much needless human misery was unleashed from this community of sociopaths.
sokoloff 5y ago
I have probably 5-10% of the economics education you have, but am surprised that you’d single out micro as being the part of economics that disconnects with observed reality. (My perception is that micro matches well at least some of the time with observation, and beats the economics average.)
- CPLX 5y ago
  Fair enough. I amend my statement to admit that both sides of the profession are equally fucking corrupt.
  - deleted 5y ago
    [deleted]
throwaway73838 5y ago
THANK YOU. Finally someone who gets it. We are being taken for a ride, by people who prey on and actively promote ignorance. Economics is an incredibly simple discipline for anyone with more than half a brain, and an interest in learning something new. Unfortunately, we’re essentially living in the dark ages.
tomrod 5y ago
Respectfully, I don't agree with your opinion on the economics profession. Perhaps having generationally fresh eyes (I come from a humble background), rather than it being ever present in my formative years generates the difference in perspective. In my view, the economics academic profession is no more or less corrupt than other academics, and I can't hazard to judge the industry side beyond my own experience.
- giraffe_lady 5y ago
  I think they mean corrupt as in necessarily compromised by knowingly adding so much misery to the world. Not the other more common sense of like, participating in graft, bribes etc. I don't think there's any reason to think economists do more of that than the average.
  - tomrod 5y ago
    That's not a common usage of "corrupt", I think?
- imtringued 5y ago
  You're right. Nutritional science of the 70s is so corrupt it is almost funny if it hadn't doomed millions into obesity.
- Gibbon1 5y ago
  I read a paper that investigated the attempts by the fossil fuel companies to head off efforts to stop global warming. By corrupting not just climate scientist profession but also economists. The former was almost impossible. Economists however took the bribes.
SantalBlush 5y ago
>Our public policy would probably better served if most of the profession was put on a cruise ship and launched out to sea. Just saying. Economic policy will be made, whether we like it or not. This policy must be based on some type of model, whether that model is simple or complex. So here's the question: do you have a falsifiable, demonstrably better model than one of those used in mainstream economics? If so, you can simply show it to us. If not, then we're sticking with one of the models used in mainstream econ. This goes for every single complaint about economics being "corrupt". Show us your better model. If you can't, well then, it doesn't matter.
- giraffe_lady 5y ago
  "The need for a status quo is so powerful that we must preserve the status quo at all costs" is there more to it than that because I really can't find anything else here. The current approach is abhorrent because of its effects on human lives today and needs to be ended for that reason. No one here is the author of the future and it's not their responsibility to present a vision of it that you will accept before you acknowledge horrors that exist now.
  - CPLX 5y ago
    What this guy said.
  - SantalBlush 5y ago
    If the current approach is ended, it will be replaced with something, even if that is a laissez-faire "we don't know, so just let it sort itself out" approach. Will that something result in fewer horrors than those that exist now? The onus is definitely on the persons wanting change to make an actual case for that change. So yes, it is their responsibility to present a vision of their alternative future that I will accept.
    - CPLX 5y ago
      > The onus is definitely on the persons wanting change to make an actual case for that change No it's not. The onus is on the people who created policies that lead to massive inequality and human misery to explain why we shouldn't string them up as an example to others.
notahacker 5y ago
I also have a degree in economics and think if you average out the two opinions upthread you get closer to the truth :) (No but seriously, rational expectations works pretty well in the limited sense of showing that economic models making other assumptions about how human behaviour expect humans to persistently make systematic errors that there's usually no justification for. It's of no value in understanding human behaviour and rather limited value in predictive modelling, especially when it emerges as the assumption that expectations are always correct in their priors, as opposed to the assumption that they eventually adapt to making random rather than systematic error. Similarly the New Keynesian paradigm is pretty good at showing that even in idealised market conditions it only takes one bit of friction to create a situation where economic stimulus results in less economic pain than letting the economy sort itself out, but if you're actually trying to predict the size of the stimulus required by estimating menu costs you're doing it wrong. Since the New Keynesians managed to adapt their models to the Lucas critique whilst having quite different policy preferences to Lucas himself, it's also pretty clear that the allegiance to models isn't blind and economists are perfectly capable of formulating different proposals for better and for worse despite rather than because of modelling orthodoxy)
- tomrod 5y ago
  Hear hear!
specialist 5y ago
I know almost nothing about economics. Yet I was flabberghasted when I read that some very influentual economists explicitly reject empiricism. Um, ok. Does that mean they're arguing about how things should be, if only everyone was rational like them? Versus, oh I don't know, getting all scientific, and try to understand how things really are, be able to make predictions, and then maybe test one's theories. Just a thought. Is that the kind of corruption you're talking about?

AtlasBarfed 5y ago

Aaaand not a mention of global warming. Just abstract "environmental regulation". And it seems to only care about 1970s era regulation. An article bemoaning the flawed state of modern economics also reflects the fundamental flaw of the culture of economics-the-study: not a flying fuck is given about existential environmental dangers and the very very real role economics-the-institution played in downplaying, avoiding, exacerbating, and denying their existence. This despite an ever growing flood of REAL science that backs it up. The non-science of economics was in denial the whole time. I was hoping this article reflected progress. Instead, it is the same old crap.

huitzitziltzin 5y ago
Take my intro micro class, or literally any intro micro class, and you will be treated to a chapter on externalities the leading example of which is unpriced carbon emissions which cause global warming. If you can find me an intro micro class at any university in the United States which doesn’t cover externalities and use global warming as an example I’ll give you a dollar. This is literally the fourth or fifth thing we teach students in their first class in the field. Your comment is uninformed.
- AtlasBarfed 5y ago
  Okay, how about a central banker or think tank economist mentioning global warming at all? THOSE are the economists that matter, the ones that make policy. But they don't want to ruffle the feathers of the masters, they want the gravy train of getting paid to rubberstamp right wing laissez faire U of Chicago cult dogma. Here's another fun one. Let's look at the not-really-a-Nobel-prize winners in Economics: https://en.wikipedia.org/wiki/List_of_Nobel_Memorial_Prize_laureates_in_Economics https://en.wikipedia.org/wiki/List_of_Nobel_Memorial_Prize_l... Hmmmmmmmmmm. Any mention of environmentalism or issues with economic models resulting in exigent danger to the human race? Nope, just a bunch of rich old white guys rewarding price theory and trade models. Your "science" is corrupt to the foundations. I hope I am wrong, because your "science" has been used to marginalize the findings of REAL science for 50 years now.