It’s really nice when someone can explain sleight of hand like this and expose the lack of intellectual honesty of an entire discipline. That said, this article is a bit one-sided. Can anyone who...
It’s really nice when someone can explain sleight of hand like this and expose the lack of intellectual honesty of an entire discipline. That said, this article is a bit one-sided. Can anyone who is actually a real economist defend this?
I have to imagine the easy defense would be:
"There is no other way to compare the productivity of workers doing different tasks."
This is one of those basic assumptions that I feel is implicit in the field of economics, but which makes it fundamentally junk science because we know we shouldn't try to reason under assumptions we know are not defensible.
The issue in a lot of sciences is the issue of measurement. A lot of things can't be measured, or by measuring them you change the value you measure, or what you measure could diverge from what...
The issue in a lot of sciences is the issue of measurement. A lot of things can't be measured, or by measuring them you change the value you measure, or what you measure could diverge from what you're using the measurement to represent.
A rule of thumb for those sciences are:
that they deal with human behavior (which always has extremely complex interactions or compound composite reasons),
that they deal with a complex definitional framework established in the field (e.g. models: Economic models; e.g. frameworks: ethical frameworks),
that they rely on creative experiments to seemingly control complex variables in ingenious ways (like games with extremely specifically defined outcomes to force a conclusion on a topic that's otherwise extremely hard to isolate)
and/or the field seems to land on conclusions that seem to go in the face of common sense *but make sense to everyone who's read up on the field.
Those four categories make up a lot of abstract words.
For economics as a field:
There are extremely complicated theoretical models that seem to be required to explain simple behaviors.
Theoretical values, and assumptions are required for the models to work.
[... ]society is controlled by a natural law, and that this law, if it worked without friction, would give to every agent of production the amount of wealth which that agent creates.
The bolded phrase is a humongous caveat that essentially means that the following is never relevant to the real world because economic markets aren't perfect and information isn't perfect. To the contrary, the best economists in the world make their fortunes because they know the markets aren't perfect and they have an informational edge.
The whole field of economics tries to explain extremely complicated human behaviors. Especially when we behave irrationally, or directly against our own values, or we have values that strongly outrank monetary concerns, the framework of conventional economics seems to become pretty useless.
Economists use scores of undergrads in creative experiments to try to measure all sorts of things that are normally impossible to measure directly because there are so many things that factor into why we make the choices we make. Do these experiments really measure the trait they're meant to isolate or are we drawing the wrong conclusions from them because the whole interpretation of results is based on the abstract assumptions in the field of theoretical economics? Do the results essentially only hold in an analogue to the physicists condition that the "chicken is in the form of an evenly distributed sphere and everything takes place in a vacuum"?
In economics a bunch of results seem to contradict obvious common sense truths. Either reality is wrong, or the model is inadequate to describe real life.
I'll use the topic of the whole article: the relationship between productivity and income to suggest they obviously can't be closely related because common sense.
We don't need an article of 1800 words and a bunch of graphs to know that productivity doesn't explain income. We don't need complicated definitions, theories or an economist at all.
All we need is a real-world example that thoroughly invalidates the theory.
I have a coworker who's extremely passionate about her job. She loves his job. She lives and breathes her job. She produces more than four times the product/value than the second best person in the same role she has in her department. We have good stats to know and quantify her productivity and to compare it to income.
I know the income of all the people working in that department. She doesn't get paid four times more than the second best person in the same role. because I speak to her, I know she knows this and doesn't care.
Economists themselves would say that's obvious. their theories would predict as much. She's loves doing her job so much she both works way more than she's paid to, and she'd be the person willing to take the lowest amount of money for doing the job because she loves the work itself so much. She's the one who has to be forced to take time off for legal reasons. She's the one who'd be willing to pay to get more working hours.
My colleague is an extreme example, but she perfectly shows a greater truth that's true for all of us: there's more to life than ensuring we get the perfect exchange between productivity and income. Dealing with economics and maximizing monetary benefit would take a lot of time we'd rather spend otherwise.
That's why people aren't even willing to change insurers or banks when they know they'd be saving hundreds of dollars per hour for the time and inconvenience it'd take us to make the switch. We aren't rational. We subjectively value a ton of different things that factor into all our decisions
All this doesn't mean economics as a field isn't extremely useful and that progress in economic theory don't lead to very real gains for society, and can cause huge changes to how the world works and consequently the daily lives of millions or billions of people.
Even with imperfect information, or results of experiments in economics that don't entirely make sense, or don't show what they're purported to mean, economics changes our lives.
To use an economics example that's relevant this week, yesterday U.S. Treasury Secretary Steven Mnuchin suggested that the US should take up loans that last for longer periods of time than the country currently does by using bonds that take longer to mature.
Today the max bond the US uses to cover its $22 trillion debt is 30 years. What if the country were to try 50 year or 100 year bonds now to lock in the historically low interest rates? How'd that work?
If you've got a good answer to whether or not this is a good idea, and are willing to put money on it, you could make a fortune.
These new bonds could also save American tax payers a fortune, if they're a good idea and the government starts using them. That calculation is entirely theoretical though. Who knows? Since the US dollar is largely the world's currency reserve, does US national debt even matter? Is it more than a number on a page?
The only way to answer those questions, and to change all the lives affected by those changes, we need the best understanding of economics we can get.
Does that mean that all esoteric research in theoretical economics is useful? Surely not. The same can be said for basic scientific research in any field, from math to ethical theory. Or it can be said of the doctorates written on a number of marginal topics that won't ever be of use to anyone.
If you ask a silly question, you often get a silly answer. Getting rid of silly assumptions in economics so we stop asking and then researching the answers to silly questions is a matter of trial, error and learning. Science isn't linearly and cumulative, where each project successively builds on the ever-growing shoulders of the giants that came before. Sometimes getting things spectacularly wrong, or the entire field getting the answer to a basic question entirely wrong is the only way to learn something new and leading the whole field forwards.
This is just one instance of a bad assumption that economists make. It seems to me this is just one of a litany of such bad assumptions. In other ostensibly scientific disciplines, it feels like...
If you ask a silly question, you often get a silly answer. Getting rid of silly assumptions in economics so we stop asking and then researching the answers to silly questions is a matter of trial, error and learning. Science isn't linearly and cumulative, where each project successively builds on the ever-growing shoulders of the giants that came before. Sometimes getting things spectacularly wrong, or the entire field getting the answer to a basic question entirely wrong is the only way to learn something new and leading the whole field forwards.
This is just one instance of a bad assumption that economists make. It seems to me this is just one of a litany of such bad assumptions. In other ostensibly scientific disciplines, it feels like the number of bad assumptions is smaller and that practitioners in those fields are quicker to admit those assumptions (and be cognizant of them to begin with). I can get behind making up economic models and studying them in theory, but my problem with economists more generally is their insistence on believing their theoretical models (based in flawed assumptions) should be used to make hugely impactful decisions in the real world. It feels to me like economics is a much more applied field when it ought to be treated more like math or physics.
Like a lot of things in macroeconomics, productivity is an average. It isn't supposed to work in every case, but on average the distortions are supposed to balance out. If an industry or a country...
Like a lot of things in macroeconomics, productivity is an average. It isn't supposed to work in every case, but on average the distortions are supposed to balance out. If an industry or a country is more productive on average, it will build and sell more stuff, so this will increase sales.
The question is whether things really do average out, or are there systematic distortions?
I think that's a good question, and accusations of intellectual dishonesty and junk science aren't going to help us find out.
What is your suggestion for a universal, objective measure of productivity then? If we can’t measure, we can’t claim to be doing science, can we? Is the index that this article proposes wrong? Are...
What is your suggestion for a universal, objective measure of productivity then? If we can’t measure, we can’t claim to be doing science, can we? Is the index that this article proposes wrong? Are the distributions in the plot inaccurate? What is your explanation for the inequality being a different distribution from productivity?
It's an interesting article and I find things to agree with, but I don't think it accurately describes economists' intentions, or why they think certain assumptions are reasonable. A more balanced...
It's an interesting article and I find things to agree with, but I don't think it accurately describes economists' intentions, or why they think certain assumptions are reasonable. A more balanced article would explain the opposing side's argument in a way they would agree with, while also explaining why the author thinks they're wrong.
I think the whole article may be based on a misunderstanding: economists simply aren't trying to compare productivity of individual workers using productivity statistics based on sales. The productivity of a factory, for example, is based on a large team of people working together, and deciding which workers get more credit doesn't really matter for measuring the aggregate output of the factory. (It does matter in real life, though.)
Economics does depend on prices, and assumes prices reveal consumer preferences. I don't have a better solution, but I'm reminded a bit of frequentist versus Bayesian approaches to statistics. The frequentist tries to make statistics objective and unbiased by avoiding any subjective inputs, while the Bayesian would rather use a prior to make assumptions explicit and then explain why they are reasonable. This is still doing science.
Similarly, assuming all prices are basically correct and reveal consumers' values seems like a way to sidestep making value judgements about what goals should be optimized. Sometimes we are explicitly questioning those goals.
For example, a "deadweight loss" is supposed to happen when a tax causes a smaller quantity of something to be sold than would otherwise happen. But if it's a sin tax, then that's the whole point. We've decided there is too much of it and consumers should buy less.
It’s really nice when someone can explain sleight of hand like this and expose the lack of intellectual honesty of an entire discipline. That said, this article is a bit one-sided. Can anyone who is actually a real economist defend this?
I have to imagine the easy defense would be:
"There is no other way to compare the productivity of workers doing different tasks."
This is one of those basic assumptions that I feel is implicit in the field of economics, but which makes it fundamentally junk science because we know we shouldn't try to reason under assumptions we know are not defensible.
The issue in a lot of sciences is the issue of measurement. A lot of things can't be measured, or by measuring them you change the value you measure, or what you measure could diverge from what you're using the measurement to represent.
A rule of thumb for those sciences are:
Those four categories make up a lot of abstract words.
For economics as a field:
The bolded phrase is a humongous caveat that essentially means that the following is never relevant to the real world because economic markets aren't perfect and information isn't perfect. To the contrary, the best economists in the world make their fortunes because they know the markets aren't perfect and they have an informational edge.
The whole field of economics tries to explain extremely complicated human behaviors. Especially when we behave irrationally, or directly against our own values, or we have values that strongly outrank monetary concerns, the framework of conventional economics seems to become pretty useless.
Economists use scores of undergrads in creative experiments to try to measure all sorts of things that are normally impossible to measure directly because there are so many things that factor into why we make the choices we make. Do these experiments really measure the trait they're meant to isolate or are we drawing the wrong conclusions from them because the whole interpretation of results is based on the abstract assumptions in the field of theoretical economics? Do the results essentially only hold in an analogue to the physicists condition that the "chicken is in the form of an evenly distributed sphere and everything takes place in a vacuum"?
In economics a bunch of results seem to contradict obvious common sense truths. Either reality is wrong, or the model is inadequate to describe real life.
I'll use the topic of the whole article: the relationship between productivity and income to suggest they obviously can't be closely related because common sense.
We don't need an article of 1800 words and a bunch of graphs to know that productivity doesn't explain income. We don't need complicated definitions, theories or an economist at all.
All we need is a real-world example that thoroughly invalidates the theory.
I have a coworker who's extremely passionate about her job. She loves his job. She lives and breathes her job. She produces more than four times the product/value than the second best person in the same role she has in her department. We have good stats to know and quantify her productivity and to compare it to income.
I know the income of all the people working in that department. She doesn't get paid four times more than the second best person in the same role. because I speak to her, I know she knows this and doesn't care.
Economists themselves would say that's obvious. their theories would predict as much. She's loves doing her job so much she both works way more than she's paid to, and she'd be the person willing to take the lowest amount of money for doing the job because she loves the work itself so much. She's the one who has to be forced to take time off for legal reasons. She's the one who'd be willing to pay to get more working hours.
My colleague is an extreme example, but she perfectly shows a greater truth that's true for all of us: there's more to life than ensuring we get the perfect exchange between productivity and income. Dealing with economics and maximizing monetary benefit would take a lot of time we'd rather spend otherwise.
That's why people aren't even willing to change insurers or banks when they know they'd be saving hundreds of dollars per hour for the time and inconvenience it'd take us to make the switch. We aren't rational. We subjectively value a ton of different things that factor into all our decisions
All this doesn't mean economics as a field isn't extremely useful and that progress in economic theory don't lead to very real gains for society, and can cause huge changes to how the world works and consequently the daily lives of millions or billions of people.
Even with imperfect information, or results of experiments in economics that don't entirely make sense, or don't show what they're purported to mean, economics changes our lives.
To use an economics example that's relevant this week, yesterday U.S. Treasury Secretary Steven Mnuchin suggested that the US should take up loans that last for longer periods of time than the country currently does by using bonds that take longer to mature.
Today the max bond the US uses to cover its $22 trillion debt is 30 years. What if the country were to try 50 year or 100 year bonds now to lock in the historically low interest rates? How'd that work?
If you've got a good answer to whether or not this is a good idea, and are willing to put money on it, you could make a fortune.
These new bonds could also save American tax payers a fortune, if they're a good idea and the government starts using them. That calculation is entirely theoretical though. Who knows? Since the US dollar is largely the world's currency reserve, does US national debt even matter? Is it more than a number on a page?
The only way to answer those questions, and to change all the lives affected by those changes, we need the best understanding of economics we can get.
Does that mean that all esoteric research in theoretical economics is useful? Surely not. The same can be said for basic scientific research in any field, from math to ethical theory. Or it can be said of the doctorates written on a number of marginal topics that won't ever be of use to anyone.
If you ask a silly question, you often get a silly answer. Getting rid of silly assumptions in economics so we stop asking and then researching the answers to silly questions is a matter of trial, error and learning. Science isn't linearly and cumulative, where each project successively builds on the ever-growing shoulders of the giants that came before. Sometimes getting things spectacularly wrong, or the entire field getting the answer to a basic question entirely wrong is the only way to learn something new and leading the whole field forwards.
This is just one instance of a bad assumption that economists make. It seems to me this is just one of a litany of such bad assumptions. In other ostensibly scientific disciplines, it feels like the number of bad assumptions is smaller and that practitioners in those fields are quicker to admit those assumptions (and be cognizant of them to begin with). I can get behind making up economic models and studying them in theory, but my problem with economists more generally is their insistence on believing their theoretical models (based in flawed assumptions) should be used to make hugely impactful decisions in the real world. It feels to me like economics is a much more applied field when it ought to be treated more like math or physics.
Like a lot of things in macroeconomics, productivity is an average. It isn't supposed to work in every case, but on average the distortions are supposed to balance out. If an industry or a country is more productive on average, it will build and sell more stuff, so this will increase sales.
The question is whether things really do average out, or are there systematic distortions?
I think that's a good question, and accusations of intellectual dishonesty and junk science aren't going to help us find out.
What is your suggestion for a universal, objective measure of productivity then? If we can’t measure, we can’t claim to be doing science, can we? Is the index that this article proposes wrong? Are the distributions in the plot inaccurate? What is your explanation for the inequality being a different distribution from productivity?
It's an interesting article and I find things to agree with, but I don't think it accurately describes economists' intentions, or why they think certain assumptions are reasonable. A more balanced article would explain the opposing side's argument in a way they would agree with, while also explaining why the author thinks they're wrong.
I think the whole article may be based on a misunderstanding: economists simply aren't trying to compare productivity of individual workers using productivity statistics based on sales. The productivity of a factory, for example, is based on a large team of people working together, and deciding which workers get more credit doesn't really matter for measuring the aggregate output of the factory. (It does matter in real life, though.)
Economics does depend on prices, and assumes prices reveal consumer preferences. I don't have a better solution, but I'm reminded a bit of frequentist versus Bayesian approaches to statistics. The frequentist tries to make statistics objective and unbiased by avoiding any subjective inputs, while the Bayesian would rather use a prior to make assumptions explicit and then explain why they are reasonable. This is still doing science.
Similarly, assuming all prices are basically correct and reveal consumers' values seems like a way to sidestep making value judgements about what goals should be optimized. Sometimes we are explicitly questioning those goals.
For example, a "deadweight loss" is supposed to happen when a tax causes a smaller quantity of something to be sold than would otherwise happen. But if it's a sin tax, then that's the whole point. We've decided there is too much of it and consumers should buy less.
Can you find me an economist (of any flavor) who would disagree with how to measure productivity?