Spot Effing On, as The Mainstreamers Edge Leftward
We have just printed the eleventh (11th) straight week in which new jobless claims have exceeded 400,000 people. As Krugman notes, “The Fed predicts disastrously high unemployment as far as the eye can see(pdf) [a]nd, in response to this dire prospect, it declares its work done.”
So this it is almost palliative that Barry Ritholtz writes the Quote of the Day, or perhaps the Decade:
The sooner we recognize that the field of economics is a branch of Sociology and not Mathematics, the better off we will all be.
Anyone who has looked at the CF that Microeconomic doctrine has created over the past twenty years will not be surprised by Ritholtz’s conclusion. The question would almost be why he waited so long to say so explicitly.
Other signs that people are coming around to the positions taken at this blog:
- The gracious, even-tempered Mark Thoma has been driven to pointing out that the math, let alone the social issues, don’t work:
I had hoped to see more acknowledgement that the current soft patch may turn out to be something more significant than a temporary aberration in the numbers, and some hint of willingness to ease further should those worries come true. But the Fed shows no such willingness, in fact as Neil Irwin notes, the “employ its policy tools as necessary to support the economic recovery” language is gone, and the main question at this point is when the Fed might begin tightening policy by reversing QE1 and QE2 rather than when they might ease further.
- Brad DeLong channels Bruce Webb or me in talking about Diane Lim Rogers:
Get out of the defensive crouch, Diane. If you and your peers won’t stand up and say that every single Republican presidential candidate is talking hogwash and that every economist who wants high federal office in the next Republican administration is acting like a craven coward, then you are giving them every incentive to do so.
- The NYT—Gretchen Morgenson, of all people—notices that Executive Pay is not aligned with optimal company management, let alone shareholders:
WHEN does big become excessive? If the question involves executive pay, the answer is “often.” …just how this paycheck stacks up against, say, a company’s earnings or stock market performance is rarely laid out.
Ritholtz also pointed us to the cartoon of the year: http://www.ritholtz.com/blog/2011/06/debt-ceiling-choices/
Simply recognizing that Economics is a social science won’t make the practioner any more capable of recognizing the limitations of his/her data. For this one shold consult S.S. Stevens
regarding levels of measurement, “On the theory of scales of measurement”. Wiki summarizes it nicely, http://en.wikipedia.org/wiki/Level_of_measurement. Economist, should know better the limits of their numbers and what kind of summarization techniques can be done, or not.
“The sooner we recognize that the field of economics is a branch of Sociology and not Mathematics, the better off we will all be.”
Says a lawyer with an undergraduate degree in political science.
As much as I like Barry, he’s not entitled to have an opinion on this matter. Let him tackle three years of graduate study in mathematics and two years of graduate level econometrics first.
Hear, hear! And, amateur, loved the cartoon.
As Ken noted the cartoon is superb. It gets to the heart of the supposed fiscal crisis.
Be careful of flaunting what you assume to be an objective education. Many an erroneous concept has resulted from intensive study at schools with an ideological bias to grind. Chicago comes to mind, especially its scourge of PhD economists which it had unleashed on the world. South Americans might not consider those years of intensive study to have bnefited them. Thank you Prof Greenspan, where ever you are.
Still, Barry has not earned the right to pass judgement.
with all respect, you are wrong. Expertise, even hard earned expertise, does not necessarily mean that a person knows what he is doing. And an expert who won’t learn from the insights of someone who is not an expert is a fool.
ken melvin’s comment below is a hear hear for Mark I assume. certainly not for me.
Or at least, with all respect, coberly thinks Mark is wrong. But that means no more than that coberly agrees with Barry, and holds his own views in sufficiently high regard to presume to know that Mark is wrong. Not much of a basis for opinion.
Mark might also have noted that Barry is no more qualified to have an opinion of the place of sociology in the world as that of economcs. There are lots of guys on lots of barstools instructing other drinkers on how the world ought to be. Some smarter than others, but in the end, they are still just guys on barstools.
Austrian economists have been making this argument for decades, see “praxeology.”
I don’t need to be a concert violinist to notice if a performer is playing out of tune.
Can you show us the math?
The expiration of the Bush tax cuts does little to anything to solve the deficit and long term financial stability. If you assume a GW Bush economy then maybe, but that isn’t the reality now or anytime soon.
It’s the collateral damage that results from the “findings” and ideologies professed by any professional that is the weight of the evidence regarding the validity of that individual’s prognostications and recommendations. Unfortunately economics is a field of study that can influence decisions and influence judgements. The result is to have created a potentially lucrative consultative profession within that field. And money talks the talk. When a scientist can be paid for their recommendations they can be boought to provide the preferred recommendations. And the data can be found to support any side of the argument, which has been demonstrated on this blog and other forms of media repeatedly.
I don’t think the cartoonist meant for his caricature to be interpreted as being drawn to scale.
“Mark might also have noted that Barry is no more qualified to have an opinion of the place of sociology in the world as that of economcs.
I wish that I had, because it’s relevant. I know something about sociology although technically I have no formal training. I wonder how much Barry knows?
Let me clarify. I’ve tutored statistical techniques in sociology. It’s actually surprisingly different from mathematical, scientific and economics approaches to statistics.
That difference begs the question as to whether the approach is more rigorous than that practiced by the economists. I’m curious as to why you break out “scientific” in suggesting that “mathematical, scientific and economics approach to statistics” differs from the sociologists”? Do any of those approaches adhere to the advice of S.S. Stevens in his paper, cited above, which laid out the guiding principles for the use of statistics in the social sciences years ago?
do you just like the sound of words, or do you ever try to think through what they mean. The expiration of the Bush tax cuts would bring in just about the exact amount of money to solve the deficit.
of course we can’t “raise taxes” because that would stall the economy… or so we are told by the people who have lowered taxes to the point where we no longer pay our bills.
and their response to that is to “cut spending” without realizing that the whole point of “lower taxes” as a stimulus to the economy requires that spending not be cut.
but hell, here I am asking you to think it through.
i could show you the math, but you wouldn’t understand it.
yes. exactly. but Marks barstool is no better than Barry’s. my gripe with Mark is not that I disagree with his economics, but that I disagree with his understanding of what it means to be an expert.
There are lots of experts running around with rigid brains and great knowledge of what every other expert says about their field who are too stupid to think about the facts in front of them.
i don’t know that Mark, or you, are like that, but his, and your, comments suggest to me that you may be.
If economists want to play in a field of politics then they are fair game. ‘Economics’ is as much a political profession as an expert profession that we see and hear on the national stage.
Spencer said the old way was for politicians to state goals and ask economists to price getting there and such in a comment a few months ago. The game is played quite differently currently for election purposes.
The meme that raising taxes will stall the economy in this environment is the same illogic that government printing/borrowing will cause inflation, heat up the economy, crowd out, whatever.
The money is there to borrow and be spent, is the same green to be taxed and spent.
Only difference is the lender gets interest the tax payer gets a good feeling about future debt and interest rates.
The lenders never want to be taxed.
Yeah I’m a little late to this dawning awareness of how much big time economic theory is simply politics by another name. Like politicians, economists ideas can often be reliably predicted by the entities who pay for them.
S.S. Stevens was a psychologist who laid out the levels of measurment that are well accepted until this day. But one would have to ask who uses nominal or ordinal data? Mathematicians? No. Scientists? No. Economists? Almost all, no. The difference between what economists do and what sociologists do is enourmous.
But I’m not sitting on a barstool. I’m sitting on a Masters degree in Mathematics and a I have Masters in Economics and I’m also all but dissertation PhD in Economics. In other words I’m the only person between Barry and coberly that actually has a degree in either Mathematics or Economics.
So, Barry is on a barstool, and you are on a barstool, but I am not on a barstool. Neither of you have a right to an opinion until you actually put forth a slightly more effort than exercising your big flapping tongues.
you are being stupid. Barry says that it is important to recognize that Economics is not Math. You reply that unless you are a mathematician you have no right to talk about it. You think you are refuting Barry, but actually you are providing an example of what he is talking about.
If I needed advice about some application of mathematics to Economics, I might turn to an expert for advice. But if I need to understand some economic problem in the real world, I would not expect to get much help from the kind of expert who can’t imagine that there could be any value in listening to people who don’t run around telling other people “I have a Master’s Degree!”
Economist, sociologist, econopoliticist? Mathematics, What they do, What they are paid to do, What they have earned the right express an opinion to. Basic concepts in the comments. nominal, ordinal, statistical, wow listen to you all.
Forty years of experience has shown me that nothing is esoteric and embracing different and disparate expertise and opinions is often the key to a static unworkable deadlock – stepping back, examining assumptions, questioning methods and enhancing models. I have twice in my life found that reaching out to mathematical methods in social sciences has been helpful to modeling first a medical problem and second an environmental problem.
This non-economist has an opinion and it’s not about whether economists are “mathematicians”. There is nothing I have seen mathematically in the economics area that has it’s fundamental mathematical basis in economics purely. It is the assumptions that require expertise and these include sociological assumptions.
At the crossroads where economics meets politics and policy, economists are useless if they don’t embrace new information, altered assumptions and societal responsibility. The reason I have always said that economics was a more difficult area than science is that one cannot devise an experiment to test on the real world without real world consequences. At the policy level, the Heisenberg uncertainty principle of economics kicks in.
What is Barry really talking about? He was complaining about how lousy the FOMC forecasts are. Well, maybe it has to do with the fact that of the five BOG seats that are currently filled, two are occupied by lawyers (Raskin and Tarullo) and one by a banker (Duke). In fact the only BOG members that actually are economists are Bernanke and Yellen. So the real problem isn’t that economics isn’t a branch of mathematics, it’s that law and business aren’t economics. If you want better economic forecasts from the BOG try putting some economists in there for a change.
So basically this is about a lawyer complaining how bad the economic predictions that lawyers and bankers make and then topping it off by making ignorant statements about economists. Pretty rich isn’t it?
P.S. If you’re going to put lawyers in charge of monetary policy I think it’s only fair that we put economists on the Supreme Court.
“But if I need to understand some economic problem in the real world, I would not expect to get much help from the kind of expert who can’t imagine that there could be any value in listening to people who don’t run around telling other people “I have a Master’s Degree!”‘
The more I think about this the angrier I get. Who caused the economic mess? It was people with professional degrees, mainly lawyers and MBAs. Having a JD or an MBA seems to grant people the entitlement to have an opinion on anything from quantum mechanics to neurosurgery. (For some reason MDs are not subject to this phenomenon. Perhaps their basic humility prevents them from pretending that they understand the “real world” better than others.). I’m glad kharris used the term “barstool” in this discussion. Because I’ve come to the conclusion the real problem is that lawyers and MBAs are “professional barstoolers”.
Let’s face it, the professional barstoolers run the world. They’re most of congress, they’re in charge of the Supreme Court and are the dominant voice in the Fed. The White house is of course run by professional barstoolers. And for that matter, the entire financial sector is run by professional barstoolers.
Now the moment things go wrong, professional barstoolers pull a Bart Simpson and say “I didn’t do it!” No, they cast the blame on the pointy headed intellectuals who spent their whole life studying something before they formed an opinion. Obviously it was the academics fault, because they spend all their time immersed in books, research papers and data. How could they know anything about the “real world?”
Maybe what this country needs is fewer professional barstoolers and more real experts. (That’ll be the day.)
Krugman is a bozo who in the face of failure is writing columns is trying to shift the blame to republicans. Keynesian economics does not work. It never has.
Law school is especially good preparation for being a professional barstooler. After all, law is all about who delivers the most persuasive BS in a court room. Business school is not far behind however. That’s because being a good businessman means delivering the most persuasive BS in the boardroom.
Barstooler is an especailly appropriate description as the letter beginning each syllable is…
Let’s hear it for the world as it is (the paradise that barstoolers have wrought).
Those who claim that “Keynesian economics does not work” have a strange definition of “work”or a measurmant system devoid of social consequences. More clearly, if “the market” is God and the people are irrelevant then “Keynsian economics” is horribly flawed. This same “failure of Keynsianism” proposition can be armed by assuming that those who are very wealthy can only maintain and expand thier wealth by provding that which the “lower classes” desire. The reality of economic rent is totally ignored in the “invisible hand” proposition.