Entry 1422, on 2012-08-07 at 19:04:09 (Rating 4, Comments)
On several occasions in the past I have commented on my lack of confidence in economics. In general I trust experts (as I will have noted here in the past, especially regarding topics such as evolution, cosmology, and climate change) but there are experts and then there are "experts". Some expertise depends on evidence and some depends on dogma. Guess which category I think most economists fit into?
If experts in most other areas had failed as badly as economists have we would have stopped talking to them years ago. We have stopped listening to experts in some other areas which aren't science based: philosophy and theology would be two good examples, so maybe it's time economics joined that group.
Why am I embarking on this rant at this time? Because I blame economists, and politicians who follow the theories of economists, for many of the world's current problems, especially the current financial crisis.
It's easy for a group to be tempted by the perception of purity or beauty in a theory. This happens in maths all the time but maths theories can be easily verified against established principles and if they don't measure up they are abandoned. The same thing happens even more in fundamental theoretical physics. It is tempting to want to believe beautiful theories such as string theory but because physics is a science the extra step or empirical confirmation is required first.
This doesn't seem to happen in economics. When a particular theory is followed and the outcome isn't what was promised the usual answer is more of the same. Lack of controls was clearly the cause of the latest financial crisis yet people who follow the standard economic zeitgeist are still calling for even less controls.
Earth to economists: Your theories don't work, OK? Free market theory is pretty but it's a pretty lie. Everyone loses. We need a new theory, and this time test it against reality!
There are a few economists who get it. One from the Bank of England has said: "I think one of the great errors we as economists made was that we started believing the assumptions of economics, and saying things that made no intellectual sense. We started to believe that what were assumptions were actually a description of reality, and therefore that the models were a description of reality, and therefore were dependable for policy analysis. With hindsight, that was a pretty significant error."
Actually, most of us non-economists could see that it was a significant error before the inevitable disaster resulted. We didn't need hindsight because we weren't blinded by ideology. Yeah, economist suck!
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