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  •  This is less of a problem of economics and more (3+ / 0-)
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    mitumba, ontheleftcoast, yaque

    of the lies perpetuated by businessmen, stock market specialists and hedge fund managers. I agree it is certainly a lot of horsefeathers amongst other things; but that is less of a problem with economics unless we only treat economics as that advocated by only those people who actually think that crises are not possible as the system is always in an equilibrium, but most economists would recognise that crises are part and parcel of the economic system; even if they only consider them just small bumps in the road. The latter (small bumps in the road that will either re-equilibrate or require some correction) is the dominant view in economics. There are also economists who view crises as part and parcel of the system requiring serious regulation (I am an economist of this bent). That is why I am uncomfortable with this characterisation.

    No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

    by NY brit expat on Sun Aug 02, 2009 at 11:47:44 AM PDT

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    •  Fair enough and a good explanation of your (1+ / 0-)
      Recommended by:
      NY brit expat

      point of view. I just wish I wasn't trying to figure out how to live my life and manage with a wife and two kids during our country's equivalent of a financial KT event.

      You want to be a 'secret' Muslim? Let me teach you the secret hand sheik

      by ontheleftcoast on Sun Aug 02, 2009 at 12:16:59 PM PDT

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      •  This is not to deny that most economists are (2+ / 0-)
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        ontheleftcoast, yaque

        truly awful and that their theories are not politically apologetic or ideologically biased, but they are not solely to blame for the current mess; many of them certainly share a large amount of responsibility in terms of removal of regulations and the advocacy of their removal ... they have also provided justifications for the massive inequality of wealth and income and for the policies that enabled it; but to argue that it derives from the fact that they do not consider crises or even uncertainty in their arguments and theories is just not correct. Hold them responsible for what they have done to create this situation not for the wrong things ... no need to give false blame when there are real reasons for anger! :)

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Sun Aug 02, 2009 at 04:18:32 PM PDT

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    •  Right (1+ / 0-)
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      NY brit expat

      in my comment above I was thinking about how to deal with uncertainty, but of course theories of cycles have been around forever as well. I do wonder, though, to what extent it's not just the hedge fund managers who propagate this market fundamentalism, but also some of the Chicago school as well. Frank Knight, who I mentioned earlier, was a member of this school, but a mostly ignored member, I think. I wonder if the idea that we could manage (that is, out-think) crises came from Friedman and company. My sense (and I'm not an economist, nor a historian of economic thought, although I've hung around with both) is that once uncertainty is on the table, you can either see it as a limit to knowledge, or as something to be managed in a "scientific" manner. The first means that we have to have some humility about what we think we know, but it limits being able to call economics a social science. The second seems to give answers, but the limit is that economists can end up with egg on their faces when a market crashes. As someone, I think Paul Samuelson but I could be wrong, had on his door, "Economics is the only discipline in which a person can have a successful career without ever once being right."

      If you meet the Buddha on the road, kill him.

      by mitumba on Sun Aug 02, 2009 at 12:42:48 PM PDT

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      •  We find it also clearly advocated by Hayek (1+ / 0-)
        Recommended by:
        mitumba

        who argued back in the debate with Sraffa on the attempt to link the natural and money rates of interests to real economy fluctuations and crises (Hayek, like Keynes, is following Wicksell here from Lectures on political economy, vol 2). Essentially Hayek argued that interference in the system by governments following Keynes recommendations will actually lead to a longer period of disequilibrium and crisis and that we are better off letting the system come back on its own. This is of course adopted by Friedman and popularised by the Chicago school. This leads to debates on what policies are actually acceptable (if any) and the limits to fiscal policy based on whether the multiplier actually is responsive enough so that fiscal policy would be of any use at all (see the New Classical economics, especially Barro on that last point).

        Uncertainty and expectations and the manner in which they are treated have been the topic of many discussions in the history of economics thought and modern economic discussions from many different perspectives including literally assuming them away due to specifications on expectations. They really do upset the applecart of certain theories given the manner in which the theories are actually structured and what they argue.

        I would argue that contrary to the opinion of most economists, economics is a social science, some of the most important influences on economic decisions, choices and variables, (e.g., customs and habits) cannot really be properly modelled and we may not actually want to do so. Some things can be addressed quantitatively, others less so or not.

        That is a great sign and unfortunately very true. "Economics is the only discipline in which a person can have a successful career without ever once being right." It is hard to think of another discipline where someone can be demonstrably wrong and still held in such high regard. :(

        No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable (Adam Smith, 1776, I, p. 96).

        by NY brit expat on Sun Aug 02, 2009 at 02:48:10 PM PDT

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