Every day economic claims are used by the media or in conversation to support social and political positions. Those on the left tend to distrust economists, seeing them as friends of the right. There is something to this, since professional economists are almost all keen supporters of the free market. Yet while factions on the right naturally embrace economists, they also tend to overestimate the effect of their support on free-market policies. The result is widespread confusion. In fact, virtually all commonly held beliefs about economics — whether espoused by political activists, politicians, journalists or taxpayers — are just plain wrong.
Joseph Heath wants to raise our economic literacy and empower us with new ideas. In Economics Without Illusions, he draws on everyday examples to skewer the six favorite economic fallacies of the right, followed by impaling the six favorite fallacies of the left. Heath leaves no sacred cows untipped as he breaks down complex arguments and shows how the world really works.
As for our second topic, we’ll take on naturalism and his (reasonable) critics. The starting point for the discussion is a recent exchange in the New York Times between Alex Rosenberg and William Egginton. As it happens, I’m also reviewing (and, so far, not liking at all) Rosenberg’s new book, The Atheist's Guide to Reality: Enjoying Life without Illusions. Much to talk about, I’m sure.
I'm glad you are talking about economics, although I wish it was with an economist. I recently listened to your brief summary of the field (Q and A live, perhaps?), and heard lots of misconceptions.
ReplyDeleteMy request for the podcast would be to evaluate if economic truth is close to the middle of the left and right's fallacies - that is are the six on each side equal?
Joseph Heath provides as about as much incisive analysis into the economic sciences as does Michael Moore, which is to say none at all. What he *does* provide is more tired anti-market criticisms in vogue in academia for the last 80 years.
ReplyDeleteThat aside, in the spirit of open discourse, I hope Rationally Speaking will hold brief for pro market views, as well.
Joseph Heath is absolutely brilliant and I'm thrilled to hear that he'll be a guest.
ReplyDeleteShooter (that's a horrible nickname, btw,) Heath formatted his book in terms of left/right "balance," but he fessed up in a Bloggingheads interview at bloggingheads.tv/diavlogs/19358 . Heath is an old-time left-winger who found himself forced to abandon some of the left's woolier economic ideas after he began to seriously study economics. (I can sympathize.) I think Heath is now convinced that a broadly "neoliberal" approach is the best way to achieve traditional left goals of fairness, justice, etc.
I don't know quite what you mean by "economic truth," though. The economic left and right are animated more by moral values than by different factual beliefs, although of course we all find our factual beliefs heavily influenced by our morals. So far as you can pin down "economic truth," it tends to be a lot more fine-grained than "the left" or "the right" or "the center" having a claim on it. So for example, I'd have to say that "the right," or rather the laissez-faire view, is more nearly correct with regards to international trade, while "the left," or rather the New Keynesians, better understand macroeconomic policy. Personally, I'd like to live in a country where libertarians write the regulations, moderate liberals manage the welfare state, and socialists set the tax rates.
Well, our producer is a libertarian / objectivist...
ReplyDeleteEconTalk host Russ Roberts talks about the role of empirical evidence and bias in economics and why economists disagree. Roberts talks about how his interviews with various economists at EconTalk have forced him to reassess the role of empirical evidence in various debates in economics and economic policy. Roberts is joined by Robin Hanson of George Mason University for counterpoint and therapeutic advice for those uneasy about the scientific or non-scientific nature of economics.
ReplyDeletehttp://www.econtalk.org/archives/2009/01/roberts_and_han.html.
Food for thought, Massimo.
(Also, I'm curious, do you generally agree with all your guests, or do you act like you have Stockholm syndrome for the benefit of the interview?)
As to Rosenberg's book, I know it has been hashed out here in the past, but I found his claims on how entropy relates to biology to be more in the realm of wild speculation than something concrete, but I am not much in the know on biology and physics.
ReplyDeleteHis examples, especially his example of how we account for the seeming "order" of sperm/egg attachment by the loss of all the other sperm, are not things that we can concretely analyze or situate into our understanding of the world, at this moment, right?
Anyways, I am on board with Rosenberg's program and do not think these exaggerations and speculations (if that is what they are) effect his more important arguments of the brain/mind, intentionality, free will, moral nihilism, etc., but they were a little baffling and I assumed you could straighten such things out.
While we're on this topic, I'll reiterate my recommendation for Zombie Economics by Australian economist John Quiggin. It's a relatively light read (as you can probably tell from the comical title and cover art), but informative, nonetheless. That said...
ReplyDeleteEvan: The economic left and right are animated more by moral values than by different factual beliefs, although of course we all find our factual beliefs heavily influenced by our morals.
I agree (as much as I enjoy Paul Krugman's claim that "the facts have a liberal bias"), which is why I recognize that my book recommendation (like this podcast) will not be equally appreciated by all - no matter how based in mainstream-academic economic theory and fact it is.
In other words, how can we be expected to agree on economic policy if we evaluate its means and ends differently - sometimes radically so (e.g. based on contrary ideas that are physically instantiated in our brains and which neuroscience tells us only change synaptically via trauma and repetition)?
Eid,
ReplyDelete> I'm curious, do you generally agree with all your guests, or do you act like you have Stockholm syndrome for the benefit of the interview? <
No, I just try to ask questions while being polite.
> I am on board with Rosenberg's program and do not think these exaggerations and speculations (if that is what they are) effect his more important arguments of the brain/mind, intentionality, free will, moral nihilism, etc. <
That's where I find the most problems with Rosenberg (and with his insufferable arrogance). More in the podcast and in a future post on RS.
mufi,
> I'll reiterate my recommendation for Zombie Economics by Australian economist John Quiggin <
It's already on my iPad, but haven't started it yet (got three books to review at the moment...).
> how can we be expected to agree on economic policy if we evaluate its means and ends differently? <
Exactly, that's what's fascinating in economics, it's a textbook study of the interactions between facts (there *are* facts out there!) and values. Neither can totally trump the other, as we may decide to go for economically sub-optimal solutions to safeguard some of our values, but values by themselves can't produce econo-magic!
Massimo: For what it's worth, well put.
ReplyDeleteBTW, I also came away from Quiggin's book with a reinforced understanding that the real debate in economic policy these days is no longer between capitalism and socialism per se, so much as between social democracy and market fundamentalism (to use his terms), both of which concern the proper balance between government and markets.
More to the point, I think that Quiggin would agree with you that this struggle revolves around partly values-based and partly evidence-based conceptions of optimality.
Evan, I've had it for twenty years and I'm not giving it up.
ReplyDeleteI wasn't trying to be deep with economic truth. I realize he's going for a probably false balance, just wanted him to discuss it. A more direct question would be: is there a theory on the liberal side as whack as Laffer's curve?
Mark Erickson
is there a theory on the liberal side as whack as Laffer's curve?
ReplyDeleteNot that I'm aware of; but, to be fair, the general question to which the Laffer curve spoke (viz. How to maximize and/or optimize income tax revenue?) is not particularly "whack" and is one that's still taken seriously by economists and policy wonks...perhaps more so by liberals (e.g. see here).
Massimo,
ReplyDeleteYeah, but you can be critical while being polite, too. Maybe that's difficult, though, because you feel your guests are doing you a favor.
Genuine interest and engagement with a guests ideas is the greatest form of politeness, whether you are agreeing or not, surely?
ReplyDeleteIf they think otherwise they're crap guests.
Snce economics is a social science, this complicates the issue of "Truth in economics". Of the many different camps (Keynsians, New Keynsians, Chicago or Friedman, Austrians) of economists, only one camp thoroughly deals with the epistemological questions of economics. That is the Austrians (read "the epistemological problems of economics" by Ludwig Von Mises) Economics is indeed a science, but due to the fact it is a social science, one cannot treat it as physics, biology or chemistry. Social science must have an agreed upon aprioristic laws. It cannot be a predictive science as physics or biology. This is why you see people like Ben Bernanki (supposed great economists) predicting the housing market is going great and will continue to do so right up to the collapse and even after (as every other Keynsian economists did). It was only the Austrians that actually predicted the housing crash through Austrian business cycle theory (dispite their claim that economics cannot be a predictive science, the theory still gave austrians the ability to predict the crash). If you want to learn "truth" in economics, start by reading "Human Action" by Mises or "Man, Economy, and State" by Rothbard. The Keynsians have proven outright failure time and time again. Since the general theory was written, the Keynsians have predicted countless times they have figured out how to prevent the business cycle through monitary expansion and government spending, now countless cycles later they are trying to convince you once again they can dig us out with yet more expansion of the money supply and government spending. I am not asking anyone to come fly Libertarian airlines with me, but read the books and learn how to define economics as Praxeology (Human action) and not silly economics models that never work (show me one that does and lunch is on me)
ReplyDelete