Comment by econgeeker | Hacker News Reader

Comment by econgeeker | Hacker News Reader

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"Actually commonly accepted by modern economists"

This phrase is the anti-science. No science operates based on "commonly accepted". Consider how absurd it would be for any modern economist to claim that a form of money, which was banned in 1933, was the cause of prolonging the great depression.

How could the use of gold as money cause anything when it was banned by executive order, and the citizens were required to turn it in? Are you going to argue there was a massive underground black market. You don't make that argument, and from my studies no such market existed because people feared the repercussions of being caught with this banned substance.

http://en.wikipedia.org/wiki/Executive_Order_6102

"The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5,000 troy ounces (160 kg) of gold. When Campbell attempted to withdraw the gold Chase refused and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold.[4] Ultimately the prosecution of Campbell failed but the authority of federal government to seize gold was upheld."

A great response! Let me see if I can shed some more light on this topic.

"This phrase is the anti-science. No science operates based on \"commonly accepted\"."

Exactly! And, there is a very good reason for this. Economics is not a science. It is a social science that makes some use of the scientific method. Within this context, meta-analysis becomes extremely important for drawing pertinent conclusions. This is just a side note, because it seems that we have crossed our wires somewhere.

"Consider how absurd it would be for any modern economist to claim that a form of money, which was banned in 1933, was the cause of prolonging the great depression."

I should have been more clear. I was referring to the global economic instability (generally manifesting itself as a number of depressions across the Bretton Woods countries) that preceded the collapse of the Bretton Woods System.

I have to apologize, but when I see "gold standard" I immediately start my Bretton Woods rebuttal. It is a reflex reaction from spending too much time arguing with Austrian economists.

Of course, the grandparent post was referring to the Great Depression. Well, all is not lost. Dr. Scott Sumner (my favorite practicing economist) has a nice starter post on the Great Depression:

http://www.themoneyillusion.com/?p=4161

Why would economics not be a science?

I wouldn't say that phrase is actually anti-science.

Science is fundamentally a social institution where groups of people can great bodies of knowledge that can be used to make accurate predictions about the world. This body of knowledge is imperfect and so periodically people challenge it, making predictions where they hope their theories will be right and the standard model will be wrong. The thing is, there are many more ways to be wrong than to be right, and the large majority of people trying to challenge established knowledge are wrong.

Because of this we generally ought to use commonly accepted views until people challenging them can point to ways that their theories can make predictions that are superior to accepted theories. New theories might be intuitivly appealing, but if they can't pull their empirical weight they shouldn't get anywhere.

In fact, my reading of George Robinson's theory is that it would predict that the US economy would be much more unstable after going off the gold standard, when in fact it tended to be more unstable before we did. Now, if his book actually did predict "fewer but worse" recessions maybe we should look into it, but I'm worried that it doesn't.

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