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Post by robeiae on Nov 11, 2016 13:30:27 GMT -5
Before there was "economics" as a field of study, there was "political economy." Economic issues were personal or private issues, were about making ends meet or turning a profit, more often than not. To put it another way, all economic issues were microeconomic ones. There was no actual microeconomic theory to speak of, there was merely decision-making (on economic issues) that necessarily varied from person to person, from family to family, from business to business, even from king (or queen) to king. It varied because specifics varied, both specific situations and specific goals or desires. Two different farmers had to decide how much of their crop to take to market. There was no formula for this. Each had to weigh many factors, from things like family size to already stored food, to weather exceptions and predictions about next year's yield, to debts, obligations, and desires. So even if many of these factors were similar for both farmers, their final decisions could vary drastically. And really, all of this remains true for microeconomic theory today: it's not formula-driven at all. Yet, economists imagine that somehow, microeconomics is fully predictable and even adjustable as a system. But it's not. Most definitely, there are valid approaches to studying the decision-making processes, algorithms that are even helpful in this regard. But fundamentally imo, that's decision-making theory; it doesn't have to be about economic choices. So I would argue that there really isn't much in the way of actual microeconomic theory, aside from some apriori and definitional stuff. Real economic theory is in macroeconomics (though even then, many assumptions are made just to make the math "work"; see The Origin of Wealth). And macroeconomics is all about interest rates, money supply, GDP, and other gross statistics. All of these things are necessarily impacted by government policy. Thus, macroeconomics is inseparable from politics. So political structures and the theories that inform them need to be considered. One can, of course, assume that current political conditions are fixed, then proceed from there. But any conclusions one arrives could only be considered potentially valid with respect to those conditions. It's kind of like finding the best way to get a kite flying on one day when the wind is blowing a steady 10 mph NW, then assuming that "best way" would still be such every day after that (yeah, I know the analogy is flawed in a number of ways; I hate analogies). So necessarily, I think, one has to consider the impact of political structures on macro issues and account for how changes to those structures impact that impact. And the best way to do that is by looking at empirical evidence, i.e. past changes and their consequences. Friedrich Engels on the issue: Laws change. Means change. Societies change (I'm not sure Engels fully groked these last two points, though; he was an idealist, after all). The point is, real economic theory is terrible complex. And it must account for the why and the how of the rules that dictate production, exchange, and a host of other things before it can truly begin to describe any sort of truths about how things go or will go. There is an historical component here, a yuuge one. Thus, the political remains primary, when it comes to actual economic theory. Thus, all economic theory is subsumed in political economy. In my opinion, of course. And in case it's not clear, I am fundamentally a Marxist in orientation here (which Don already knows, I think).
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Post by Don on Nov 12, 2016 5:39:53 GMT -5
This is where our two paths diverge in the woods, rob. tl;dr version: Macroeconomics is to economics as organized religion is to the scientific method. Once your blood pressure drops, read on. Before there was "economics" as a field of study, there was "political economy." Economic issues were personal or private issues, were about making ends meet or turning a profit, more often than not. To put it another way, all economic issues were microeconomic ones. There was no actual microeconomic theory to speak of, there was merely decision-making (on economic issues) that necessarily varied from person to person, from family to family, from business to business, even from king (or queen) to king. It varied because specifics varied, both specific situations and specific goals or desires. Two different farmers had to decide how much of their crop to take to market. There was no formula for this. Each had to weigh many factors, from things like family size to already stored food, to weather exceptions and predictions about next year's yield, to debts, obligations, and desires. So even if many of these factors were similar for both farmers, their final decisions could vary drastically. And really, all of this remains true for microeconomic theory today: it's not formula-driven at all. Yet, economists imagine that somehow, microeconomics is fully predictable and even adjustable as a system. But it's not. Most definitely, there are valid approaches to studying the decision-making processes, algorithms that are even helpful in this regard. But fundamentally imo, that's decision-making theory; it doesn't have to be about economic choices. So I would argue that there really isn't much in the way of actual microeconomic theory, aside from some apriori and definitional stuff. Your first paragraph perfectly illustrates the theory of subjective value, which should have put a stake in the heart of Marxist theory at about the same time as Marx released Capital, Part I. Labor is not the sole source of wealth, as Marx claimed, and that failure of Marx is widely recognized today. It takes inventiveness to design new products, and entrepreneurship and capital to convert raw materials and labor into products that others are willing to buy. Any economic theory that discounts entrepreneurship and inventiveness is a particularly shallow one. All economic issues are still microeconomic ones. Economics, at its heart, is about allocating scarce resources in the face of unlimited needs and wants. The most scarce resource of all, on an individual level, is time. Any view of economics that is strictly financial in nature cannot possibly account for the subjective value of an individual's time, his or her most precious resource. Nor are all needs and wants financial in nature. Choosing to have a child, for example, may not make sense financially, but it's still an economic decision, choosing to allocate scarce resources to satisfy what to many is a major desire. Ignoring the non-financial rewards of that decision makes it seem like a foolish decision, economically. Recognizing the subjective value that individual parents place on those non-financial rewards is critical to understanding the economic decision some people make to have children. Opportunity cost (one of those inconsequential definitions) makes deciding to spend time in the park with the kids instead of working overtime a profoundly economic decision. Any study of economics that ignores all but financial considerations is ignoring a huge hunk of economic behavior, perhaps the most important hunk from a personal perspective. Every choice you make about how you spend your time is an economic one. "Decision-making," as you call it, is the heart and soul of economics. And that apriori and definitional stuff is critical to understanding that every personal choice is an economic one. I agree that any economist who thinks that microeconomics is fully predictable and even adjustable as a system is wildly off-base. All valuations are subjective, while objective valuations are a necessity if you want to plug them into a formula and get accurate answers after cranking the numbers. And this is why I claim that macroeconomics is to economics as organized religion is to the scientific method. Read on. Real economic theory is in macroeconomics (though even then, many assumptions are made just to make the math "work"; see The Origin of Wealth). And macroeconomics is all about interest rates, money supply, GDP, and other gross statistics. All of these things are necessarily impacted by government policy. Thus, macroeconomics is inseparable from politics. So political structures and the theories that inform them need to be considered. One can, of course, assume that current political conditions are fixed, then proceed from there. But any conclusions one arrives could only be considered potentially valid with respect to those conditions. It's kind of like finding the best way to get a kite flying on one day when the wind is blowing a steady 10 mph NW, then assuming that "best way" would still be such every day after that (yeah, I know the analogy is flawed in a number of ways; I hate analogies). So necessarily, I think, one has to consider the impact of political structures on macro issues and account for how changes to those structures impact that impact. And the best way to do that is by looking at empirical evidence, i.e. past changes and their consequences. Friedrich Engels on the issue: Laws change. Means change. Societies change (I'm not sure Engels fully groked these last two points, though; he was an idealist, after all). The point is, real economic theory is terrible complex. And it must account for the why and the how of the rules that dictate production, exchange, and a host of other things before it can truly begin to describe any sort of truths about how things go or will go. There is an historical component here, a yuuge one. Thus, the political remains primary, when it comes to actual economic theory. Thus, all economic theory is subsumed in political economy. In my opinion, of course. And in case it's not clear, I am fundamentally a Marxist in orientation here (which Don already knows, I think). Your first sentence in this section says it all. IF, as Marx and Engles declared, the Labor Theory of Value held true, and all values were objective, based strictly on the value of all inputs (including labor), then macroeconomics might have some small value as a predictive tool, assuming the possibility of accurately collecting the data about trillions of transactions by millions of players even in the subset of the world economy that is the United States. However, post- LTV, attempting to average only the financial portion of subjective valuations by Mormons and Hedonists and make something meaningful of them so as to direct the whole of the economy is on the level of witchcraft. It's not gonna happen. Looking at the dismal record of macroeconomists should be all it takes to prove that point. OTOH, those who rely on "that apriori and definitional stuff" have a far better track record of spotting long-term trends than the macro-based rune-casters. From Mises vs. Keynes in the 1920s to "contrarians" who saw 2008 coming when the economic court jesters were saying everything was fine, the record favors "that apriori and definitional stuff." Nobody has said it better than Friedrich von Hayek: ""The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." So what, then, is the purpose of macroeconomics? To justify intervention in the economy by the state. Nothing more or less. Thus my statement, "Macroeconomics is to economics as organized religion is to the scientific method." Just as organized religion was used for centuries to justify the intervention of the ruling class in the lives of the productive class, macroeconomics is used for the same justification today... and it's just as bogus. "Real economic theory" is only complex because it tries to prove facts not in evidence, ignore other facts that are in evidence, and force subjective values to conform to objective standards, all the while ignoring the non-financial aspects of subjective valuation. It's no wonder the track record of macroeconomics is so terribly dismal. Real economics is relatively simple compared to that. IMO, of course. But over the course of 64 years, I've accumulated vast experience proving, at least to my satisfaction, that I'm correct. And isn't that, at heart, what subjective valuation is all about anyway?
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Post by ben on Nov 12, 2016 19:55:55 GMT -5
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Post by Deleted on Nov 12, 2016 20:01:03 GMT -5
this is the nerd thread, ben.
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tanstaafl
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Post by tanstaafl on Nov 12, 2016 21:34:32 GMT -5
So Cass, you're saying the pocket protector brigade is alive and well? And for those who don't know what that is, you were never a nerd growing up.............Yes, I was, got a lot of strange looks, but adolescent nerds are totally oblivious to those.
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Post by Deleted on Nov 12, 2016 22:29:18 GMT -5
So Cass, you're saying the pocket protector brigade is alive and well? It is indeed. But you know, given the rampant slew of idiocy and ugliness we've seen this election and indeed around the world lately, I'm delighted to see nerdiness flourishing. I'm thrilled to see anything in the shape of rational discussion. Maybe there's some damn hope after all. Please forgive my silly derail, robo and Don. I hope you know that I have the greatest respect for you both. I must learn to rein in my silliness just a bit, if I'm going to do this mod thing. Carry on. If I can add something intelligent, I will. ETA: Robo, if you like, I could move our derail.
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Post by Don on Nov 13, 2016 6:34:11 GMT -5
Oh, no, @cassandraw, it doesn't work that way. I think as penance for derailing this thread, you, and ben, and tanstaafl, should seriously consider both sides of this debate and either pick a side or define a third way. Letting folks off the hook for derails leads to anarchy, dontchaknow? And I say that knowing full well you'll all side with robeiae, because I'm being a meanie and calling out your shenanigans. Also, did you notice the cool way I can call all these people's attention to this thread? That's a very cool feature of this board. But enough of the technical derail, amirite?
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Post by Don on Nov 13, 2016 6:51:26 GMT -5
ETA: A handy link for those who wish to understand economics sans politics. Opportunity cost (one of those inconsequential definitions) makes deciding to spend time in the park with the kids instead of working overtime a profoundly economic decision. Any study of economics that ignores all but financial considerations is ignoring a huge hunk of economic behavior, perhaps the most important hunk from a personal perspective. Every choice you make about how you spend your time is an economic one. "Decision-making," as you call it, is the heart and soul of economics. And that apriori and definitional stuff is critical to understanding that every personal choice is an economic one. I'm quoting myself here to make an additional point about economics and opportunity cost. "He who dies with the most toys, wins," is the direct result of economists claiming that economics is about money. The true economic statement is "He who dies having maximized the fulfillment of his subjective desires with the most astute expenditure of his most precious resource, wins." Yeah, it's a mouthful, but it's way more accurate. Here's a better version.
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tanstaafl
Pundit
Retired 11/01/2016 and loving it!
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Post by tanstaafl on Nov 13, 2016 12:06:43 GMT -5
Actually, my opinion is that "economics" is a label placed by mortal humankind to understand the the unknowable. "Economics is a social science concerned with the factors that determine the production, distribution, and consumption of goods and services." www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjO9POqmabQAhVEJiYKHbnNDRYQFggtMAE&url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FEconomics&usg=AFQjCNHkndeR7lGnQdGHofqT_ntWNCChQw&sig2=o9LRTtrlJjT-5d6iXBNR3QYou could consider it a tool to do predictions. Of course there are Macro and Micro variants. Please remember, there are lies, damn lies, and statistics. Anyone can make statistics say what they want them to say. We just saw the validity of that in the real world. Polls are a form of statistics that predict large numbers from a small sample. You choose the sample and the questions, you choose the results. The majority of the polls said that what happened was statistically impossible. Yet it did. Many people are scrambling to understand what happened. Very simply put, the map is not the territory. It is a bit like a doctor who practices holistic medicine. They have to consider the whole person AND the environmental factors surrounding them. It is difficult with one person, very hard with large groups.
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Post by Don on Nov 13, 2016 16:09:00 GMT -5
"The map is not the territory," indeed. The problem with macroeconomics in a nutshell. Analyzing only the financial component of an economy and attempting to plan the economy on that basis is an attempt to construct an edifice in a massively multi-dimensional space utilizing only a two-dimensional map completely lacking in fine detail.
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Post by robeiae on Nov 14, 2016 9:08:14 GMT -5
"Real economic theory" is only complex because it tries to prove facts not in evidence, ignore other facts that are in evidence, and force subjective values to conform to objective standards, all the while ignoring the non-financial aspects of subjective valuation. It's no wonder the track record of macroeconomics is so terribly dismal. Real economics is relatively simple compared to that. Well again, economics in terms of decision-making isn't theory. It's practical application. We all do it, but we can't rightly say how everyone else does it, much less predict how everyone as a group will do it in the future. We agree there. But when I say "real economic theory is terribly complex," I'm not talking about what passes for economic theory and analysis--by and large--these days. Like the economists who "predicted" the consequences of the stimulus package on unemployment rates, most everyone is doing it wrong imo. The analysis of professional economists, the papers most write--some of which lead to Nobel Prizes-- seem complex but they're really not. They're simplistic. As you say, they're full of subjectivity, of opinions masquerading as facts, of unjustifiable and logic-killing assumptions. Most rely on formulaic approaches, as well, as opposed to algorithmic ones. And with regard to all of this, the single most important issue, the idea that drags most economic theory into the toilet is the idea of equilibrium. There is no equilibrium to be had in an open, complex system. There just isn't. Complexity economics is the path forward, imo. All that said, I still maintain that there is real economic theory in macroeconomics, alone, and that it's rightly seen as political economy. Consider the action of the Fed in raising or lowering the interest rate. This is going to have consequences. The problem with traditional economics is that it is assumed such consequences are not only predictable, but are--for the most part--always the same. Look at this piece: www.foundationsforliving.org/articles/foundation/fedraiselower.htmlWhat is outlined there is pretty much dogma for a traditional paradigm of economics, no? And you and I both would agree, I think, that it's bs, that the "chain reaction" posited there in response to raising or lowering the interest rate is not a certainty, at all, that the whole thing represents a phony manipulation of peoples' emotions, regardless. Yet that point of view is one held by educated, intelligent people. It's something they know because they learned it, and because they think they see empirical evidence of it playing out in real life. But the truth is that such actions by the Feds--regardless of the manipulating of emotions aspect--only create incentives down the line. And incentives are created by lots of other things, with regard to the individual. Complexity economics recognizes this. The biggest complaint about complexity economics is that it's not providing any "answers." And that's because it can't, not in the faulty sense of "answers" that most economists have been offering up since Keynes. So it is--imo--a valid field of study. Doesn't mean it will yield solutions. And that's a tough pill to swallow for many in academia; they want to imagine that they're solving problems as a matter of course. They don't like hearing that they're just spinning their wheels.
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tanstaafl
Pundit
Retired 11/01/2016 and loving it!
Posts: 91
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Post by tanstaafl on Nov 14, 2016 13:45:18 GMT -5
When you combine Chaos Theory www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0ahUKEwix8dC276jQAhWEYiYKHS9OCmMQFggqMAM&url=http%3A%2F%2Fwww.abarim-publications.com%2FChaosTheoryIntroduction.html&usg=AFQjCNH9OHSJccESgeC8cBHY9q8mIBkX0A&sig2=Bfmx2Y5hu9InBDhB94E2dAWith Heisenberg www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&cad=rja&uact=8&ved=0ahUKEwigx5jp76jQAhVHLSYKHf4MBJkQFghUMAs&url=http%3A%2F%2Fhyperphysics.phy-astr.gsu.edu%2Fhbase%2Funcer.html&usg=AFQjCNHc8jnXxNjnOYRHyFejl_9u8xwY8A&sig2=nxkqeWNIsfi9sp5DT3XKrQ You get this www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwiv1uCs8KjQAhVD6yYKHT_YBssQFggfMAE&url=http%3A%2F%2Faex.sagepub.com%2Fcontent%2F41%2F2%2F27.full.pdf&usg=AFQjCNFa25-fpg9cQNLsFf7LgM_fb0uKYg&sig2=LoYv30agZ1vE8zw3g-pZeQWhich leads to this Abstract The paper argues that there is a fundamental difference between the indeterminism of chaos theory and the indeterminism of quantum mechanics. The difference somewhat resembles Knight's distinction between risk and uncertainly. Theorists interested in going beyond equilibrium economics have failed to notice the difference. Therefore, they confuse between two kinds of economic change which involve indeterminism, viz., nonlinear dynamics and technological/institutional development. They also regard the evolutionary paradigm as an alternative of the equilibrium one—whereas each deals with a different phenomenon. www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwiv1uCs8KjQAhVD6yYKHT_YBssQFggkMAI&url=https%3A%2F%2Fwww.jstor.org%2Fstable%2F25604105&usg=AFQjCNHBuV7rUA3SwZC34zzKAIULa_ooog&sig2=RCx7wYh-A0swFwWkL3po1AThen there is this, which basically gives credence to Robo's version, almost word for word about "stable equilibrium" not present in most models "Have you ever wondered why ALL economic predictions are wrong? Have you noticed that in spite of a proven record of error, economists and politicians continue to bang their heads against the forecast-wall and refuse to do anything else but continue to predict outcomes which by now, they must realise will be incorrect? They certainly use all the latest computer models which have been empirically derived and used for many years. So, are there any incorrect assumptions about “fundamentals”? Is the economic process Stochastic (a sequence of random variables)? Or is it Deterministic (when the output of a system is totally dependent on its initial state and subsequent inputs – and therefore, predictable)? (Mind you, to add to the confusion, deterministic systems may occasionally produce random and therefore unpredictable results. ) Is economics a question of Stochasticity v Determinism? Why do I ask the question? Because there appears to be a total absence the ‘stable equilibrium’ predicted by classical economists. On the contrary, Market Economics behaves like a collection of dynamically unstable systems. The instability is attributed to external ‘shocks’ rather that any fault in the basic concept. There is what can only be described as ‘non lineality’. One solution to this ‘non-lineality’ is CHAOS THEORY!" Link below www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=38&cad=rja&uact=8&ved=0ahUKEwiSzsOW8qjQAhUJPCYKHbvyBn44HhAWCEUwBw&url=http%3A%2F%2Fwww.spygun.uk%2Frichard-ruzyllo%2Feconomic-chaos&usg=AFQjCNF3qkMXI6kEeXLJnG1kqPwgndH04w&sig2=z0y4hwnp2ZY0_-cJeIPgbADiscuss among yourselves, going back to clean the garage for a while.
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Post by Don on Nov 14, 2016 19:18:45 GMT -5
"Real economic theory" is only complex because it tries to prove facts not in evidence, ignore other facts that are in evidence, and force subjective values to conform to objective standards, all the while ignoring the non-financial aspects of subjective valuation. It's no wonder the track record of macroeconomics is so terribly dismal. Real economics is relatively simple compared to that. Well again, economics in terms of decision-making isn't theory. It's practical application. We all do it, but we can't rightly say how everyone else does it, much less predict how everyone as a group will do it in the future. We agree there. While I will agree that we can't predict how everyone as a group will decide about anything in the future, we certainly can understand how everyone makes those economic decisions. That is at the core of microeconomic theory. If microeconomic theory doesn't exist, where or how do you classify the following? The Subjective Theory of Value, Opportunity Cost, Incentives, Gains from voluntary exchange, Specialization and Division of labor, and Emergent Order. Those are all components of microeconomic theory, the study of the allocation of scarce resources to satisfy unlimited needs and wants. In particular, the first four are intensely microeconomic, regardless of the political economy the actors are operating within. I'd daresay economic theory, period, because as you've repeatedly pointed out, there is no sense to be made of what passes for macroeconomic theory these days. Now on to Complexity Economics. Complexity economics is, AFAIK, an attempt to mathematize a macro view of the activity occurring in the microeconomic sphere. Can we agree on W. Brain Arthur as a leading light in that field? I'll note a few pieces from his about page at Santa Fe University that support my thesis. Austrian economics has never made that mistake. Here's a bit about Hayek on the idea of hyper-rational actors. As for static equilibrium, the Austrian school posits that as soon as man satisfies the desire highest on his list, he immediately moves on to the next. Hardly the image of a static equilibrium economy. Now let's look a little deeper at Arthur's approach. That's supremely Austrian in nature. Austrians argue that the economy is organic, not mechanic. That parallels "the economy is not a perfectly balanced machine, but an evolving complex system." As I said above, it appears to me that complexity economics is an attempt to mathematize a macro view of the activity occurring in the microeconomic sphere according to the Austrian School. When you take note of the economists that he notes as most influencial to this new way of thinking, it's even more apparent. Shumpeter - a student of the Austrian capital theorist Eugen von Böhm-Bawerk, a major influence on the Austrian School. Hayek - another major influence on the Austrian School. Shackle - started work on his PHD under Hayek at the London School of Economics. Veblen was an economic Marxist, but we won't hold that against him, since he was also a firm critic of Marx. I think the argument is pretty solid. But when I say "real economic theory is terribly complex," I'm not talking about what passes for economic theory and analysis--by and large--these days. Like the economists who "predicted" the consequences of the stimulus package on unemployment rates, most everyone is doing it wrong imo. The analysis of professional economists, the papers most write--some of which lead to Nobel Prizes-- seem complex but they're really not. They're simplistic. As you say, they're full of subjectivity, of opinions masquerading as facts, of unjustifiable and logic-killing assumptions. Most rely on formulaic approaches, as well, as opposed to algorithmic ones. And with regard to all of this, the single most important issue, the idea that drags most economic theory into the toilet is the idea of equilibrium. There is no equilibrium to be had in an open, complex system. There just isn't. Complexity economics is the path forward, imo. Agreed. If there is a useable path ahead for macroeconomics, it lies in the area Arthur is exploring. All that said, I still maintain that there is real economic theory in macroeconomics, alone, and that it's rightly seen as political economy. Consider the action of the Fed in raising or lowering the interest rate. This is going to have consequences. The problem with traditional economics is that it is assumed such consequences are not only predictable, but are--for the most part--always the same. Look at this piece: www.foundationsforliving.org/articles/foundation/fedraiselower.htmlWhat is outlined there is pretty much dogma for a traditional paradigm of economics, no? And you and I both would agree, I think, that it's bs, that the "chain reaction" posited there in response to raising or lowering the interest rate is not a certainty, at all, that the whole thing represents a phony manipulation of peoples' emotions, regardless. Yet that point of view is one held by educated, intelligent people. It's something they know because they learned it, and because they think they see empirical evidence of it playing out in real life. But the truth is that such actions by the Feds--regardless of the manipulating of emotions aspect--only create incentives down the line. And incentives are created by lots of other things, with regard to the individual. Complexity economics recognizes this. The biggest complaint about complexity economics is that it's not providing any "answers." And that's because it can't, not in the faulty sense of "answers" that most economists have been offering up since Keynes. So it is--imo--a valid field of study. Doesn't mean it will yield solutions. And that's a tough pill to swallow for many in academia; they want to imagine that they're solving problems as a matter of course. They don't like hearing that they're just spinning their wheels. Agreed. Apparently our primary point of disagreement is whether microeconomic theory exists or not.
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Post by robeiae on Nov 15, 2016 10:07:20 GMT -5
Well, let's consider just the idea of incentives. In my mind, there's no "theory" to speak of there. There's just the simple reality of their existence and the fact that they influence decision-making. There's no economic component necessitated in any of this. The incentives occurring withing a video-game storyline are no different than the real-world incentives occurring on a daily trip to the grocery store. One can create a decision tree to map out potential in this regard, to see where incentives can lead, but there's no mathematical or logical surety in any of this at all.
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Post by Don on Nov 15, 2016 10:48:50 GMT -5
Well, let's consider just the idea of incentives. In my mind, there's no "theory" to speak of there. There's just the simple reality of their existence and the fact that they influence decision-making. There's no economic component necessitated in any of this. The incentives occurring withing a video-game storyline are no different than the real-world incentives occurring on a daily trip to the grocery store. One can create a decision tree to map out potential in this regard, to see where incentives can lead, but there's no mathematical or logical surety in any of this at all. But incentives aren't a given at all, although you and I, as rational economists, see the reality of their obviousness. It's not so obvious to the whole branch of psychology, however. And we still have The Subjective Theory of Value, Opportunity Cost, Incentives, Gains from voluntary exchange, Specialization and Division of labor, and Emergent Order. Oh, and how could I forget Marginal Utility? There are those who would argue against the "simple reality of their existence" in each and every case. How many times have you heard liberals argue that there are no gains from voluntary exchange because corporations hold the upper hand and we either take what they offer or else? Hell, isn't Marx' whole theory based on the exploitation of workers because of the imbalance of power? Marx would be one who would argue against the reality of gains from voluntary exchange, just as his whole argument rests on the negation of the Subjective Theory of Value in favor of the Labor Theory of Value. The whole "back to the land" movement places no value whatsoever on the concepts of specialization and division of labor, or they wouldn't be thinking a pastoral life would produce an actual improvement in standard of living, or at least be comparable, to today's corporate/political mishmash. They obviously have competing theories of production.
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