Poor Economics – efficacy of aid

Poor Economics – http://wp.me/p7vxeK-lQ

Defining the fundamentals away:

(US) How Long Can Economic Reality Be Ignored? – http://wp.me/p3zSiD-xyh

Economics for Humans

Economics for Humans by Julie A. Nelson – http://wp.me/p7IW4y-Pr

DSGE macro models criticism 4. Capital. | Real-World Economics Review Blog



TerrorismAs an economist I have a particularly dim view of terrorism. It simply isn’t pareto efficient. The terrorist gains publicity and an awareness of their”Cause”, but at the cost of destruction to invariably innocent bystanders, who typically have no interest in this Cause. The interest thus sparked, instead of becoming powerful and persuasive in support of this cause, is likely to provoke a backlash, resulting in a worse outcome for the terrorist than had he done nothing. When nothing is better than something, you know you are onto a loser…

There is, of course, the action that defies containment: by continuously and repeatedly engaging in terrorist acts, the terrorist forces the target to succumb to his will and adjust policy accordingly. By its nature though, terrorism is usually ill focused and so the recipients of this terror are themselves disperse (this is a “good outcome” – carnage is equalised across random members of the public. It is of course, only good in a relative way…)

Okay – enough economics…so we resort to diplomacy instead. Is this a useful decision? Is it possible to negotiate with groups for whom your very value system may be subject to distrust and contempt? To negotiate with groups for whom your idea of resolution bares an extraordinarily small resemblance to theirs…? Pursue a resolution when actually their aim may include never ending attacks…

Military outcomes: now we’re talking. Let’s bomb the hell out of them! See how resilient they are after a little justice comes their way…Justice for our fallen; justice for our lost, as we avenge our anguish. Yes, this may bring some respite, even a pause in hostilities, but seldom has history shown this as the way forwards in dealing with terrorism. For every terrorist slain, several more are usually willing to step forwards.

Politics: is this all we have? is this good enough? How do we persuade ourselves that this is where we should start from – rather than return to, after a decade of insurmountable loss? A decade of conflict, an era of asymmetric war..? Nothing is ideal, nothing – all we can aim to do is make our engagement with the process as “efficient” as possible. This is what Pareto would have likely advocated…

Economics x.0: the debate continues

In most ways, the term “modern economics” has lost its distinction: so many of today’s economists know of no other form of the discipline. The profession, pre Samuelson, is now purely viewed through the lens of history. We take the bits we believe we need and leave the rest. In this case, the “rest” is the subtlety, rather than the headline formulas – the nuance and interpretation that goes along with an understanding of resources (for so many early economists had direct experience of trade themselves.)maths and economics

Will Self, the noted irascible novelist, and no mean thinker himself, broadcast a radio essay recently in which he argued for a re-evaluation of the profession of economics. He had been a PPE (Politics, Philosophy and Economics) student at Oxford, and in his case finalised in the P + P parts of PPE – students drop one and focus on the other two for their last two years. His argument was that the profession itself needs to adopt “more of the P (here denoting Philosophy), and less of the E”.

Economics has become an alienating and exclusive subject, all too lost in its intricate and exhaustive formulas. Recently, in studying part time for an MSc Economics at a well-respected department, after half the taught course, I have found myself learning no new economics, but only struggling unpleasantly with a level of maths that seems relevant only for pure scientists – dealing with pure science. The students have little grasp of the core of economics, and wish only to master the equations in order to pass the qualification – and get good jobs. Broader knowledge and economic thinking (“Economic Thought” in the jargon of university departments) is offered in fewer departments these days, and if it is, is seen as an optional module, rather than the core that it is. Microeconomics seems exclusively to rely on “comparative statics” (holding one variable constant whilst you assess another, in a state of equilibrium, using differential calculus). Yet, given we are not rational beings, the irrationality of this seems wide of the mark. The recent trend in “Behavioural Economics” is a step in the right direction (intertwining psychology into statistical assessments of activities), but again, one isn’t certain if the exercise is just a ruse to further complicate the stats…I remain a fan of Schumpeter, and though for a time, he was head of the Econometric Society, he was also concerned to try and integrate more sociological understanding into his economic theories. The profession would not do too badly by trying to revitalise this, more fully integrationist approach, utilising more of the core social scientific developments, and perhaps fewer of the natural scientific attempts at mapping certainty.

Hence the debate goes on…..and on, for there seems no resolution. In order to be useful, the computationalists argue, we have to quantify our actions and be able to replicate them – anything else is simply hokum, and lacks both rigour and logic. Logic, the theorists demand, is the key to everything. So it may be…but with increasing numbers of economists stemming from maths and engineering, what they are bringing with them is not economics. Moreover, it is pushing away well-equipped critical thinkers from a discipline many regard as diseased with the false certainty of maths.

However, in a lifetime of work, study, family interactions and educational exposure, I have known very few people who are logical and rigorous, consistent and replicable. OK then – but what about the financial markets – surely their purpose can be seen here, comes the counterargument…again, if we had cracked the phenomena of financial dynamics, software programmes that have automated actions following trends’ analysis, would not bring august institutions to the ground in hours and there would likely be no business cycle. For those of you still guessing – we haven’t and they do…By embracing the lack of clarity, and “fuzziness” (a scientific term), perhaps we can promote the contemplative again…

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