Monday, June 28, 2010

More on "Economics is Hard"

Yesterday I mentioned a paper from Kartik Athreya titled "Economics is Hard, Don't Let Bloggers Tell you Otherwise."

Not surprisingly, today, many bloggers responded to Athreya's piece, including some of the ones he named specifically in his piece (Brad Delong, Matthew Yglesias - both well respected, widely read bloggers who I actually do not read on a daily basis.)  Here are some of the responses:

1) The Reformed Broker wins for his simplicity, summarizing: "Economists Can't Do Economics Either"

3) Matthew Yglesias  "Completely apart from the fact that the “science” of economics is a good deal less developed than what you see in real sciences, the fact is that economic policy is economics plus politics."

4) Scott Sumner expresses a sentiment I talked about recently: "Unlike Athreya, I don’t judge people by their credentials, but rather by the quality of their arguments."

"It's so hard that experts don't always do it well.  The experts are constantly prone to correction by non-experts, by practitioners, by people who are self-educated economic experts but not professional economists, and by people who know some economics and a lot about some other field(s).  It is very often that we -- at least some of us -- are wrong and at least some of those other people are right.  Furthermore those other people are often more meta-rational than a lot of professional economists."




scharfy said...

Anytime you paint with a broad brush you're gonna paint over a few of the lines.

Some bloggers pedantic "If I were king I'd do it different" mentality is annoying and it reeks of having been away from the real world for some time, and safely behind a keyboard, but it makes for good reading and sexy titles.

Others, not so far removed from the sausage factory, try to see the whole equation and minimize economic monday morning quarterbackery.

The real world is a difficult place to play. Its real easy to be an ideologue in a vacuum, where you're rantings have no consequence.

"Bankrupt BP!"
"Pull out of Iraq today!"
"Let them all fail!"
"Bernanke is an idiot!"
"Bring the Fed Funds to 2%!"
"Abolish the FED!"
"Impeach Obama"

All of these decisions have significant consequence, most of which involve death, heartache, lost jobs, etc.

They are not easy decisions to make. Policy makers come into the game with the chessboard locked up. The type of game has already been decided. There are only 1 or 2 legitimate moves to make, most involve simply extending the game. They cannot willy nilly say -"I wanna new game, with new rules." Occasionally a master may change the tone of the game with one swift move, (dxC6!!) or one may blunder (Qd7??), but usually they understand the game, and are constrained by circumstances, and their actions have consequence, unlike bloggers.

Ironically enough, some bloggers are eerily similar to the politicians they slam, more than they care to admit - they pander to their base!

So like everything, bloggers and economists included, there's good, bad, and ugly.

Good readings though.

getyourselfconnected said...

I cannot believe that guy wrote that piece. Did he not expect heat on that one?

oc bear said...

A whole year of PhD work - wow! I guess a crummy Math Degree and years of actual experience on Wall Street makes the Kid a poor opponent for someone who works at the Fed. I wonder if bonuses at the Fed are paid in Agency Debt?

Jonathan said...

I disagree with the assertion that economics is hard. The establishment purposely makes it difficult to understand.

Obviously if you read Henry Hazlitt's "Economics in One Lesson" or Murray N. Rothbard's "What has government done to our money?" or any other type of Austrian economics book, it's not difficult to understand.

It's just that a person who works in the finance industry wants to be viewed as an intelligent superiority!

For example, guys on Wall Street are stating that Obama has now helped the consumers and the average American but it's quite on the contrary.