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We're not getting a lot of economists writing on Bitcoin. What's the track record of economists vs. computer scientists over the past ten years (or twenty, or
by temphn 14y ago
We're not getting a lot of economists writing on Bitcoin.
What's the track record of economists vs. computer scientists over the past ten years (or twenty, or fifty)? You don't have liberal sorting algorithms and conservative ones, but you do have liberal and conservative economic theories. This indicates that economics, especially macroeconomics, is more like opinion journalism than science. We need empirical tests. Bitcoin provides one.
Postscript:
Computer science has delivered the goods in a way that economics just hasn't, as even Krugman admits[1]:
...the widely accepted proposition that events like those
of the 1930s could never happen again. But even pessimists
like me, even those who realized that the age of bank runs
and liquidity traps was not yet over, failed to realize how
bad a crisis was waiting to happen...
What you can criticize economists for – and indeed, what I
sometimes berate myself for – is failing even to see that
something like this crisis was a fairly likely event.
Why weren't they able to see this was a likely event? Well, rewind a bit and witness Bernanke writing in 2004 about the "Great Moderation" [2], the ostensible "decline in macroeconomic volatility":
My view is that improvements in monetary policy, though
certainly not the only factor, have probably been an
important source of the Great Moderation. In particular, I
am not convinced that the decline in macroeconomic
volatility of the past two decades was primarily the result
of good luck, as some have argued, though I am sure good
luck had its part to play as well.
In other words, Bernanke thought the (nonexistent) Great Moderation was the result of improvements in monetary policy. Thereby approving of the monetary policy that inflated the housing bubble, while blithely unaware of the catastrophe that was to unfold. Conclusion: economists aren't so good at predicting economic events or structuring economic systems. Ben thought the system he'd helped build wouldn't fall down. It did. Time for some new ideas, from people who actually do build systems that don't fall down: computer scientists.
[1] http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the-crisis http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the...
[2] http://www.federalreserve.gov/boarddocs/speeches/2004/20040220/ http://www.federalreserve.gov/boarddocs/speeches/2004/200402...
- codeulike 14y agoWhat's the track record of economists vs. computer scientists over the past ten years? Compare y2k to 2008 banking crisis?
- temphn 14y agoY2K: nothing bad happened after the intervention of computer scientists. 2008 banking crisis: terrible things happened even with (or because of) the intervention of economists.
- waterlesscloud 14y agoCompare the damage done by each? Computer scientists come out waaaaaaaaaay ahead on that one.
- JumpCrisscross 14y ago"you have liberal and conservative economic theories" We have politicians who have misunderstand and politicise economics. Similar to how evolution is somehow now a liberal theory. New Keynesian economics is not liberal or conservative. It says, in hyper-simplified form, save (conservative) in good times, and spend (liberal) in bad. Right-wing Central Europe is one of the few in recent memory to have implemented both legs. Politically conservative trade theory, about which there is consensus amongst economists, earned left-wing Paul Krugman his Nobel Prize. Myth of the Rational Voter [1] explores issues economists have put to rest but the public refuses to accept there is consensus on. Similar to how the masses insist on perceiving "hackers". [1] http://www.amazon.com/Myth-Rational-Voter-Democracies-Policies/dp/0691138737 http://www.amazon.com/Myth-Rational-Voter-Democracies-Polici...
- temphn 14y agoThat's great about what Keynesian economics says to do. But there haven't been controlled experiments in which thousands of different countries ran economies with different characteristics and parameters. With virtual economies and digital currencies, followed by seasteading, we can finally get that. And something tells me "Keynesianism" (which primarily serves as a bastardized justification for slow wealth seizures via inflation and fast wealth seizures like Cyprus) won't be doing so well when the numbers are toted up.
- Locke1689 14y agoThis will never happen. The combinatorics blow up exponentially. Besides, your comment basically says that you don't have data to support your position, but you have a hunch, so we should just trust you on this.
- temphn 14y agoI do have data to support my position. North Korea vs. South Korea, East Germany vs. West Germany, Maoist China vs. Taiwan/HK/Singapore. Leftism produces poverty, capitalism produces wealth. Communism doesn't work. That's a macro result you can hang your hat on. Millions died, one would hope the point is proved. Now today the question is whether the "mixed economy" which allows unlimited state intervention (which does indeed lead to Cyprus) is better than fettered government and unfettered capitalism. We're going to find out.
- pavpanchekha 14y agoThis is nonsense. "Time for some new ideas, from people who actually grow complex organic systems: animal trainers." "Time for some new ideas, from people who actually keep large masses of people happy: sex workers." "Time for some new ideas, from people who actually clean up others' problems: garbage men." What your argument is missing is that even if top economists aren't great at economics, they might still be better at it than computer scientists. Maybe top economists are bad at economics because economics is hard. Not because only idiots do economics.
- temphn 14y agoComputer scientists have proven themselves capable of going into completely unrelated areas (advertising, video, audio, hotels, taxis, airplanes, and most notably payments) and completely disrupting the status quo of the "experts". And those experts were at least operating profitable legacy businesses, so had _some_ empirical proof of their claims (to wit: their products worked, even if not as well as the Valley's). Now, lo and behold, we have a direct test of open source software vs. Krugmanesque proclamations. Krugman is simply not qualified to evaluate Bitcoin. You think he knows SHA-256 from a hole in the ground? He'll say it won't work just like legacy payment providers thought Paypal wouldn't work. And then he'll start advocating that it be prosecuted once it does threaten him, and then he will lose.
- haberman 14y agoYou are exhibiting a selective memory that only remembers the successes. Investors in the late 90s pumped money into "computer scientists" only to find that just because something is being done on the Internet doesn't make it automatically profitable. You look at Bitcoin and think it is so obviously Amazon.com, but it could just as easily be Pets.com.
- smokeyj 14y agoThe same way studying entrepreneurship doesn't make you an entrepreneur, studying economics doesn't make you an economist. If someone can reliably predict macroeconomic trends and manage risk, what's their excuse for not being filthy rich? If they're not rich, I don't trust their tallent. If they are rich, I trust they won't give away their secret formula.
- haberman 14y agoThis is an absurd conclusion. Computer science concerns itself with closed systems with known and predictable behavior. Economics must deal with the the human brain with all of its wants and needs, and the interaction of all of the people and resources on the earth. We can't even begin to understand the brain in the same way we understand a CPU. We can absolutely control the inputs and outputs of computational processes. The real world is messy and orders of magnitude more complex.
- DennisP 14y agoExcept mainstream economics doesn't do that. It makes dramatically unrealistic and sometimes contradictory simplifying assumptions. For details see Steve Keen's Debunking Economics.
- haberman 14y agoEconomics concerns subject matter that is far too complex to analyze without making simplifying assumptions. If you want to argue that they make the wrong simplifying assumptions, fine, but what evidence do you have that Computer Scientists are going to do a better job of it just because they have proved the asymptotic bounds of sorting algorithms?
- DennisP 14y agoI made no claims about computer scientists. Keen argues that the assumptions made by mainstream economics are in fact terribly wrong. He also suggests that people outside the field are making better contributions, but I haven't gotten to the part in the book where he argues that in detail.
- brown9-2 14y agoAre you asserting that computer scientists know more about economics, and particularly currency systems, than economists?
- rsanders 14y agoSo you're saying that computer scientists are inherently more likely to be correct about an economic proposition than economists? Could it be that the field of computer science is more amenable to provably correct statements than the field of economics? I'd say that computer science has shown similar failures when dealing with phenomena that are as large-scale and chaotic as economics. Artificial intelligence is one such area in which it has been difficult to produce results. Using the word "system" as broadly as you have in this post seems like a recipe for shaky reasoning.