Note:
Economics has the reputation of being dry-as-dust (“the dismal science”,
thus dubbed by its own practitioners). And in the
public arena (free-coinage-of-silver, Reaganomics) America has a long
history of “voodoo economics” (in the famous phrase of Reagan’s OMB director
David Stockman, characterizing the economic fantasies of his boss). Yet some very distinguished work
has been done, some of it of interest not only to specialists, but touching
over into contiguous fields.
In solidarity
with our son, now a math major taking freshman economics, we offer links to
insightful commentary in the economic field. The list should grow with time, so check back occasionally.
(1) iPhones and liquidity traps
A somewhat subtle argument, from a Nobelist; still mulling
it over myself.
In any event, it is good to find economic arguments in the MSM that stimulate thought, rather than the podex.
In any event, it is good to find economic arguments in the MSM that stimulate thought, rather than the podex.
(2) “Falsifiability”
From economist and former Treasury secretary Larry Summers:
It is the mark of science, and
perhaps rational thought more generally, to operate with a falsifiable understanding of how the world operates. So it is fair
to ask economists what could cause them to substantially revise their views of
how the economy operates and to acknowledge that the model they had been using
was substantially flawed. As a vigorous advocate of fiscal expansion as an
appropriate response to a major slump in an economy with interest rates near
zero, I have long said that if the British economy were to enjoy a rapid
recovery, it would force me to substantially revise my views about fiscal
policy and the workings of the macroeconomy more generally.
Unfortunately for the British
economy, nothing in the past several years compels me to revise my views.
This term falsifiable
could easily be misunderstood. It
is a term of art in the Philosophy of Science, and denotes a good thing. In one homely formulation, “a theory needs to stick its neck
out”: meaning, we need to be clear
on what would count as counterevidence
to our thesis.
Strictly, this concept of “falsifiability” can apply to any
would-be-empirical statement at all, not merely statements that are theoretical
or scientific. But scarcely
anything we say can actually meet this exacting standard.
Note: Professor
Summers is given to statements that, while impeccably correct, can be
misunderstood -- in particular, wilfully misunderstood. While President of Harvard, he made a
statement based upon the statistical facts of leptokurtosis; this was met with enraged howls, and he
was hounded from his job.
(3) Word of the
Day: “liquidationism”
I know, I know; it’s lazy of me to keep linking to Krugman
articles, but the man really does write both acutely and enertainingly. And we owe him a debt of
gratitude for continuing to wage the good fight, year after year, rather than
simply tossing his pen aside in boredom and disgust (as a lesser man, such as
myself, would have done, when Dubya won re-election).
Romney’s language echoed that of
the “liquidationists” of the 1930s, who argued against doing anything to
mitigate the Great Depression.
(4) David Stockman
on “too big to fail” vs. “too big to exist
(5) An
economics thriller
A remarkably gripping movie-documentary, which feels more
like a business thriller such as “Duplicity” than a 60 Minutes exposé, is “Inside
Job” (2010).
Cannily, the film begins, not with the hot wet empirical
messiness of America, but with the cool and virtually in-vitro example of
Iceland, which suffered a
spectacular economic meltdown after its banks were deregulated and privatized. Capital is global, and the vices and
greeds of speculators are akin all
over the world.
One of the villains of the piece is Larry Summers, the same whom we treated more kindly above. His economic prescriptions
certainly enjoyed the philosophy-of-science virtue of being “falsifiable”; and they have been falsified. Does he, or anyone else who once held
them, admit this?
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