They serve the same role that soothsayers and captive religions used to play.
… excepting those who call bad ideas "bad ideas" even if they help the rich:
https://www.nytimes.com/2024/04/12/opinion/inflation-economi...
Any "science" whose theories aren't falsifiable and cannot make useful predictions of future behavior isn't a science.
Since the economy is made up of individuals who make chaotic choices, I think anyone claiming to be able to predict inflation perfectly is a charlatan. Especially since businesses and consumers react to the inflation predictions themselves which make them obsolete the moment they are published.
Only an economist could write something so far from the truth.
Astronomers do predict how everything moves, with great precision. The 3-body problem is unsolvable IN GENERAL aka "it has no general closed-form solution, meaning there is no equation that always solves it"
However, all specific REAL cases are solvable, each with their own equations, not by substituting in one general equation. I could say a lot more about it but I know economists only pretend to understand math and I'd be wasting my time.
Besides, the contemporary economists specialize in gaslighting shamanism, an example of which is bringing up the 3-body problem into a discussion of the absolute impotence of academia economics compared to "we can do everything" technology fields.
https://en.m.wikipedia.org/wiki/Lyapunov_time
Thus its easy to imagine inflation not being predictable, especially since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
When economics will be able to give meaningful forecasts just 5 weeks in advance that would be a very massive step forward though.
> since the prediction is invalidated when it itself is released since people change their behavior chaotically in response.
That's exactly the problem the study of all dynamic systems face, including the n-body problem you mentioned above! Yet with proper models you can get very good approximation as you acknowledge yourself.
Since the stock market is not predictable, alongside many other things in our economy, and there is inherent error in the economic data collected since we only spend so much on surveys and continuously revise the data as new information arrives, and since we aren't running an authoritarian state that big brothers our citizens, expecting perfect inflation predictions is unrealistic.
Also, your claim that the stock market has a big influence on inflation is unsubstantiated.
Finally, you're fighting a strawman when talking about “perfect” inflation prediction or limited precision in data: nobody is asking for a .1% precision in inflation forecasts (though most economics seem to have a problem understanding the concept of significant figures and keep producing numbers with a ridiculous amount of details relative to the underlying error in the data), but the fact that nobody can predict a surge in inflation before it starts poses serious questions on the usefulness of the models. And don't tell me it was the stock market …
Those with insider information beg to differ. The stock portfolios of most in Congress beat Joe Average's by far, and these are people who only get little hints, no more.
> and since we aren't running an authoritarian state that big brothers our citizens,
However, our citizens are big bordered by private entities, and that results in a government blindsided by them.
> The stock market has a big impact on inflation, since it changes the value of people savings and thus how much they spend.
That's backwards. Fed policies target inflation and the stock market is totally obsessed with them, they drive the market. That is, inflation expectations have a big impact on the stock market via the Fed.
Claiming that inflation isn't predictable is a claim that the Fed mandates are fake and all these meetings, market interventions and rate changes are all for naught.
In fact, the Fed can control inflation... if they really wanted, if there were no conflicts of interest and if there was no political pressure from the government, war funding, etc.
How prices rise, decreasing purchasing power.
Notwithstanding that "science" isn't about forecasting, this is a Social Science, which shares the same pitfalls as Sociology and even Nutrition in most cases. What you have to work with is large datasets and logic, not observing and measuring material properties. Obviously that doesn't mean useful information can't be gleaned, nor that the scientific method isn't applied to research.
Ideas that we take for granted as a given now, like supply and demand, were not always. Data reflects it's a highly predictable effect. It's a moot point whether you want to call it science or not: data quality and interpretation matters.
Your use of science here is just a thought-terminating cliche meant to say "nooooooo don't pay attention to the facts!"
Economics makes all sorts of falsifiable statements, including (recently) on tariffs, and in the past, tax cuts and "expansionary austerity":
* https://en.wikipedia.org/wiki/Kansas_experiment
* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...
There were predictions in the 2010s where some folks said QE wouldn't be a big deal, but others were giving dire warnings:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
* https://www.hoover.org/research/open-letter-ben-bernanke
The real difficulty in economics is predicting what humans will do: Feynman once joked "Imagine how much harder physics would be if electrons had feelings"—or free will . Well, that's just the situation that economists are in.
For your inflation example, we know of causes such as demand-pull, cost-push, and expectations:
* https://en.wikipedia.org/wiki/Inflation#View_post-2000_to_pr...
The US saw demand-pull from the COVID recovery funding (to help kickstart the economy) and inflation was expected:
* https://www.piie.com/blogs/realtime-economic-issues-watch/in...
What wasn't expected was a simultaneous effect of cost-push factors due to energy and food prices spiking due to human actions:
* https://en.wikipedia.org/wiki/Russian_invasion_of_Ukraine
There was also a change in human behaviour between services demand and goods demand that had a long tail:
* https://www.frbsf.org/research-and-insights/data-and-indicat...
* https://www.frbsf.org/research-and-insights/publications/wor...
* https://www.frbsf.org/research-and-insights/publications/eco...
The difficulty is not in the predictions, but in accepting accurate ones from accurate models and living life and making policy based on them. Some folks simply do not wish to "accept" them, or wish to ignore them to pursue their own interests.
Climate change models are not inaccurate because people reject their accuracy and smother the findings.
Milei's policies curbed hyper-inflation in Argentina. Is that because he's a wizard? Is that because it's impossible to predict that drastically reducing deficit spending would reel in inflation? And if it's so fucking obvious that it would, what's the significance of denying those data points be scientific? They're either valid or not.
The theories that last e.g. supply-and-demand have lasted because they work. Guess what 20th century experiments didn't work?
Try some Milton Friedman [0] on for size:
Now the first step towards understanding the cause of inflation is to
recognize that it is always and everywhere a monetary phenomenon. It's
always and everywhere a result of too much money - of a more rapid
increase in the quantity of money than in output. [...] inflation in the
United States is made in Washington and nowhere else. [...] We have
evidence for the United States for over a hundred years; for Great Britain,
for two hundred years; for Sweden, for two hundred years. There has never
in history been an inflation that was not accompanied by an extremely rapid
increase in the quantity of money. There has never in history been an
extremely rapid increase in the quantity of money without an inflation.
We may quibble over the specifics and the numbers, just as one may quibble over what the exact percentage probability of rain is on any given day. Given that both economics and weather are chaotic systems, it is inherently difficult to make precise predictions in either domain. That does not mean that we cannot observe basic patterns and causal relationships.
More broadly, I dislike this form of modern journalism because I would rather read the source directly instead of having someone pre-digest the ideas for me which are thereafter coprophagically consumed. People read the headline, which is an oversimplification of an article which itself already oversimplifies, misrepresents, or misunderstands the source material, and all they repeat are the clickbait titles without bothering to look into the actual details.
I in fact looked up the book referenced in the opinion piece, and the reality of what the book asserts is far more nuanced than what the article quotes, to the point where I consider it a deliberate misrepresentation of the material:
[...] we have no compelling theory of inflation dynamics
that would allow us to understand the Phillips
correlation — or the historical shifts in the Phillips
curve — on anything like a deep level,” he writes.
What this means is that we also have no good way to
explain the two most important changes to the inflation
process that have taken place over the past fifty years;
namely, the near-constancy of inflation’s stochastic
trend after the mid-1990s, and the reduced sensitivity
of price inflation to real activity.
The fact that “we simply don’t know what caused the U.S.
economy to transition into an inflation regime” like the
one of 2021 and 2022 [...]
What all this implies is that we simply don’t know what
caused the US economy to transition into an inflation
regime where inflation became a mean-reverting process
and the price Phillips curve flattened.
This is not a collage, where you cut out passages from magazines and books and paste them together onto bristol board for artistic effect or political messaging. As a technical discipline the surrounding context and the integrity of the entire idea, as a whole, are important too.
This is conspiratorial anti science rhetoric, any econ student will tell you isn’t the case.
When you say something preposterous in the first place, saying “it's not perfectly accurate” a bit later is never going to be enough.
- libertarianism derives from a fringe branch of economics (the Austrian school) which is an heterodoxy.
- but mainstream economics, the classical branch then the neoclassical synthesis, is nonetheless heavily ideological (markets being seen as inherently good, even though they are often imperfect in the real world). And when you have a clique going as far as making their own apocryphal “Nobel prize” in order to promote their views and establish scientific credibility to political leaders, calling it “propaganda” is not entirely unwarranted.