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Economics Is About Human Interaction

economics is not about impressing with mathematics

 

"It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences - an attempt which in our field may lead to outright error. It is an approach which has come to be described as the 'scientistic' attitude - an attitude which, as I defined it some thirty years ago, 'is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.'" -- Friedrich von Hayek, Nobel Lecture

Too often well educated individuals take the bit of focused knowledge they have acquired through years of schooling and then leverage it to proclaim themselves experts in other disciplines. In economics most economists have decided that math and statistics is their field - an entire discipline has wandered outside of its expertise.

The initiates of the economics inner circle know their models are inaccurate - they just hope they will prove useful. Overly complex economic models also serve the purpose of eliminating competition, few wish to spend years of schooling creating and understanding models that they know don't work.

Normal people need a high priest of the economic future to act as interpreter of the math based oracles. The priests confusing wording and frequent guesses allow them the comfort of pointing back at one of their guesses and stating - "see, I was right." If you can't guess right, guess often.

I am not saying that economists exist to make weather men look good; instead they frequently exist to explain the mistakes of leadership - even before mistakes are made. An economist waving his wand and pronouncing appropriate actions validates a country's leadership taking self-indulgent short term actions, with terrible long term effects. After the next election those nasty long term effects will be someone else's problem.

Since economist John Maynard Keynes mentioned it might be good, at times, for the government to spend money; do you think any leadership has spent less effort selecting economic advisors than they spend selecting judges?

The economist Keynes, when asked about large long term problems stemming from expedient short term solutions, said something like "In the long term we will all be dead." The oracle said in effect - we will look good today, the disaster will be someone else's problem.

Not all economists can be painted with this same brush. While the peaking of the industrial age has increased the emotional value of mechanical approaches, there are still many economists that realize economics is about human interactions, and that humans even on a large scale are very hard to predict.

In short, most economists are fancy talking salespeople. If they work for a stock broker - they want you to make a transaction. If they work for the government, they want you to let it take more of your money to increase its power. If they work for a bank - they want you to seek the security they pretend to offer.

Do not be fooled by fancy mathematical models, another economist could deconstruct their model and show its errors. If you want to listen to an economist, find one that you can understand, that doesn't make oracle like pronouncements, and doesn't work for the organization selling you something.

In all endeavors we as humans are still quite ignorant, distrust anyone that tells you they know the future - however dim their forecast. Walk away from those that say they not only know the future - they can control the future. Invariably the latter are trying to sell you something.

Life is not linear, economists using linear methods distort reality, and create traps. When the economic conversation turns to statistics and models, turn away. In economics it is the simple powerful ideas and the long term approaches that have value.

 

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