Talk:Economics

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Archaic ideas[edit]

In other words a random collection of ideas that the author disagrees with, without any detailed exposition as to why, and despite a small number of serious academics still adhering to them (dismissal on these grounds is blatant argumentum ad populum), and despite the fact that there is a huge spectrum of views in economics and only a tiny number of economists were competent enough to foresee the events of recent years.

This section should NOT be here, it is intolerable to rationality. — Unsigned, by: 86.138.69.164 / talk / contribs 2011-12-29T21:56:33

"But I thought this was supposed to be RATIONALWiki!" Drink!
Correct, only a handful of economists foresaw the recession. Of those that did, note that none of them espoused belief in the archaic beliefs listed. Star of David.png Radioactive afikomen Please ignore all my awful pre-2014 comments. 06:12, 30 December 2011 (UTC)
A lot of economists foresaw the recession, including Marxists and Austrian Schoolers who interestingly had some similar critiques (dispite the obvious differences) largely centered around the Fed, the debt-based nature of the economy, and the trade deficit with China. Unless you're being sarcastic here. The list iirc came about because of myself and User:Researcher, but on reflection there are really different levels: One, obvious crank ideas. Two, ideas which made a serious impact on economic thought at one time but not today, e.g. Georgism. Three, those with serious and arguably widespread academic adherence today, e.g. laissez-faire/Austrian School and Marxism. I would tend to agree with BoN here that those last two, at least, should be removed from the list. There is quite a bit of bias toward Krugmanomics floating around this wiki... Secret Squirrel (talk) 13:46, 2 January 2012 (UTC)
Which would mean I've reversed my view in the discussion above from 2008 where I argued for the inclusion of both on the list. Times change. Secret Squirrel (talk) 13:49, 2 January 2012 (UTC)
Thanks for schooling me on economists, Squirrel. And I change my mind all the time—you get used to it, after a while  :-) Star of David.png Radioactive afikomen Please ignore all my awful pre-2014 comments. 21:42, 2 January 2012 (UTC)
"A lot of economists foresaw the recession". I wouldn't doubt it. Did the majority of economists foresee it? Can we give percentage points to this statement? What percentage failed to foresee it? How many astrologists foresaw the recession and did they do any better than economists?--BobSpring is sprung! 22:43, 2 January 2012 (UTC)
Marxism and the Austrian School are in many ways two sides of the same coin, particularly in the economic doom factor and the rejection of empiricism. No single laissez-faireite has explained why up here we didn't share the same fate of the US without strong banking regulations, and we all know what's wrong with the Communist Manifesto.
Keep them both in this section, and for good reason. Osaka Sun (talk) 23:13, 2 January 2012 (UTC)

Then in 2014[edit]

This article gives space to ridiculous heterodox ideologies like praxeology but gives no mention of Schumpeter, Solow-Swan, entrepreneurship, cultural capital, technology or endogenous-growth theory in the main text! This article seems to be as out-of-date as mainstream economics is these days. /rant — Unsigned, by: Pietro / talk / contribs 01:08, 28 February 2014 (UTC)

The macroeconomics of Middle-Earth dragons[edit]

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[edit]

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. — Unsigned, by: 98.26.68.16 / talk / contribs

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?"[edit]

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:

  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).

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.)

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)

@Ifly6 Would you please edit the article in order to improve it? Nerd (talk) 00:56, 23 March 2018 (UTC)