
How did we geeks become experts on macroeconomics? - lbrandy
http://lbrandy.com/blog/2009/02/how-did-we-geeks-become-experts-on-macroeconomics/
======
falsestprophet
_"The more interesting question is why? Why the false expertise? Why the heir
of authority? Why the certainty?. The conversations tend to be extremely
emotional and defensive. This doesn’t happen in other fields. Programmers love
to talk about quantum physics, the speed of light, and black holes. But you
won’t find geeks getting all authoritative on the finer points of the event
horizon? Why? Because that shit is complicated, beyond their knowledge, and
they know it. This doesn’t happen with macroeconomics. Don’t kid yourself.
It’s complicated, too. And it’s beyond your knowledge. So what’s the
difference?

Here’s my theory. Macro-economics is:

    
    
      Easy to grasp (the basic principles, anyway)
      Experiments are pretty much impossible (making being disproven relatively rare)
    

The first makes you think you are an expert, and the second removes any fear
you have of being wrong."_

A cynic might observe that all of this is true of both the author and
professional economists (and other soft scientists). Many of their theories
cannot be tested, presumably this fact ought to temper their certainty. As far
as I can tell, it doesn't. No lack of certainty is evident in this post.

The author's chief defense of academic economic _hypothesis_ is they are
complicated. I have not had much patience for the "its complicated, trust us"
idea since Catholic school.

Perhaps the author's and our time would have been better spent if he offered a
coherent defense (maybe even using vaguely correct grammar) of these academic
economic hypothesis rather than a sweeping ad hominem attack.

~~~
lbrandy
Author here.

First, I did say, but perhaps not strong enough, that I include myself in the
list of people who do not what they are talking about (or, more properly, in
the group of people that do not have strong opinions).

 _I’ve done a fair bit of reading on topics like the Federal Reserve and money
creation, like any good amateur, and the only thing I know for certain is that
it’s insanely complex._

More importantly, however, _you've missed my point_. Nowhere did I want to
claim that you shouldn't have opinions, beliefs, or the desire to argue about
topics you are interested in, even as an amateur. "Its complicated, trust us"
is _not_ my point. It's missed my point by a wide margin.

My point is that bringing a false sense of expertise, or authority to the
issue makes the discussions worthless and turns them into flamewars. People in
online discussions want to pretend they are experts in macroeconomic theory.
That makes them defensive and emotional. That makes the discussions
uninteresting.

~~~
Tichy
Can you point to any negative examples of such discussions? No doubt the web
is full of stupid discussions, but I mean specifically on geek sites like HN?

~~~
lbrandy
Alright, at the bottom of this thread is a downmodded discussions about
macroeconomics (started by someone who read only the last paragraph of my post
and decided to argue with me about my facetious assertions).

Last week, there was a post here about the youtube video "money as debt" that
ended up getting killed here: <http://news.ycombinator.com/item?id=461720>

Equally, you could peruse Reddit (espsecially, say, politics). I don't know
about digg, because I stopped going there for awhile, but it was as bad as
reddit is now.

Now, you could argue that these discussions are all fairly above board, with
none of the emotion-laden rhetoric that I appear to see. I'd disagree though
but we can leave that as a matter of perspective. I think there is an
-obvious- tonal difference in matters of economics (or politics, or religion)
versus other topics.

~~~
Tichy
Thanks for the examples. I must admit that the tonal difference is not so
obvious to me, at least not in the example from this thread.

I am trying to think about some topics that might be less "heated"? Startups?
Nutrition?

------
davidw
I think programmers have a tendency to believe in simple, elegant systems
without a lot of fuzzy human messiness in them. It's discomforting to look at
our present system and think that it actually is pretty good, and the best
we've done so far. Wouldn't it be so much easier if there were something
cleaner and simpler that would make all the problems and uncertainty go away.

~~~
msluyter
And this may also be one (not the only) reason libertarianism seems to be so
popular on HN. It assumes a relatively small set of basic axioms (like
Nozick's self-ownership principle, supremacy of markets) and thus ostensibly
appears to be an elegant, self-consistent system. (That's actually debatable,
hence the "ostensibly.")

In general the article demonstrates what PG was saying in his article on
identity. A lot of economic theory is difficult/impossible to test
empirically, so there's plenty of room for all sorts of nonsense like
ideology/identity/etc... to enter into one's economic world view.

~~~
randallsquared
I would imagine that most economic libertarians are such because they believe
the economy, like the weather, to be too complex to feasibly manage. Of
course, the weather may eventually be manageable with enough computing power,
but the economy is unlikely to be, because the complexity of individual units
is increased (more or less) proportionately to the computing power of the
managers, in any semi-free society.

~~~
cx01
Libertarians are against managing the econonomy because this would infringe on
the individuals property rights.

~~~
davidw
This is exactly what I'm talking about.

Property rights are one of the foundations of a modern, successful capitalist
economy. De Soto's "The Mystery of Capital" is a great read about some of the
problems that occur when there are no property rights. However, they are _one_
component in an economy, not _the_ component. And, sadly, there is no clear,
easy line dividing collective rights from individual rights, although we have
a vague idea where it is (communism was a colossal failure, being way too much
about collective stuff, and ignoring individuals).

By way of example, in Libertopia, perhaps it would be ok if I ran my own high-
explosives & toxic sludge storage business in my apartment? Back in the real
world, other people's rights to not be exposed to risk they didn't sign up for
trump my property rights. Supposedly, in Libertopia, 'contract law' would take
care of things, but in practical terms, how are you going to set up contracts
so that you pay the people N meters away M amount for the risk they're taking
by being around your munitions storage facility / smoking lounge? It's simply
too complicated, and far easier to just have a local law that says "ok, this
is not a part of town for munitions dumps".

~~~
pelle
I love De Soto's work check out his foundations site for more:

<http://ild.org.pe/en/home>

Common law has a pretty good alternative to contract law for the kind of cases
you mention. This is known as Tort law.

<http://en.wikipedia.org/wiki/Tort>

Most people know it as the law the dodgy lawyers who advertise on TV practice.

It is however a really neat concept that deals with just about anything
outside of contract law. It was even used to handle things like pollution in
the days before the EPA.

In your example your high-explosive and toxic sludge storage business could
easily be sued under Tort law.

Local and property owners association bylaws can absolutely be used to spell
out these offenses. However the wider regulation happens, the more it becomes
silly.

For example smoking regulations could probably be done a lot more
realistically through tort law than through blanket bans on smoking in bars
and restaurants throughout a country. Using Tort would allow courts to look at
individual circumstances. Thus one punitive ruling against a restaurant on
behalf of an employee with lung cancer could effectively ban it. However a
similar suit from an employee of a cigar bar would probably be dismissed,
because an employee couldn't reasonably expect to avoid second hand smoke in a
cigar bar. Thus allowing cigar bars to exist.

~~~
davidw
One problem with simply suing people who cause damage is that in some cases,
it's possible to do a lot more damage than you can ever pay for. For example,
if my munitions dump business blows up and levels a city block, killing 50
people, I have no house and no business left to be sued for. I'm essentially
broke, and no one is ever going to get more than a pittance from me (I may
have even blown up with it). So in that case, it may make sense to prevent the
damage before it happens by banning my bad business idea. Of course, you can't
prevent _everything_ bad from happening, as that would probably lead to an
excess of silly regulation. It is, in other words, a balancing act, that must
be constantly watched over and tweaked.

~~~
randallsquared
This is an argument for mandatory crime/injury insurance. :)

~~~
davidw
Ok, but at that point, you've decided that the collective benefits of forcing
someone to do something outweigh the individual's rights to do whatever the
hell they want. How to go about finding the actual compromise that best suits
everyone and is most efficient in economic terms is left as an exercise for
the reader.

~~~
randallsquared
If only it were that simple. The metrics of "best suits everyone" and "most
[economically] efficient" almost certainly do not coincide with today's
populations, though I would say that the latter would probably come fairly
close to a libertarian society (David D. Friedman's _The Machinery of Freedom_
is a book-length treatment of the idea).

If you take a random grouping, finding an arrangement that suits everyone will
be very, very difficult, or impossible. The only way I can see to solve this
is to make moving to where you agree easier.

~~~
davidw
We weren't talking about a random grouping though, but about the people who
were happily living in some neighborhood when I moved in and decided to open
up my munitions dump (I agree that things are a bit different if I were the
only one there with my dump, and they all decided to move in). What groups of
people we're talking about matter in policy terms - companies, which are far
more towards the 'voluntary' end of the spectrum, should be treated
differently than local neighborhoods, which should be treated differently from
larger aggregations of people (states, or countries).

~~~
randallsquared
I guess the word I should have used was "arbitrary". It's going to be
difficult to get all of my neighbors and myself to agree on all the rules for
our society, I'd imagine. I have no reason to expect that they share more than
the most basic assumptions about societal rules.

In the case where we move in and open up a munitions dump, either we signed an
agreement not to engage in risky behavior, or we didn't. If we did, we're
liable. If we didn't, then it still may be that the folks we bought the land
from had, and then _they're_ liable, since they didn't make buying the land
conditional on signing the no-risky-behavior contract. Otherwise, buying that
land turns out to have been a bad call for everyone else. Of course, once the
dump explodes, we're liable for the damage, but as you note, we may no longer
be able to pay for it.

Even when I advocate mandatory crime/injury insurance, I don't mean mandatory
in the sense that I'm willing to throw people in jail for not buying it, but
mandatory in the sense that I'm not willing to interact with people who refuse
to buy it, or who are such bad risks that they can't afford it.

------
lionhearted
This book will give you some overall perspective:

[http://www.amazon.com/Economics-One-Lesson-50th-
Anniversary/...](http://www.amazon.com/Economics-One-Lesson-50th-
Anniversary/dp/0930073193)

Here's a link to one chapter on rent control, with detailed examples (saw this
here at HN before reading the book):

<http://jim.com/econ/chap18p1.html>

Here's part of the reason people won't honestly evaluate the pros and cons of
economic arguments:

<http://www.overcomingbias.com/2007/03/blue_or_green_o.html>
<http://www.overcomingbias.com/2007/02/politics_is_the.html>

Finally, economics is complicated, but we've got almost all of human history
to give us some data. It's got an immense amount of noise in it, but general
trends do emerge. Price controls far below market have always created a black
market, even in a hardcore enforced police state. That's a fact. Maximum price
of goods under what people want to pay... human behavior... black market. That
example is clear enough, and not many places in the world today are trying
that one. Likewise, we're constantly trending to better economic systems with
some blips here and there along the way. Many of the ideas we're arguing about
today will be settled, and many of the positions held today will look really
foolish in the near future. That's part of being human and progress in
thought.

------
pg
The same way he became an expert on the level of expertise among "geeks"
(whatever that means) in macroeconomics.

Maybe his analysis is right, and maybe it isn't. But we judge him by what he
says, not his credentials, and he should be willing to grant the same to
people writing about economics.

If you disagree with some specific argument, or even class of arguments,
refute that. But blanket ad hominems lower the level of the conversation.

~~~
davidw
> The same way he became an expert on the level of expertise among "geeks"
> (whatever that means) in macroeconomics.

It's pretty easy to observe that amongst geeks (or at least those that post a
lot on the internet), there are way more people, compared to society at large,
who believe in what most actual economists consider to be fairly fringe
theories, like "Austrian" economics. I think this is interesting enough in
itself to warrant thinking about.

To cite an example, this could be any number of people on this site:

<http://news.ycombinator.com/item?id=473812>

There's definitely lots of curiosity about the world there, which is
definitely a hacker trait, but also this element of going from socialism to
the another extreme, rather than, say, settling down somewhere in a range
between, say, Krugman and Friedman, who are probably at two ends of mainstream
economics.

I'll also add: sometimes "extremes" are correct. The concept of the US was
pretty extreme at the time. (Many?) other times, however, they aren't. Plenty
of smart people thought communism was a pretty good idea, and we are lucky in
the US that during the 30'ies, the most extreme we got was FDR, rather than
the wild swings that were going on in Europe.

~~~
pelle
I don't think you can consider Austrian school of economics nor the Chicago
school fringe economics. Milton Friedman and Friedrick Hayek were hardly
fringe loonies, but rather continued the free market tradition of classical
economists such as Adam Smith and David Ricardo.

You mention that you should settle down in a range between Krugman and
Friedman. These are so completely opposite in their beliefs that you would end
up believing nothing. -1+1=0. There really is no such thing as one mainstream
economics, most economists are in one of these two camps Free Market or
Keynesian.

I would also like to take issue with this using me as an example of "this
element of going from socialism to the another extreme".

I grew up in a society (Denmark) where Socialism and the particular flavor of
Socialism (Democratic Socialism) I believed in was mainstream and not at all
considered extreme. When I look at the beliefs I had, they were pretty much
the same as mainstream democrats have in the US today. I can accept
libertarianism as being extreme, but in most of the world democratic socialism
is not considered extreme.

I take pride in the fact that I was able to independently of anything but my
own observations realize that this system, where I was living (Denmark) and my
own party was corrupt and change the fundamental beliefs I had grown up on.
Yes being a geek, who constantly question and optimizes things probably was an
important part of this.

I think just accepting the status quo is impossible for a hacker, or we
wouldn't have tech startups, open source or any other tech project that wasn't
sponsored by DARPA.

~~~
davidw
I think there are some significant differences between the "Austrians" and the
"Chicago school" folks, no?

[http://en.wikipedia.org/wiki/Austrian_School#Analytical_fram...](http://en.wikipedia.org/wiki/Austrian_School#Analytical_framework)

The latter are considered mainstream, even if they're certainly very biased in
favor of the infallibility of markets and/or inability of governments to do
anything useful. The Austrians aren't, and tend to take things to even further
extremes than someone like Friedman.

I am sorry if I mischaracterized your shift from socialism to libertarianism -
I was thinking of a different sort of socialism, not the nordic sort, which
isn't very extreme, all things considered.

Also, don't think there isn't some commonality between various branches of
economics. Most everyone, Krugman included, is basically in favor of free
trade, for instance. Generally, though, they talk about the stuff they
disagree about, so it tends to be more visible.

------
mixmax
The reason people, not just hackers, have opinions on macroeconomics is that
unlike many other branches of science it hasn't come up with a lot of
definitive answers. As the article notes experimentation, a basic ingredient
in science, is very hard in macroeconomics. This means that there are all
sorts of ideas floating around on how economies actually work. Some reputable,
some not.

Newtons laws of motion don't get discussed much because experimentation and
time give overwhelming evidence that they're probably right. Thus there's not
much point in discussing them, they're accepted as a foundation on which you
can build, which is exactly what science does. Standing on the shoulders of
giants.

Economics is different. Partly because of the inability to test a thesis,
partly because everything is closely linked making it hard to distinguish
cause from effect. I actually believe macro economics is currently in it's
early stages, with professional practitioners still trying to get a grasp on
the basics. Even among Nobel laureates in economics there's still disagreement
about whether Keynes, one of the most heralded economists ever, was right or
wrong. And he wrote his main work " _The General Theory of Employment,
Interest, and Money_ " in 1936. Likewise, if you look at the wikipedia entry
on the great depression there's still substantial debate as to what caused it,
and how we got out of it.

I also think that this discussion is good. Yes, there are some ridicolous
theories on youtube, but the serious amateur probably knows enough to discard
these as the crap they are. A public discussion of macroeconomics will,
however, be very fruitful as people from other fields bring their expertise to
the subject. Mandelbrot and his knowledge of fractals and mathematics has
interesting points on economy, Kahnemann uses psychology to explain economic
phenomena, and hackers, of course, can set up interesting computer models,
which is probably the closest we come to experimentation in this field.

------
zupatol
I actually studied economics and worked 4 years in the economic department of
a bank, but I can't say I understand much about the economy. My feeling is
macroeconomics itself doesn't help understand much of the economy. There is
hardly a topic where all economists agree.

If you want to have an idea about how the best economists think the economy
works, read the economist. Don't be surprised if they completely change their
minds now and then. Only last year I would not have believed they would
support a stimulus package today.

------
cia_plant
The underlying assumption of this blog post is that only experts should ever
discuss technically complex topics. I disagree strongly.

The common notion is that someone who hasn't read 1000 books about the
conventional academic wisdom can't possibly make a valid argument. However,
academic fields can often get into a cycle of conformance to an absurd belief.
You don't have to read Aquinas to make the correct argument that belief in God
is absurd from the start. You don't have to read Skinner to see the problem
with behaviorism. You don't have to read all the latest analytic philosophy to
see that it's all circular and useless. And you don't have to read the latest
mainstream economics to see that it's based on a narrow and largely useless
formalization of the difficult complexities of the actual economy.

~~~
cchooper
I don't know why everyone thinks he said that people _shouldn't discuss_
economics. What he said was that geeks overrate their competence and therefore
their discussions tend to be stupid.

~~~
mynameishere
Err, his overarching implication was that people should just shut up and let
the experts have their way. I guess that was his implication, because it's
hard to tell from all the whiny confusion:

 _The more interesting question is why? Why the false expertise? Why the heir
of authority? Why the certainty?. The conversations tend to be extremely
emotional and defensive._

I actually don't see too much false expertise, or pretenses of authority, etc.
People want to discuss things so they do. If it effects their lives, well,
who's to say otherwise? Oh right, some jerk with a blog.

If the treasury department issues 750 billion dollars with my name on it, I'm
frankly not much a citizen if I declare my unavoidable ignorance on the matter
and so devote myself to my suitable recreations of drinking beer and watching
football.

~~~
cchooper
Your quote doesn't back up your point at all, nor can I see any 'confusion'
there. He is saying that geeks overrate their expertise in economics. It
couldn't be clearer.

~~~
Tichy
To me saying "you don't have a clue" amounts to almost the same as saying "you
shouldn't open your mouth in this discussion".

~~~
davidw
No, it means that you should approach things with an open minded, questioning
attitude, rather than thundering on about the gold standard or some such.

~~~
Tichy
Maybe... Anyway, I take it as a given that in any such discussion, there will
be some obnoxious people (the ones that dismiss arguments as "obviously
stupid" without even thinking about them). I just ignore their attitude and
try to extract ideas, information and inspiration. Personally I tend to start
all sentences with "I think that...", "Maybe..." and so on, but I seem to
remember PG writing somewhere that doing so is kind of lame ;-)

------
elidourado
I am ABD in economics, and I use the following rule of thumb: If you think you
understand macroeconomics, you are hopelessly lost. If you are thoroughly
confused, you are beginning to understand.

By the way, since people seem to be interested, I think the best macro book is
Snowdon and Vane's Modern Macroeconomics.

[http://www.amazon.com/exec/obidos/ASIN/1845422082/elidourado...](http://www.amazon.com/exec/obidos/ASIN/1845422082/elidourado-20)

------
peregrine
I've been waiting for an article like this for a long time. Anytime there is
an article about money the entire comments section will light up in flame. I
will simply post, "we have no idea what will happen, not even the experts.
Live responsibly and work hard and you know all you will ever need to."

People can't down mod me, and it never insights any sort of emotions or
response so it dies near the bottom. Thanks for the link!

------
jfoutz
These two things

* Easy to grasp (the basic principles, anyway)

* Experiments are pretty much impossible (making being disproven relatively rare)

make me think that it is not possible to be an expert on macroeconomics. Or,
since nothing is falsifiable my opinion about how these random rules fit
together is just as good as anyone else's. My entire career is based on how
random rules fit together. I'm good at it. That's why I'm an expert on
macroeconomics.

~~~
cglee
Experiments are at the core of modern social science. In general, econ, poli
sci, etc have been moving towards a more rigorous statistics and experiments-
based approach. Now whether or not you think social science experiments are
valid is another question, but they do perform.

------
mightybyte
This sounds very similar to PG's recent essay, though they're coming at it
from slightly different directions. I like his point about the big concepts of
contentious topics being reasonably simple. His comparison to physics is a
great example of this. People are only likely to make a topic part of their
identity if they think they have a reasonable understanding of it.
Macroeconomics is a bit more scientific than politics and religion and seems
to fit nicely in the sweet spot of simple-enough topics that are also complex
enough to appeal to the above average intelligence of the geek community.
Maybe macroeconomics is the geek's politics.

~~~
snitko
Actually, that was my first thought, that it's very similar to what PG has
recently written. But then I thought that this case is different and the
author has made wrong assumptions. I don't think geeks made economics part of
their identity. I think sometimes it's not enough for geeks to be geeky in
their own field and they want to demonstrate their ability to analyze and
become experts in things that lie behind computer fields, while not realizing
this might not be just as easy for them as learning another language.

~~~
mightybyte
I completely agree with you here. There are certainly geeks (and HN seems to
have a higher concentration of them) who haven't fallen into the trap of
making a macroeconomic belief part of their identity. But there are plenty who
have. This guy appears to be ranting at all of them, with the questionable
implied assumption that you can't have useful things to say on complex topics
without some kind of advanced degree.

~~~
ellyagg
Why do people keep saying that? He didn't suggest any implied assumption like
that at all.

And, no, if you don't understand the system, then you can have very little of
value to say on it. Just _precisely_ like if I don't understand quantum
mechanics, it would be extremely stupid of me to make passionate forum posts
about it.

------
chez17
This is 100% true, but what this guy is failing to mention is that it seems
that economists don't understand macroeconomics. We are in a terrible terrible
mess that was predicted by a very select few that have been shouting out for
years by this point. The majority of economists seemed to think everything was
just fine. I read somewhere that the world has lost 40% of it's wealth in this
recession. This tells me that the old systems, even if I don't understand
them, aren't working that great. They very well be the best we have, but it
doesn't take a rocket scientists or macro-economists to see that.

~~~
yummyfajitas
A minor note: we didn't lose 40% of the world's wealth in this recession.

In the years leading up to the recession, we _wrongly believed_ the world's
wealth to be 40% greater than it actually was. Figuring out that the true
value is lower didn't destroy wealth, it just looks that way in many
timeseries.

~~~
sethg
How are you defining "true value"?

The inflated prices that various assets had at the height of the bubble were
"true values" in the sense that their owners could sell them (or, more
importantly, put them up as collateral for loans) for those values. Someone
who bought a house at the top of the market, lost their job, and is now trying
to sell their house so they can move to somewhere more affordable, is
certainly feeling a real loss right now.

~~~
yummyfajitas
I guess by "true value", I mean the value that assets would have had absent
the housing-bubble induced speculative premium.

My best estimate for this quantity: let gamma = (historical price to
own)/(historical price to rent), with "historical" meaning pre-1995. Gamma was
more or less constant up until the housing bubble.

I'm guessing the "true value" of a house was in the neighborhood of gamma x
(price to rent).

------
Tichy
How else to get an understanding, if not by reading and discussing stuff? Why
should it not be possible to gain an understanding of economics (including
knowing what we don't know yet)?

Also, economics has a lot of maths in it, which many geeks tend to excel in.
So I don't think their starting position is that bad. Actually even most
economics students try to brush over the maths, so I don't have troubles
believing that some geeks might have a better understanding of economics than
the actual economists.

------
knieveltech
Does anyone else find it highly entertaining that this post has resulted in a
deluge of posts arguing various facets of economics?

I can't help but wonder if this is a generational thing. I seem to recall that
not too terribly long ago major geek pasttimes included hacking the local
phone switching equipment and cruising usenet. Now we're on to debating
economic theory esoterica. My how the times have changed.

------
pelle
I myself am an armchair economics. I am fairly well read on the subject over
the year. I think to an extent the article has a point. However if the whole
point of the post is true, then it's summary should of course also be taken
into doubt. ;-)

The real trouble with economics is that even economists disagree. It really is
impossible to say anything like consensus amongst economists is x. A recent
EconTalk (an excellent podcast to learn more about economics) talks about just
this issue. Why do economists disagree:

[http://www.econtalk.org/archives/2009/01/roberts_and_han.htm...](http://www.econtalk.org/archives/2009/01/roberts_and_han.html)

Their conclusion is that it is so easy to go in and fine statistics to prove
just about any point, so in the end it is the "religion" of the economist in
the end that decides which statistics and studies he uses. The two major
schools and yes there are many more of Economics Keynesian vs Austrian/Chicago
(ok those are 2 schools, but closely related) are in such a fundamental
disagreement about just about anything.

Which brings me to question the premise of your article. I think it's healthy
that geeks have an interest in economics. In particular geeks involved in
startups need to know and understand the dynamics going on. So their analysis
might not match yours, but that doesn't matter. They have an understanding and
interest that helps them understand the world around them. This is not
necessarily bad, in particularly if they are open to learning.

Saying that geeks shouldn't think about economics, because it's too complex
for them to understand completely is just plain silly and also extremely
elitist. It is also to a certain extent hypocritical as your post intentional
or not says "Your understanding of economics is not as good as mine, so just
stop thinking you know anything".

My "religion" in economics is the Austrian school of economics. I definitely
view the world and politics through these colored glasses. I gradually arrived
there on a long journey starting off as a socialist.

My life as a programmer has definitely helped me reach the conclusion that the
economy is so complex that no amount of experts could possibly understand it
completely. That the only possible way of living (not controlling) in such a
complex system is through a distributed network of autonomous agents. I am
sure many other programmers have reached the same conclusions.

My belief in markets has been flavored recently by Nassim Taleb's Black Swan,
who concludes that the reason free markets are superior is not because of some
complex theory of efficient prices, but because free markets allow more people
to experiment and therefore accidentally find the right answers. An expert
driven planned economy allows only one person throwing the dice.

The next 3 paragraphs should be understood is my conclusion about elitists as
seen through my "free market" goggles:

Then again there are many other programmers who follow another religion. Since
childhood many programmers have always been the most intelligent person we
know. If you grow up like this it is very easy to start seeing other people as
stupid. This is essentially how elitism grows.

It is very hard to avoid being elitist, when you spend a lot of time analyzing
every situation in your life and see the vast majority of the people out there
not doing the same. This elitist way of thinking almost requires the
intelligentsia to take control. People often credit this way of thinking to
Plato, all though it is such a natural way of thinking I'm sure it goes way
back.

The Keynesian approach is one of the less evil outcomes of this elitist way of
thinking. "We need to stimulate the economy so the small simple people can
build their economy up". The other extreme was Lenin's dictatorship of the
proletariat, where he concluded that it would take several generations of
reeducation of the people by the elite, before society would be perfect. These
two approaches while very different have the same fundamental reasoning that
people are stupid and we the decision makers are not.

Both of these economic religions are very common among geeks. I also think it
is natural that they are prevalent and that people discuss it. You see both of
these (I know I'm overgeneralizing) battle it out on hacker news. I think this
is actually healthy. I know that I can't convince a true believer of socialism
that the free markets are the way to go. I can also safely say that it is
highly unlikely that anyone will convince me in a single discussion that we
should all become leninists.

That said, I have been corrected several times in discussions here on hacker
news and have learnt from that. It is also an interesting and fun intellectual
exercise for both of us. Who knows we might even convince someone sitting on
the fence to jump off in our direction.

My conclusion is that Geeks and in particular geeks in startups should have an
interest in economics. I also don't think we need to hold geeks to an even
higher standard than actual card holding economics professors.

------
TravisLS
Looking at our present crisis in particular, there's certainly something to be
said for taking a simplified approach based on core economic principles,
logic, and intuition (all three of which this author seems to dismiss
categorically). Yes macroeconomics is complicated, and yes we have created
concepts in our financial systems that are beyond the understanding of
everyone involved. But the basic fundamentals still apply and should still be
discussed in the context of the more complex systems. The idea of long-term
equilibrium doesn't disappear just because your financial system is
convoluted.

The foundation of macroeconomics is the aggregation of microeconomics, which
comes down to people making decisions with their money. And everyone can
understand that - even programmers. If the public truly can't understand the
financial system, then that's a tremendous problem in and of itself.

------
anthonyrubin
I'd like to offer an alternative theory: no one is an expert on
macroeconomics. How much agreement is there between Friedrich Hayek, Paul
Krugman, Milton Friedman, John Maynard Keynes and Ludwig von Mises? Claiming
that someone is "right" about economics seems akin to claiming that someone is
"right" about philosophy.

------
mhartl
I'm not an expert on Catholicism. The Pope knows more about Catholic doctrine
than I do. But I know something important about Catholicism that the Pope
doesn't know.

Mainstream macroeconomists are starting to look a lot like the Pope.

------
pj
This is linkbait, pure and simple. The author is trolling. Posting his own
blog posts in HN knowing he'll start a flame war... The post was written
specifically to do what it did... unfortunately.

Move along folks, nothing to see here...

------
c00p3r
Why only economy? The football discussions is almost the same, but there are
no experiments, because it is "a game"! (no, it is certainly not a show) Or
this cosmo-style discussions? Seems like it is the way people prefer. This
style has its name - 'blah-blah-blah'.

------
giardini
Bankers are not necessarily evil but their incompetence/greed appears
unbounded. Reference the current credit crisis and mortgage blowout. It is
quite obvious that we can no longer allow them to make decisions and that the
process of loan approval will have to be automated and safety checks
(independent auditing) added. And bye-bye "investment banking" that has any
government protection.

And how would the OP or anyone else know the Federal Reserve Board does "a
half decent job?"

"Money is not debt" - Did he mean "currency is not debt"? When I borrow $10k
at the bank, money is created (they need only maintain a fractional reserve)
and there is also an associated debt created - I owe the bank $10k. The
"money" and the debt are unconditionally linked.

I think he's overspecified his point, that possibly being that macroeconomists
have no trustworthy predictive models. Inotherwords, he's repeating part of
Nassim Nicholas Taleb's work: <http://www.fooledbyrandomness.com/>

~~~
cchooper
> When I borrow $10k at the bank, money is created

This is a perfect example of the kind of misunderstanding the OP was talking
about. Money is created by _depositing_ money at a bank, not by the bank
lending it. Banks only lend base money, and it's illegal for them to print
that.

Of course, people usually don't take the cash loan directly, but have the
money deposited at the bank instead, which results in money (in the form of
current account balances) being created. But it's the act of _depositing_ ,
not the act of borrowing, that creates the money. If they took the cash, no
money would be created.

~~~
wlievens
Banks don't create money. When you deposit money, they give you the promise
that you can have it back, but you are no longer owner of the money.
Similarly, when you borrow money, they let you have some of their money (when
you withdraw) on promise that you pay it back, with interest.

Banks don't create money. Government institutions do.

~~~
cchooper
A current account is a bit like a short-term bond. It is a valuable commodity
that is created by banks and can be traded in the market. The difference is
that bank trading systems allow current account balances to be used directly
as payment, without having to be converted into cash first. Therefore the
current accounts themselves are being used as payment, and count as money in
their own right.

This is why current account balances are counted in all the official measures
of money quantities, including the most strict measures such as M0.

~~~
natrius
Account balances are not a part of M0. M0 is all of the bills and coins in
existence. Your bank does not have all of the bills to back all of its
customers account balances. Account balances are part of M1.

