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Hoisted from the Archives: February 22, 2009: The Stimulus Victory: Let's Keep in Contact with Reality Here...

Hoisted from Comments: Economics as "Science"

John Emerson:

The BIS Fails to do Its Job...: As I understand, economics is a science that starts off with a pidgin toy model of human psychology (rational actors) because this methodological simplification makes it possible to develop models with great predictive power. (Milton Friedman, Preface to "Positive Economics".) And once this is done, from the heights of Science they look down scornfully on ordinary folk and on the lesser social scientists who lack the powerful analytical models.

Except that sometimes their sciences have no predictive power and fail utterly, in which case they start talking about "confidence" and kick the can down to psychology and say "Hey, stupid: here's one for you!"

And then they say: what can we do to increase confidence? And as often as not, they say:

All the way back to the Scythians it has been known that gold is an imperishable store of value which you can safely bury in the ground (along with your sacrificed slaves) and be rich for all eternity. You can put it under your bed and it will be completely safe no matter what, except from burglars and strong-arm men of course, and your virility will improve too. And you can take it out and hold it in your hand and you'll just feel so good! And if you have enough of it, and enough automatic weapons and stores of food, you can survive the collapse of civilization

At least Keynes didn't succumb to the fetishism. (With the continuous tradition all the way back to Beowulf and Skunxa, gold-buggery is one of the few areas where the Marxo-Freudian theory of fetishism might be entirely reasonable.) But he was still kicking the can.