Buiter: Monetary Economics..."a privately and socially costly waste of time"

[petertribo]

From Willem Buiter, here's the full quote from a recent piece:

Indeed, the typical graduate macroeconomics and monetary economics training received at Anglo-American universities during the past 30 years or so, may have set back by decades serious investigations of aggregate economic behaviour and economic policy-relevant understanding. It was a privately and socially costly waste of time and other resources. [my bold]

http://blogs.ft.com/maverecon/2009/0...ary-economics/
Original link was at
http://www.nakedcapitalism.com/

Amen, Willem. And hats off to you for fessing up. Echoes of Nassim Taleb who advocates an immediate shutdown of the "education" of Financial Engineers.

I have yet to see any Economist (or Criminologist for that matter) produce any study analysing the cost of Corporate and Political Corruption in the current Disaster. Yet, these seem very significant factors. Is this subject then TABU to academic careers? Hey, folks, look at the Elephant in the Economic Room! This is just one of numerous topics Economics ignores.

If academic Economics is of dubious value, then what about all those other academic disciplines and departments, like Medicine (docs in bed with PHARMA), Engineering (do we get only INDUSTRY driven solutions?), etc. We think the Best and Brightest are running things when it may be the Worst and Dimmest, but well-connected.

Let's not ignore the fact also that Universities are in the main heavily publicly subsidized but the Public has little say over who gets access to them. Hmmm, that sounds like the Socialized Banks

[Uno]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Empirical economics is a joke. Financial Engineering is a bigger joke.

What are they engineering? Lies?

Engineering must be based on natural laws, not psuedo social science.

That is where economics has failed.

You cannot compare economics to medicine nor engineering as they are based on natural laws.

Economics is about as scientifically accurate as astrology.

[flintlock]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Agree 100%. And I'm also convinced that in the future we'll see the truth come out about how medicine has become corrupt as wall street. The United States of Scamerica.

[alcyone]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Bite your tongue Kemosabe, As an occult science, Astrology is far more reliable than Economics will ever be. You might want to reconsider your unexamined prejudice. A wise man once wrote: “A touchstone to determine the actual worth of an "intellectual", is to find out how he feels about Astrology.“

[don]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Empirical economics is a joke. Financial Engineering is a bigger joke.

What are they engineering? Lies?

Engineering must be based on natural laws, not psuedo social science.

That is where economics has failed.

You cannot compare economics to medicine nor engineering as they are based on natural laws.

Economics is about as scientifically accurate as astrology.

We've been going about this all wrong....:eek:

Business is booming for fortune-tellers

Brian Macquarrie, Boston Globe
Wednesday, March 4, 2009

Barbara Bonham slowly shuffled the tarot cards as Alex Palermo, owner of the Original Tremont Tearoom, locked eyes across a small table brightened by a row of smiling Buddhas. After spreading the cards before him, Palermo gently fingered his graying goatee as the $55 half-hour session began.

"There definitely are concerns here about property and property dealings," Palermo intoned solemnly, culling a message from the astrological symbols and Hebrew letters contained in the cards. "I see circular reasoning. Not knowing when to do it or what to do; indecision about whether to buy or not to buy."

Bonham nodded in agreement. She has, in fact, been struggling with whether to buy a condo in Colorado in this plummeting, unpredictable market.

In a business that has long catered to questions about romance and family, many psychics are finding that not only is the recession good for business, but it also has changed their business.

Palermo said the tearoom, which opened amid the desperation of the Great Depression, has seen a 50 percent increase in customers since the economy tumbled into free-fall late last year, with many of them looking for guidance through the hard times ahead.

Now, instead of 150 clients a month, Palermo said, the tearoom is handling 225, ranging from lawyers to single women to CEOs to priests.

[petertribo]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Agree 100%. And I'm also convinced that in the future we'll see the truth come out about how medicine has become corrupt as wall street. The United States of Scamerica.

Just like the Finance and Economics "disciplines" which have numerous dissidents, Medicine now has numerous dissidents, members of the discipline who have little faith in its methods or its domination by corporate interests. One such dissident is Dr.Nortin M. Hadler who wrote How to Stay Well Despite the Health-care System:

A rheumatologist and professor of medicine at the University of North Carolina, Dr. Nortin Hadler has been known to rigorously examine the statistics generated by his medical colleagues' practices for over three decades now. Afterwhich, he arrives at startling conclusions about their effectiveness.

http://www.seniorfitness.com/tutoria...0_article.html

I have a friend who ten years ago became an invalid because he trusted Modern Medicine without any question. If FIRE teaches us anything, it is that we should be skeptics of all these disciplines. Blind faith in America's institutions may be far more costly than just losing your bank account.

It is indeed Scamerica and becoming worse each day as the country's Rackets desperately search for lost revenues. Our Universities educated most of the people running these rackets and must bear much of the responsibility for what the country has become.

Willem Buiter, Nassim Taleb, Nortin Hadler, let the dissidents blossom!

[gwynedd1]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Economics is simple. It really is. If I drive a car into my living room it creates "jobs" but anyone with any sense will tell you its not a good thing to do. Always reduce the problem to 10 people on an island and you get the picture.
However one very simple law in economics is that capital will seek to expand its market and kill off its competition. The schemes to achieve this by monopoly capital are ferociously complex.

Trucking company:
1 truck. Cost to operate per day $100
1 truck driver. Cost of labor $200
fuel $100

shipping charge $1000

expected profit $600

Actual profit: a $(200,000) loss.

Someone cut the brake lines and the truck went into a ravine. The economics are easy but the plots of monopolistic capital and labor are hard to follow. Its not really economics until you know the results. Should we lower interest rates or start arresting people cutting break lines?
Why is health care so expensive? Here is an economic reason.

1. People like to sleep.
2. The low paying training period in residency makes one sleep deprived and they have no personal life.
3 result? Fewer people enter the field and the labor supply is restricted driving up the price. There should be a law about that but then there goes the malpractice money lawyers get from sleepy doctors.

[Spartacus]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Don't forget Ravnskov

http://www.ravnskov.nu/cholesterol.htm
http://www.westonaprice.org/moderndi...s_cholest.html

and TAubes
http://www.amazon.com/Good-Calories-.../dp/1400040787

Just like the Finance and Economics "disciplines" which have numerous dissidents, Medicine now has numerous dissidents, members of the discipline who have little faith in its methods or its domination by corporate interests. One such dissident is Dr.Nortin M. Hadler who wrote How to Stay Well Despite the Health-care System:

http://www.seniorfitness.com/tutoria...0_article.html

I have a friend who ten years ago became an invalid because he trusted Modern Medicine without any question. If FIRE teaches us anything, it is that we should be skeptics of all these disciplines. Blind faith in America's institutions may be far more costly than just losing your bank account.

It is indeed Scamerica and becoming worse each day as the country's Rackets desperately search for lost revenues. Our Universities educated most of the people running these rackets and must bear much of the responsibility for what the country has become.

Willem Buiter, Nassim Taleb, Nortin Hadler, let the dissidents blossom!

[Supercilious]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Bite your tongue Kemosabe, As an occult science, Astrology is far more reliable than Economics will ever be. You might want to reconsider your unexamined prejudice. A wise man once wrote: “A touchstone to determine the actual worth of an "intellectual", is to find out how he feels about Astrology.“

I know nothing about Astrology, but regardless how accurate or not astrological predictions are, definitely it is far more reliable than modern Wall Street economics.

[*T*]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

Empirical economics is a joke. Financial Engineering is a bigger joke.

What are they engineering? Lies?

Engineering must be based on natural laws, not psuedo social science.

That is where economics has failed.

You cannot compare economics to medicine nor engineering as they are based on natural laws.

Economics is about as scientifically accurate as astrology.

Erm, no.

Natural laws are theories, empirically verified. Real engineers use empirical laws too.

Much of economics however does not submit to empirical verification.
As Taleb says, only one Nobel Econ Laureate proposed theories that could be verified against out-of-sample data. The problem is not enough empiricism. Not enough trusting of the observations.

[halcyon]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

I think what Uno was trying to say, please correct me if I'm wrong Uno, was:

In it's current form, much of the empirical financial and macro-economic theory is a joke, because it doesn't really adhere to the criteria of empirical science. It's mostly empirical in it's name, and only in the name.

Now, theoretical macro-economics for the most part is even worse. In such schools, such as the much vaunted Chicago schools yet not limited to it, reality is wrong if in contradiction with the theory.

Yes, we need real empirical macro and financial economic theory.

But the roots of that are NOT in 100+ year old mumbo-jumbo theoretic models, but in real world physio-economic observations. Read papers by Robert Ayres, who's got a PhD both in physics and economics and understands that economic systems must be based on real physical systems.

After we have basic ecological economics can we start building 'pure' economic models on top of that, but never should these two become completely disconnected, because they are not so in the real world.

However, for this revolution to happen... let's say I won't be holding my breath.

Lots of papers will be written about the current crisis and most forgotten when the next boom part of the debt boom-bust cycle begins.

[*T*]

Re: Buiter: Monetary Economics..."a privately and socially costly waste of time"

I think what Uno was trying to say, please correct me if I'm wrong Uno, was:

In it's current form, much of the empirical financial and macro-economic theory is a joke, because it doesn't really adhere to the criteria of empirical science. It's mostly empirical in it's name, and only in the name.

Now, theoretical macro-economics for the most part is even worse. In such schools, such as the much vaunted Chicago schools yet not limited to it, reality is wrong if in contradiction with the theory.

Yes, we need real empirical macro and financial economic theory.

But the roots of that are NOT in 100+ year old mumbo-jumbo theoretic models, but in real world physio-economic observations. Read papers by Robert Ayres, who's got a PhD both in physics and economics and understands that economic systems must be based on real physical systems.

After we have basic ecological economics can we start building 'pure' economic models on top of that, but never should these two become completely disconnected, because they are not so in the real world.

However, for this revolution to happen... let's say I won't be holding my breath.

Lots of papers will be written about the current crisis and most forgotten when the next boom part of the debt boom-bust cycle begins.

I agree with all these statements. If Uno was saying this, then I agree with him too.
I'm not holding my breath though. A decent economics theory will come out of the Physics profession before it comes out of the Economics profession.