from the map is not the territory
Rigour and consistency are the two most powerful words in economics today.
They have undeniable virtues, but for economists they have particular interpretations. Consistency means that any statement about the world must be made in the light of a comprehensive descriptive theory of the world. Rigour means that the only valid claims are logical deductions from specified assumptions. Consistency is therefore an invitation to ideology, rigour an invitation to mathematics.
Consistency and rigour are features of a deductive approach, which draws conclusions from a group of axioms – and whose empirical relevance depends entirely on the universal validity of the axioms. The only descriptions that fully meet the requirements of consistency and rigour are complete artificial worlds, like those of Grand Theft Auto, which can ‘be put on a computer and run’.
For many people, deductive reasoning is the mark of science, while induction – in which the argument is derived from the subject matter – is the characteristic method of history or literary criticism. But this is an artificial, exaggerated distinction. ‘The first siren of beauty’, says Cochrane, ‘is logical consistency’. It seems impossible that anyone acquainted with great human achievements – whether in the arts, the humanities or the sciences – could really believe that the first siren of beauty is consistency. This is not how Shakespeare, Mozart or Picasso – or Newton or Darwin – approached their task.
The issue is therefore not mathematics versus poetry. Deductive reasoning of any kind necessarily draws on mathematics and formal logic; inductive reasoning is based on experience and above all on careful observation and may, or may not, make use of statistics and mathematics.
huge.. this is huge. we've lost sight of mathematical thinking... sold it out to school math. mathematical thinking in its true form is both deductive and inductive. it's thinking.
Empirical work in economics, of which there is a great deal, predominantly consists of the statistical analysis of large data sets compiled by other people.
The modern economist is the clinician with no patients, the engineer with no projects. And since these economists do not appear to engage with the issues that confront real businesses and actual households, the clients do not come.
insert the modern school above for the modern economist
Since the followers of this approach believe strongly in the premise – to deny that there is a single pre-specified model that determines the evolution of economic series would, as they see it, be to deny that there could be a science of economics – they accept the conclusion that expectations are formed by a process consistent with general knowledge of that model. It is by no means the first time that people blinded by faith or ideology have pursued false premises to absurd conclusions – and, like their religious and political predecessors, come to believe that those who disagree are driven by ‘woeful ignorance or intentional disregard’.
This is not science, however, but its opposite. Properly conducted science is always provisional, and open to revision in the light of new data or experience: but much of modern macroeconomics tortures data to demonstrate consistency with an a priori world view or elaborates the definition of rationality to render it consistent with any observed behaviour.
More eclectic analysis would require not just deductive logic but also an understanding of processes of belief formation, anthropology, psychology and organisational behaviour, and meticulous observation of what people, businesses, and governments actually do. You could learn nothing about how these things influence prices if you started with the proposition that deviations from a specific theory of price determination are ‘too small to matter’ because all that is knowable is already known and therefore ‘in the price’. And that is why today’s students do, in fact, learn nothing about these things, except perhaps from extra-curricular reading.
There is a – trivial – sense in which the deviations from efficient markets are too small to matter – and a more important sense in which these deviations are the principal thing that matters.
zoom out even more... than economics..
to school. to that thing we spend 12+ years, 7 hours a day on. that thing that not only takes our time, but forms the core of how we think, or in many cases, how we learn not to think. for the rest of our lives.
we need to take notice that this publicly prescribed curriculum, (because we believe anything else is too small to matter), and all our focus of time/energy/people on getting better at delivering this prescribed curriculum, is not the silver bullet we are so desperately seeking. but rather, it has become the thing holding us captive/hostage/addicted to a false assumption that it is the thing that matters. it has become the thing that is keeping us too busy to notice something that would otherwise appear so obvious. we have lost the art of zooming out. we're so inclined toward mindlessness.
we need to realize that our religious following of this publicly prescribed curriculum, and all the verbiage and credentialing, that goes along with it throughout the rest of our life, is creating a world that knows not mathematical/scientific thinking, because it has boxed them up in a predictable and easy to measure form. we are measuring and proving ourselves as if we were living in a fake world. we are not listening to reality, because it doesn't fit our premises and assumptions. this is not only doing less and less good in the world toward efficiency, but it's doing quite extensive damage to the human spirit. we have come to accept such a limited view of normal. and so daily, we succumb millions of fresh minds to that mold.
we simply need to start respectfully questioning everything.
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