Have seen very little discussion or interest in this year's economics prize compared to previous years'. Wonder why that is.
Romer's work could be politically contentious if it wasn't so abstract and embedded in a history of technical economic ideas about development that way back when (in the Solow era) echoed the basic insights and biases of micro 101. Of course, HN (and everyone else) wants to have its own ideas about development and hamper on how "unrealistic" micro 101 is -- so development theory is never discussed.
Then there's charter cities, which is like Urbit for non-nerds.
Well, there's this guy called Paul Romer who thinks that too:
"Paul Romer says he really hadn’t planned to trash macroeconomics as a math-obsessed pseudoscience. Or infuriate countless colleagues. It just sort of happened."
https://www.bloomberg.com/news/articles/2016-11-18/blah-blah...
>Romer's work could be politically contentious
It is politically contentious. He wrote a paper on bankruptcy for profit, ffs. The Steve Keen loathing neoliberals on HN reading that sentence probably can't even conceive of such a thing being possible.
http://pages.stern.nyu.edu/~promer/Looting.pdf
Alan Greenspan famously, when challenged, also couldn't wrap his head around Akerlof and Romer's paper, but he's a high profile economist so naturally as a lowly programmer and "Steve Keen fan" I'm not allowed to call him out on it ;-)
It was written in 1994, but sums up the financial crisis pretty well.
If I understand his critique correctly, it's that macroeconomics has used mathematical rigor and internal consistency to mask the common-sense observation that the models' actual connections to the real world phenomena they seek to simulate have almost completely eroded away.
I, for one, can think of a couple of reasons that vein of criticism might not be the sort of argument HN is primed to embrace.
Piketty - 163 results
Krugman - 426 results
Milton Friedman - 69 results
Econtalk - 24 results
Tyler Cowen - 88 results
Bengt Holmström - 8 results
Keynes : 86
Adam Smith : 106
Is it common to assume economic growth can proceed at an infinite rate?
"Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist."
Can global economic growth proceed at a modest positive average rate for centuries? It might not, but there’s no obvious reason to believe it can’t.
I quoted the sentence that claims this guys main discovery was that the process of economic growth does not "explode without limit".
It isn't just a hypothetical exercise. This sort of relationship with returns over time is common in both economics and finance. I, for example, experience it as a futures trader. It's not uncommon for successful day traders who intentionally limit their trading capital to get returns averaging 1% per day. Those returns, however, are completely infeasible when talking about trading capital even on the small end of mutual funds. When your trading capital increases, it becomes much harder to grow at the same rate, and returns rates diminish greatly. But they still may have positive returns.
No economist I know of would ever presume that growth can happen without limit or diminishing returns. Reasonable economists will inevitably disagree on parameterization of their models though, which is entirely to be expected.
Infinite rate = adding wealth at infinity dollars per hour. Clearly absurd.
Unbounded growth = adding 100 dollar per hour without an end date in sight. I can argue this is feasible:
Let's say you and I are trading loaves and fishes between us (using dollars as a medium of exchange). This makes a stable economy grounded in tangible goods. Then we introduce notion of intellectual property: I make paintings and you make software. Each year you make better software and sell it to me at higher price, then I make better paintings and sell them to you for the higher price. The price of bread and fish remains the same, so when the government comes in to measure the CPI they will see that the food price did not go up, therefore there is no inflation. So the dollar value of all transactions is going up, but the inflation is not going up. This can easily go on forever because it doesn't rely on any kind of natural resource that could be exhausted, apart from your hunger for better paintings and my desire for better software.
It has struck me, though, that this standard of living increase is actually dependent upon a very specific system of production. I live in Japan and I have an interest in traditional Japanese clothing. I can buy traditional Japanese clothing made the same way it was always made, but I can't afford it. So in a way, we are not comparing apples to apples when we measure our increase in standard of living. The very fact that an artisan making traditional goods in the traditional way desires the same increase in standard of living as I have means that their goods are at least as expensive (as a ratio of average income) as they always were. Sometimes because they have a very limited market, their prices are considerably higher in order to achieve an acceptable income.
In that way, I think economic growth is a bit of an illusion. We can still improve efficiency a lot -- how many people are limited in their life because they simply lack capital? I would argue that the vast majority of people on the planet fall into this category. We can grow the economy in very real terms by ensuring that more people get access to more capital. But a lot of it is smoke and mirrors. Externalities are not accounted for -- whether it be environmental degradation or simply loss of lifestyle and culture. Our march of progress steamrolls things that are valuable, without much thought.
But today you have a much higher chance of actually having something to wear independently from the scale of your income. 100 years ago having _something_ to wear was a luxury. Today you can buy it at any quality/price you'd like.