The Dim-Post

July 28, 2015

Economics and propaganda

Filed under: general idiocy — danylmc @ 8:00 am

Last week I tweeted a couple of observations about the role of economics in modern propaganda and marketing; namely that it’s a frequently used tool in both of those disciplines that relies on its ability to advocate for political parties or ideologies or corporate – or other interests – while masquerading as an impartial science. Some people agreed with this and others took objection, and twitter isn’t the best medium for fleshing these things out, so here’s a more extended take.

There’s a famous science fiction short story called The Cold Equations. It was written by a guy called Tom Godwin and published in 1954 in Astounding Magazine.  In it an emergency ship is heading to a remote planet with urgently needed medical supplies without which the explorers on the planet will die. The pilot finds a stowaway on board the ship: a young girl. But, the pilot explains to her, the ship does not have enough fuel to account for her additional mass. If she stays on-board then she, the pilot, and all the people who need the medical supplies will die. She must be blasted out of the airlock into space. The laws of physics demand it, and there can be no humanistic appeals to morality against the cold, hard equations of the universe. In the end (spoiler) she willingly goes to her death.

There have been plenty of criticisms of this story, all making much the same point: Godwin’s science is fine but everything around it is ridiculous (engineers especially hate it on the grounds that no space mission would ever have such a tiny margin of error that a ~60kg weight discrepancy, preventing even the most minor course correction, would doom it to disaster). A whole lot of absurd premises are piled on top of each other to get to the point where the author can blast a young girl into space and justify it on the basis of science.

Most of the economic arguments I encounter look exactly like this to me. Selected, sometimes sound but often absurd premises carefully framed around a statistical finding or mathematical model so the economist can advocate for a client or ideology or agenda but say, ‘Look. Science! We gotta face the cold hard facts. There is no alternative!’ Here are two very recent examples:

1. Should we have a ban on foreign property buyers? BNZ Chief Economist Tony Alexander says we should. He provides six very compelling-sounding reasons why, but doesn’t mention what is certainly the most important from the BNZ’s point-of-view – that foreigners paying cash or overseas-raised debt for houses means fewer mortgages for New Zealanders, and thus less profit for the BNZ. And he ignores the fact that Australia has a foreign-buyers ban (with an exception for new homes) and absolutely none of the things Alexander predicts a foreign-buyers ban will accomplish have happened in Australia. The empirical evidence from the very similar country right next door seems like it should have some salience here.

Bank economists are, along with politicians, the most prominent economic spokespeople in our society. Most people hear economic arguments from these two groups every day, and sometimes what they say is sensible and sometimes it ain’t – but there is always an agenda, and the reason these groups use the language of economics to advance their own interests is because they know that it is the perfect propaganda tool, because it disguises itself as impartial and scientific.

2. But, twitter pointed out to me, what about academics? Politicians aren’t real economists and of course bank economists have an agenda, but academics are out there doing real science and getting peer reviewed, right?

Well here’s something that a bunch of right-wing economists, mostly academics, were all retweeting today. A blog post by Bryan Caplan, a very famous professor of economics at George Mason University in the US. Caplan is also a libertarian which means he adheres to an ideology which preaches that government is evil, and all of his research as a scientist harmoniously proves that his ideology is correct. (This doesn’t tend to happen in other sciences; science is mostly the experience of dreaming up beautiful ideas and theories and testing them to find out that they’re dead wrong, but somehow libertarian economist’s results always seem to endorse their beliefs about the state, and left-wing economists results’ always endorse theirs, even though the two ideologies are totally incompatible). Caplan talks about a documentary in which a homeless guy is given $100,000 and wastes it. He concludes:

Libertarians have occasionally offered their critics the following deal: We’ll support a one-time Equalization of Wealth, if you agree to abolish the welfare state. I’m not surprised that no one has taken the bait. Most poor people aren’t as dysfunctional as Ted. But deep down even bleeding hearts subscribe to my insensitive theory that – at least in the First World – ordinary prudence is enough to keep almost anyone out of poverty.

I could say a lot about that but I’ll restrict myself to the science. Firstly, most scientists try to have a cohort of more than one person before they make a sweeping statement about all of humanity. Secondly, you also try and have a control group. What happens if you give a non-alcoholic non-homeless person a huge sum of money? Like, say, lottery-winners? Well, if you google ‘lottery winners curse’ then you find out a lot of them do exactly what the homeless guy did – they fritter it all away. Some middle-class lottery winners end up becoming homeless. The academic literature on just how prevalent this is is contradictory, but my point is that this prominent academic economist and all of the economists retweeting and endorsing him sure don’t look like serious scientists. They look like bank economists or politicians, only they’re advocating for ideologies, not corporate or political interests.

The other point I’d make about economics and peer review is that yes, other sciences have peer review, but peer review is not really that robust. If you find something interesting in a new anti-cancer drug and you’ve tested it on mice, then you publish it in a peer-reviewed paper. If you want to give the drug to thousands of patients then you have to put it through clinical trials, a very robust process that takes years (and costs a fortune). You really, really, really need to be right. But economics doesn’t go through that kind of screening before it gets picked up by policy-makers and used to justify policy changes that affect the lives of millions, or tens of millions, or billions. Here’s an Economist article on the Reinhart-Rogoff debacle (too long to excerpt) explaining why that’s a problem.

But what really set me off on my twitter rant was thinking about Thomas Pikkety, and the response to his contention in Capital in the Twenty-First Century. His thesis in that book is simple – that in a capitalist system the rate of return on capital is greater over time than economic growth, meaning capitalism leads to concentration of wealth and greater inequality. It’s an important and simple thing to know about the economic system that drives the world. If he’s right then it has huge implications for our society and the level of redistribution and government intervention. Caplan above believes that capitalism is moral. If you work hard it will reward you. Piketty claims the opposite. That it is an amoral system in which wealth simply aggregates to itself.

Unfortunately there’s no way for a layperson to tell whether Piketty is correct because the response from his economist peers are neatly divided along ideological lines. Left-wing economists say he’s right, right-wing economists insist Piketty has been ‘debunked’. He’s dead wrong.

Because my values are left-wing I’m inclined to think Pikkety is right. But I also trained as a scientist, and I know that a gut-feeling based on my prior values isn’t good enough when you’re making huge decisions about the political economy. Economics is supposed to be a science, and economists certainly view themselves as such, and tend to be far more confident in their findings than, say, climate scientists, or geologists, or psychologists, or any other field that deals in uncertainty. But as a non-economist I find that every time I encounter the discipline it looks nothing like science and is indistinguishable from either politics and political activism or marketing, but is made more insidious and more powerful from its presentation as a cold, objective set of facts against which there can be no argument

64 Comments »

  1. I reckon economics is reckons. That’s a fact!

    Comment by Reckonition Man — July 28, 2015 @ 10:01 am

  2. The fact that economic opinion can be clearly divided along ideological lines amply demonstrates that it’s not a science and I hope nobody considers, say, the head of investment banking at ASB as anything other than a self interested hack. Its probably not possible to conduct macroeconomic experiments with credible scientific rigour.

    Comment by Adrian — July 28, 2015 @ 10:07 am

  3. Brushing past all the boilerplate “economics is junk science” flak, I’ll point out once again that as recently as last year Danyl was advocating a ban on non-residents buying NZ properties.

    Comment by kalvarnsen — July 28, 2015 @ 10:07 am

  4. Thank you. Very well written, and it is also my experience.

    Comment by Brent — July 28, 2015 @ 10:09 am

  5. So one thing I’ve read, which seems like there’s a not-bad argument in favour of it, is that while we have a pretty decent science of economics, we don’t have a good engineering if economics, that translates economic research into real-world applications.

    Like, okay, if you construct a mathematical model on these terms A, B & C, you will get result X, and that’s a True Science Fact. What are the policy implications of that? Well, who knows? Do A, B, & C reflect reasonable assumptions to make in the real world? We’re not sure. etc.

    Comment by Finn — July 28, 2015 @ 10:10 am

  6. But Finn, the high priests of economics really are frictionless spheres!

    Comment by eleventynumber — July 28, 2015 @ 10:25 am

  7. …we don’t have a good engineering if economics, that translates economic research into real-world applications.

    That’s a good point. I’m reminded of the story about famous cosmologist, Fred Hoyle. Mr Hoyle was giving a public lecture in the 1960’s and was asked by somebody in the audience, “Professor, tell us, what is mass? What is gravity?”. Hoyle, for once, was stumped and replied that he couldn’t tell the man what they were, but could tell him what they could do. The questioner was not impressed and responded, “What they do? That’s not science, that’s technology”

    Comment by tom hunter — July 28, 2015 @ 10:45 am

  8. Economics is not a hard science so there aren’t immutable laws, such as in physics. To see why this is true for neoliberal economics read Debunking Economics by Steve Keen.

    Comment by Ken S — July 28, 2015 @ 10:53 am

  9. Just on this:
    Politicians aren’t real economists and of course bank economists have an agenda, but academics are out there doing real science and getting peer reviewed, right?
    One of the weirder things about the Greek crisis is that they have no less than THREE ACTUAL ECONOMISTS in their government (Varafoukis, Tsakalotos, and one other).

    Comment by James — July 28, 2015 @ 10:58 am

  10. There’s an interview with Feynmen in which a journalist asks him to explain magnetism, and Feynman admits that he can’t because it is just too complex for a layperson. But there is consensus between physicists on how magnets work, and they can make falsifiable predictions based on their theory, and they’re always right.

    Comment by danylmc — July 28, 2015 @ 11:07 am

  11. Unfortunately there’s no way for a layperson to tell whether Piketty is correct because the response from his economist peers are neatly divided along ideological lines. Left-wing economists say he’s right, right-wing economists insist Piketty has been ‘debunked’. He’s dead wrong.

    Politics is the art of false dichotomy, the economics is merely a prop.

    Comment by unaha-closp — July 28, 2015 @ 11:13 am

  12. Good post and totally agree.

    Also, the same problem applies to political “science”. After studying it I realised the so-called scientific theory part of it sucks at predicting anything meaningful.

    Another good example of how economist’s projections vary with ideology is with climate change. When Treasury does an economic analysis the costs are always astronomical because of the short-term (and stupid) assumptions they use. When Greenpeace economists do it, the result is the opposite because their assumptions don’t discount the future so much, which I would argue far more appropriate from the perspective of um, the survival of human civilisation as we know it.

    Regardless, which group is successful depends on their authority in the eyes of the media and the public. Treasury is staffed with lots of serious looking people in suits and carries an air of authority, while I assume Greenpeace are still perceived as radical by most people, so their economic analysis is taken with a grain of salt. The point seems to be that in economics, style is as important as substance.

    Comment by Seb Rattansen — July 28, 2015 @ 11:16 am

  13. Yup, science relies absolutely on peer review, and the more of it the better. Economics mostly uses little bits of science and a lot of theory, pushed through a sieve of ideology

    Comment by Jack Craw — July 28, 2015 @ 11:17 am

  14. But there is consensus between physicists on how magnets work…

    Sort of. Perhaps economists could learn from physics and introduce darkness to clarify things.

    Comment by NeilM — July 28, 2015 @ 11:18 am

  15. @danyl: I totally agree with this post.

    One of the confusing things, is that it is perfectly possible to do “small”-scale economic analysis in a “scientific” and sensible way. Companies do that all the time when making decisions about capital expenditure. “This milk powder plant costs this amount to build, costs this amount to operate, it has this life-time, costs this amount to clean-up / decommission, and therefore it will be profitable if we can source capital at this rate and can sell the milk powder for at least this much”. While this analysis can be done more or less well, it generally works (eventually) because the assumptions you need to make are more limited and the results are verifiable.

    The problem is attempting to similar analysis for an entire nation’s economy (i.e. what Treasury does) is just dumb — because there is no sensible way to make many of required assumptions, and no way to verify the results.

    Comment by RJL — July 28, 2015 @ 11:33 am

  16. Well, approximately 5% of the economy _is_ a spherical cow, so we can start with that…

    FM

    Comment by Fooman — July 28, 2015 @ 11:40 am

  17. exactly

    Comment by Rick Bryant — July 28, 2015 @ 11:57 am

  18. Danyl,

    Your point regarding Piketty reminds me of an interesting and damning critique made by Yanis Varoufakis, former Greek Finance Minister regarding Piketty’s book and its conclusions.

    Despite being far-Left himself, even calling himself an ‘erratic Marxist’, he is quite critical of Piketty and is a glaring exception to your rule regarding the ideological split between Left and Right. I think you’ll find it interesting

    Here’s the link : https://www.youtube.com/watch?v=wNLPO2j9RQ0

    Comment by Bastiat — July 28, 2015 @ 12:03 pm

  19. It would be interesting to perform a discourse analysis of economics discourses in the media. I’m betting that since the Chicago school came to prominence, the ‘scientific’ explanation of economics has been pushed more and more by it’s adherents.

    Science is supposed to be able to reproduce results, and provide some predictive power. Economics typically fails a lot of the time on the former (especially as many economics theories are a-priori unprovable because they cannot be run through double blind trials – the gold standard of science research practice), and almost always on the latter.

    It’s better to understand that Economics is a discipline/craft, and provides some post-hoc explanative power but is essentially about assisting political decision making and essentially in an economy all decisions are political decisions.

    Comment by nukefacts — July 28, 2015 @ 12:16 pm

  20. especially as many economics theories are a-priori unprovable because they cannot be run through double blind trials – the gold standard of science research practice

    I’m pretty certain we don’t have double-blind trials to determine the nature of Black Holes, either… but we’re all on board with them existing.

    Comment by Phil — July 28, 2015 @ 1:14 pm

  21. Luckily most other forms of social studies are given less credence than economics, notwithstanding we like a good story.

    While economics can be very useful as history-with-empirisim it seems to have been on a decades long decline in usefulness as economic academics have focused more and !more on econometrics. Smith, Keynes and Friedman would probably be told to piss off to the sociology dept nowadays.

    Comment by Richard — July 28, 2015 @ 1:24 pm

  22. Piketty says somewhere in his book that there is no such thing as economic science, and economics only makes sense as part of the humanities.

    Comment by Fergus — July 28, 2015 @ 1:58 pm

  23. It’s not so much that economics is bogus, as that NZ economics was allowed to become a monoculture dominated by one neo-liberal school of thinking, especially in Treasury.

    Labour had nine years to fix this, and didn’t (all part of the left’s concept of playing by the rules of cricket while the right are setting up a machine gun down by off stump).

    They could, for instance have told Treasury that they wanted a broad spectrum of views and that staffing should be adjusted to deliver that. Or just fired every economist in the place and pared them back to a bunch of accountants keeping the books in order).

    Comment by richdrich — July 28, 2015 @ 2:20 pm

  24. Up to a point, Lord Copper. People have looked at exactly this issue and found that there is significant agreement across the economics trade on quite a large body of knowledge and theory. See http://ftp.iza.org/dp7184.pdf for one example. A large part of understanding economists when they move into contentious policy areas is where they are coming from. That’s not exactly difficult for a moderately sophisticated audience to manage. RJL is also right that it is easier to be precise and testable in smaller commercial propositions and microeconomics has more precision than macroeconomics, a branch of the trade that many economists look down on. But there are also plenty of scientists whose views dominate the way they approach their subjects. The public health specialists at the Department of Public Anxiety at the University of Otago are perhaps the leading NZ example but I also recall an academic meteorologist (since deceased) who was a staunch Labour Party member whose public utterances made me realise that political meteorology was a subset of the wider whole.

    Comment by Tinakori — July 28, 2015 @ 2:34 pm

  25. I’m betting that since the Chicago school came to prominence, the ‘scientific’ explanation of economics has been pushed more and more by it’s adherents.

    They’re in good company then: say Hello Karl

    Comment by tom hunter — July 28, 2015 @ 2:52 pm

  26. I’ll just leave this here…

    http://www.random-austerity-measure-generator.com/#

    All scientifically proven!

    Comment by eleventynumber — July 28, 2015 @ 3:31 pm

  27. I haven’t noticed any comments from academic economists here yet… Be keen to read Eric Crampton and Matt Nolan’s response to this.

    If economics is a science, why did only a very small number of economists (something under 25) predict the GFC?

    Comment by RHT — July 28, 2015 @ 3:51 pm

  28. “The other point I’d make about economics and peer review is that yes, other sciences have peer review, but peer review is not really that robust. If you find something interesting in a new anti-cancer drug and you’ve tested it on mice, then you publish it in a peer-reviewed paper. If you want to give the drug to thousands of patients then you have to put it through clinical trials, a very robust process that takes years (and costs a fortune). You really, really, really need to be…”

    …rich.

    Comment by unaha-closp — July 28, 2015 @ 4:34 pm

  29. RHT, Steve Keen is one of the few who did predict the GFC. As he explains in the book mentioned above, Debunking Economics, neoliberal economics acts more as a religion than a science. The models taught in virtually every mainstream school for the last many decades do not incorporate debt; they do not even incorporate money as part of a macro-economic view, as macro economics has effectively been banned in the neoliberal religion. It is really no wonder our economists can’t predict that a debt bubble will have to come to an end at some point if their teaching doesn’t allow for the existence of such a thing.

    Comment by Ken S — July 28, 2015 @ 4:39 pm

  30. @Seb: I always thought political science should really be called “political studies”. But the label “science” got applied very early on in the discipline’s history.

    Comment by kalvarnsen — July 28, 2015 @ 5:14 pm

  31. [Alexander] doesn’t mention what is certainly the most important from the BNZ’s point-of-view – that foreigners paying cash or overseas-raised debt for houses means fewer mortgages for New Zealanders, and thus less profit for the BNZ.

    Except he is writing from his point of view which may differ from the bank’s point of view. I imagine he gets paid for his work, and whether the BNZ supplies more or fewer mortgages is irrelevant in that context.

    It’s worth noting that until recently Alexander seemed to think that foreign ownership of properties here wasn’t a big deal.

    Comment by Ross — July 28, 2015 @ 5:15 pm

  32. Indeed, this is what Alexander says at the end of his piece:

    “Sporadic is written by Tony Alexander, Chief Economist at the Bank of New Zealand. The views expressed are my own and do not purport to represent the views of the BNZ.”

    There is of course this tired old joke about economists:

    A physicist, a chemist, and an economist are stranded on a desert island. They’re hungry. And then a can of soup washes ashore. Reduced Sodium Chicken Noodle, let’s say. Which is perfect, because the physicist can’t have much salt, and the chemist doesn’t eat red meat.

    But, famished as they are, the three professionals have no way to open the can. So they put their brains to the problem. The physicist says “We could drop it from the top of that tree over there until it breaks open.” And the chemist says “We could build a fire and sit the can in the flames until it bursts open.”

    Those two squabble a bit, until the economist says “No, no, no. Come on, guys, you’d lose most of the soup. Let’s just assume we have a can opener.”

    Comment by Ross — July 28, 2015 @ 5:30 pm

  33. I took economics at university and was appalled by what I taught. Beginning with simple supply and demand curves as models gradually the subject segued to assertions unsupported by evidence that I thought occurred because my lecturers were confusing their models with reality. As the models became more complex the subject drew further away from reality and it’s conclusions less and less robust.

    And today all I see in policy arguments is ideology where the consequences of theory are accepted only if they agree with ambition and ignored as if non-existent otherwise.

    Recently I was having a bit of an argument with a friend who has worked in the middling echelons of our government over the ideological bent of Treasury where I was disparaging them for their lack of rigour and he defended them for being people he knew personally as trying their best with good hearts. Who were all employed because they fit in with the institution.

    We’ve just had a nearly ten year real world contest of economic ideologies about whether or not public spending helps in recession, and whether or not easing monetary supply inevitably causes inflation. The empirical data is right therei n front of us, yet economists are still exactly divided by their ideology on the topic as they were ten years ago.

    Scientists they are not.

    Comment by Fentex — July 28, 2015 @ 6:08 pm

  34. Well said, Fentex. Religion, not science.

    Comment by Ken S — July 28, 2015 @ 6:14 pm

  35. The models taught in virtually every mainstream school for the last many decades do not incorporate debt;

    I don’t know if that’s true, but I do know there’s one big hole in most economic schools – little to no accounting for fraud and corruption.

    Comment by Fentex — July 28, 2015 @ 6:19 pm

  36. Early on economics was called political economy which is probably a better descriptor.

    An interesting insight into some economic methodology is Freidman’s contention that you don’t need realistic assumptions in a model so long as the predictive power is right.

    Then there are others, eg Keynes, who are a lot more realistic in their theorising. A big part of his General Theory is how does an economy work given the fact that there is uncertainty. (Which as a tad different to the rational economic man model.)

    Comment by Andrew R — July 28, 2015 @ 7:16 pm

  37. I recall an after dinner address many years ago from the BNZ’s Chief Economist at the time. After observing that many of us had probably never met an economist before he explained that:

    “An economist is the type of person who looks at something which is working perfectly well in practice and ponders whether it could possibly work in theory”

    I recall nothing else from his address.

    Comment by grantmnzGrantM — July 28, 2015 @ 8:00 pm

  38. @kalvarnsen: Yep, like Auckland Uni – I specifically remember a lecturer there saying that political science was a pretentious label. At the time I didn’t want him to be right, because probably like most young pol students, I wanted to believe social science had progressed to the point where it had some predictive ability.

    “It’s better to understand that Economics is a discipline/craft, and provides some post-hoc explanative power but is essentially about assisting political decision making and essentially in an economy all decisions are political decisions.”

    If only all economists were so humble🙂

    Comment by Seb Rattansen — July 28, 2015 @ 8:22 pm

  39. Here’s a clip from the Freakonomics movie about the economist co-author’s ingenious “incentive scheme” to toilet train his daughter (He bribes her with lollies, it fails, then he goes on to sell millions of books and a movie about the amazing power of economics).

    Comment by rtay — July 28, 2015 @ 11:47 pm

  40. Despite being far-Left himself, even calling himself an ‘erratic Marxist’,…

    He turned out to be pretty far-left (in the mode of the modern leftist), but not even slightly Marxist.

    When Syriza got in I thought this just might work, because Marxism doesn’t mess about with half methods. Marxists can deliver the sort of “austerity” that will scare the shit out of Europe’s elite. There will be confiscation of the physical assets that have been looted in the 30 plus years Greek capitalism evaded tax. Ships, shipping lines, corrupt monastries, resorts, private islands, villas, sports cars, everything will be seized by the state.

    None of that happened. Instead we got the modern Left, pissant minor tax adjustments that might come in next year which Greeks will avoid anyway and all that swag remaining in private hands. The modern Left wants Germans to work harder, for longer in worse conditions, with less social spending. The modern Left is crap. They moan on and on about “neo-liberalism”, but as soon as they get into power they go straight into begging for foreign investment.

    Comment by unaha-closp — July 29, 2015 @ 12:16 am

  41. @Seb: Do you regret studying it?

    @Unaha: It’s worth noting that Varoufakis wasn’t carrying out his own personal policy preferences. He was bound by the collective responsibility of a Cabinet which was dominated by a party he didn’t belong to. If he’d been PM rather than FM, we might have seen a different tack.

    Comment by kalvarnsen — July 29, 2015 @ 6:16 am

  42. great post danyl.

    i think people often forget that economics is one of the humanities, not a hard science. they also ignore that for much of the C20th “political science” and “economic science” were in direct competition to influence decision-makers. economics won because it’s more easily quantifiable, whereas politics was always a little vague.

    Comment by Che Tibby — July 29, 2015 @ 6:23 am

  43. If you want to give the drug to thousands of patients then you have to put it through clinical trials, a very robust process that takes years

    Or not as the case may be. I suggest you study the history of the MeNZB vaccine, NZ’s most expensive health initiative and huge waste of taxpayers’ dollars.

    Comment by Ross — July 29, 2015 @ 8:25 am

  44. Re Political ‘science’

    At Otago the discipline was named Political Studies (although I see know it’s just termed ‘Politics’). And I recall one lecturer (it may have been Jim Flynn actually) explicitly telling us that it was so named precisely because the area was not certain enough to bear the label ‘science’. Which always struck me as a remarkably honest and honourable approach for the academic staff involved to take.’

    I never went near any economics classes though, so can’t comment on whether the Otago economics lecturers were similarly honest about their discipline.

    Comment by Conrad — July 29, 2015 @ 9:14 am

  45. It was called political ‘science’ during the “behavioural revolution’ of the 80s and early 90s.

    It failed because politics just doesn’t quantify, so couldn’t ever really provide the kind of hard evidence you need in the actual sciences. Now, economics on the other hand allows the appearance of hard evidence…

    Comment by oldentired — July 29, 2015 @ 10:28 am

  46. The term “political science” goes back to the writings of Fisher Ames in the late 18th century – it is very much not a recent creation. In a sense it’s an artifact of a time when “science” simply meant academic study, and didn’t have such a narrow association with the “hard sciences” that it does today.

    Having said that I do think renaming it away from “political science” would be a good idea, but the use of the name isn’t some kind of modernist stupidity, quite the reverse in fact.

    Comment by kalvarnsen — July 29, 2015 @ 10:39 am

  47. Haven’t you just done the same thing as Caplan? Cited one example of an economist and drawing equivalencies? Also, the foreign buyer “ban” in Australia may not have worked, but was it a well designed policy? No one has asked that question. I understand there were lots of work arounds being used – eg local residents fronting the purchase.

    Comment by Andreas — July 29, 2015 @ 10:57 am

  48. Re #43:

    While there may be some benefits from the vaccine, it’s difficult to know for sure. The manufacturer’s own data sheet says that “no prospective efficacy trials have been performed with MeNZB”. The Ministry of Health says that the vaccination programme is proceeding …“without efficacy data.”

    http://www.scoop.co.nz/stories/PO0410/S00214/three-parties-question-health-minister-on-vaccine.htm

    Danyl, I’m surprised you didn’t comment on this at the time the vaccine was rolled out. Where was the “very robust process”?

    Comment by Ross — July 29, 2015 @ 11:43 am

  49. @kalvarnsen: No regrets because I’m a history and politics nerd… I just have to whip myself when I start to think that because I know some frameworks/theories that I have some magical abilities to predict the future. I have lots of respect for historians for that reason – they only ever try to understand the past, not draw generalisations from it.

    @unaha: The modern left is crap. Found this column from John Harris @ the Guardian which articulates why better than I ever could: http://www.prospectmagazine.co.uk/features/labour-leadership-contest-2015-burnham-corbyn-kendall-cooper

    “Society and politics are now so fragmented that the centre left’s old blueprint for winning power is in danger of irrelevance. It could be that social democracy belonged to the 20th century and is beyond help in the 21st.”

    Comment by Seb Rattansen — July 29, 2015 @ 12:39 pm

  50. @Seb – in the same vein, but shorter: http://thoughcowardsflinch.com/2015/07/28/10-more-hard-truths-for-labour/

    Comment by unaha-closp — July 29, 2015 @ 1:15 pm

  51. Agree with the majority of that, especially “Deep and longlasting cultural change under capitalism (and not just the neoliberal phase) means that appeals to citizenship and solidarity that we could once rely on simply don’t work anymore. however loud, clever or often the messaging. We need to appeal to deeper motivations, while retaining our overall socialist ethic.” The question is…what motivations? I was trying to think of what the modern left/centre left offers. The best I could come up with was “fairness”. Hardly inspiring…

    Comment by Seb Rattansen — July 29, 2015 @ 4:28 pm

  52. An academic (Valerie Pitt) in the 80’s described utilitarianism as ‘If there is only enough food on the lifeboat for eight, and there are nine people, then one person has to go overboard.” Fortunately our society doesn’t work on that model – rather it enables many to cling to the side of the lifeboat. Is it possible to claim that if a person doesn’t have the wits to climb into the lifeboat and supplant one of its passengers, then they are destined to drown, but are ‘allowed’ delay the inevitable – unlike the girl on the spaceship. I don’t think ‘science’ or ‘economics’ has the wherewithal to explain human motivation – yet..

    Isn’t there a cause and effect issue? It could be argued that lottery winners are in all probability doomed to fail if they win because their financial literacies are so low that they convinced them it would be a good idea to spend a high percentage of their income on a very slim probability that it would make them rich. So if they apply the same kinds of financial literacies to their situation after they win, they will rapidly become bankrupt. In the same way, the girl on the spaceship’s decision-making capabilities (which encouraged her to stowaway) were the same which enabled the pilot to persuade her to commit suicide.

    So some people who manage by improbable fluke to climb into the lifeboat but end up trying to eat the cabin-boy, jump overboard and perish in the sea anyway. I’m sure science and economics can explain this.

    Actually I’m not. It seems to me that scientists and economists are equally baffled by human nature, and are the kind of people who wear odd socks on a plane flight in the expectation it will reduce their statistical chances of being in a crash.

    Comment by Lee Clark — July 29, 2015 @ 7:30 pm

  53. I wonder whether Danyl is just biased by the sort of economists he happens to interact with and the hot topics they discuss. One relatively non partisan debate in the economics blogosphere at the moment is around market monetarism and NGDP level targeting. Real debate about real policies. Additionally there is a bunch of bread and butter stuff that has very broad agreement amongst economists. For example road pricing to sort out traffic congestion, or the trade offs between urban planning and housing affordability. Expecting there to be an answer as to whether capatilism will inevitably lead to greater inequality is a bit naive, it is basically philosophical musing.

    As for policy makers picking up a paper and running with it, the onus really has to be on the policy maker. It should be fairly well understood that any hypothesis that is backed up by a study looking at a relatively smallcollection of non-randomly selected data from different countries at different times with infinite variables not accounted fore going to be indicative at best. Policy makers really need to use their judgement in this situation.

    I work in a field where the science underpinning what I do is very uncertain and is evolving all the time. But we have to apply it in real world problems with consequences. We are sometimes left with no option but to consider a problem based on one or two papers on the subject. Ultimately you cannot rely on something just because it is published and have to use your judgement.

    Comment by Matthew W — July 29, 2015 @ 10:07 pm

  54. Science, bitches…

    http://io9.com/half-of-biomedical-research-studies-dont-stand-up-to-sc-1720835208

    Comment by Phil — July 30, 2015 @ 9:12 am

  55. some perspective: Chicago-school-type libertarian economics has not been cool for a while now, and I think many of the criticisms in this post are straw man type complaints. See here for some interesting history: http://www.nytimes.com/2015/07/24/opinion/paul-krugman-the-mit-gang.html?rref=collection%2Fcolumn%2Fpaul-krugman

    I think that saying economics is bad because it isn’t like science is pretty anti-intellectual. I don’t think it purports to be, it only tries to analyse data about social phenomena and human behavior, to answer key questions about how people might behave under different circumstances, particularly under different scarcity scenarios. If you can find a better way to do this, you are by definition engaging in economic analysis!

    I would also note that economists are not licensed – anyone can do it (maybe that is why there is so much rubbish analysis) and any claims are subject to criticism. Only the good ideas survive in the long run (but yeah, in the long run we are all dead, so maybe write the ideas down…).

    Comment by Ben — July 30, 2015 @ 5:43 pm

  56. in the long run we are all dead

    Being just contaminates the void, sho’ nuff.

    Comment by Joe W — July 30, 2015 @ 7:02 pm

  57. Phil – I’m sure game theory / rational actor economics and skewed incentives can explain why biomed research might be so shaky…

    Comment by Gregor W — July 31, 2015 @ 8:39 am

  58. @gregor – not sure if you’re being sarcastic with that comment but you may, genuinely, be on to something.

    Comment by Phil — July 31, 2015 @ 9:13 am

  59. Hmm. I’d replied a couple days ago but I don’t see it here.

    In short:
    1: There is much stronger consensus among economists on positive matters than Danyl pretends. The stuff we argue about is what hits headlines. When we all agree, we get crickets. There is disagreement among economists, sure. But imagine that we’re trying to decide one the true value of some random variable distributed on [0,1]. The public thinks it’s 0.9. economists argue about whether it’s closer to 0.2 or to 0.3. On the Pikettty stuff, Danyl ignores strong critiques from economists who would not reasonably be considered left wing, like Justin Wolfers.
    2. If you want evidence on the Econ consensus vs the public, don’t read the Caplan blogpost to which Danyl linked, read instead the Caplan study to which I’d pointed him and which he somehow failed here to link. Caplan has a survey of hundreds of economists, and the public, on matters of positive economics. Like “On a scale of 1 to 10, how much is each of the following hurting economic performance”. On items like welfare spending and foreign aid, there’s strong economic consensus that those weren’t hurting the overall American economy; the public thought both were pretty substantial. On items like companies taking too much profit or shipping jobs overseas, again economists agreed that that was no issue at all; the public was frothing. So folks on the right ignore economists on foreign aid; folks on the left ignore economists on business profits. And partisans of both sides will say stuff to dismiss economists like “Oh, it isn’t science anyway and they can’t agree”. Because it serves partisan interests to insulate their policy preferences from falsification.

    Maybe my comment got knocked out because I’d linked Caplan’s paper on this. It’s “What Makes People Think Like Economists? Evidence on Economic Cognition from the Survey of Americans and Economists on the Economy”. Journal of Law and Economics, 44:2, 2001. Note that Caplan himself disagrees with many parts of the mainstream economic consensus he identifies: he’s far more strongly libertarian than the modal economist. That doesn’t mean that there’s no consensus of economists though.

    It’s also worth checking the IGM Panel of Economists. They there have a pretty broad panel of economists answering questions on a broad range of issues, weighted by the respondents’ confidence. So on the question of the California drought, 48% of respondents (weighted by confidence) strongly agreed and 39% agreed that California would be better off on average if all final users in the state paid the same price for water, adjusted for quality, place and time, even if some food prices rose sharply and some farms failed. I don’t see any obvious left-right divide in the respondents there. Economists *know* stuff about how markets work and how prices work – stuff that isn’t obvious to a lot of other people.

    Comment by Eric Crampton — July 31, 2015 @ 9:34 am

  60. Akh, typo above. “On the Piketty stuff, Danyl ignores strong critiques from economists who would not reasonably be considered right wing, like Justin Wolfers.” I like Justin, but he’s pretty centre-left.

    Comment by Eric Crampton — July 31, 2015 @ 9:35 am

  61. @phil – attempted irony rather than sarcasm.

    Comment by Gregor W — July 31, 2015 @ 9:40 am

  62. @Eric: But the things economists disagree about are the most important things from a policy point of view. E.g. Keynesian stimulus vs Hayek austerity. It’s easy to find arguments for both sides and to me at least it’s unclear which “theory” is right. Both seem to be situational dependent.

    Comment by Seb Rattansen — August 1, 2015 @ 1:55 pm

  63. 5 days late, but I agree with all of that, Danyl.

    The thing about calling it a science is that, yes, it could be one. But that doesn’t make it foolproof right there. Most sciences have had lengthy periods of being wrong as they home in, and they have multiple groups of people completely disagreeing with each other at some of the most crucial nexus points. After a very long period of doing that and making lots and lots of profound discoveries, then you might converge to a point where a whole lot of basic ideas form a consensus. We’re there with, say, physics. But sciences in their infancy, as physics was, say, 500 years ago, had periods where ideas competed strongly and powerful political forces hampered growth due to (ironically) the earlier success of the dominant model. It would have been lonely and cold thinking that the heliocentric model of the solar system was correct, when all of the resources of the church were into the Ptolemaic system (which was by far the best thing until that point), and the church had powerful political influence. Wind forward to it being lonely and cold believing in a non-monetarist model now.

    But in some ways it’s even worse than religion controlling the scientific dogma. At least religion was only really doing it to assert their dominance. They didn’t have any real powerful motive to choose one physics model over another beyond that. But with economics, the very people who control the ideology, benefit from the ideology. Not necessarily economists – they may well all be pure in motive. But the finance sector that has a monopoly on the employment of economists…they really have powerful motives to thwart any theoretical directions that contradict their profit interests.

    Comment by Ben Wilson — August 2, 2015 @ 1:38 pm

  64. Spooky.

    33.I took economics climate science at university and was appalled by what I [was?] taught. Beginning with simple supply and demand curves simple theory of CO2 as a major greenhouse gas and overly simplistic General Circulation models gradually the subject segued to assertions unsupported by evidence that I thought occurred because my lecturers were confusing their models with reality. As the models became more complex the subject drew further away from reality and it’s conclusions less and less robust.
    And today all I see in policy arguments is ideology where the consequences of theory are accepted only if they agree with ambition and ignored as if non-existent otherwise.

    Recently I was having a bit of an argument with a friend who has worked in the middling echelons of our government over the ideological bent of Treasury Ministry for the Environment where I was disparaging them for their lack of rigour and he defended them for being people he knew personally as trying their best with good hearts. Who were all employed because they fit in with the institution.

    We’ve just had a nearly ten eighteen year real world contest of economic ideologies about whether or not public spending helps in recession, and whether or not easing monetary supply inevitably causes inflation warming pause. The empirical data is right there in front of us, yet economists politicians are still exactly divided by their ideology on the topic as they were ten years ago.

    Scientists they are not.

    Comment by Fentex — July 28, 2015 @ 6:08 pm

    (Apologies in advance if the html fails…)

    Comment by Clunking Fist — August 3, 2015 @ 1:23 pm


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