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So … just normal economics. If that school of “science” was more than retconning and trying to see ideologically aligned patterns in the irrational noise and re

by gmerc 3y ago

So … just normal economics. If that school of “science” was more than retconning and trying to see ideologically aligned patterns in the irrational noise and result of complex interwoven incentive systems that would make the complexity of the three body problem look tame, we probably wouldnt have a financial crisis every few years :/

RandomLensman 3y ago
I don't think economics as such has really any trouble explaining and even seeing potential financial crises. I would even go so far as to say economics also explains quite well why usually nothing substantial is done to prevent them.
- andy_ppp 3y ago
  If economists knew what was going to happen they'd all be extremely wealthy. They are all academics or work for banks making someone else wealthy. More information: https://www.youtube.com/watch?v=EwB5ihGu4Jw https://www.youtube.com/watch?v=EwB5ihGu4Jw
  - RandomLensman 3y ago
    Placing bets successfully needs way more than a general understanding of what might happen (and, of course, capital). Also, you conveniently ignore all the economists that got rich in financial markets over the years.
    - andy_ppp 3y ago
      Name them. Which economists are rich from their theories or is Warren Buffet right about them, because that's who I'm paraphrasing from... Here's the quote: https://www.cnbc.com/2018/05/18/warren-buffett-explains-why-he-never-listens-to-economists.html https://www.cnbc.com/2018/05/18/warren-buffett-explains-why-...
      - RandomLensman 3y ago
        Economists that made it in financial markets (examples): Cliff Asness, Barr Rosenberg, John Paul Tudor Jones, Stanley Druckenmiller, Kenneth Griffin , John Paulson (but that's an MBA) - is that enough billionaire economists for you? What exactly made each rich is a bit more tricky, but certainly Asness and Rosenberg got rich based on their research.
        treyfitty 3y ago
        Those are not economists by trade nor profession. None of those people had PhDs in Econ. Never once were they called “economists”
        RandomLensman 3y ago
        Why does Asness' PhD in finance under Farmer not count, for example? Is a financial economist not an economist, i.e., things like the EMH are not part of economics? Why do you think their training in economics was irrelevant?
        trust_bt_verify 3y ago
        This list is rather disingenuous. > Kenneth Cordele Griffin is an American hedge fund manager, entrepreneur and investor. He is the founder, chief executive officer, co-chief investment officer, and 80% owner of Citadel LLC, a multinational hedge fund. He also owns Citadel Securities, one of the largest market makers in the U.S. I don’t see economist anywhere in Ken’s Wikipedia.
        RandomLensman 3y ago
        Last sentence under Early Life and Education says he graduated with a degree in economics.
        trust_bt_verify 3y ago
        You have a very low bar for classifying someone as an ‘economist’. I see why that’s the case as it does help your narrative but does not really lend much strength to your argument in my view.
  - eastbound 3y ago
    Economics is not a reproducible science, because no system can be properly isolated and initial state can’t be reset. But it’s still a science. It’s in the same category as biology, or even sociology, and it’s way more accurate than the study of brownian systems like meteorology. “If biologists were so good at their science, they’d all be extremely healthy”? “If sociologists could predict what humans think, they’d have a job”? In fact competent sociologists do, and generally in marketing departments. Same for economists.
  - seventhtiger 3y ago
    The same could be said for climate scientists and geologists couldn't it?
  - amelius 3y ago
    I'm betting they will all be replaced by AI in the coming years. One reason is that we can now better simulate the rational actors in a market.
    - tchaffee 3y ago
      What rational actors? Could you share some sources showing that individual economic choices are mostly driven by a cost-benefit analysis to determine whether an option is right for them? As opposed to being driven by habit, emotion, and social customs? The rational choice for food would not lead to an obesity and diabetes epidemic in the wealthiest country. Something doesn't add up.
      - amelius 3y ago
        AI is even better at predicting mood and emotion. See social media.
        tchaffee 3y ago
        Ok, so you couldn't give sources for your first claim, so now you're moving the goal posts. Let's try again. Can you give sources showing that AI effectively models the economic decisions of non-rational actors? Anyone who can predict the economy should be able to quickly become very wealthy.
        amelius 3y ago
        I never said we can perfectly model rational actors. I did say we can now do it better than before.
        tchaffee 3y ago
        Fair point that you're just making a prediction about future capabilities. I'm not convinced but time will tell.
    - HPsquared 3y ago
  - dtgriscom 3y ago
    If a single economist (or anyone) could predict the future, they'd be wealthy because they could bet against the prevailing wisdom. If a lot of people predict the future, and share their guesses, then those predictions are the prevailing wisdom and there's nobody to bet against.
  - amelius 3y ago
    Why does nobody keep a score of which economists said what and if it turned out they were right about it?
    - andy_ppp 3y ago
      Because it would show they don't know anything about the economy. Isn't the US meant to be in a recession right now?
- joelegner 3y ago
  Isn’t predicting what we want out of a science, more so than explaining?
throw0101b 3y ago
> If that school of “science” was more than retconning and trying to see ideologically aligned patterns in the irrational noise and result of complex interwoven incentive systems There was a physicist (Feynman?) who once joked that his job would have been much harder if particles had free will. But there are regular experiments that are run in the realm of economics and various models make different predictions. It turns out that tax cuts don't pay for themselves, as some say: * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment * https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act Turns out QE wouldn't devalue the currency and cause hyperinflation (as some said it would): > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://manhattan.institute/article/an-open-letter-to-ben-bernanke https://manhattan.institute/article/an-open-letter-to-ben-be... Turns out that austerity is not expansionary (i.e., cutting government demand/spending does not grow the economy; see Chart 2): * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... * https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Dangerous_Idea https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da... There are certainly areas where things can get complicated and there's room for debate, but in other areas the mechanisms are understood. Just because some folks choose to go with ideology over accurate models does not mean we don't have accurate models: is it the fault of medicine that some people say vaccines and masks don't work for ideological reasons?
- Retric 3y ago
  It’s also common for economic ideas to be taken out of context. In an environment with 99% tax rate it’s beloved that lowering taxes will increase revenue. This is directly applicable when the sudden loss of government subsidies creates an effective 90+% tax rate within an income band resulting in people working less. Yet, politically the idea gets simplified to lowering taxes will always increase revenue which is false. Austerity to the point of being able to pay down government debt is painful, that’s well known. Unchecked spending and unlimited growth in debt is however unsustainable.
edanm 3y ago
That sentence seems to be fairly ignorant. For one thing, it's kind of like saying "if scientists really understood the weather, we wouldn't have tornados every few years". Or even better, "if we really understood climate change, we'd stop it". There's a big difference between understanding something and being able to do something about it. Another thing, it's missing the nuance that financial crises could be handled better or worse, and it seems to me like it's getting better (e.g. compare the great depression to the great recession). People like to dump on things they don't have much familiarity with, and software engineers and the HN crowd in general seems to think everything besides software is all noise full of uneducated people. (Not saying you specifically are an outsider to economics or a software engineer, but that is the general trend.)

by gmerc 3y ago

RandomLensman 3y ago

I don't think economics as such has really any trouble explaining and even seeing potential financial crises. I would even go so far as to say economics also explains quite well why usually nothing substantial is done to prevent them.

andy_ppp 3y ago
If economists knew what was going to happen they'd all be extremely wealthy. They are all academics or work for banks making someone else wealthy. More information: https://www.youtube.com/watch?v=EwB5ihGu4Jw https://www.youtube.com/watch?v=EwB5ihGu4Jw
- RandomLensman 3y ago
  Placing bets successfully needs way more than a general understanding of what might happen (and, of course, capital). Also, you conveniently ignore all the economists that got rich in financial markets over the years.
  - andy_ppp 3y ago
    Name them. Which economists are rich from their theories or is Warren Buffet right about them, because that's who I'm paraphrasing from... Here's the quote: https://www.cnbc.com/2018/05/18/warren-buffett-explains-why-he-never-listens-to-economists.html https://www.cnbc.com/2018/05/18/warren-buffett-explains-why-...
    - RandomLensman 3y ago
      Economists that made it in financial markets (examples): Cliff Asness, Barr Rosenberg, John Paul Tudor Jones, Stanley Druckenmiller, Kenneth Griffin , John Paulson (but that's an MBA) - is that enough billionaire economists for you? What exactly made each rich is a bit more tricky, but certainly Asness and Rosenberg got rich based on their research.
      - treyfitty 3y ago
        Those are not economists by trade nor profession. None of those people had PhDs in Econ. Never once were they called “economists”
        RandomLensman 3y ago
        Why does Asness' PhD in finance under Farmer not count, for example? Is a financial economist not an economist, i.e., things like the EMH are not part of economics? Why do you think their training in economics was irrelevant?
      - trust_bt_verify 3y ago
        This list is rather disingenuous. > Kenneth Cordele Griffin is an American hedge fund manager, entrepreneur and investor. He is the founder, chief executive officer, co-chief investment officer, and 80% owner of Citadel LLC, a multinational hedge fund. He also owns Citadel Securities, one of the largest market makers in the U.S. I don’t see economist anywhere in Ken’s Wikipedia.
        RandomLensman 3y ago
        Last sentence under Early Life and Education says he graduated with a degree in economics.
        trust_bt_verify 3y ago
        You have a very low bar for classifying someone as an ‘economist’. I see why that’s the case as it does help your narrative but does not really lend much strength to your argument in my view.
- eastbound 3y ago
  Economics is not a reproducible science, because no system can be properly isolated and initial state can’t be reset. But it’s still a science. It’s in the same category as biology, or even sociology, and it’s way more accurate than the study of brownian systems like meteorology. “If biologists were so good at their science, they’d all be extremely healthy”? “If sociologists could predict what humans think, they’d have a job”? In fact competent sociologists do, and generally in marketing departments. Same for economists.
- seventhtiger 3y ago
  The same could be said for climate scientists and geologists couldn't it?
- amelius 3y ago
  I'm betting they will all be replaced by AI in the coming years. One reason is that we can now better simulate the rational actors in a market.
  - tchaffee 3y ago
    What rational actors? Could you share some sources showing that individual economic choices are mostly driven by a cost-benefit analysis to determine whether an option is right for them? As opposed to being driven by habit, emotion, and social customs? The rational choice for food would not lead to an obesity and diabetes epidemic in the wealthiest country. Something doesn't add up.
    - amelius 3y ago
      AI is even better at predicting mood and emotion. See social media.
      - tchaffee 3y ago
        Ok, so you couldn't give sources for your first claim, so now you're moving the goal posts. Let's try again. Can you give sources showing that AI effectively models the economic decisions of non-rational actors? Anyone who can predict the economy should be able to quickly become very wealthy.
        amelius 3y ago
        I never said we can perfectly model rational actors. I did say we can now do it better than before.
        tchaffee 3y ago
        Fair point that you're just making a prediction about future capabilities. I'm not convinced but time will tell.
  - HPsquared 3y ago
- dtgriscom 3y ago
  If a single economist (or anyone) could predict the future, they'd be wealthy because they could bet against the prevailing wisdom. If a lot of people predict the future, and share their guesses, then those predictions are the prevailing wisdom and there's nobody to bet against.
- amelius 3y ago
  Why does nobody keep a score of which economists said what and if it turned out they were right about it?
  - andy_ppp 3y ago
    Because it would show they don't know anything about the economy. Isn't the US meant to be in a recession right now?
joelegner 3y ago
Isn’t predicting what we want out of a science, more so than explaining?

throw0101b 3y ago

> If that school of “science” was more than retconning and trying to see ideologically aligned patterns in the irrational noise and result of complex interwoven incentive systems There was a physicist (Feynman?) who once joked that his job would have been much harder if particles had free will. But there are regular experiments that are run in the realm of economics and various models make different predictions. It turns out that tax cuts don't pay for themselves, as some say: * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment * https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act Turns out QE wouldn't devalue the currency and cause hyperinflation (as some said it would): > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://manhattan.institute/article/an-open-letter-to-ben-bernanke https://manhattan.institute/article/an-open-letter-to-ben-be... Turns out that austerity is not expansionary (i.e., cutting government demand/spending does not grow the economy; see Chart 2): * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... * https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Dangerous_Idea https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da... There are certainly areas where things can get complicated and there's room for debate, but in other areas the mechanisms are understood. Just because some folks choose to go with ideology over accurate models does not mean we don't have accurate models: is it the fault of medicine that some people say vaccines and masks don't work for ideological reasons?

Retric 3y ago
It’s also common for economic ideas to be taken out of context. In an environment with 99% tax rate it’s beloved that lowering taxes will increase revenue. This is directly applicable when the sudden loss of government subsidies creates an effective 90+% tax rate within an income band resulting in people working less. Yet, politically the idea gets simplified to lowering taxes will always increase revenue which is false. Austerity to the point of being able to pay down government debt is painful, that’s well known. Unchecked spending and unlimited growth in debt is however unsustainable.

edanm 3y ago

That sentence seems to be fairly ignorant. For one thing, it's kind of like saying "if scientists really understood the weather, we wouldn't have tornados every few years". Or even better, "if we really understood climate change, we'd stop it". There's a big difference between understanding something and being able to do something about it. Another thing, it's missing the nuance that financial crises could be handled better or worse, and it seems to me like it's getting better (e.g. compare the great depression to the great recession). People like to dump on things they don't have much familiarity with, and software engineers and the HN crowd in general seems to think everything besides software is all noise full of uneducated people. (Not saying you specifically are an outsider to economics or a software engineer, but that is the general trend.)