European Economy

[A23]

Since a few year many European countries unified their money (even if there are differences on the banknotes), like taking away the separation per countries in a Global European Bank.

[Boerseun]

What's a "Global European Bank"?

 

Is it Global, or European?

[Eclogite]

I voted other. Economics is not only not an exact science, it is not even a science. Any attempts to predict the economic future are akin to alchemy.

[maikeru]

I voted other. Economics is not only not an exact science, it is not even a science. Any attempts to predict the economic future are akin to alchemy.

 

I'm glad someone finally said it. Economics isn't a science, and it isn't science, yet it's often given the benefit of the doubt. Anecdotes, assumptions, and assumptions about human psychology and rationality usually make pretty poor starting points for theories, laws, and mathematical models...

[Buffy]

....Economics isn't a science, and it isn't science, yet it's often given the benefit of the doubt. Anecdotes, assumptions, and assumptions about human psychology and rationality usually make pretty poor starting points for theories, laws, and mathematical models...

Oh piffle. Unless you're going to remove all sciences except for Physics and Chemistry (and I always argue that Chemistry is Physics).

 

Now I'll hardly argue that you should actually listen to some of the charlatans who call themselves Economists, and it's predictive value is certainly commensurate with where say, Biology was in the 1600s, but you simply can't definitively claim it's "not a science" without so severely circumscribing the definition of that word to make it unlike anything anyone agrees it means.

 

Anthropology can be called pure guesswork, because it's all based on interpretation, and subsequent discoveries have proven some anthropological theories to be laughably based on then current mores.

 

Psychology? Freud or Jung?

 

"Political Science?" Well, you guys probably think that's the same as Economics anyway, but it has far less data and far fewer coherent theories....

 

Medicine/Biology? Hey no one has any clue as to how all the little black boxes work, so any theory has to be meaningless.

 

You see how silly this exercise gets.

 

No folks, there's data that can be gathered, and there are theories that are at least as testable as 99% of the other sciences out there.

 

That's science.

 

No, it'll never be physics, but if it helps even a little bit to prevent the current batch of teabag idiots with their mind-numbingly stupid dreams of bringing back the gold standard and eliminating all government regulation in markets, well then it's done some good.

 

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics, :coffee_n_pc:

[maikeru]

Oh piffle. Unless you're going to remove all sciences except for Physics and Chemistry (and I always argue that Chemistry is Physics).

 

I won't argue that chemistry isn't physics, because I think it is. So is biology. I believe they are specialized studies and focuses within the larger field of physics.

 

Now I'll hardly argue that you should actually listen to some of the charlatans who call themselves Economists, and it's predictive value is certainly commensurate with where say, Biology was in the 1600s, but you simply can't definitively claim it's "not a science" without so severely circumscribing the definition of that word to make it unlike anything anyone agrees it means.

 

Anthropology can be called pure guesswork, because it's all based on interpretation, and subsequent discoveries have proven some anthropological theories to be laughably based on then current mores.

 

Psychology? Freud or Jung?

 

"Political Science?" Well, you guys probably think that's the same as Economics anyway, but it has far less data and far fewer coherent theories....

 

No, actually I think the same of much of psychology, as much as I admire Jung and somewhat Freud. (I do think Freud had interesting ideas and a desire to find out the "truth" behind psychology, psyche, and dreams, etc., but an obsessive-compulsive and dogmatic attachment to his work and ideas that limited him and his investigations. If you read some of Jung's work and letters, he discusses Freud's peculiarities and obsessions.) Psychological knowledge which is backed by scientific experiments though acquires and utilizes scientific knowledge.

 

You're correct in that I'm using a more restricted sense of the word "science," as in requiring a science to collect knowledge from the use of the scientific method and involve the fundamentals like being observable, testable, verifiable, falsifiable, etc., as is in the natural sciences.

 

Medicine/Biology? Hey no one has any clue as to how all the little black boxes work, so any theory has to be meaningless.

 

I disagree. Biology rests on a solid bedrock of knowledge informed by and gained from its own studies, chemistry, physics, etc., and must adhere to the same rigorous rules of the scientific method. Medicine relies on biology, chemistry, physics, etc. Medicine is an applied science which utilizes the knowledge and skills gained from the former. In this aspect, I believe it is similar to engineering.

 

No folks, there's data that can be gathered, and there are theories that are at least as testable as 99% of the other sciences out there.

 

That's science.

 

Data can be gathered and analyzed, theories can be generated, but are you really sure they are fully subjected to the scientific method? I'd argue mostly and often no.

 

I can collect data on sunspots, record numbers, occurrences, and years, and then formulate a theory on how sunspot frequency influence people's tendency to buy iPods or not. But I have to prove my argument and the validity of my conclusions. If I can't do that, no matter how much data and analyze on sunspots and iPods, it is all for nought, IMO.

 

For example, I've spent time reading some of Keynes's work (like The General Theory on Employment, Interest, and Money), and while it is very interesting, it relies on historical case studies, thought experiments, and I mention again, his assumptions and definitions. Interesting, yes, highly interesting. But science? No. I think there are many things in economics that are not falsifiable, and thus, in a way, it is similar to theology and religion. Interesting? Yes, surely. Science? No.

 

Falsifiability - Wikipedia, the free encyclopedia

 

I also have issues with the assumption of "rational actors" when experience in real life proves that people often make irrational choices and decisions that may decrease and not maximize their gain. I should know, because I'm irrational on occasion too. :eek_big:

 

No, it'll never be physics, but if it helps even a little bit to prevent the current batch of teabag idiots with their mind-numbingly stupid dreams of bringing back the gold standard and eliminating all government regulation in markets, well then it's done some good.

 

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics, :coffee_n_pc:

 

Agreed.

[Buffy]

I disagree. Biology rests on a solid bedrock of knowledge informed by and gained from its own studies, chemistry, physics, etc., and must adhere to the same rigorous rules of the scientific method.

But this is the trap: it relies in black boxes and *unsupported* beliefs about how they might work, in the areas of cellular operation and cognitive (biological) function. Much of what goes on in developing theories in biology is indeed pure guesswork.

 

An example of this showed up in this month's SciAm 50, 100, and 150 years ago column:

June 1910 - "Nearly all mineral waters have been found to contain radioactive emanation. The tracing of efficacy to radioactivity naturally suggested the artificial control of radioactivity so as to impart curative effects to inactive spring water or to increase the efficiency of natural spring. The idea of adding variable amounts of emanation has been carried into practice on a large scale by the Administration of Municipal Salines of Krueznach, Germany, where drinking and bathing water, artificially treated by the very radioactive substances contained in the springs, is manufactured and sold. Though the radium-water cure is yet of too recent date to allow definite conclusions to be drawn, it doubtless constitutes a valuable addition to the present methods of modern medicine."

 

Even 50 years after this we had atrocities of "science" like Thalidomide, really based on the fact that the "theory" is based on systems that are not at all well-understood.

 

My argument is that to dismiss a "science" because it--as Eclogite said is "akin to alchemy"--does a tremendous disservice to the advancement of knowledge.

 

This sort of thing is short-sighted prejudice, pure and simple, and if you think about it, plays directly into the hands of the Intelligent Design argument that if it isn't perfectly explained by the theory, it "must have been designed" or if you're an atheist "must be perfectly random and is beyond prediction."

 

I find that attitude incredibly backward.

 

Yes Economics hasn't been around very long and is prone to the promulgation of theories not too distant from the "lets put radium in the public water!" noted above. But imagine if deaths from that experiment had been treated with reactions of "see it doesn't work, and its all guesswork, so it absolutely should not be treated as a science, just mystical hookum no more useful than bloodletting," where would we be today?

 

Are you willing to say you support ending all studies in economics by branding it as "the work of charlatans, and of no useful import?"

 

Now we can have a debate about application of the scientific method, but I'd argue that most of it is examples of the pot calling the kettle black:

For example, I've spent time reading some of Keynes's work (like The General Theory on Employment, Interest, and Money), and while it is very interesting, it relies on historical case studies, thought experiments, and I mention again, his assumptions and definitions. Interesting, yes, highly interesting. But science? No. I think there are many things in economics that are not falsifiable, and thus, in a way, it is similar to theology and religion. Interesting? Yes, surely. Science? No.

Gosh, Einstein used "thought experiments" endlessly before there was any supportive data. Would you call him a "priest of the religion of Relativity?"

 

And how much of biology is "barely falsifiable?" I can find lots of examples too, many surrounding one of the fundamental elements of scientific proof in biology, like the practice of exposing animals to unnaturally large doses of substances (like radium) to prove harmful effects of normal exposure over long periods of time. That's an *assumption* that is too infrequently followed up with long term studies that verify the links, and even those studies suffer from cross-contamination of other possible causes of outcomes.

 

Even though these approaches provide the weakest of Falsifiability, they are fundamental and absolutely necessary to moving the science forward. If you are going to call out Economics for doing similar things, it's hardly convincing.

 

Moreover, if you insist upon attacking it, do try to keep up on the current work:

I also have issues with the assumption of "rational actors" when experience in real life proves that people often make irrational choices and decisions that may decrease and not maximize their gain. I should know, because I'm irrational on occasion too. :eek_big:

This is exactly like Creationists insisting that the Evolutionary theory of Gradualism isn't supported by the data and therefore Evolution is false. Of course we know that most Evolutionary theory has moved on based on Punctuated Equilibrium, and similarly, some of the most interesting work in Economics is calling into question all of the "old" theories of "rational actors" and "perfect knowledge" neither of which exist in the real world.

 

Bottom line is that dismissing Economics as alchemy is Luddism, and we all do ourselves a disservice by allowing it.

 

I don't mind terms like "soft science" and "hard science" if you still want your group to be called "the only real kind" (boys!), but I'll come after you with my riding crop if you try to pull this argument....

 

In real life, unlike in Shakespeare, the sweetness of the rose depends upon the name it bears. Things are not only what they are. They are, in very important respects, what they seem to be, :coffee_n_pc:

Buffy

[lawcat]

Never confuse money and economy. Economy has to do with labor, production, and consumption. Money has to do with financial markets, and financial markets are regulatory. Single currency is simply a regulatory mechanism to control liquidity and borrowing in financial markets. Theoretically, single currency should lead to more stable financial markets. Well, it does not always happen, as U.S. in the past decade provides the example of bad centralized policies.

 

As for sciences, there are two: natural and social. I would categorize economy under social science column.

[maikeru]

But this is the trap: it relies in black boxes and *unsupported* beliefs about how they might work, in the areas of cellular operation and cognitive (biological) function. Much of what goes on in developing theories in biology is indeed pure guesswork.

 

Buffy, with the distinct difference that guesses are tested. You keep talking about black boxes and unsupported beliefs. And sometimes that can lead to ethical, medical, and environmental issues, that I understand. It is also the responsibility of the experimenter to create experiments that can better test his hypotheses.

 

An example of this showed up in this month's SciAm 50, 100, and 150 years ago column:

 

You know what's funny and sad at the same time is that I'm reminded of the snake-oil salesmen who keep trying to sell me oxygenated, ionized, or ozonated water claiming it will give me better health. I tell them filtered tap water works just fine, and even then, I don't usually drink water but tea or coffee.

 

Regarding radium in water, they made the mistake of taking correlation for causation.

 

Even 50 years after this we had atrocities of "science" like Thalidomide, really based on the fact that the "theory" is based on systems that are not at all well-understood.

 

I agree, but you dismiss the tendency of the advancing nature of science. Not only does scientific knowledge expand and refine itself, it also has methods that encourage self-checking and self-correction. Most of the time drugs and treatments require much better testing and we shouldn't overestimate or underestimate our stock of knowledge or lack thereof. I studied thalidomide and the horrors it caused, but much of its action is quite straight forward as an anti-angiogenic agent. Doctors and researchers should've known that it could have high risks. It's a tragedy. I hope more stuff like that doesn't happen.

 

My argument is that to dismiss a "science" because it--as Eclogite said is "akin to alchemy"--does a tremendous disservice to the advancement of knowledge.

 

This sort of thing is short-sighted prejudice, pure and simple, and if you think about it, plays directly into the hands of the Intelligent Design argument that if it isn't perfectly explained by the theory, it "must have been designed" or if you're an atheist "must be perfectly random and is beyond prediction."

 

I find that attitude incredibly backward.

 

I think you're inserting your words here for mine. I'm not saying that economic knowledge and theory isn't valuable, but what I am doing is questioning the validity of such theories and knowledge, because it has such important applications, both in people's normal lives and the lives and affairs of countries. In fact, better economic knowledge is highly valuable because it has such important ramifications. But without methods and means to test the validity of different schools of economic knowledge and economic theories, better and worse are difficult, maybe sometimes or fully impossible, to discern. They are quite often not falsifiable, quite often not testable, quite often not repeatable, etc. Exactly what do we know and what don't we know if we cannot know that we know?

 

Gosh, Einstein used "thought experiments" endlessly before there was any supportive data. Would you call him a "priest of the religion of Relativity?"

 

Unfortunately, and fortunately for physics, Einstein's thought experiments were testable and observations could be made and experiments conducted to test their validity and conclusions. If he formulated them in a matter that wasn't testable or had aspects that could be examined in experiments, we might have some issue with that. Sometimes validation takes time...months, years, decades, or centuries. But if you can't validate because the question or theory is put in such a form or way it can never be validated, well...

 

"Does God wear a Hawaiian shirt and pink biker shorts?" It might be an interesting challenge to formulate an experiment to test that hypothesis, but it already raises red flags and warnings.

 

And how much of biology is "barely falsifiable?" I can find lots of examples too, many surrounding one of the fundamental elements of scientific proof in biology, like the practice of exposing animals to unnaturally large doses of substances (like radium) to prove harmful effects of normal exposure over long periods of time. That's an *assumption* that is too infrequently followed up with long term studies that verify the links, and even those studies suffer from cross-contamination of other possible causes of outcomes.

 

Of course, it follows that all of biological knowledge should be falsifiable. The biggest target is evolution. Shoot that down and you can spear the remaining fish in the shrinking pools in the dry stream bed.

 

Natural and unnatural are relative terms. Furthermore, what you bring up are questions and issues with experimental design, problems that can afflict experiments and inquiries in any field of science. The burden rests on the experimenter, and it's a heavy and worrisome burden, speaking from personal experience.

 

Even though these approaches provide the weakest of Falsifiability, they are fundamental and absolutely necessary to moving the science forward. If you are going to call out Economics for doing similar things, it's hardly convincing.

 

No, what I'm doing is questioning theories, assumptions, and knowledge that aren't falsifiable, testable, etc. A study or field of knowledge that cannot withstand a rigorous introspective gaze gives much worry, IMO. Why the fear? Why the worry? Shouldn't "truth" stand up well to inspection and question?

 

Moreover, if you insist upon attacking it, do try to keep up on the current work:

 

Perhaps more than you suppose, Buffy.

 

I don't mind terms like "soft science" and "hard science" if you still want your group to be called "the only real kind" (boys!), but I'll come after you with my riding crop if you try to pull this argument....

 

In real life, unlike in Shakespeare, the sweetness of the rose depends upon the name it bears. Things are not only what they are. They are, in very important respects, what they seem to be, :D

Buffy

 

Let us agree then to disagree. But it does not diminish my respect for your insights.

[Buffy]

I agree, but you dismiss the tendency of the advancing nature of science. Not only does scientific knowledge expand and refine itself, it also has methods that encourage self-checking and self-correction.

...and by saying this you imply that Economics can't possibly do so.

 

While certainly there are things that are hard to falsify--as I've noted and you've done nothing to refute--you are saying--again, without any real data, just your "distaste" for admitedly flawed economic theories--that Economic theories are somehow "less falsifiable."

I think you're inserting your words here for mine. I'm not saying that economic knowledge and theory isn't valuable, but what I am doing is questioning the validity of such theories and knowledge, because it has such important applications, both in people's normal lives and the lives and affairs of countries.

I can tell, and that's just fine.

 

But you *are* conflating bad economic theories of the past into "economics is not science and cannot subject itself to the scientific method." You're welcome to try to prove this, but you've said nothing so far that supports this claim.

 

And you need to consider that you are *not* just "questioning the validity" of specific theories, by saying it can't be scientific, you are stating quite clearly that the *study* of these theories is invalid.

 

You need to take a look at your view of biology:

Of course, it follows that all of biological knowledge should be falsifiable.

Actually it isn't in many cases because the biological environment may not be replicable either (e.g. previous periods in Earth's history).

 

Again, biology has as many challenges as Economics with certain theories. If you are going to argue that Economics Cannot Be Scientific, you're going to have to supply a strong argument that there are fundamental differences in the nature of economic data which prevent replicability and falsifiability at not just a "higher level" than something like Biology, but a fundamental aspect of the nature of this data that makes such activities impossible.

 

If you feel like I'm putting words in your mouth, I'd argue you're not doing a complete job of thinking through the implications of what you're arguing for, and possibly reflect on the possible prejudices you may harbor on the subject....

 

The best economists are far more modest about the claims of their studies than I think you give them credit for, and are well aware of their limitations. But as I alluded to in the quote in my last post, names matter, and with absolutist statements like "Economics Is Not Science" you ensure that few people take it seriously, and it will indeed provide justification for all sorts of bad political decisions (maybe you need to listen to a Tea Party rally to really get the idea).

 

The only function of economic forecasting is to make astrology look respectable, :D

Buffy