Two Types of Economists: Fact-based vs. Assumption/Fantasy-based

Brad Delong expresses my thoughts quite well:

One of the dirty secrets of economics is that there is no such thing as “economic theory.” There is simply no set of bedrock principles on which one can base calculations that illuminate real-world economic outcomes. We should bear in mind this constraint on economic knowledge as the global drive for fiscal austerity shifts into top gear.

Unlike economists, biologists, for example, know that every cell functions according to instructions for protein synthesis encoded in its DNA. Chemists begin with what the Heisenberg and Pauli principles, plus the three-dimensionality of space, tell us about stable electron configurations. Physicists start with the four fundamental forces of nature.

Economists have none of that. The “economic principles” underpinning their theories are a fraud – not fundamental truths but mere knobs that are twiddled and tuned so that the “right” conclusions come out of the analysis.

The “right” conclusions depend on which of two types of economist you are. One type chooses, for non-economic and non-scientific reasons, a political stance and a set of political allies, and twiddles and tunes his or her assumptions until they yield conclusions that fit their stance and please their allies. The other type takes the carcass of history, throws it into the pot, turns up the heat, and boils it down, hoping that the bones will yield lessons and suggest principles to guide our civilization’s voters, bureaucrats, and politicians as they slouch toward utopia.

Not surprisingly, I believe that only the second kind of economist has anything useful to say.

From Project Syndicate.

One thought on “Two Types of Economists: Fact-based vs. Assumption/Fantasy-based

  1. WOW!!! I loved this! I loved economics in high school taking both AP Micro and AP Macro and earning credits so that I didn’t have to take either in college despite earning a BBA from Baruch College. Wish I still HAD to take them because I bet I would have enjoyed them just as much, if not more. Now as I embark on my latest business of starting a local barter exchange, I realize the economic theory so necessary to running this business and I wonder if I will one day call myself “an economist”. I sure hope so 🙂 By then there will probably be some regulation preventing me whereas now, it seems like I can call myself an economist working for Barter Matchmakers. Please correct me if I am wrong on that point.

    I definitely fall into the 2nd category and so I will continue to research hoping to spot the trends that will guide my future decisions and those I am blessed to have as an audience for what I have to say.

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