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View Diary: Krugman Admits to Being a "Big Meanie." (111 comments)

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  •  The problem is that humans get involved (1+ / 0-)
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    and their emotions, this giant sine wave with peaks of greed and panic that seems to engulf the world's citizens over time, don't fit well in numbers and graphs.  Economics is much like psychiatry.  You can track lots of data but ultimately you can't track human stimulus completely.  Our brains and our genetic programming for survival make us unpredictable and rash and we often move in packs and herds - group think.  Krugman, like other scholars and scientists can track the concrete stuff, the percentages, the assets, the liabilities, the charts and graphs of real numbers over time but explain how science could explain the dot com bubble we went through.  

    Suddenly this technology appeared that gave us all instant access to one another, freed us from conventional means of communications.  Yet, our manufacturing didn't suddenly increase.  We found no additional natural resources.  Human population seemed to grow at the same expected rate and yet thousands of companies suddenly sprang up because we had this new way of ADVERTISING and none of the intellectuals could fit this new paradigm into their equations.  Money was flooding into the stock market.  Numbers looked good and yet not a single calculation told all those guys to engage their common sense and realize that our economy cannot realistically grow so fast without population or manufacturing or resources behind the growth.  Everyone just WANTED it to be so so they made the numbers fit.  

    Same thing with the real estate boom.  We didn't suddenly discover new land.  There was nothing but speculation driving up prices of homes and property and yet the "economic geniuses" all told us their numbers pointed to this bull market.  Buy, buy, buy!

    Krugman is better than most but true economics should be as much a study of human nature as it is the numbers.  He was free to scream from the podium that the stimulus had to be bigger to work right and yet this very human irrational battle was going on with votes and political arm twisting that couldn't be quantified and put in a spreadsheet.  It didn't matter what his numbers said.  If the votes weren't there we weren't getting to his totals.  

    I appreciate his input but the study of economics is an incomplete one to me and easily manipulated if taken at face value.  One of my favorite novels of all time is the Foundation Trilogy.  In it, brilliant men predict and set up the future, the economics, the wars, the evolution of society not based just on tangible data but on a study of the human mind, much like trying to discover how a gust of wind develops from a butterfly flapping their wings in a distant land.   World economics is that complex.  

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