Tag Archives: Economics

There are often attempts in the west to depict China as capitalist rather than socialist. After decades of China going from strength to strength on macroeconomic criteria – and in view of its undeniable achievement in reducing poverty at a rate unmatched in recorded human history – some on the right wish to deny that this could have been accomplished through socialism and so instead claim China to be capitalist. At the same time, there are those on the left who wish to distance notions of...

Chicago economics — only for Gods and Idiots If I ask myself what I could legitimately assume a person to have rational expectations about, the technical answer would be, I think, about the realization of a stationary stochastic process, such as the outcome of the toss of a coin or anything that can be modeled as the outcome of a random process that is stationary. I don’t think that the economic implications of the outbreak of World war II were regarded by...

Economics — too important to be left to economists Bad economics underpinned the grand giveaways to the rich and the squeezing of welfare programs, sold the idea that the state is impotent and corrupt and the poor are lazy, and paved the way to the current stalemate of exploding inequality and angry inertia. Blinkered economics told us trade is good for everyone, and faster growth is everywhere. Blind economics missed the explosion in inequality all over...

Does it — really — take a model to beat a model? A critique yours truly sometimes encounters is that as long as I cannot come up with some own alternative model to the failing mainstream models, I shouldn’t expect people to pay attention. This is, however, to totally and utterly misunderstand the role of philosophy and methodology of economics! As John Locke wrote in An Essay Concerning Human Understanding: The Commonwealth of Learning is not at this time...

Why all the fuzz about trade? The share of US expenditure on imports is smaller than in most other countries. To a large extent, this reflects the fact that for a large country like the United States, a significant fraction of trade occurs intra- rather than internationally. This basic observation implies that that the welfare gains from international trade in the United States are smaller than in most other countries. Although magnitudes vary greatly...

There is a big difference between predicting and forecasting. Scientific theory is about causal explanation and prediction through formulating testable hypothesis that challenge the theory rigorously based on experimental evidence. Forecasting is making educated guesses based on limited and variable information information. The former applies chiefly to ergodic systems and the latter to non-ergodic, or if the system is actually ergodic, not enough it known about it to construct a rigorous...

Is economics — really — predictable? As Oskar Morgenstern noted already back in his 1928 classic Wirtschaftsprognose: Eine Untersuchung ihrer Voraussetzungen und Möglichkeiten, economic predictions and forecasts amount to little more than intelligent guessing. Making forecasts and predictions obviously isn’t a trivial or costless activity, so why then go on with it? The problems that economists encounter when trying to predict the future really underlines...

On the use of mathematics in economics Balliol Croft, Cambridge 27. ii. 06 My dear Bowley, I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules — (1) Use mathematics as a short-hand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4)...

Crasht im Jahr 2023 die Weltwirtschaft?  [embedded content]

What went wrong with economics To be ‘analytical’ is something most people find recommendable. The word ‘analytical’ has a positive connotation. Scientists think deeper than most other people because they use ‘analytical’ methods. In dictionaries, ‘analysis’ is usually defined as having to do with “breaking something down.” But that’s not the whole picture. As used in science, analysis usually means something more specific. It means to separate a problem...