60 sats \ 9 replies \ @om 3 Apr \ on: Markets and Science are Self Correcting in the Long Run FiresidePhilosophy
I don't buy it. Both science and markets converge towards reality only in the absense of government's pressure. However governments can apply such pressure over a really long time. Notably, economics have degraded back into Keynesian bullshit right before our eyes.
"Long run" is a vague enough concept as to be almost unfalsifiable. However, the way we use the concept in economics is that in the long run everything becomes variable. That means government pressure is not fixed in the long run. Once that pressure changes, if not before, the correction will come.
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Actually, "converge" usually means "to approach". In this loose sense, it means that the expected distance between reality and our approximation of reality lessens over time.
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Yes, that's what I'm talking about. The sequence 0, 1, 0, 1, 0, 1, ... does not converge. Similarly, the sequence Keynesianism, Austrian Economics, Keynesianism, Austrian Economics, etc. doesn't converge either (counting Monetarism as Austrian here, even though it's not exactly right).
the expected distance between reality and our approximation of reality lessens over time.
Yeah, except it doesn't. Only in areas that the government doesn't care about too much, such as physics and math, can progress towards truth be sustained.
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I think you're viewing this on too short of a time horizon. Economics has progressed as a science even if policy makers are disingenuously using fringe nonsense to justify their programs.
One hundred years ago there was widespread belief in outright central planning. Even Keynesians and MMT'ers don't really believe that anymore.
Two hundred years ago Subjective Value Theory had yet to be developed.
Three hundred years ago comparative advantage had not yet been thought of.
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Keynesianism is fringe!? I wish. The nonsense is everywhere now. We are the fringe ones.
One and half hundred years ago Bastiat basically nailed it and the belief in central planning is a downgrade from Bastiat's understanding, and one hundred years ago they also had Boem-Bawerk to read, and all to no avail. And Keynesians and MMT'ers might not believe in full central planning now but some want "stakeholder capitalism" which means that the companies should follow goals set by the government but they get to plan how to do so best. Basically communism with extra steps.
When Marco Polo returned to Venice and reported that the khan of the Mongol Empire forbids gold circulation and issues paper money instead, Venetians refused to believe that any people would tolerate such obvious abuse.
Islamic civilisation managed not to debase its golden coins.
Maybe Venetian and Islamic attempts do not yet look like what we'd call science, but communist's critiques of Boem-Bawerk already do look the part - and they're total nonsense.
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Keynesianism is sort of fringe, just not amongst people who go to work for the Fed. Most economists are neoclassical micro people who don't put much stock in modern macro. Even some macro people see the importance of micro-foundations for macro theories.
Think about a damped oscillator. It doesn't always move towards it's final state, but the swings become smaller over time.
None of the Austrian work ever represented the mainstream of the profession.
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Keynesianism is sort of fringe, just not amongst people who go to work for the Fed.
The governments have officially blamed Monetarism for GFC even though they printed way more money than Monetarists recommended and GFC is exactly the sort of thing that Monetarists expect in such a case.
Most economists are neoclassical micro people who don't put much stock in modern macro.
Most economists were educated before GFC and the goverment can't just flip a switch to make them all Keynesians. I would describe the micro people who don't put much stock in modern macro as economists who see the scam but are too afraid to call it out because they're paid by the public funds, that is, the government. The problem however is that public universities educate new economists in Keynesianism these days.
Would you also describe the Soviet biologists living in times of Lysenko as non-geneticists who don't put too much stock in modern (from their viewpoint) genetics? My point is that we're exactly in this situation.
Think about a damped oscillator. It doesn't always move towards it's final state, but the swings become smaller over time.
Yeah I know how convergence works. I just don't see the swings becoming smaller.