Why do people labor under the assumption that the laws of economics can be overcome through politics? Reversing the rising seas aside, most people don't think Obama can suspend or manipulate gravity.
dance said...
Maybe we don't believe in the laws of economics? Because we don't trust the process that has written the laws of economics? Weren't there once "economic laws" that assumed all people behaved rationally and made decisions based only on money?
FLG said...
Just because we didn't understand gravity until Newton doesn't mean it didn't apply.
I felt that my response was inadequate.
In truth, we don't know how gravity actually works. We have never found a graviton for instance. But that goes back to my theory about the incomprehensibility of the universe, and I don't want to go there right now.
Human beings have infinite wants and finite resources to fulfill those wants. Therefore, laws of supply and demand, and by extension other economic laws, must exist.
Economists certainly don't know everything about the economy. If the issue is that we don't know enough about economics to run the economy perfectly efficiently or whatever, then okay. I can grant that point.
Just as we trust scientists when they tell us the Large Hadron Collider isn't going to suck us into a galactic vortex even though nobody has ever built a collider this big and scientists once thought the world was flat, we should acknowledge that economists do have some expertise in the field. If you are going to make policies, then I'm not sure wishful thinking combined with politics is going to get it done. We need humanity's best guess. Economics is humanity's best guess. We can't hold the science of economics to perfection and then use its flaws as a crowbar in order to justify our particular political preferences.
For example, if one wants to redistribute wealth and the economists say that will retard economic growth, then the solution is not to point to where economists were wrong in the past but either why the social benefits of wealth redistribution are greater than the economic loss or where their analysis is wrong.
Perhaps I misunderstood Dance's point and I probably responded to more than her point as well.
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No, you understood. My point is that we trust physical scientists in a way that we don't trust economists, as well as being less familiar with the laws of economics. I didn't even know what laws of economics you might have been referring to, and I'm not sure I believe that redistribution will always retard economic growth (in addition to considering that less inequality might be worth slower growth). Redistribution ought to generate consumption, after all....if it's a question of achieving the perfect balance, then yes, politics ought to be able to DO something to get us there. For a politician, econ, history, anthro, soc, etc all offer conflicting best guesses that must be reconciled.
My point about being wrong in the past was not that economists have no valid expertise, of course they do, but that what economics posits as a law today might not really be an UNBREAKABLE LAW. Apples have never not fallen when dropped, regardless of when gravity was accepted. Does economics offers anything that is similarly absolute?
For instance, it seems to be that Apple regularly charges higher prices and yet sells out of things. Doesn't that undermine the law of supply and demand, which you posit as the foundation of all other laws of economics? I'm pretty sure that at least half the current crisis is caused by fear causing liquidity problems, not by anything economic laws can account for.
(I'm a historian. We don't do LAWS or MODELS.)
Humans having infinite wants and finite resources is absolute.
The laws of diminishing returns, diminishing marginal utility, and supply and demand are rock solid. However, there is such a thing as a Giffen Good.
"In economics and consumer theory, a Giffen good is that which people consume more of as price rises, violating the law of demand."
But it's never been actual evidence of a Giffen good.
Apple's a screwy company. They don't violate any economic laws, but I'd spend half the night trying to explain why and get off on computer geek tangents. So, I'll let it alone for now.
Last and only partially related point, a lot profs, especially humanities and political science profs, object to what I call the colonization of other academic subjects by economics and quantativeness, for lack of a better term. I tend to agree with them, but I think it's root cause is the materialistic, as opposed to spiritual not money, focus of society since the Enlightenment and the Scientific Revolution and economics is both a product of that shift and riding it for all it's worth into other disciplines.
Pardon my grammatical lapses.
Personal Godwin's Law: all discussion ends when someone starts nitpicking grammar. :)
If it would take you half the night to reconcile Apple to the laws of econ, then there's half your answer about why people don't respect such laws as laws that cannnot be changed. Because the laws disagree with what people can observe.
Respecting the laws of diminishing marginal utility/returns does not oblige one to agree with the economist's view on what point will trigger diminution, however.
Economics' fundamental strength is also its weakness. The discipline builds on itself, much like math. Just as one can't understand multivariate calculus without algebra and single variable calculus, one cannot just jump into certain aspects of economics. I try my best to explain it, but I'm just a dumbass with a BS in international economics.
My issue with Apple could be that I either don't understand something myself or it really is that complicated, but Apple is an exception that doesn't disprove the rule as far as supply and demand.
Arguing something is an exception to the rule, gravity doesn't matter at the molecular level, is fine. My issue is when people either ignore or are ignorant of basic things like supply and demand and, the most annoying, belief that politics can somehow fulfill infinite wants with finite resources.
But you are correct. Anything that gets as complicated as economics does is open to debate and interpretation.
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