One of the trademarks of Austrian Economics is that it argued that the economy is too complex to fully comprehend. The conclusion, therefore, is that we should approach understanding it with humility, and we should beware of anyone who says they know how to make it behave as they would wish it to behave. This is always my argument against those who think they know how the economy will or ought to behave, those who believe this or that regulation will have this or that definite outcome -- interventionists and socialists of all stripes. My argument is always that we cannot know what the outcome will be, that the system is too complex to fully comprehend -- particularly since we are elements within that system, meaning the economic system is more complex than we are. I argue that we are necessarily ignorant of what we can do to make the economy behave exactly as we want it to behave -- even as we can understand how people will typically behave given the right conditions, the right incentives, etc. We can make pattern predictions, but not outcome predictions.
I preach humility-- that we have to be honest about our ignorance. Yet when I do, I get accused of arrogance. How is it that the one who argues for humility in the face of our necessary ignorance is the one who is arrogant, while those who argue that we can in fact know everything such that we can plan the economy or, at least, knowingly regulate it, are not? By definition, it is the latter who are arrogant. Basically, I love that the one who says we should have humility when it comes to the economy because it is too complex to control is called arrogant by those so arrogant they think they can understand and control things more complex than they are.
It is amazing how much of a NewSpeak world we live in:
Humility is arrogance; arrogance is humility.
Wisdom is Foolishness
Ignorance is Knowledge.
War is Peace
More Regulation is Deregulation
Corporatism (fascism) is Free Markets
Power is Virtue
Hate is Love
"We are only threatening to kill you for your own good."
The solution to the problems created by power is more power.
6 comments:
You are arrogant because when you see someone attempting to fix a problem you call them "interventionist" and "socialist".
If someone proposes a government regulation to solve a problem, by definition they are interventionists. If someone proposes the government take over something to solve a problem, by definition they are a socialist.
I love for people to solve problems. When I see them using private enterprise and private philanthropy to do so, I call them good and just and support them.
Anyone who thinks they know the exact cure of every problem is arrogant. Pointing out you can't know the outcome of every action isn't.
There's an amazing disconnect between your criticism of mainstream economics and your proposing Austrian economics. It's bizarre to criticize mainstream economics for "[saying] they know how to make it behave as they would wish it to behave" while being a proponent of the one school of economics that says that it can model all of economic behavior based on initial axioms! You don't see the hypocrisy there?
Ironically, it's econometrics (which the Austrians completely reject for specious reasons) that gives economists a variety of ways for us to understand our error. Unfortunately, it often seems that internet Austrians who criticize mainstream economics have only seen econ 101.
As for your comment above, that's taking things to an amazing extreme. You are saying that anyone who believes that a single piece of government regulation should exist is an interventionist, and that anyone who believes that even one thing should be run by the government is a socialist. Are you that self-unaware?
And are you seriously comparing all government regulation to fascism AND killing? And you guys wonder why you're not taken seriously?
Good Share.I hope more people discover your blog because you really know what you're talking about. Can't wait to read more from you!
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You are right, there is a disconnect between my criticizing mainstream economics for "[saying] they know how to make it behave as they would wish it to behave" while "being a proponent of the one school of economics that says that it can model all of economic behavior based on initial axioms!" That disconnect is between macroeconomics, which makes the first claim, and microeconomics, which makes the second claim. I am arguing that economists, in following Keynes into macroeconomics and econometrics, took a wrong turn. And, worse, they are beyond arrogant about what they can know because of the misguided notions that one can in fact understand the macroeconomy and that math = scientific knowledge. One can mathematically model nonsense, after all.
I must say, though, that your idea of Austrianism is quite naive. Austrianism is not internet Austrianism, and the a prioristic theory of human action underlying microeconomics was a development of Mises and, obviously, not of his predecessors, Menger, Weiser, and Bohm-Bawerk. There are even some who think Hayek was not really making much use of Mises' a priorism. I myself am much more of a Hayekian in my interest in spontaneous order theory and complexity. It is my understanding of the nature of knowledge, complexity, and self-organization that makes me embrace Austrian economics.
As someone who has been publishing quite often of late in economics, I would hardly call myself an "internet Austrian."
Now, as for your absurd claim that I claimed that if you are for a single regulation, you are an interventionist, that's quite a straw man you created. I said nothing of the sort. There are many regulations that are not interventions. An interventionist is one who believes that government needs to intervene in the economy every time there is a problem. That is different from, say, labeling laws that inform the consumer. It is a regulation, yes, but not an intervention.
As for your ridiculous final question, perhaps you need to go back to school and take a remedial English course so you can learn how to read. My list does not create a causal connection among the statements. The statements are things I have either heard directly, or statements one can derive from the expressed beliefs of people I have had discussions with. When someone argues that a supporter of free markets, an advocate of the separation of state and economy, is a national socialist, then that person is engaging in NewSpeak. All of the statements are examples of the NewSpeak I have heard. Neoconservatives believe that war is peace. So, apparently, does Obama. That has nothing to do with the claim I have heard that corporatism is free markets. It may also not be coincidental that those who believe one believe the other, either, though.
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