Friday, November 28, 2008
Economics Is One Discipline With Low Perceived Barriers to Entry
I know there is a much more eloquent Rothbard quote to this effect, but I want to second his observation: For some reason, many people have no hesitation in confidently offering views about economic topics even though they would be much more modest if it came to another specialty.
For example, at Thanksgiving I was talking with a perfectly pleasant and intelligent relative of my wife. We were chatting about our respective businesses. He explained that he did video editing, and I explained that I was an economist. I asked him a few questions about his line of work, and when I was explaining mine, the issue of price movements came up. I gave my standard spiel about the monetary base and prices taking off once the panic subsides. Then he confidently told me that it's not a matter of how much money there is, but how fast it moves from person to person; it was like water moving through a pipe (I think was the simile he used).
Now his statement was fine as far as it went, but it just struck me how breezily he "corrected" my own views on monetary theory. It would be as if he told me how he knew where to stand when taping a wedding, and I said, "Well it's not so much that, but rather that you have to ask the father of the bride where he wants you to stand, since he's paying for it."
To repeat, I'm not picking on this guy in particular; it's just a recent example of something you see all the time. I think it's partly because politics is so partisan that people don't think there really is an objective science of economics. So since any random econ PhDs might disagree about price inflation next year--whereas two physics PhDs won't disagree about the trajectory of the moon--people don't take "trained professionals" seriously when they are economists.
However, I think there's more to it than just that. I think most people have no idea how complicated an economic system actually is. And the last thing, people have a first-hand knowledge of the basic content of economics. So it really doesn't seem hilarious for someone to pontificate about the causes of price movements, whereas that same person wouldn't dream of "taking issue with" something a heart surgeon says about his job while passing the gravy.
For example, at Thanksgiving I was talking with a perfectly pleasant and intelligent relative of my wife. We were chatting about our respective businesses. He explained that he did video editing, and I explained that I was an economist. I asked him a few questions about his line of work, and when I was explaining mine, the issue of price movements came up. I gave my standard spiel about the monetary base and prices taking off once the panic subsides. Then he confidently told me that it's not a matter of how much money there is, but how fast it moves from person to person; it was like water moving through a pipe (I think was the simile he used).
Now his statement was fine as far as it went, but it just struck me how breezily he "corrected" my own views on monetary theory. It would be as if he told me how he knew where to stand when taping a wedding, and I said, "Well it's not so much that, but rather that you have to ask the father of the bride where he wants you to stand, since he's paying for it."
To repeat, I'm not picking on this guy in particular; it's just a recent example of something you see all the time. I think it's partly because politics is so partisan that people don't think there really is an objective science of economics. So since any random econ PhDs might disagree about price inflation next year--whereas two physics PhDs won't disagree about the trajectory of the moon--people don't take "trained professionals" seriously when they are economists.
However, I think there's more to it than just that. I think most people have no idea how complicated an economic system actually is. And the last thing, people have a first-hand knowledge of the basic content of economics. So it really doesn't seem hilarious for someone to pontificate about the causes of price movements, whereas that same person wouldn't dream of "taking issue with" something a heart surgeon says about his job while passing the gravy.
Comments:
Turn the question around: why do you feel qualified to question climate science, but not, say, theoretical quantum physics?
(Oh, I know, right, because theoretical physicists never use their work to ask for tax dollars ...)
(Oh, I know, right, because theoretical physicists never use their work to ask for tax dollars ...)
I don't think the attitude towards economics as described by Bob is really comparable to Bob's own attitude toward climate science. He is hardly bristling that lay people dare to question the infallibility of learned economists such as himself. He is merely noting the tendency to venture upon economics with a glibness and confidence that wouldn't be in evidence were they talking about most other academic disciplines.
I don't see that same glibness and confidence from Bob when he talks about climate science. From what I've read he tends to acknowledge both that he has no special expertise on the subject and the possibility that things he perceives as errors or flawed arguments may merely be products of his ignorance on the matter.
As far as the subject of the post I would note the general quality of the higher profile economists. Here I am talking as much about demeanour as intellect. If someone views the kind of oafish, puerile personalities you regularly get on tv as exemplars of their field I can fully understand why they might aquire a dim view of it.
I don't see that same glibness and confidence from Bob when he talks about climate science. From what I've read he tends to acknowledge both that he has no special expertise on the subject and the possibility that things he perceives as errors or flawed arguments may merely be products of his ignorance on the matter.
As far as the subject of the post I would note the general quality of the higher profile economists. Here I am talking as much about demeanour as intellect. If someone views the kind of oafish, puerile personalities you regularly get on tv as exemplars of their field I can fully understand why they might aquire a dim view of it.
# posted by 
: November 29, 2008 at 6:45 AM
: November 29, 2008 at 6:45 AM
I see linguists making the same complaint all the time.
"And the last thing, people have a first-hand knowledge of the basic content of economics."
Dead right. I imagine the same might be true of history or law or anything else where it's easy to have a basic understanding of what the subject is all about.
"And the last thing, people have a first-hand knowledge of the basic content of economics."
Dead right. I imagine the same might be true of history or law or anything else where it's easy to have a basic understanding of what the subject is all about.
# posted by : November 29, 2008 at 9:47 AM
: November 29, 2008 at 9:47 AM
1. My moderate Republican father always pulled that velocity of money thing on me when he didn’t want to think things through. My own favorite retort is that the central bank creates money out of thin air. The people who get the new money have no assets backing it up. Their use of the money necessarily DILUTES the value of the money stock of everyone else whose money reflects their own real assets. That’s a form of theft and it’s immoral. And it’s the essence of the fiat money system. No one can really know EXACTLY what the effect of the new money will be on prices other than to totally screw up the price system. No one really knows if a price reflects actually scarcity or if it reflects people simply trying to find a store of value of their diluted fiat dollars. Why would anyone support such an immoral system?
2. A corollary of Mr. Murphy’s story is that EVERYONE believes that the government has magical powers to cure everything. Everyone (except libertarians) always pontificates about how the government should use its magical powers to cure everything. When challenged, everyone seems to have a seven second attention span for a discussion about their political proposals. And then they say, “Don’t talk about politics so much!” At which point I respond, “Oh, the government is just Nixon with a SWAT team.”
2. A corollary of Mr. Murphy’s story is that EVERYONE believes that the government has magical powers to cure everything. Everyone (except libertarians) always pontificates about how the government should use its magical powers to cure everything. When challenged, everyone seems to have a seven second attention span for a discussion about their political proposals. And then they say, “Don’t talk about politics so much!” At which point I respond, “Oh, the government is just Nixon with a SWAT team.”
Your point is well taken...
However, while not too many people will try to tell a heart surgeon how to do his job, there are plenty of people who will try to tell psychiatrists that it's the mercury causing austism, or other equally ridiculous claims.
However, while not too many people will try to tell a heart surgeon how to do his job, there are plenty of people who will try to tell psychiatrists that it's the mercury causing austism, or other equally ridiculous claims.
I always found this statement by a famous non-economist amusing, "We're all Keynesians now."
I don't think the publc believes for a moment that it's easy to earn a doctorate in economics. But public does seem to think, "so what? Aside from maybe Keynes you guys don't have a great record of making money." Anyone who participates in the financial world (politicians, traders, bankers, investors, et al.) has to form economic opinions to make decisions. It's part of the fabric of our society. "We're all armchair economists now!"
I don't think the publc believes for a moment that it's easy to earn a doctorate in economics. But public does seem to think, "so what? Aside from maybe Keynes you guys don't have a great record of making money." Anyone who participates in the financial world (politicians, traders, bankers, investors, et al.) has to form economic opinions to make decisions. It's part of the fabric of our society. "We're all armchair economists now!"
Bob,
maybe your wife's relative is a hobby economist and has read a number of basic economic texts - and came across the velocity theory of money?
My general experience is not that people have many opinions on the economy, but rather simply parrot what they have heard in the media.
One generally notes this phenomenon on topics one happens to know a lot about: there is always somebody who has picked up some nonsense he read only yesterday in the newspaper.
Maybe you should have engaged your wife's relative in a more detailed discussion?
At the very least he knew something about inflation most people have never heard about. It may be wrong, but it shows that he may possibly be quite interested in the topic.
Just a thought.
Silas: base on my own experience with people of different interests, laypeople can sometimes be incredibly well-versed in the most surprising things. All it takes is interest.
Always remember: neither Einstein nor Niels Bohr had a degree in quantum physics, and Newton was only a hobby-physicist.
Silas: i bet you if quantum physicist started to ask for massive policy changes based on their research, Bob would start reading up on that very quickly.
Oh, and one final point: there shouldn't be public funding for quantum physics, either. Looking back a century, public funding for this type of research has caused more trouble than it has brought good. Or do you think nuclear weapons were a good thing?
maybe your wife's relative is a hobby economist and has read a number of basic economic texts - and came across the velocity theory of money?
My general experience is not that people have many opinions on the economy, but rather simply parrot what they have heard in the media.
One generally notes this phenomenon on topics one happens to know a lot about: there is always somebody who has picked up some nonsense he read only yesterday in the newspaper.
Maybe you should have engaged your wife's relative in a more detailed discussion?
At the very least he knew something about inflation most people have never heard about. It may be wrong, but it shows that he may possibly be quite interested in the topic.
Just a thought.
Silas: base on my own experience with people of different interests, laypeople can sometimes be incredibly well-versed in the most surprising things. All it takes is interest.
Always remember: neither Einstein nor Niels Bohr had a degree in quantum physics, and Newton was only a hobby-physicist.
Silas: i bet you if quantum physicist started to ask for massive policy changes based on their research, Bob would start reading up on that very quickly.
Oh, and one final point: there shouldn't be public funding for quantum physics, either. Looking back a century, public funding for this type of research has caused more trouble than it has brought good. Or do you think nuclear weapons were a good thing?
"I imagine the same might be true of history or law or anything else where it's easy to have a basic understanding of what the subject is all about."
That should read, "It's easy to imagine one has a basic understanding of what the subject is all about." I've spent the last 8 years regularly thinking about history and am still not sure I have a basic understanding of it.
That should read, "It's easy to imagine one has a basic understanding of what the subject is all about." I've spent the last 8 years regularly thinking about history and am still not sure I have a basic understanding of it.
"My own favorite retort is that the central bank creates money out of thin air."
Why do 100%-reservers always bring this up as if, if it were true, it would be bad? If anyone could create something out of "thin air," this surely would be great, wouldn't it? I mean, no resources expended! Of course, even central banks can't create things out of "thin air," but why in the world would anyone think this would be a complaint about them if they could?
Why do 100%-reservers always bring this up as if, if it were true, it would be bad? If anyone could create something out of "thin air," this surely would be great, wouldn't it? I mean, no resources expended! Of course, even central banks can't create things out of "thin air," but why in the world would anyone think this would be a complaint about them if they could?
"The people who get the new money have no assets backing it up."
Nor, in a fiat money system, does anyone else! What "assets" do you think "back up" the money in your wallet?
Nor, in a fiat money system, does anyone else! What "assets" do you think "back up" the money in your wallet?
Danny_Butterworth: I don't see that same glibness and confidence from Bob when he talks about climate science. From what I've read he tends to acknowledge both that he has no special expertise on the subject and the possibility that things he perceives as errors or flawed arguments may merely be products of his ignorance on the matter.
Not true. Have you even read Bob's Nordhaus paper? He spends the first 19 pages saying that the data are "uncertain". Then, five minutes before he submitted the paper, he realized that that could mean the proposed schemes are *under*- rather that over-reacting. So, he gave us this little gem (previous mention):
"Naturally, the proponent of
strict measures could argue that Nordhaus may be underestimating the risks of inaction.
Although certainly possible, we believe the balance of evidence lies in the favor of conservatism,
since we have identified several key areas in which Nordhaus relies on speculative estimates that
depart from historical trends in a direction that yields higher carbon taxes."
So, in other words, Bob is "unconvinced" in one of the directions, so that overrides all of the data he didn't cherry-pick. There's nothing humble about that at all!
And of course, not content to dehumanize Bengalis, Bob later said, later in that aguanomics thread that I need to stay on the topic of the Nordhaus paper, even though that was exactly what I had criticized, because he couldn't be bothered to read any more than a few words from my posts before feeling qualified to respond to them.
@James_Rothfield: Silas: i bet you if quantum physicist started to ask for massive policy changes based on their research, Bob would start reading up on that very quickly.
Yes, but that's the problem. Bob_Murphy is coming in with the pre-ordained conclusion that his gasoline use must not be violating anyone's rights, and so will do whatever it takes to "prove" that, no matter what the evidence shows. You're supposed to fit the theory to the data, not the other way around!
there shouldn't be public funding for quantum physics, either.
I'm not the one that needs to hear this -- Bob_Murphy is! Let's not forget, he's the one who points to government-researched geo-engineering that is only worthwhile for governments, as a solution to global warming ... without the slightest hint that he sees the irony!
Looking back a century, public funding for this type of research has caused more trouble than it has brought good. Or do you think nuclear weapons were a good thing?
Careful! Now you're adopting Bob_Murphy's tactic of falsely attributing a belief to me so he can point and stare! :-P
If you blame the government for nuclear weapons, you have to credit it for nuclear energy.
Thanks for linking my kitty, btw.
Not true. Have you even read Bob's Nordhaus paper? He spends the first 19 pages saying that the data are "uncertain". Then, five minutes before he submitted the paper, he realized that that could mean the proposed schemes are *under*- rather that over-reacting. So, he gave us this little gem (previous mention):
"Naturally, the proponent of
strict measures could argue that Nordhaus may be underestimating the risks of inaction.
Although certainly possible, we believe the balance of evidence lies in the favor of conservatism,
since we have identified several key areas in which Nordhaus relies on speculative estimates that
depart from historical trends in a direction that yields higher carbon taxes."
So, in other words, Bob is "unconvinced" in one of the directions, so that overrides all of the data he didn't cherry-pick. There's nothing humble about that at all!
And of course, not content to dehumanize Bengalis, Bob later said, later in that aguanomics thread that I need to stay on the topic of the Nordhaus paper, even though that was exactly what I had criticized, because he couldn't be bothered to read any more than a few words from my posts before feeling qualified to respond to them.
@James_Rothfield: Silas: i bet you if quantum physicist started to ask for massive policy changes based on their research, Bob would start reading up on that very quickly.
Yes, but that's the problem. Bob_Murphy is coming in with the pre-ordained conclusion that his gasoline use must not be violating anyone's rights, and so will do whatever it takes to "prove" that, no matter what the evidence shows. You're supposed to fit the theory to the data, not the other way around!
there shouldn't be public funding for quantum physics, either.
I'm not the one that needs to hear this -- Bob_Murphy is! Let's not forget, he's the one who points to government-researched geo-engineering that is only worthwhile for governments, as a solution to global warming ... without the slightest hint that he sees the irony!
Looking back a century, public funding for this type of research has caused more trouble than it has brought good. Or do you think nuclear weapons were a good thing?
Careful! Now you're adopting Bob_Murphy's tactic of falsely attributing a belief to me so he can point and stare! :-P
If you blame the government for nuclear weapons, you have to credit it for nuclear energy.
Thanks for linking my kitty, btw.
I don't attribute any beliefs to you:)
Yes, w/o gov finance, nuclear energy wouldn't have been developed this early. On the other hand, there is no reason to believe it wouldn't have been developed otherwise. And probably with better technology, just like space flight.
Which private business would have been mad enough to attempt sending a man to Mars with 1960s computing technology.
You're welcome on the kitty :)
Yes, w/o gov finance, nuclear energy wouldn't have been developed this early. On the other hand, there is no reason to believe it wouldn't have been developed otherwise. And probably with better technology, just like space flight.
Which private business would have been mad enough to attempt sending a man to Mars with 1960s computing technology.
You're welcome on the kitty :)
Wow. This Silas guy is so horribly annoying that I'm surprised you bother allowing this twit to post here Bob. All he does is clog the blog with inane posts and stupidity.
Count me as one of the people who will no longer read the comments section of this blog.
No wonder this @sshole has been blocked from other economists websites.
Count me as one of the people who will no longer read the comments section of this blog.
No wonder this @sshole has been blocked from other economists websites.
# posted by : November 30, 2008 at 2:48 PM
: November 30, 2008 at 2:48 PM
Wow I hadn't kept tabs on this post; I didn't realize how many comments there were.
Silas, besides the tone of your remarks, there is the huge irony in that your quote from me proves you wrong. Look at this:
"Naturally, the proponent of
strict measures could argue that Nordhaus may be underestimating the risks of inaction.
Although certainly possible, we believe the balance of evidence lies in the favor of conservatism..."
Forget whether or not you like my response (you obviously don't like it). The fact that I conceded there might be something wrong with my argument already moves us beyond the topic of this blog post. The guy at the party didn't say, "OK, I see what you are saying, but what if we look at it from the point of view..."
No, he flatly said, "It's not so much the amount of money as..." I.e. he instantly informed me what I had just said was irrelevant, and went on to tell me what the right approach to inflation was. He acted as if we were arguing about the best '60s band, rather than something in which I had a PhD.
Silas, besides the tone of your remarks, there is the huge irony in that your quote from me proves you wrong. Look at this:
"Naturally, the proponent of
strict measures could argue that Nordhaus may be underestimating the risks of inaction.
Although certainly possible, we believe the balance of evidence lies in the favor of conservatism..."
Forget whether or not you like my response (you obviously don't like it). The fact that I conceded there might be something wrong with my argument already moves us beyond the topic of this blog post. The guy at the party didn't say, "OK, I see what you are saying, but what if we look at it from the point of view..."
No, he flatly said, "It's not so much the amount of money as..." I.e. he instantly informed me what I had just said was irrelevant, and went on to tell me what the right approach to inflation was. He acted as if we were arguing about the best '60s band, rather than something in which I had a PhD.
James,
The guy may very well have read up on stuff. To repeat, I didn't even have a problem with the content of his position; it was basically right.
What struck me was the speed and confidence with which he blew off my analysis and gave me a "better" one. It would have been inconceivable that I would have said something analogous regarding his discussion of his own line of work.
Furthermore, the difference wasn't one of courtesy. For some reason, it doesn't seem like economists are entitled to the same degree of authority in their field as most other professionals are.
Last thing: The guy did ask me, "What do you think of that theory?" a few minutes later, in regard to something else. So it wasn't that he was a jerk or anything, just that people can form opinions about economic topics much more easily than they would about other technical subjects.
The guy may very well have read up on stuff. To repeat, I didn't even have a problem with the content of his position; it was basically right.
What struck me was the speed and confidence with which he blew off my analysis and gave me a "better" one. It would have been inconceivable that I would have said something analogous regarding his discussion of his own line of work.
Furthermore, the difference wasn't one of courtesy. For some reason, it doesn't seem like economists are entitled to the same degree of authority in their field as most other professionals are.
Last thing: The guy did ask me, "What do you think of that theory?" a few minutes later, in regard to something else. So it wasn't that he was a jerk or anything, just that people can form opinions about economic topics much more easily than they would about other technical subjects.
Gene said:
Why do 100%-reservers always bring this up as if, if it were true, it would be bad? If anyone could create something out of "thin air," this surely would be great, wouldn't it? I mean, no resources expended! Of course, even central banks can't create things out of "thin air," but why in the world would anyone think this would be a complaint about them if they could?
I can't decide if you are being brilliant or goofy here, Gene, but I'll play along and maybe we'll find out by the end which it is. :)
OK you're right, central bankers don't create new money out of thin air. Instead, they do something involving electric charges and circuit boards that Silas could better explain. (For real everyone, I am sure Silas knows far more about electrical engineering than I ever will.)
So yes it's not quite as good as "out of thin air," but it definitely uses fewer resources than 100% gold reserves.
So is FRB now "great," though not as great as it would be if it really could happen out of thin air?
Why do 100%-reservers always bring this up as if, if it were true, it would be bad? If anyone could create something out of "thin air," this surely would be great, wouldn't it? I mean, no resources expended! Of course, even central banks can't create things out of "thin air," but why in the world would anyone think this would be a complaint about them if they could?
I can't decide if you are being brilliant or goofy here, Gene, but I'll play along and maybe we'll find out by the end which it is. :)
OK you're right, central bankers don't create new money out of thin air. Instead, they do something involving electric charges and circuit boards that Silas could better explain. (For real everyone, I am sure Silas knows far more about electrical engineering than I ever will.)
So yes it's not quite as good as "out of thin air," but it definitely uses fewer resources than 100% gold reserves.
So is FRB now "great," though not as great as it would be if it really could happen out of thin air?
Maybe it's because the thinking layperson feels that they can grasp the concepts of economics through deductive reasoning and a priori truths. ; )
And of course, because they recognize the contradictions to their own reasoning by the so-called experts. Glenn Beck ranting about Barney Frank or Paul Krugman's policy prescriptions -- even though he had no idea what Keynesianism is -- comes to mind.
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And of course, because they recognize the contradictions to their own reasoning by the so-called experts. Glenn Beck ranting about Barney Frank or Paul Krugman's policy prescriptions -- even though he had no idea what Keynesianism is -- comes to mind.
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