Maybe There’s No Such Thing As ‘Economics’

Richard Clarida reckons the conditions may be right for the Fed to start hiking rates -- by the end of next year. In a speech called "Flexible Average Inflation Targeting and Prospects for US Monetary Policy" prepared for a Brookings webcast, Clarida said Monday that the US economy is "clearly a ways away" from meeting the standards that would compel the Fed to consider raising rates. He cited the three conditions set out in the Fed's outcome-based forward guidance, one of which is, of course,

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10 thoughts on “Maybe There’s No Such Thing As ‘Economics’

  1. Most social sciences are just a tribal language. It is hard to be “in” if you do not understand the language. Shoptalk, vocal dialect just give the ability to participate and criticize. Humans have a need to feel like somebody else is smarter than them and in control. The absolute randomness of so very many things either frightens one or amazes one.
    I put you in the amazed camp.

  2. Foucault and Agamben have related but ultimately different takes on the philosophical origins of homo oeconomicus, which align well with what H is talking about. I believe both philosophers are reconcilable. And reconcilable with H as well, hence my comment…

  3. I am curious about H.’s opinion of the work of Oskar Morgenstern & John von Neumann and John Forbes Nash Jr. (My “mathematical grandfather” Isadore Manuel Singer shared an office with Nash starting in 1951 and Nash’s story has always interested me.)

  4. Oh how you hurt. You introduce me to the thoughts of Stephanie Kelton, which in turn leads me to Hyman Minsky. I just start feeling gratitude for your direction, only to have you tell me I’ve been duped.

    1. Don’t be so sure. Didn’t the US budget something like $4.7 trillion because of Covid-19 (with around 70% already distributed)? As Kelton and others have pointed out, when politicians decide something needs to be done, traditional economic thinking is not a real barrier. Deciding on priorities in the obstacle. The jury is still out.

  5. OMG, you are so right! In the days of John Stuart Mill, in my view likely one of the 10 or 15 humans in the last two millennia, the so-called “dismal science” of economics was actually characterized as “Political Economy.” We who studied this largely philosophical field muddled along until the middle of the last century when universities, in a misguided attempt to rid themselves of well-reasoned thought, endeavored to turn their ship around to emphasize the more erudite realm of so-called hard science. Now virtually every new PhD, no matter what field they study, must put some kind of math or statistics in their dissertations to prove they are “scientists.” Economists felt they were truly among the “anointed” when they field was allowed to have its own Nobel Prize. Trouble is, try as they might economists just can’t seem to get their laws right, mainly because economic outcomes in the real world depend on the behavior of individuals who have their own intelligence, goals, resources, politics and interests. You just can’t really collect all that individual diversity and make it into physics or chemistry. Economists, for all their pretense, can’t seem to figure out cause and effect in the real world. All their models are circles, behavioral loops for which outcomes and their reasons are just not all that apparent. Hence … we get many “policy mistakes.” I majored in economics and wrote an undergraduate thesis in a complex sub-field known as welfare economics. I also had courses in my MBA and a whole Economics field in my Finance doctoral program. Through all of that the full “mysteries of the lodge” were not fully revealed but I became convinced that all new Economics PhDs should be subject to some sort of term limits. Arthur Laffer, for example, is well past his sell by date and should be, once and for all, ignored. Note, the gentleman has switched from economics and politics to the more lucrative field of investment/wealth management. Perhaps he finally figured out the real world, perhaps.

  6. My advisor in my philosophy department in college used to say sociology is the obvious taught by the inept. He referred to economics was only the rationalization of avarice. When he retired from the department, he said he was going to travel the world in search of an island to rule as an enlightened civilization. Wonder if he ever found one? Doubtful.

  7. Even though the Federal Reserve “tells” us their goals are employment, low inflation, etc. they certainly “act” as if their goals are to inflate away the obligations of the US government, so they don’t have to print too many USD’s and destroy the coveted position as the world’s reserve currency.
    That goal would be pretty difficult to verbalize in an acceptable way.
    Would not be the first time I have encountered homo sapiens who say one thing and believe/do another.

  8. I used to say the same thing verbatim. For a number of reasons I dropped out of my economics Phd program. This was one of the reasons. The discipline became a contest of who could make the most complicated models- god forbid they had any relationship to the actual functioning world.

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