What’s Wrong With Economics

One of the things that has struck me most about the debates on the ‘crisis’ is that most of it are narratives about what happened – most of which just confirm prior biases.

Even the debates about the so-called stimulus bill are bias confirming stories about how it will ‘fix’ things or do nothing.  For all of the talk about how economics is a science there is little or no real science involved.

Science is, or is supposed to be, about the formation of theories that have predictive power.  We have plenty of theories, but most of them look backward, where are the testable hypothesis?

What I would like to see is economists making testable predications.  The economy as a whole is too chaotic and complex to use the power of economics to predict the state of the economy for the next year – or even the next month!

However, there are cases where the real science of economics can provide testable theories.  Use them!  Publicize them!

Start collecting aggregate scores of the different ‘schools’ of economics.  Are Neo-Keynesians better at predicting the effect of legislatures or the Monetarists or the Austrians? 

Physics hasn’t gained ground in the understanding the cosmos by attempting to explain it all at once, it broke it into testable pieces.  Economics has made attempts at explaining pieces but put that knowledge to practice.

Make predictions.  Be wrong.  Add to the collective understanding of the human species and quit the bias confirming narratives.   Most of all, put some science back into the discussion.

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