Talk:Economics

The macroeconomics of Middle-Earth dragons
Old, but worth a chuckle: http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/the-macroeco.html The comments are also good. --ZooGuard (talk) 14:12, 25 April 2015 (UTC)

Pseudoscience
I thought Rationalwiki was supposed to debunk pseudoscience, but here it is touting economics as a legitimate "social science". No other science could get away with making the kind of assumptions without evidence that economics makes - assumptions that not only are limiting, but are easily debunked through seconds of rational thought. There's obviously no invisible hand guiding the market. That is something Adam Smith simply made up to explain what he didn't understand like many scientists have invoked God of the gaps at the limits of their understanding, yet it's still taught in economics classes today.

People act rationally and in their best interest, but sometimes they act selflessly and irrationally too. Is there any scientific method by which economists have tried to determine what causes people to act irrationally/selflessly or at least how often they do so as to be factored into the equations? The notion that "these issues have been the focus of much attention among economists, to the point where the finer details can be difficult to communicate" is a pretty convenient excuse for failing to practice the scientific method, but anyone who has actually studied "economics" can tell you: anything that flies in the face of an economic model is simply written off as an "externality" and quickly swept under the rug. There's no scientific rigor in economics whatsoever.

Also, the "ten fundamentals of economics" are not "universally accepted" by any stretch of the imagination, but that's not even the biggest problem with them. They are very vague and inherently unscientific statements (they are not specific). Markets are *usually a good way to organize economic activity. How often is "usually"? Because in real science, you're supposed to give an "operational definition" that cannot be vague in this sense. Even social sciences like Psychology and Sociology understand and respect that. If the 'fundamentals' of your field of science amount to vague assumptions that can be debunked by anyone, you're probably not practicing a real science! Can you imagine if a Biologist said "Plants *usually sustain themselves through a process called photosynthesis wherein the sun's energy is used to produce glucose." or if a Physicist or Chemist said "Energy *usually can't be created or destroyed"? Yea, they would be rightfully dismissed as charlatans espousing woo. Real science can be tested and verified, unlike Economics.

Just because some of the mathematics are consistent doesn't make it a real science. Anyone can make generalizing assumptions about reality and then start tacking math onto it to make it seem more legitimate. But in logic/reasoning, you learn that the conclusions you can draw are only as true as the premises with which you started. Any "science" that excuses itself in making assumptions that are empirically incorrect without at least attempting to account for them in any way isn't a science at all. Put Economics in the "Math woo" section where it belongs.


 * The above was written on 7 September 2017. God knows why the BoN decided to put it between stuff written in 2012 and 2014. Spud (talk) 12:51, 7 September 2017 (UTC)


 * I work as a economist. However it is, to the question of whether we determine how people act irrationally? We can't – irrationality isn't a thing you can measure due to subjectivity. But you impact this to theory. Most reputable economics in the modern era, i.e. since around 1940, is almost entirely empirical and statistical. You don't get published without an empirical appendix. We create models not to predict the world, but to try to piece together plausible explanations for observed phenomena.
 * Anything that flies in the face of an economic model can't simply be written off. You would be laughed off your presentation if you tried. The ten fundamentals of economics aren't really such things – it seems to me they were basically copied directly from Mankiw or some other introduction to economics text. It is meant more as a means to introduce people to thinking in an economic way of thought. You also rely far too heavily on this strawman that economists only care about theory. Again, almost all reputable economics today is rooted in empirical statistics, which you strawman out of existence. Ifly6 (talk) 00:34, 23 March 2018 (UTC)

Strawmanning in "Assumptions or Empiricism?"
While economics continues to develop, it is not a surprise that while economists agree on methodology, they disagree over the interpretations and assumptions. Note that model-making always requires assumptions to be made. But one should be aware of the existence of through think tanks and other special interests groups advocating one school of economic thought over another.

Unsurprisingly, axiomatic and empirical schools of economics lead to very different policy prescriptions. Axiomatic recommendations include:
 * 1) No minimum wage, because it causes unemployment and poverty. A product of the assumption that all a firm's profits but none of its employees' wages are spent in a way that positively contributes to the economy.
 * 2) No collective bargaining (unions), since wages always reflect the objective value of the work to society. Product of assuming that the society-wide demand for a job will translate into the specific wages offered by the employer, since that employer is assumed to be omniscient, and it is assumed that they wish to better society rather than maximising their profits.
 * 3) Low taxes on labor (e.g. income tax), because it makes people work more. Product of assuming that working hours directly and only reflect wages, having no relation to the nature of the work or total hours worked.
 * 4) Low taxes on capital (e.g. machinery), because it makes people save more and thereby increases growth. Again, comes from simply assuming that this happens.
 * 5) No state healthcare, since private companies provide cheaper and better care. Derived at base from the assumption that people only work for personal profit, and therefore a for-profit entity will always be more efficient than a non-profit/government one (aka 'private good, public bad').
 * 6) No healthcare monopolies (public or private), since competition produces the cheapest and best care. Comes from assuming that if multiple entities provide the same good or service, they won't cooperate to maximise their profits but will instead compete to minimise them.
 * 7) No outlawing any goods or services, because people always choose what is best for them. Known as 'Marginality', this tautology applies to everything which could be bought if it was offered for sale e.g. child prostitution and heroin.
 * 8) No outlawing financial derivatives, because they produce the best possible allocation of capital and reduce systemic risk. Comes from assuming that everything which can be sold is good for society, that the financial sector plays no role in the economy, and that financial entities are omniscient unto eternity so they will never do anything bad for the economy.
 * 9) Free Trade (no restrictions on the movement of capital or labor), because the flows and specialisations benefit all countries. Simple tautology.
 * 10) Free Trade, since it benefits everyone within those countries. Again, tautology.

Whereas Empiricism favours: To be honest, I think this section should be removed. Fundamentally, I view it as strawmannining theoretical economics. The question of theory is one which most people outside the field don't really seem to understand. Now, in the undergraduate level, I can see how this could be the case – we don't really cover imperfect information markets, general equilibrium models with imperfect competition, imperfect capital markets, transaction cost incorporated models, etc. (I'm covering how we theoretically deal with the 'gotchas' posed by the list literally one by one.)
 * 1) Minimum wages, because they reduce poverty but have little or no effect upon employment (but it does reduce corporate profits).
 * 2) Collective bargaining (be it unions or other), since wages largely or solely reflect relative bargaining power (the average US CEO is not actually 700% more productive than their Swedish counterpart).
 * 3) High taxes on labor have few effects upon employment, bar a small number of married women.
 * 4) High taxes on capital have little to no effect upon savings or investment (people make emotional decisions about how much to save or spend without paying much or any attention to taxes).
 * 5) State-operated or state-monitored healthcare, since the state provides cheaper and better care (e.g. French 14% of GDP to US 18%).
 * 6) Healthcare monopolies (public or private), since state-monitored monopolies provides cheaper and better care (monopolies have fewer bureaucrats and are easier to monitor).
 * 7) Outlawing goods and services designed to take advantage of the consumer, because people are relatively easily duped (e.g. complex credit card and mortgage plans) and this reduces economic efficiency.
 * 8) Outlawing financial derivatives, because this produces excessive risk-taking and systemic instability (see 2006-8).
 * 9) Free Trade can benefit all participant countries, but it rarely does (capital constantly flows from the third-world to the first, into such 'useful' forms as stock market and housing bubbles).
 * 10) Free Trade in the form it usually takes today does not benefit everyone (since it prioritises corporate rights).

Number 7 is patently wrong by the way, the idea of a margin has to do with the marginal revolution à la 1870 and the explanation for things like why water, which is necessary for life, is priced more cheaply than diamonds. The thing number 7 is actually talking about is early neoclassical consumption theory. Also, the problem isn't really a problem, because one should consider (1) morality, (2) externalities, (3) subjective valuation of a good due to those two considerations as means to deal with certain bads being prevalent absent government intervention.

I work as an economist for a financial regulator. The eighth assertion is fucking hilarious. I can't conceive of any reputable economist thinking that there are perfect capital markets with perfect information that perfectly evaluate risk. If I presented a model asserting those things to a journal, it would never get published.

Number 9 is a strawman for how trade works. There's a pretty good explanation which Paul Krugman wrote in the New York Times recently: https://www.nytimes.com/2018/03/15/opinion/paul-krugman-aluminum-steel-trade-tariffs.html. However, the fundamental idea about trade is one of comparative advantage. Simply put, it is a question of how we allocate resources. Trading means that we can make things for least cost, wherever that is. Fundamentally, it is a question of resource allocation.

Also, the empirical approach to economics doesn't have a monopoly on these outcomes. First, minimum wages are a good thing in theoretical considerations of a monopsony labour market. Second, collective bargaining achieves similar goals in a monopsony labour market. Similarly, a well-calibrated model will have limited effects from income taxes due to high inelasticity of labour supply. That is similarly the case with capital markets. Many New Keynesian models assume imperfect capital markets and sticky prices, which produce the same outcomes which this strawman attributes only to empirical economics. Then, healthcare being state operated as a good thing can be explained theoretically as the confluence of transaction costs and monopsony buying power on the part of the state. Similarly, imperfect information models explain how outlawing goods and services can have a good effect (e.g. much of the behavioural economics theoretical models). Empirically, the second to last one, saying that free trade creates third world dependency, is just wrong. And the last one is a question of policies. The kind of free trade that most trade economists support isn't something like the TPP (e.g. Krugman, linked above, has this opinion). — Ifly6 (talk) 00:45, 23 March 2018 (UTC)
 * Would you please edit the article in order to improve it? Nerd (talk) 00:56, 23 March 2018 (UTC)

Oxy whitewashing on this article
So, you reverted my reversion of your edit. I would like good sources, peer reviewd, saying that 1. Maoism is state capitalism and not socialism. And 2. Marxism (though I think Marxian would be a better word) is still relevant for modern economic thought and not a fringe school of thought in economics. GeeJayK (talk) 07:52, 8 March 2021 (UTC)
 * Do you not know the difference between Marxism-Leninism and Marxism proper? — Oxyaena Harass  11:31, 9 March 2021 (UTC)
 * Yes. But that's not what I asked you. Do you have sources claming that Maoism is capitalism and that Marxian economics is still relevant nowdays? GeeJayK (talk) 14:32, 9 March 2021 (UTC)
 * Since you didn't post any source to back your claims I'll revert your edit. GeeJayK (talk) 00:32, 10 March 2021 (UTC)

Marxian Economics shouldn't link to Communism.
From what I read of Marxian Economics such as the collection of essays by Joan Robinson -- Marxian Economics isn't strictly speaking a promotion or reiteration of Marx's economic theories. It's a field that explores the strengths and limitations of Marx's theories; sometimes in aim of refutation; sometimes in aim of improvement; and sometimes in aim of vindication. The people who practice Marxian Economics are not strictly speaking Marxists; and we shouldn't conflate the study with the ideology and system of communism as a whole. That is incredibly misleading. For example Okishio's Theorem comes from the field of Marxian Economics, but it's specifically intended as a refutation of Marx's idea about the tendency for the rate of profit to fall necessitating a depression of real wages; and the necessitation of the rate of profit to fall more broadly. - Only Sort of Dumb (talk) 19:44, 29 October 2022 (UTC).

Criticism of economics
Perhaps the points raised in this article are worth some coverage? Vee (talk) 07:16, 7 November 2022 (UTC)