Now, Arraya, what I’m going to attempt to do here is frame what I THINK you believe (well, the highlights at least) and compare it with what I believe, along with some commentary. That way, we might be able to avoid some of the back-and-forth over minutiae.
Please correct me if I’m wrong, but I think the following are some of your core beliefs where global economics is concerned (based on your posts):
(1) Economics is a “pseudo science… guess work with a wishing aspect,” (to use your words) and, as such, is useless (to study, apply, etc.).
(2) An understanding of “traditional” economics and finance is counterproductive in understanding how the world “really” works. I quote: “Intricacies of finance are not really necessary to see where this is going. Actually it is probably a hinderance [sic].”
(3) The Financial And Social Apocalypse (“FASA” for short) is upon us and will, for all intents and purposes, take down the world as we know it in relatively short order (I’m guessing your time horizon is less than 10 years). In your eyes, this is not a possibility, it is a certainty.
Where (1) is concerned, I’m going to use the analogy of Newtonian Physics. Q: What’s the one thing we know with absolute certainty about Newtonian Physics? A: It’s wrong; Einsteinian Physics supplanted it. But despite the fact that Newtonian Physics is “wrong,” it happens to do a very good job of explaining a lot of what we see around us. Likewise, one thing we know about the body of Traditional Economic Theory is… that it is wrong on many levels as well. But, like Newtonian Physics, Traditional Economic Theory (and particularly micro-economics) does a very good job of explaining a lot of what we see around us; not everything, mind you, but a lot. Now, Newtonian Physics does a better job of explaining physical phenomena than Traditional Economics does of explaining “production, distribution and consumption”… but the point remains the same. They are both bodies of theory that are wrong, but nonetheless fairly useful (if judiciously applied, of course).
One obvious example is the Theory of Supply and Demand. It’s not a perfect theory, obviously, or it wouldn’t be a theory, it would be an axiom. Nevertheless, until someone shows me more than a tiny handful of upward sloping demand curves, I’m going to contend that the Theory of Supply and Demand is quite robust and explains a hell of a lot of what we see happening in the world around us. Likewise, the Efficient Market Hypothesis is wrong, and even dangerous when over-applied (as we’ve seen). But… it still explains a fair amount of what we witness in financial markets, so it’s not completely useless when applied in moderation.
So, I agree that much of economics is pseudo science. And while I’ll agree with you that there’s too much math in economics and that such math makes a lot of economic theory appear to be more legitimate than it really is, this doesn’t automatically lead to the conclusion that economics is useless. It’s just not as useful as lots of folks (economists, Wall Street, et al) would like us to believe, which has led to a shitpile of problems.
In my view, (2) is a cop out and pure intellectual laziness. Basically, what you’re saying is, “I don’t need to understand the foundations or details of the topic we’re discussing because that entire body of theory is bunk. My theories are the reality.” My comment would be that if you don’t fully understand the theories… how do you really know they’re bunk? It’s awfully convenient just to say, “Oh, I don’t need to understand all that stuff – it’s all bullshit. THIS is the reality.” As I’ve noted in a few different threads, it’s very difficult to have an intelligent discussion about a topic when it’s obvious that one person doesn’t even understand the basics. In your eyes, however, an understanding of the basics isn’t just unnecessary – it’s a hindrance! “I know nothing, therefore I know everything!” How convenient…
I have a few problems with (3). One issue is that of certainty. If you were to present FASA as a possibility, that would be one thing. Or even a high probability. But you present it as a fait accompli, a done deal, a 100% certainty. And anyone who doesn’t agree with you “doesn’t get it.” You present the “impossiblehampster” and declare, “End of discussion.” I view it as the beginning of a discussion (or perhaps the middle).
So, on the subject of long-term sustainable growth (“LTSG”), you think “the end is nigh,” so to speak. In fact, you’re certain of it. I, on the other hand, think the future is quite uncertain where LTSG is concerned. Could LTSG last for another 10 years? Maybe. 50 years? Perhaps. Longer? Maybe, maybe not – it just depends on a lot of random factors. But there’s one thing I do know: humans have proven themselves quite adaptable and innovative. I’m quite certain that not many folks living in 1930 would have imagined that 40 years later we’d send a man to the moon. (I’m sure Malthus would be shocked that the human race has made it this far given the size of our population.) Likewise, almost every major invention throughout history has been a “surprise” – such is the nature of invention – from electricity to nuclear power. My point being that we don’t know what kind of innovation we’re going to see over the next few decades that might change the face of energy usage dramatically for the better. We have no idea. You believe FASA is imminent and a certainty. I believe it is merely one possibility and that if it does occur, it’s likely several decades into the future. Is it a much higher likelihood longer term (let’s say 25+ years) if we don’t come up with some major innovations in the energy area? Yes. But is it a CERTAINTY – as you portray it – over any particular period of time? Nope. Because we just don’t know what’s going to happen on the technology front… we simply have no idea. And that’s my problem with many of your arguments: you seem more certain of everything than I am of anything.
Obviously, feel free to correct me where I’ve misrepresented your beliefs.
