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The problem I see with claiming that the model is wrong is that, well... the model isn't wrong. Sure, maybe one day our economic policies will shift away from c
by johngunderman 18y ago
The problem I see with claiming that the model is wrong is that, well... the model isn't wrong. Sure, maybe one day our economic policies will shift away from capitalism, but we are a capitalistic nation (though with some unfortunate socialistic leanings IMHO). The reason why economists can apply practically the same methods to the 21st century as they did the 20th is that there is no real difference in the fundamentals of the economy have not changed. We still operate in a capitalistic society where supply and demand create (relatively) efficient generation of wealth. Sure, you can buy things on eBay and the like, and transactions on the stock market are now digital, but the market still fundamentally behaves in the same way.
- natmaster 18y agohttp://en.wikipedia.org/wiki/Austrian_School http://en.wikipedia.org/wiki/Austrian_School
- rw 18y agoKrugman and other macroeconomists do not generally dispute those commonly-held microeconomic assumptions. Where they differ, and what the original article is referring to when he says "Keynes vs. Friedman", are in the macroeconomic models. Macro is tricky because 1) we cannot ethically run controlled experiments on the economy, and 2) there are way too many parameters one could include. Macro is a useful but very approximate science; no serious economist would tell you that these models are without flaws.