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Comment by Joeri | Hacker News Reader

This article really demonstrates how meaningless most economics reporting is, it's nearly as bad as markets/finance reporting.

The problem is not with the reporting, it’s with the field. Economics is pseudoscience. It has all the trappings but none of the explanatory or predictive abilities. So you get articles like these that use a lot of jargon pretending like they’re making a strong case, but there’s no strong consensus position reached here beyond the bare observables.

Economics can’t be a science yet. It is a branch of sociology, modelling the economic behavior of people, and we lack the sociological insight to do that currently.

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Economics is not pseudoscience. Pseudoscience is essential oils being marketed as medicine.

Economics is a social science, just like anthropology, archaeology, history, linguistics, political science, psychology, sociology, etc. etc.

It's never going to be something with Laws of Gravity or the like, because humans are never wholly predictable or rational creatures. But that doesn't mean we can't come up with models that explain markets a majority of the time, in a macro sense.

Why do you think central bank policy has been able to prevent a depression from occurring over the last 90 years, when in the past they were a regular occurrence? That's economics in action. Just because it lacks the certainty of computer science doesn't mean you can throw out the baby with the bath water.

>Economics is a social science, just like anthropology, archaeology, history, linguistics

Unlike those sciences there's a lot of money in economics invested in certain conclusions, though.

It does not help Walmart's bottom line, for instance, if everybody stops believing that raising the minimum wage causes unemployment.

There aren't equivalent controversies with money behind them like in other social sciences (and other social sciences don't get paid as much).

We've avoided a major depression so far, but our institutional knowledge only spans a couple generations. There are very few people left who lived through the Great Depression. That there is active debate regarding policies that will prevent future depressions is not encouraging. Those who learn history are cursed to watch as history repeats.

> Why do you think central bank policy has been able to prevent a depression from occurring over the last 90 years, when in the past they were a regular occurrence?

There is a strong school of thought that argues that central bank policy has created _more_ and _worse_ depressions than before.

The fact that we can now debate if a central bank is a good thing or a bad thing is evidence that it's all pseudoscience.

People debate whether or not global warming is happening (or whether its man made). Does that mean the field behind global warming research a pseudoscience (by your definition)?

> Economics can’t be a science yet

Macroeconomics, yes. Microeconomics is a proper science. It has theories which make predictions which can be demonstrated in experiments.

Probably worth reading Debunking Economics before being sold on all microeconomic ideas. Particularly anything to do with the theory of the firm.

> Particularly anything to do with the theory of the firm

Theory of the firm is closer to a hypothesis. I’m not sure how one would experimentally verity its claims.

I don't think that makes it a science.

When Karl Popper criticised economics (and freudianism) for being a pseudo-science, there wasn't a real macro-micro divide. Adam Smith, Ricardo and the like were essentially micro-economists.

You can experiment in some very small (raise the price of a product on a shelf) ways. The bulk of economics is about how these small components interact as a large dynamic. When it comes to predictions like "increasing minimum wage will lead to increased unemployment," it's never been adequately demonstrated experimentally.

> The bulk of economics is about how these small components interact as a large dynamic

If I’m setting pricing and volumes at a firm, I don’t give a rat’s ass about the larger dynamics. I want to know how production variables will impact sales. For this, I can A/B test and rely on a deep corpus of research on queueing theory, supply and demand network and latency models, and logistical models.

> I don’t give a rat’s ass about the larger dynamics

But just because you don't, doesn't mean they don't exist/matter. You can do a lot on your individual micro-scale, but you will have a very hard time understanding how these changes affect the overall economy on a macro scale.

For all we know, "the market" is pretty much just a giant black box. It's not totally black, but we have a very hard time properly defining, or even quantifying, what's actually going on there.

> you will have a very hard time understanding how these changes affect the overall economy on a macro scale

We understand the relationship between the temperature and pressure of ideal gasses without a precise presentation of quantum mechanics. Similarly, we can produce useful production functions without comprehending the complexity of the bulk.

I'm not sure I can agree with that comparison because physics, even quantum mechanics, are a still considered a natural science.

Economics, on the other hand, are usually considered part of the social sciences, due to the heavy sociological influences, which make modeling, predicting and testing extremely difficult.

For all the talk of "the market", especially in the financial sector and by glorifying certain successful individuals, the reality seems to be far less understood than many people would admit to. Probably has to do with these people usually trying to sell their services/financial products with a reputation for "understanding and mastering the market".

You cant replicate an A/B test in economics.

> I don't think that makes it a science.

Hypothesis, experimentation, the ability to negate/falsify, some predictive ability ... Either these things are not true, or your bar for "being a science" is higher than most.

> Economics can’t be a science yet. It is a branch of sociology

Sociology is a science, and so branches of it are also science. There are differences between the hard/soft or natural/social sciences but that doesn't mean that soft science isn't science.

>> Economics is pseudoscience

I was cranky at The Economist when I wrote that and I guess from the upvotes other people were too. It's a crappy article, and they shouldn't publish crap... I like the Economist, on balance.

Anyway, interesting that you bring up pseudoscience. I think most good economists, or economists on good days prefer to think of economics as just not science. Some of the founders of modern economics were also the founders of modern anti-scientism. They were the generation that experienced bloody wars between marxism, liberalism, and a highly pseudoscientific nazism. They were all backed by pseudoscientific "theories," with key elements leaning heavily on economics. ..actual wars. Karl Popper is IMO, the iconic guardian of the fine line.

These are the same intellectuals that The Economist's position alway alludes to when they get ideological themselves. open society, liberalism. It's actually not ironic. Even Hayek & Popper were sort of confused cases, having been drawn into all sorts of utopian stuff. I think it was the time. Even libertarians/anarchists became obsessed with boring technical philosophy, and all the schismatic flavours hate one another.

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