quote:

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So now we know how to overthrow the neoclassical paradigm: we disrupt lectures, unfurl banners and nail manifestos to our professors’ doors. We ridicule them in campus newspapers and on campus radio.

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Yeah. Intimidating scholars because you disagree with their views. That's always turned out really well.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

Edited to add:

Oh yes, we're still waiting for that demonstrably better alternative. We don't believe for a minute that we've achieved perfection in our knowledge or in our policies. If you have a better idea, we're all ears.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

quote:

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Originally posted by Oliver Cromwell:
Knowledge is not a democracy. Remember Einstein's response when he was told that the Nazis had organised a petition in which hundreds of physicists had denounced relativity? "If the theory were wrong, one would be enough."

Edited to add:

Oh yes, we're still waiting for that demonstrably better alternative. We don't believe for a minute that we've achieved perfection in our knowledge or in our policies. If you have a better idea, we're all ears.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

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quote:

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Originally posted by Oliver Cromwell:
Knowledge is not a democracy. Remember Einstein's response when he was told that the Nazis had organised a petition in which hundreds of physicists had denounced relativity? "If the theory were wrong, one would be enough."
[ 08 October 2004: Message edited by: Oliver Cromwell ]

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quote:

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Originally posted by Oliver Cromwell:
But those are political choices; the economists in those countries teach the same things we teach here.

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Except that the Scandinavian's, Belgian's, Dane's, French, German's and socialist Singaporean's roll a larger percentage of GDP back into social programs; wages are higher, corporate taxation is higher, national debts considerably lower, infant mortality and child poverty, lower in Euro-socialist nations and Singapore.

I agree, those are political decisions as to what degree to pursue either corporate welfare statism or social justice. So far though, Paul Martin is reducing taxation on capital income and taxing consumption as Euro-socialists have done, but he is starving social spending like a political conservative. When annual income and wealth of a nation becomes more and more concentrated in the hands of a few while unemployment, child poverty, and infant mortality go ignored by everyone but the left, what do economists have to say about that economic phenomenon ?.

Again, Oliver, how long do you think this economic model based on middle class capitalism and consumption of plastic widgets can last for even the five to seven per cent of humanity holed-up in North America ?. Why not focus off of producing plastic shower curtain liners using up thousands of gallons of fresh water and non-renewable resources and focus on expanding access to education?. Why not a society that focuses on a more equitable distribution of income and driven ny science, technology and not subzidizing private enterprise with publically funded research and propping up corporations with taxpayer handouts ?. How long can the corporate welfare state last in America, and why are we in Canada beginning to copy the worst aspects of American politicized economy ?. What's the diff between political conservatism and what Paul Martin is doing to Canada ?.

Are we all one dimensional prisoners of our own self-interest and greed as is Adam Smith's homo economicus ?.

[ 08 October 2004: Message edited by: Fidel ]

[ 08 October 2004: Message edited by: Oliver Cromwell ]

quote:

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Originally posted by Oliver Cromwell:
Again, these are all political questions that have nothing to do with what we teach in economics courses.

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quote:

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Yes indeed. We have a pretty good grasp of most of the general stuff, but when you look closer, there are any number of puzzles that we haven't solved yet. Economics journals are full of new ideas, as well as demonstrations that last year's exciting new theory was in fact another dead end.

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I find more distressing the simplistic level of economics used in public debates. Economists have botched the explanation of their ideas.

quote:

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Originally posted by paxamillion:

Have you thought that this in itself might be a serious problem? That maybe the discipline is scoped in too narrow a way?

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No, I don't think so. We're also accused of 'imperialism' - using our analytical tools in areas outside of traditional economics.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

quote:

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Originally posted by August1991:
Nobody is going to question the idea of comparative advantage, for example.

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Just wait until the next thread on free trade

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I find more distressing the simplistic level of economics used in public debates. Economists have botched the explanation of their ideas.

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I agree.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

quote:

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Nobody is going to question the idea of comparative advantage, for example.

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Don't be so sure! I have heard the theory of comparative advantage questioned in Latin America, by economists there.

That is: no one questions that it is more efficient to produce oil in Saudi Arabia than in Denmark; you can only export what you have.

But the problem with "comparative advantage" is that it assumes certain things: first, that labour is relatively immobile. So, the "inexpensive labour" factor is conceived to be place-specific. There is cheap labour in China.
But that is also because we keep most Chinese in China.

On the other hand, capital is assumed to be movable. So, it is assumed that, contrary to labour immobility, capital is presumed to be mobile.

Consequently, the idea I have heard is that too much of economics is based on a refusal to consider the political decisions which underpin the system. Those are treated as "givens".

That is why it is profitable to produce cabin cruisers, but not moderate-income housing; the market simply reflects the skewed distribution of wealth in a society.

It's true that you don't need factor mobility to get the gains from trade result. But if factors are mobile, then the gains are increased.

Anybody knows that when you break something, it costs to fix or replace it. The GDP records this as a net benefit. The GPI calls it an expense and it is subtracted. When we subtract the social negatives like unemployment, enviromental degradation, disasters, etc., we get a better picture of our economy.

Edited to add:

Sorry, cougyr, that wasn't directed at you. It was a reaction to the website linked by pax.

[ 08 October 2004: Message edited by: Oliver Cromwell ]

[ 08 October 2004: Message edited by: ReeferMadness ]

If air was privatized, at what price would people no longer be willing to pay for it?

A second question springing from the first is what is the cost of air in any manufactured product?

quote:

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If air was privatized, at what price would people no longer be willing to pay for it?

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A second question springing from the first is what is the cost of air in any manufactured product?

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But is your question different? Is it Léo Ferré? Achète-moi, je ne vaux rien car l'amour n'a pas de prix?

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What is the cost of stock options, and how are they accounted for?

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I think the point I was making (or trying to make) is there are externals which have no value, and yet have all the value.

Air, for instance. Air cost nothing, yet it is a component of every manufactured product.

Also, somewhat facetiouusly I admit, I was pointing out that economics can't put a price on air. You can't cut back your usage of air when the price goes up.

Economics is one of those 'disciplines' that works well when it is separated from the real world. Thus, economists tend to examine problems in isolation, making their theories sound scientific, when they're not.

They ignore external factors which they can't put a value on, even though those externals may be fundamental to the question.

That was also the point behind the question on stock options.

What is the present value of a stock option which depends upon an unknown variable for it's value (future price of stock), and which may never have a value (if the option holder doesn't exercise it).

So far as I know, no one has yet been able to correctly value stock options, even though they are used in lieu salary, and may (as we know) severely affect the future value of the stock.

I believe economists think they are dealing with science because they use math as their tool.

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Economics is one of those 'disciplines' that works well when it is separated from the real world. Thus, economists tend to examine problems in isolation, making their theories sound scientific, when they're not.

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In isolation from what? In macroeconomics, the standard analytical workhorse is a dynamic stochastic general equilibrium (DSGE) model, in which we take into account uncertainty, the dynamic nature of the world (the past affects the present; the present affects the future), the role of givernment policy, and the interaction between (among other things) investment, savings, labour supply and wages.

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They ignore external factors which they can't put a value on, even though those externals may be fundamental to the question.

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1. There is no science or mathematics that can clearly connect assumptions about the behaviour of individual agents in a complex environment to the overall picture of these interactions.

2. The lack of this predictability requires that instead patterns be formed from empirical observations. However, the large-scale patterns in economics would take thousands of years before sufficient data could be collected to produce a reliable theory that we could apply to real-world decisions.

3. Other sciences that deal with the development of complex systems over long periods of time implicitly accept 1 and 2. Look at macroevolution--no macroevolutionary theorist would claim to be able to predict what species or relations between species may occur in the future.

4. It is thus not clear to me that it has been well-established that following the often-conflicting advice of economists is consistently superior to following "commonsense" moral judgements.

quote:

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Originally posted by fuslim:
Here's a couple of questions for the economist.

If air was privatized, at what price would people no longer be willing to pay for it?

A second question springing from the first is what is the cost of air in any manufactured product?

---

Good question. Who can own the the air?. And can we continue to ignore its real value ?. What is the value of safe streets to walk on ?.

What price to reduce our infant mortality and child poverty rates to those of Euro-socialist nations ?.

Is it time we raised the standard of education ?. What are the job prospects for a high school grad today compared to 30 years ago ?.

Observe the world-wide experiment for free markets in water. It goes against human nature everywhere it's being conducted. But that doesn't stop the American's from suggesting that laissez faire capitalism has actually worked somewhere in the world since 1929. Bolivian's have asked a good question: Who can own the rain ?.

[ 10 October 2004: Message edited by: Fidel ]

quote:

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Originally posted by ReeferMadness:
Ollie, you've ignored my questions:

1) Who, if not economists, are to blame for our societal obsession with growth of the GDP?
2) What do economists propose as a more balanced picture of societal well-being?

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1) People who don't know any better. They outnumber us by quite a lot.

quote:

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1. There is no science or mathematics that can clearly connect assumptions about the behaviour of individual agents in a complex environment to the overall picture of these interactions.

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quote:

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2. The lack of this predictability requires that instead patterns be formed from empirical observations. However, the large-scale patterns in economics would take thousands of years before sufficient data could be collected to produce a reliable theory that we could apply to real-world decisions.

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3. Other sciences that deal with the development of complex systems over long periods of time implicitly accept 1 and 2. Look at macroevolution--no macroevolutionary theorist would claim to be able to predict what species or relations between species may occur in the future.

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quote:

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4. It is thus not clear to me that it has been well-established that following the often-conflicting advice of economists is consistently superior to following "commonsense" moral judgements.

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As an aside, I find it peculiar the disjunction Oliver implicitly assigns to the concepts "political" and "economic." Perhaps economists are glowing green aliens?

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1) People who don't know any better. They outnumber us by quite a lot.

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OK. You see a whole bunch of people taking a measure devised by economists and using it inappropriately, to the detriment of the world in general. Do you think that economists have some unique ability and perhaps even some responsibility to attempt to correct this?

quote:

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2) The short answer is the we don't have one. There are important theoretical problems involved in trying to put a number on welfare (or utility, or 'happiness'). We're pretty sure that a typical Canadian is better off than a typical Chinese. But unless you're willing to make the herioc assumptions required to generate things like the GPI, it's virtually impossible to say things like 'Canadians are 6.87 times better off than the Chinese'.

---

Look, Oliver, when people pointed out that GDP is a deeply flawed way to measure how well we're doing, you said yeah but it's only one measure.

When I asked for other measures you said there aren't any.

When I mentioned that media, government and business seem to have an unhealthy obsession with the GDP, you said yeah, but it's not the fault of us economists.

And now, when I point out that you economists actually do have a role to play in determining how a measure designed by economists is used in policy, you're saying it's not an issue.

I wish you were more open to exploring different paradigms. The system we have now is grotesquely broken, a radical change in thinking is required.

If you say it's not economists who are responsible for these indicators, etc. which flow from your desks and workstations then exhibit leadership and tackle the fallacies head on.

Because we are not economists does not mean we are somehow incapable of understanding the issues. Every time we expend a non renewable resource the GDP (and international esteem for the country) go up. Pollution is not factored in.

The current model of economics is predicated on the most grotesque of LAissez faire models, I don't care if you put an asterix, the model is fucked.

The more conservative monetarists explanation for the last major world depression of the 1930's was that businesses and factories weren't producing enough product and services as the cause of the slow down. Of course, Keynesian's would explain an economic event like 1929-1936 with several pointed arguments with the main ones being that the rich had too much income and the working class and poor, too little income. This makes more sense to me as it did to John Maynard Keynes, Baron of Tilton as it does today for JK Galbraith, born in Ontario and who was economic advisor to FDR and his New Dealer's in the 1930's.

Edited to add that today, Galbraith doesn't see a New Deal sol'n to today's economic woes. Rather, Galbraith sees a world-wide spread of trade unionism to level the global work/playing field and basic human rights as the ulitmate achievment for the working class. I think it's possible(naive, I know).

The New Deal and subsequent government spending initiatives on infrastructure were the basis for helping the Yanks out of economic depression. And it did just that in building the most prosperous society bolstered by spending on "Keynesian-militarism." And few political conservatives in the States will point out that the economic model that is responsible for producing so much of the wealth in America over the last several decades is essentially ammenities and soft budget spending on services to the middle class and poor: pensions, public education, medicaid for the poor, social housing and health care are the core. Programs that have very little to do with the free market system except that private-for-profit entities have their hands in the public purse and causing the Yanks to spend the more than any other nation on an inadequate health care system, pharmaceuticals that depend on publically funded research and handouts from taxpayers and a deteriorating public infrastructure since the Reagan years.

[ 11 October 2004: Message edited by: Fidel ]

quote:

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When I mentioned that media, government and business seem to have an unhealthy obsession with the GDP, you said yeah, but it's not the fault of us economists.

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The notion of GDP exists since Keynes and was first measured in the late 1940s. Economists understand its weaknesses. For example, it critically ignores non-market transactions. (Ignoring environmental costs is much more serious than mere national accounting.)

GDP, alone, is a meaningless measure but it may be correlated with a broader, unknown measure.

[ 11 October 2004: Message edited by: August1991 ]

Is it unfair of me to suggest that ideological divides exist within economics? This is important, 2+2=4 may be free of ideology, but your discipline is many orders of magnitude more complex and as such differences of interpretation exist with respect to the many ambiguities.

As such, I question if economics can provide definitive answers.

In my own arguements with you OC I have had to laugh in retrospect at how quickly the fight ends up on your own turf. The same can be observed in this thread. Its too easy to debate in terms of logic, to banter back and forth about the tenets of economics. But that is a fight non-economists are unlikely to win.

I have no doubt that academic economists are intelligent and hard-working. I'm sure they all want to make the world better (though it must be remembered that 'better' is extremely relative, we all have different ideals).

But being bright; being knowledgeable and proficient with the technical details of your discipline does not imply the rightness of what you do. I would liken it to what hot-air, and helium balloon scientists would be like today, had we not attained winged flight. People of considerable intelligence, but all of it directed towards the sort of constant maintenance required to keep an antiquated system going. Scientists who had spent careers refining balloons, who had built upon the work of respected predecessors, might well resist and even be angered by the suggestion that a better way is possible.

As a discipline that strives for the rigorous validity of the 'hard sciences', let me remind you of how many of our technical developments were preceeded by learned scientists convinced that it could not be done (Even in the 20th Century: flight, the sound barrier, space flight).

Being smart is no immunity to cultural prejudice, nor to mistaken assumptions (even shared assumptions). OC, you talked about Einstein. Smart guy. Yet he long refused to accept the theories of quantum mechanics (a field within his own discipline!).

Being smart is no immunity to being wrong.

Failures of imagination, the power that history exerts on belief. What we know, what we think we know, can never be entirely rational.

Lastly, when OC and August ask: “Well, can anyone do better than what we have?”

This question is misleading. It ignores the conservative social influences that undermine adoption of new ideas (or social ingenuity). It ignores the role of power. It ignores the enormous political influence that wealth exerts on our political and social discourse; the concept that those who benefit within the current system may well act in a fashion that reinforces the status quo. It ignores the essentially conservative nature of our human systems.

In Homer-Dixon's "Ingenuity Gap" the author makes an excellent analogy (borrowed from evolutionary theory). This is his concept of adaptive space. Think of a 3-D map, adaptive systems are like sharp sloped mountains rising above this space, but the nature of each system sets certain limits on how high the crest can go. Our economic system has reached its peak. Our adaptive system has reached natural constraints and can rise no further. But to change to another system means dropping down to the valley floor and finding a higher mountain.

I'm not sure economists are willing to contemplate the descent.

[ 11 October 2004: Message edited by: britchestoobig ]

"We can have great wealth concentrated in the hands of a few, or we can have democracy. But we can't have both." -- Louis Brandeis.

I saw some interesting stats on a Yankee-imperialist news station the other day. I can't recall the exact percentages, but it said that over the course of previous economic recoveries in that country, workers gained an average of something like 40% of the overall revenues from economic expansio. In the last four years of this particular net job-loss recovery under conservative rule, worker's share of the gains have been a dismal 19%. Meanwhile, the cost of living only goes up. Conservatives point to home ownership being at an all time high but neglect to mention that the percentage of American's defaulting on mortgages is up by 45% since the beginning of Bush, part deux. And the number of American's living below the Census Bureau's 1960's guidelines for poverty are up by over three million.

Yes, I know. That's down there, and we're here where purchasing power parity is greater for the same bottom two-thirds of worker's in Canada and Keynesian-militarism isn't funneling borrowed money into the hands of a select few. But with Paul Martin at the helm, similar declines and losses for Canadian workers are not from a lack of effort on Martin's part.

[ 11 October 2004: Message edited by: Fidel ]

Economists like OC and A91 suggest that they are striving to achieve what I will call machine E. At one end E takes in policy goals and spits out the other end the economic solutions to achieve them. Ideally, E is neutral as to what goals enter it in its production of solutions that leave it. If so, E is a very good machine, and we should all praise OC and A91 for their efforts on it.

But here comes the problem with E: it seems that whenever we put in goals like "permanently raise the living standard of poorer countries without rolling back the hard-won gains of the working and middle classes of richer countries" we E suddenly starts to bleep and give us "Error! Error!" But when we put in goals like "increase productivity," E chugs happily along.

This makes us suspicious that E is not really neutral.

[ 11 October 2004: Message edited by: Mandos ]

Though I'd add that in a few threads, OC (and I think Aug as well) have implied that its not economics per se that is to blame, but rather the political/business environment which employs the decisions which distorts economics to their own (nefarious) ends.

If I might extend your analogy Mandos, this argument would be like certain popular brands of Machine E producing 'love bunnies'. The problem being that too often the people using these 'love bunnies' are easily able to transform them into weapons to be used against the weak.

Sure the buyer is at fault, but the manufacterer shares the blame for not building better bunnies.

[ 11 October 2004: Message edited by: britchestoobig ]

A few points (some of which were also mentionned above):

Economics used to be called Political Economy for a good reason, i.e. you can't seperate the politics from the economics very well.

Economics is an axiom system with a gazzillion (mostly) unrealistic assumptions. Adam Smith knew it, Oliver seems to have forgotten it in spite of all the textbooks he reads (or writes).

In spite of the numerous (and unrealistic) assumtpions only one of the four macro models is consistent and conclusive. That is perfect competition, which includes such "real-world-relevant" assumptions as no transportation cost, perfect information available to all market participants, identical products and no participant has any market power to name a few

Adam Smith knew this was totally unrealistic but Oliver keeps on talking about science.

(In passing Oliver, you never told me on that other thread why it is possible that 2 economists, Myrdal and Hayek can get a Nobel Price for saying opposite things. Some science!)

At the other extreme you have the model of monopoly. The text book example used to be insulin but there is now a substitute available, I believe.

Then you have 'imperfect competition, which bears some resemblance to small businesses, e.g. restaurants but is inconclusive as to the price which would clear the market and hence 'equilibrium' level of output.

Finally, the model that matters most in the real world oligopoly, which includes the firms responsible for most output in capitalist economies. (Say the Fortune 100 or the Fortune 500)

Again it is totally inconclusive as to 'equilibrium' price, i.e. the one which would clear the market and quantity produced.

Come on Ollie don't pretend that economists are neutral with respect to GDP. Why do you think they speak of goods as opposed to commodities?

What economics is really good at is 'justifying' our social order and it does this on the basis of a model (perfect competition), which has no relevance for the real world we live in.

It definitely is much more ideology than science.

On the subject of international trade and comparative advantage you might profit by reading George Soros Open Society Reforming Global Capitalism

quote:

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Originally posted by VanLuke:
(In passing Oliver, you never told me on that other thread why it is possible that 2 economists, Myrdal and Hayek can get a Nobel Price for saying opposite things. Some science!)

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quote:

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Originally posted by Oliver Cromwell:
Socrates: Your post saddens me even more. It's not what an intellectual would write.

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I think you need to get off your high horse Oliver. That comment was totally uncalled for, I expressed opposition to your point of view, I did not attack you as a person.

Whether you are right or not your attitude is insufferable. You are not superior by virtue of your status as an "Economist".

If you believe our opposition to your point of view is rooted in our introductory textbooks then you are indeed mistaken.

While i do happen to be a student, and apparently a very stupid one at that, I am friends with many economists who are proponents of True Cost economics.

If my feeble brain can be relied upon I believe you would refer to them as "Political Economists"

You may not agree with us but you cannot claim that we are simply a bunch of uneducated yahoos running our mouths off. We are putting forward arguments representative of a divergent stream of thought within the discipline of economics.

Your dogmatic insistence that you are the keeper of the "truth" and we are wrong by definition because we disagree with you is emblematic of the problem we are referring to.

No, economists do not agree on every point. But on the basic things - such as how to use GDP - we do. And academics don't have any particular incentive to play it safe; no-one gets tenure by reciting textbooks. If you want to make a name for youself, you have to make some waves. We welcome new ideas - it gives us something to think about. And then debunk. Over time, we've accumulated quite a lengthy inventory of fallacies and errors. Virtually all of the 'new ideas' proposed by non-economists fall into two categories:

a) Stuff we know already.
b) Stuff we know to be wrong.

Mandos: That's why they call it the 'dismal science'. I wish we had a magic wand that would costlessly solve all our problems. I really do.

VanLuke: Did you see the thread on assumptions made in economics?

quote:

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RM: It's a non-issue because economists know the pitfalls of using GDP when it's not appropriate - we read intoductory textbooks as well (hell, we write them). When it's not appropriate, we don't use it.

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Oliver, I have to say that I'm having a great deal of difficulty with the picture you describe.

You economists come up with this wonderful concept called GDP which is a good thing when used as directed but along come the great unwashed and they run off with this concept like an unruly pack of dogs and do all manners of unspeakable things with it. You and your economist buddies shrug your shoulders and retreat back to the ivory tower. Is that pretty much it?

I have trouble with this picture because I hear economists saying things like 'A rising tide raises all boats' which is economist-slang for 'If we grow the economy enough, eventually a bit of the cash will wash down to the peasants at the bottom'.

I have trouble with it because all large financial institutions have economists on staff and they all seem to want to pursue the 'growth-at-all-costs' path

I have trouble with it becauase most of the government ministries have economists on staff and they seem to be going the same way.

I have trouble with it because there doesn't seem to be any hurry on the part of economists to challenge the way the GDP is used or to develop alternatives.

Dynamic Stochastic General Equilibrium models are what economists use to say "I don't know."

One has to wonder about a 'science' that has to invent long-winded terms to cover over the fact they're guessing. They'd probably be better off to just call it 'chaos theory', and let it go at that.

Every year the Financial Post has a feature they call "Junk Science". For a week they run a series of editorials that mostly attack climatology as a 'junk' science.

Somehow economics is never mentioned as junk science, despite the fact it has proven over the years to be more or less useless as a predictive tool.

Anyone remember Alan Sokal? He blew a peer reviewed journal of the social sciences (Social Text #46/47, pp. 217-252 (spring/summer 1996), out of the water with a nonsense article.

He accomplished this feat by:

First, I quote some controversial philosophical pronouncements of Heisenberg and Bohr, and assert (without argument) that quantum physics is profoundly consonant with ``postmodernist epistemology.''

Next, I assemble a pastiche -- Derrida and general relativity, Lacan and topology, Irigaray and quantum gravity -- held together by vague rhetoric about ``nonlinearity'', ``flux'' and ``interconnectedness.''

Finally, I jump (again without argument) to the assertion that ``postmodern science'' has abolished the concept of objective reality.

Nowhere in all of this is there anything resembling a logical sequence of thought; one finds only citations of authority, plays on words, strained analogies, and bald assertions."

What a perfect description of economics.

Why did he do it?

What concerns me is the proliferation, not just of nonsense and sloppy thinking per se, but of a particular kind of nonsense and sloppy thinking: one that denies the existence of objective realities, or (when challenged) admits their existence but downplays their practical relevance.

Again, almost a perfect description of the science of economics.

He quotes Stanislav Andreski:

So long as authority inspires awe, confusion and absurdity enhance conservative tendencies in society.

Firstly, because clear and logical thinking leads to a cumulation of knowledge (of which the progress of the natural sciences provides the best example) and the advance of knowledge sooner or later undermines the traditional order.

Confused thinking, on the other hand, leads nowhere in particular and can be indulged indefinitely without producing any impact upon the world."

Disingenuous constructs such as DSGE models, and a variety of other devices and models don't advance clear and logical thinking, nor cumulative knowledge.

Some economist you are.

Myrdal AND Hayek SHARED a Nobel Price SAYING OPPOSITE THINGS

Sorry for the shouting but this is the THIRD TIME I pointed this out to you asking for an explantion form you with respect to your claim that economics is a science.

And what do I get as an answer: Ask the committee why Myrdal got the price.

Hayek wasn't Swedish. So why did he get the price?

MORE IMPORTANTLY: Why did they share a price while saying opposite things and how do you reconcile this with your claim that economics is a science?

Thank you for the link to the thread about assumptions in economics. I don't need to consult it; I studied economics.

MORE IMPORTANTLY: How do you reconcile my (incomplete) list of the ridicolous assumptions incorporated in the model of perfect competition with your claim of economics being a science?

An analogy to astro-physics could be put into these terms:

Earth has no gravity.
The other planets don't move and have no gravity.
There are no black holes.
The amount of thrust in a rocket doesn't matter.

(I'm not really very good in science but to illustrate the nature of economics the preceding gives an idea.)

MOST IMPORTANTLY: How do you explain that economics hasn't got any definitive answers as to output and price levels in the two models which most closely resemble the reality we live in.

Most notably, you ignored all the challenges I put down re economics being a science.

Maybe because deep down inside you know it's mainly ideology?

[ 11 October 2004: Message edited by: VanLuke ]

If you studied economics, and if you really learned that economists make unquestioning use of the assumptions you list in all contexts, then you should ask for a refund.

Mandos: Who pays when poor countries benefit from capital inflows to develop? You know that already: rich-country workers and poor-country owners of capital. Rich-country workers can be protected by income support and training programs. If that doesn't happen, blame the politicians, not the economists.

RM: You keep saying the same thing, and I keep agreeing with you: GDP is not best suited for dealing with things like pollution. Environmental economists and resource economists know it, too. What more do you want me to say?

Spare me your advice about calming down, will you?

You're an "ideologist" (just made this word up) who instead of actually responding to the points I made gets personal. It's because you can't refute them, isn't it?

I'm not the only one who pointed out your high and mighty attitude lecturing everybody else heren who doesn't agree with you.

Ans when you can't deal with an argument you just ignore it.

As to Hayek having "deserved" the price and Myrdal not, I can only conclude that you like the former's ideology but not the latter's.

I don't remember what Milton Friedman got his price for but I think it's safe to assume you'd say 'he deserved it'.

I sure hope it wasn't for his 'permanent income theory".

For those of you who are not familiar with this, it (in a highly simplified way) says that people spend their last penny just before their last breath; that somehow they 'know' just how much they're going to earn over their lifetime and adjust their spending habits accordingly.

In Canada, we're fortunate to have people like Jim Stanford and institutions like the Canadian Centre for Policy Alternatives who get some media attention and space and are able to provide progressive perspectives on economics issues.

Dean Baker, a liberal American economist, writes a fascinating column that gives an economist's take on how the New York Times and Washington Post cover economic news.
See the Economic Reporting Review

OK...but I do have an Economics related quote that some of you may be interested. And it kinda takes a pot shot or two at the dismal science.

I just finished reading, Emotion: A Very Short Introduction by Dylan Evans and in this very short book the author touches upon the orthodox Economic view of rationality in his discussion of the role of emotions in human activity. A good read...but here is the quote:

quote:

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"...we should take a rather different view of rationality than that proposed by logicians and economists. Economists define rationality in a rather technical way, as the maximization of one's expected utility. Roughly speaking, this means that a rational person is one who, given a certain set of preferences, will act in such a way as to satisfy as many of those preferences as possible. This is all well and good as far as it goes, but it says nothing about where those preferences come from, nor whether it is rational to have some preferences rather than others. Indeed, the last question is, strictly speaking, meaningless for economists, since they define rationality in terms of satisfying preferences. There may be irrational consumers and irrational purchases (that is, those that could not be the result of a 'consistent' set of preferences), but there is no such thing, in economics, as an irrational preference (or a rational one, for that matter; preferences just are).

This seems crazy to me. It seems perfectly sensible to ask whether or not it is rational to have a certain preference. For example, I think that it is reasonable to want to be liked by a few friends but unreasonable to want to be adored by everyone in the world. If economists regard such statements as nonsense, it is because they are out of step with the rest of the world, not because the rest of the world is out of step with them.

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Personally, I prefer to use the term Political Economy, as it includes broader terminology and avenues of investigation than orthodox Economics. A final point...in his book, Evans borrows from Gigerenzer the terms "evolutionary rationality" or "ecological rationality" to outline a larger notion of rationality than orthodox Economics is prepared to use.

I had an economics professor whose favourite example was that of a masochist. Hurt me! Hurt me! Hurt me! may not sound rational to us but heck to each his own. So the more he/she gets beaten the higher his/her utility.

Two hundred year old ideology which is still used to prop up the myth of unfettered "private enterprise" producing the highest degree of satisfaction. (Never mind how you add up your utility and mine!)

And of course as you rightly point out just where do these preferences come from? (Especially considering that in the only model that has a determined outcome of output and price of a commodity (which is not necessarily "good" as in goods; think SUVs), i.e. perfect competition there is no place for advertismement. Nor a need for it since everybody has perfect information and products are identical.

I think this link leads to economics which is a lot more fun than the kind they teach in classrooms (though it helps in the appreciation of the jokes to know some economics).

http://netec.mcc.ac.uk/JokEc.html

An appropriate example for a chat site is this specimen:
"Talk is cheap. Supply exceeds Demand. "

[ 12 October 2004: Message edited by: VanLuke ]

Well I'm glad you pointed out to me that I am not an intellectual. HEavens, on my own i might never have figured that out!

Did I ever say I agreed with the first quote you posted? In fact, according to your logic (everyone who disagrees with you agrees with that quote), we are all not intellectuals.

Great, thanks for straightening that out for us. God knows the result if some of us were to get the idea we were intellectuals.

I agree with the neccessity of a radical paradigm shift in the discipline of economics. One which will incorporate unpaid work, environmental impact, etc.

True Cost Economics is much bigger than adbusters and their conception of how to realize it.

There is an inherent split in the discipline of economics between mainstream economists and political economists. For you to argue that they all agree in the face of this split is preposterous.

If you were willing to engage in friendly debate I would love to discuss these ideas. However you refuse to address the issues, choosing instead to focus on personal attacks and pumping up your own ego.

I don't think you should be leaving.

Oliver can't even answer the criticism of economic theory I reiterated three times. (And there are many more) He just keeps on repeating the same refrain or gets into personal attacks.

He's done it to me too; several times.

I just feel like there's no point talking to him since he isn't listening to a damn thing we say.

His pomposity makes me think we should introduce him to Paul C. from the YFS over on the "Big Announcement" thread. They're clearly made for each other.

You make some good points VanLuke, it's good to meet you.

While it clearly makes me a non-intellectual, i do agree that the manifesto needs to be posted all over economics departments, that banners need to be unfurled, that we need to make the phrase True Cost Economics the buzz word on campus, and the one whose name mainstream economists dare not speak.

I've been trying to get him to comment on policies and the imbalance of power between worker's and employers, and some of the things that ppl like Joe Stiglitz has said about the current state of global economics without much success. I think OC is not interested in politics, or perhaps because he is a prof of economics, he has to convey a neutral opinion about politics and stick with what he does know.
Afterall, who could blame anyone for not wanting to be associated with any of the two old political lines of thought prevalent thruout N. America ?. And we do realize that you're a total egghead where economics is concerned, OC. Pardon me, but that was not meant as an insult or even a virtual display of disrespect, even if you do have admiring photos of Milton Friedman or Gordon Thiessen on the back of your pickup hockey helmet.

Who knows?. Perhaps OC is a closet orthodox Keynesian or even socialist dying to comment but does not for the slightest fear of reprisal by colleagues or students who might discover his true identity here. I, for one, would be disappointed to learn that Oliver doesn't even vote in Canadian elections, he's that neutral. But I doubt that's the case.

quote:

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Originally posted by Socrates:
Thanks for the support VanLuke.

While it clearly makes me a non-intellectual

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You're welcome.

Intellectual, shmintellectual