
Blame Economists for the Mess We’re In - pseudolus
https://www.nytimes.com/2019/08/24/opinion/sunday/economics-milton-friedman.html
======
gojomo
Applebaum tries to finger "elfin libertarian" Milton Friedman as "the most
important figure". But the specific policies he attributes to Friedman don't
seem so bad:

* end the draft, replace with well-paid all-volunteer military

* let international exchange rates vary

* evaluate regulations based on the cost-to-save-a-life

Does Applebaum want to bring back the draft? Put exchange rates back under
direct political control (as is attempted in places like Venezuela &
Argentina)? Have a purely "feel-it-in-our-guts" approach to regulation,
without regard to whether the same $X million dollars in imposed costs could
save 1 life in one case, or 100 lives somewhere else?

~~~
klez
There are reasons the draft can be a good idea.

When the military is only voluntary you get a military with specific ideas
about foreign policy and how you see the enemy, whoever they are.

If you introduce the draft you have a more heterogenous military.

~~~
zarkov99
Absolutely. A draft would also force Americans of all backgrounds to interact
with each other in an environment that builds cohesion. It would also give
even the most powerful of Americans skin in the game when it comes to starting
wars.

~~~
gonzo41
This only works if there isn't an out for folk with bone spurs.

~~~
zarkov99
How widespread were those sort of shenanigans back when the draft was on, do
you know?

~~~
pintxo
Wasn’t the last president who has served bush senior? This would mean it‘s
rather common in some circles.

~~~
pmiller2
Barack Obama wasn’t old enough to serve in Vietnam, so he wouldn’t have needed
to dodge serving. In about 20 years, provided the draft doesn’t get
reinstated, we’re likely to have more presidents who never served.

------
logicchains
I think there's some misunderstanding due to a disconnect between what
economics values and what Joe Public values. For instance, there's a
relatively un-controversial mainstream economic theory called
[https://en.wikipedia.org/wiki/Factor_price_equalization](https://en.wikipedia.org/wiki/Factor_price_equalization),
which predicts that "When two countries enter a free trade agreement, wages
for identical jobs in both countries tend to approach each other" (e.g. low-
skilled workers in the rich country are now competing with low-skilled workers
in the poor country). Economists are fine with this, because the model
predicts an overall increase in global standard of living. I suspect however
if you asked the voters "would you support a policy that will reduce the
standard of living for less-skilled Americans but lift hundreds of millions of
people in Asia out of poverty", support would be far from unanimous.

------
trentnix
We in the USA live in the most gilded time in history, partially thanks to
free markets and all the reasons the author bemoans. All income levels
experience a level of prosperity without equal. Our poor are obese,
unemployment is low, and the access to career altering knowledge and skills
has never been better. A dip in the economy is overdue yet here we are, still
experiencing a historic period of growth and economic strength.

But a presidential election is coming and the side not in power must convince
everyone they are miserable. And since the economy historically ebbs and
flows, “experts” will line up to write articles about the upcoming sunset so
they can preen about when it inevitably does.

All the while our government is 22 trillion in debt and nobody cares. The left
claims it’s because we don’t tax enough and then proposes programs that would
explode the debt. And the right claims we spend too much yet, on their watch,
deficits have never been larger despite record receipts.

~~~
Ozzie_osman
Poor being obese is not a sign of prosperity. There are many countries that
are not prosperous at all with obesity problems. Obesity can be due to
genetics, lack of access to healthy food or time for recreation, etc.

High unemployment doesn't mean much if real wages are dropping for most people
and necessities like housing or Healthcare are becoming less affordable even
for those employed.

I agree that there are people out there incentives to make things seem worse
than they are, but I so think things are pretty bad.

~~~
trentnix
Once upon a time being poor absolutely meant being hungry. No more.

That is an utterly _remarkable_ change and is unprecedented in all of human
history. And so many wizards of smart assured the people of their time that
population growth was going to lead to famine. They were dead-ass wrong.

~~~
krilly
I think we can all agree This is due to technological advancement, not
economics, which is what we are discussing

~~~
gbacon
Reasons why said technological advancement occurs in some times and places but
not others is most definitely a question of economics.

------
abhinai
Blame no one. I sincerely doubt if humans truly understand economics. I mean
we have the data for last 100 years. Maybe more. And everything we know today
has been inferred from this data. But honestly, how do we know how economy is
supposed to behave over a 20 year period in a world of high frequency trading,
automated trading, disruptive technologies, globalization, ability to work
remotely, a Continental currency and the list goes on. We don't know what we
don't know. We just have to accept that.

~~~
JumpCrisscross
> _I sincerely doubt if humans truly understand economics_

This exaggerates our ignorance. Microeconomics is well understood, down to
producing testable hypotheses. In macroeconomics, we can draw broad lessons.
We know, with respect to elected governments, economies with independent
central banks outperform those with political ones. We know there is a
relationship between interest rates, money supply and inflation, even if we
can’t precisely predict it.

Macroeconomics is largely qualitative. It tells us directions, but not
precisely. (Microeconomics is properly a science, offering a full set of
experimental tools and falsifiable predictions.)

~~~
tonyedgecombe
_We know, with respect to elected governments, economies with independent
central banks outperform those with political ones._

We know there is a correlation, that's all. I happen to think that an
independent central bank is a good idea but that is little more than a guess
based on my low opinion of the political class.

------
pessimizer
Or don't, because we're not listening to economists in general, but people who
are employed/supported by the very wealthy (just like lobbyists and
thinktanks) to give politicians something to say publicly when they do things
that the very wealthy want them to do.

~~~
s_Hogg
Economics as a discipline has been pretty relaxed about the need for state
intervention in some cases and the idea that some government debt can be good
- these aren't wacky, out-there ideas in the panoply of economic thought.

But they absolutely are when you turn on the TV and listen to the Koch
brothers go on and on about taxes. So many people just learn the bit of
economics that supports their world view and then repeat that ad nauseam. Then
the discipline as a whole gets the blame, because no-one stops to think that
the messenger is in fact a self-interested (surprise!!!) idiot.

------
ukj
Nobody pays attention to Goodman's problem of induction [1].

The truth is that nobody really knows how we ought to arrange society, and
which arrangement is likely to work. Everybody is guessing!

The moment you arrange the system one way, people game it and your economic
model no longer applies. What worked in 1999 needs not work in 2019.

Blaming the people you chose to listen to is just another form of avoiding the
elephant in the room - that you don't know how to decide who to listen to.

1\.
[https://en.wikipedia.org/wiki/New_riddle_of_induction](https://en.wikipedia.org/wiki/New_riddle_of_induction)

~~~
gbacon
Related:

 _To act on the belief that we possess the knowledge and the power which
enable us to shape the processes of society entirely to our liking, knowledge
which in fact we do_ not _possess, is likely to make us do much harm. In the
physical sciences there may be little objection to trying to do the
impossible; one might even feel that one ought not to discourage the over-
confident because their experiments may after all produce some new insights.
But in the social field the erroneous belief that the exercise of some power
would have beneficial consequences is likely to lead to a new power to coerce
other men being conferred on some authority. Even if such power is not in
itself bad, its exercise is likely to impede the functioning of those
spontaneous ordering forces by which, without understanding them, man is in
fact so largely assisted in the pursuit of his aims. We are only beginning to
understand on how subtle a communication system the functioning of an advanced
industrial society is based – a communications system which we call the market
and which turns out to be a more efficient mechanism for digesting dispersed
information than any that man has deliberately designed._

[https://www.nobelprize.org/prizes/economic-
sciences/1974/hay...](https://www.nobelprize.org/prizes/economic-
sciences/1974/hayek/lecture/)

~~~
ukj
"Iatrogenics" is a handy metaphor to capture the sentiment above.

[https://en.wikipedia.org/wiki/Iatrogenesis](https://en.wikipedia.org/wiki/Iatrogenesis)

------
gbacon
Peter Boettke responds[0] by quoting Hayek’s Nobel banquet speech in which he
warned about economists making pronouncements outside their respective areas
of expertise

 _[Hayek’s worry about establishing the Prize in economics] is that the Nobel
Prize confers on an individual an authority which in economics no man ought to
possess._

 _This does not matter in the natural sciences. Here the influence exercised
by an individual is chiefly an influence on his fellow experts; and they will
soon cut him down to size if he exceeds his competence._

 _But the influence of the economist that mainly matters is an influence over
laymen: politicians, journalists, civil servants and the public generally._

and pointing out the op-ed piece’s mistaken diagnosis.

 _The problem with narratives like Appelbaum’s isn’t that he is suspicious of
the pretensions of economists, it is that he is blaming the wrong culprit for
the mess we’re in. Here it is important that every one of these critics read
Gregory Mankiw’s very important piece[1], published before the financial
crisis, on the macroeconomist as scientists (read Chicago New Classical and
Monetarists) and the macroeconomists as engineers (read MIT /Harvard Keynesian
and New Keynesians)._

[0]: [https://www.aier.org/article/blame-
economists](https://www.aier.org/article/blame-economists)

[1]:
[https://www.aeaweb.org/articles?id=10.1257/jep.20.4.29](https://www.aeaweb.org/articles?id=10.1257/jep.20.4.29)

------
inflatableDodo
One of the many wonders of policy based evidence is that if the policy goes
tits up, you can still always blame whichever profession you cherry picked.

------
Doubl
Isn't economics one of those disciplines where the more seriously a prediction
is taken the less likely it is to be accurate. If people believe a prediction
they alter their behavior and as a result the prediction fails.

~~~
benj111
If I predict your car is going to crash based on the fact that the tyres are
bald, the brakes are worn, and the steering wheel isnt attached. You probably
(if you take the prediction seriously) want have a crash, because you'll get
the car fixed.

So it isn't a particular problem of economics. The problem of economics is
testing theories. I would guess that most economists have a theory that never
gets tested, because you can't test them in a lab, only in real life, the
depth of knowledge just isnt there to know what will work, what won't, and
popular but wrong theories aren't proven wrong fast enough. I cant reasonably
say whether bald tyres will cause a crash, because no ones seen bald tyres
before.

------
rayiner
What are Mr. Applebaum's qualifications to address such a weighty topic? He
has a B.A. in history and seems to have been a journalist throughout his
relatively short career:
[https://en.wikipedia.org/wiki/Binyamin_Appelbaum](https://en.wikipedia.org/wiki/Binyamin_Appelbaum).

~~~
repsilat
His arguments should be qualification enough. Of course, one's arguments are
often not qualification enough _to be listened to_ , but publication in the
New York Times adds some weight on that side -- they lend him credibility, and
if his arguments are well received he pays it back, and if they aren't he
defaults and both he and they are poorer for it.

------
patientplatypus
From 08-10 I was a flunky analyst at the federal reserve. First job out of
undergrad and the first w2 I ever took home. The most important thing I
learned is that the people in charge don’t know what they’re doing. The second
most important thing I learned is that the same people will claim they do for
money.

~~~
samsonradu
Some scary comments right here.

------
dcolkitt
For those who believe that economics has never done anything useful or
benefits the common man, here's a small counterclaim.

The widespread adoption of index funds was absolutely an outgrowth of academic
financial economics. In particular the efficient market hypothesis and CAPM
theories, as well as empirical research studying the (lack of) performance of
active investment managers.

In the US alone, index funds now make up more than $3 trillion of assets.
That's saving investors more than $30 billion in wasteful fees every single
year. (Which doesn't even account for the downward pressure on fees for active
funds.) Moreover this revolution has benefited ordinary and small investors
the most.

~~~
jwatt
It no doubt benefits individual investors, but if index funds were to swallow
up the market the main benefit of capitalism - the efficient allocation of
capital - would at some point arguably be destroyed. That raises the question
of whether/when a centrally planned economy would start to outperform such a
passive system?

~~~
thekyle
If index funds were to become an inefficient way to allocate capital then
their returns would become subpar and money would go elsewhere.

------
cdbyr
I think this misses the point and lets legislators off too easy. Economics
tends to be concerned with maximizing the size of the pie, not distribution of
benefits. That’s generally seen as government’s domain, with the idea that
(with proper distribution) growth can genuinely make everyone better off. As
it happens, legislators (and their appointees) seem to be willing to implement
the growth-oriented ideas, but not the programs that retrain/etc people who
lost out.

Tangentially, there are some nice lists out there of things economists do
agree on - here is one of them: [http://gregmankiw.blogspot.com/2009/02/news-
flash-economists...](http://gregmankiw.blogspot.com/2009/02/news-flash-
economists-agree.html?m=1)

------
sleepysysadmin
This article is the definition of what's wrong with journalism. So many
assumptions that aren't supported with facts and just proposed as facts; with
an extreme amount of one sided bias.

If you actually 'understand economics' which is more about 'understanding that
you don't understand economics'

One thing is for sure is that we are wealthier now than ever before in
history. In 1969 how many households had infinite knowledge at their hands?
How many even had basic appliances?

>The rise of economics is a primary reason for the rise of inequality.

It's literally supply/demand.
[https://en.wikipedia.org/wiki/Labor_force_in_the_United_Stat...](https://en.wikipedia.org/wiki/Labor_force_in_the_United_States#/media/File:US_Labor_Participation_Rate_by_gender.svg)

As women entered the workforce, men left the workforce. Which isn't a bad
thing, talented women are now contributing to society and displaced the
incompetent men.

Those men however are still looking for a job and so we have greater supply
and same demand. It means those people at minimum wage are competing with each
other and driving their wages down.

------
known
[https://www.thebalance.com/u-s-inflation-rate-history-by-
yea...](https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-
forecast-3306093) says otherwise

------
einhverfr
If you have the time and patience to listen to it I strongly recommend
listening to Mark Blyth's 2016 lecture entitled "Global Trumpism" where as a
political economist he discusses the implications of Keynsian economics,
Neoliberalism and the class revolt we now see around the world.

[https://www.youtube.com/watch?v=Bkm2Vfj42FY](https://www.youtube.com/watch?v=Bkm2Vfj42FY)

~~~
gbacon
Which individual or group calls themselves neoliberal?

~~~
einhverfr
In this regard, he was referring to the transformations in policy away from
full employment as a target towards zero inflation as a target. These policies
began I think under Ford, but really took off under Reagan.

------
mrozel
I get tired of 'blame economist' articles. They're almost always cheap and
circumstantial. People often forget that Economics is considered a philosophy
and not a science. Sure, its great for coming up with ideas and theories but
with this perspective would never put your faith into it like you would STEM.

~~~
sprafa
Absolutely, but politicians use it as if it was scientifically reliable

~~~
Agathos
Politicians ignore economists unless and until they happen to propose
something politically convenient.

~~~
sprafa
Also true

------
gbacon
> Markets are constructed by people, for purposes chosen by people — and
> people can change the rules.

Economic law is immutable. There is no changing the law of demand. Price caps
will always create shortages and price floors gluts. Even Marx knew this and
tried to paper over it with nonsense about historical determinism and the rise
of the New Socialist Man.

------
lota-putty
Blame Economists/Scientists

Blame Law/Politicians

Blame News/Social Media

...

Blame anyone but yourself?

But blaming doesn't score much on HN, no?

~~~
alecco
Like people don't have the option to vote.

------
stillbourne
No, let's blame the real culprit, ignorance.

1\. Using 19th century trade implements (tariffs) to wage a 21st century trade
war was a dumb idea.

2\. Bernake and Powell did too little to raise interest rates higher. While it
would have been painful to do so, not doing it will make the next recession
more difficult to weather and will likely compound recession with a liquidity
crisis.

3\. We have learned nothing from the last 40 years of boom and bust and are to
scared of to end laissez faire capitalism to prevent it from happening again.

4\. Because economics is not taught or is taught poorly the general public
don't understand the difference between debt instruments and debt. They then
shout ignorant stupidity into their favorite echo chamber and when it echos
back they nod in agreement. When their idiot politicians repeat these dumb
ideas back to them later they can do nothing but nod their heads in unison and
cast their vote for another idiot.

------
alecco
Non-paywall [https://archive.is/4dn8na](https://archive.is/4dn8na)

But don't even bother. It has no clear reasoning, only a handful of anecdotes
and hurling an insult to Friedman. It's a weak hit piece to sell you a book.
NYT is a joke.

------
techntoke
I blame politicians.

------
codingslave
1980s/1990s economists:

"Here is what we will do, we will pass laws and make it easy to outsource all
of the jobs, and then we will import tons of foreign labor. Then, our gracious
corporations will happily retrain all of our workers for new jobs with
completely new skills. Mid/Late career workers can change on a dime right?
Next, when the economy crashes in 2008, we will print unprecedented levels of
money to save the economy by pushing up financial assets. That money will
mostly end up in the hands of the upper class. Then we will scream wealth
inequality! Telling those disenfranchised middle class citizens that it was
not us who created such a disparity... we are not the enemy. As China
continues to destroy and hollow our economy, we will paint all dissenting
politicians as crazies, surely China's unprecedented wealth did not came at
our own cost. We need more free trade, more immigration, and more
outsourcing."

~~~
mirimir
> ... we will pass laws and make it easy to outsource all of the jobs ...

Not just laws. During the Reagan era, there were US government programs to
promote outsourcing jobs. And to coach firms on how to do it.

~~~
barney54
That’s an interesting claim. I’d like to read more about it. Do you have a
citation?

~~~
mirimir
I can't find it now, but I recall an article about it from the mid 80s. A
reporter, posing as an executive, attended a government-run
training/conference. I think that it was Michael Moore, but I'm not sure.

------
chiefalchemist
> "Why did America listen to the people who thought we needed “more
> millionaires and more bankrupts?”"

Pardon my somewhat unorthodox HN tone but who is "America" here? I'll tell you
who it's not...plenty of those who voted for the current POTUS.

There was - and still is? - an economic narrative that's pumped out of W.DC
via the the corporate media shoveling machine. That spin is disconnected from
the reality that plenty of people are experiencing.

Regardless of the static thinking of leading economists, those theories have
been tested time and again, and the market has spoken. There's a dark sad
irony to the NYT taking notice of reality; mind you it's merely an op-ed.

