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What Kind of Answer?

There’s an old joke which I find amusing. I can’t remember it exactly but the punch line involves an accountant asking “what kind of answer did you have in mind” when he is being asked to produce an answer for an accounting issue he is being paid to work on. I think the same could apply to economists. After all, aren’t economists just accountants for the “big picture” and aren’t accountants just people who add up columns of numbers in essentially arbitrary ways?

Yes, I know, I’m being a bit unkind here because both accounting and economics are genuine intellectual pursuits (laugh, snigger – oh no, there I go again) but seriously folks I do hold business professionals in high esteem… oh forget it – who am I fooling here? The whole world of commerce is a joke and economists are the biggest clowns, aren’t they?

OK, sorry about that. Maybe I am being a bit unfair there, but let’s look at practical results. Of all the areas of human knowledge has economics not been the least successful in it’s real outcomes? Look at medicine: we have many amazing surgical procedures and very effective drugs. Electronics has given us machines which would be a distant dream 20 years ago. Chemistry, biology, geology, every branch of real science has produced amazing results. Progress seems to happen everywhere… except in economics.

Some people call economics a science but I doubt that. Actually, to be perfectly honest, I know very little about it but that hasn’t stopped me from commenting in the past and it won’t stop me now either! But let’s look at real science: it creates hypotheses with carefully stated consequences, those are tested, re-tested, and a consensus usually arises. Sure, that can be overtaken by better theories when more data becomes available but it’s very rare for a significant theory to be simply wrong: generally they are just inaccurate (Newtonian gravitation versus Relativity is the classic example).

Does this happen in economics? It doesn’t seem to. I often hear economists discussing issues and debating the effectiveness of different policies. They almost always disagree, which is bad enough, but it is far worse than that: the reason they reach different conclusions is almost always based on theoretical considerations, which themselves often arise from a political or philosophical bias (an unfounded belief in the effectiveness of laissez-faire economic policy for example).

Most scientific conclusions in other areas are based on empirical evidence or at least theory which is backed up with real data. Sure, sometimes economics uses survey results and real data from specific instances, but this too often seems anecdotal, so I’m generally less than convinced that these are credible.

Also economists are often labelled with political stances like “left” and “right”. The truth has nothing to do with politics and I have never heard these labels used to describe real scientists. So this is another reason I am deeply distrustful of economics.

Of course business and economics are important to our society but I think we succeed despite them because the underlying driver of modern society isn’t really economics, it’s science and technology. Technology has a way of improving most people’s lives despite the factors ranged against it. But imagine how much better things would be if our society was based on fact driven economic and political principles instead of what we have now.

I can’t help but think that I have been unkind to economics because of my essential ignorance of it, so if anyone wants to point out where I am wrong here I will happily read any comments and make corrections. I was going to talk to some contacts in the economics department of the university I work at but I was too worried they would just ask: “what kind of answer did you have in mind”!

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