Good advice for you know who

For quite a lot of people actually.

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Including me at times.

14 thoughts on “Good advice for you know who”

  1. Probably is a science. But more in the nature of botany than physics. It’s very good at looking at what happened & explaining why this transpired in terms of economic “laws”. Fails completely at predicting what will happen by trying to apply those “laws”. See sociology.

  2. Incidentally, it’s quite easy to validate the above statement by using one of the few laws of economics that does correctly predict. Economists who were successful would be incredibly wealthy.

  3. Predictiveness (is that a word? It is now!) is not a criterion of whether something is a science or not. Evolution doesn’t predict anything either, or cosmology. They just provide a general framework for understanding the mechanisms underlying what happens.

    Are polar bears going to be an aquatic species? Dunno, come back in 10 million years and we’ll see what happened.

    Come to that, using a scientific theory to make predictions isn’t science anyway. It’s engineering.

  4. think that’s roughly what I meant, Ian. It’s a descriptive science.
    “using a scientific theory to make predictions isn’t science anyway. It’s engineering.”
    Isn’t using a prediction to validate a theory a core scientific principle?
    And engineering’s the realisation; what looked so very clever in theory ain’t so easy in practice.

  5. bloke in spain,

    Not sure I entirely agree. When I see politicians saying why they are introducing a policy and I see the response of Friedman-leaning economists to that policy, they generally get it broadly right.

  6. A science has to have predictive power; good science is not only predictive but accurately predictive. This is not the same as saying that anything which makes predictions, even true ones, is a science.

    I can tell the difference because I’m a mathematician. (I spent my entire PhD trying to avoid making any testable predictions, in spite of working in theoretical physics.)

  7. The Popperian test is one way to distinguish a science, but it is not comprehensive. I already gave the example of evolution (and most of the rest of biology, or at least zoology).

    Mathematicians work in the most perfect form of proof there is, since mathematics is a formal system in which objective proof can be found. Science in the real world isn’t that certain. A physicist cannot even predict the landing spot of a cricket ball, despite knowing all the equations that govern its motion.

    The economy is a dynamical, unpredictable system. You can have a general understanding of its mechanism, but the hope of predicting it is fools gold. This is not just an insufficient data problem. It’s a fundamental limit.

    Talking of which, the whole point of Quantum Mechanics is its own prediction of its own incapacity to predict real world outcomes. In that regard, economics is remarkably similar.

  8. Quite a lot of economists forecast the Euro area problem, including Tim. Optimal currency area theory or summat.

  9. Economists are not very good at telling you what to do, they are, however, very good at telling you not what to do. Hindsight is a wonderful thing, and economists are very good at it, they wont predict whether your policy will work or not, but they will certainly advise you if it will fail. Policy makers frequently forget the past, and economists are always there to remind them (and to subsequently be ignored).

    Tim adds: There’s a wonderful quote from Bernanke around on this. Economics is very good at telling politicians not to do damn foolish things, not so good at telling them what to do.

  10. I read that the “dismal science” tag came from the slave trade debate; Adam Smith had written against slavery, showing that a free market in labour was more efficient. The response of the pro-slave trade camp was to throw “dismal science” as an insult. From memory the phrase was actually invented by a pre-slave trade poet, possibly Wordsworth. Or did I imagine that?

    Tim adds: Carlyle called it the “dismal science” but otherwise quite right.

  11. “Economics is very good at telling politicians not to do damn foolish things, not so good at telling them what to do.”

    Probably because there are actually two streams of economics.
    There’s the economics that, whilst it is taught in a 3 year university syllabus, can be acquired running a stall on Romford market for 6 months*. It informs that the second stream of economics, which politicians.embrace when trying to plan economies, is complete & utter bollocks. See Bernake quote.
    *Yep all of it. Including that bit on company tax incidence which came as a prize winning revelation to the economics community but’s a no-brainer to anyone who’s run a small business. And more. But the bits make the stallholder a fortune flogging dodgy electronics to gullible punters & give the opportunity to be insulting on reality TV, they tend to keep to themselves

  12. I think that it was Rutherford who claimed that “physics is the only true science, all others are merely stamp-collecting”. 🙂

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