4 ms·
This is overly cynical, and I would say microeconomics is even more bogus than macro. In micro you come up with gross oversimplifications of the world and obtai
by karmakurtisaani 3y ago
This is overly cynical, and I would say microeconomics is even more bogus than macro. In micro you come up with gross oversimplifications of the world and obtain a mathematical model that's supposed to be scientific because it's mathematical.
In macro, the problem is that when central banks follow some economic theory, you don't see what would have happened if they didn't. As an example, people love to criticize the bailouts of banks and ZIRP, without understanding why it was done. The reason was that economists identified that the long and destructive recession in the 1930s was largely made worse by lack of available money: banks in those days could not evaluate who to give loans to, so they were overly cautious. As a result, businesses went bankrupt and no new ones were founded.
This is what they wanted to avoid in our recent crises, and of course their actions come with other consequences. Those consequences are impossible to predict, as you say, but that's not the point. The point is to do or predict at least something, and try not to repeat past mistakes. This holds true for any study of complex systems where you cannot just make repeated experiments to obtain exact knowledge (some parts of medicine, psychology, nutrition etc.)