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This leapt out at me.Economics isn’t rocket science or any other hard science, and never will be.
How little they know
HAS THE RECESSION ended?
Yes, says Larry Summers, the president’s top economic adviser and a former secretary of the Treasury. He told ABC’s George Stephanopoulos on Sunday, “Everybody agrees that the recession is over.’’
No, says Christina Romer, who heads the White House Council of Economic Advisers. The official definition may suggest that the economy has bottomed out, she said on NBC’s “Meet the Press,’’ but when moderator David Gregory pressed her on whether the recession is over, Romer replied: “Of course not . . . The people on Main Street . . . are still suffering. The unemployment rate is still 10 percent.’’
If the administration’s top economists can’t agree on something as fundamental as knowing when a recession has ended, how can they possibly be certain that they know how to end it?
Back in January, the incoming Obama administration warned that passing an immense “stimulus’’ package was an urgent priority if unemployment was to be held below 8 percent; without it, the economic team forecast, unemployment would climb as high as 9 percent. Congress gave the new president the stimulus he wanted - at $787 billion, it was the largest spending bill in US history - yet the share of the workforce without jobs rose well above the promised 8 percent. By November it had reached 10.2 percent, the highest level since 1983, before dipping to 10 percent in December.
What do economists really know? Are their insights into the workings of a modern economy comparable to, say, the medical profession’s understanding of the intricacies of human health? Are economists’ grasp of the forces that drive the business cycle on a par with aerospace engineers’ grasp of the forces encountered by aircraft during flight? Perhaps no apples-to-apples comparison is possible. But consider: Medical science has conquered polio, tuberculosis, and smallpox; air travel is safer than ever. Yet economists still don’t know how to prevent recessions, or whether stock prices will go up or down, or whether it is possible to “stimulate’’ a $14 trillion economy without causing harm.
As the Obama administration’s senior economists were declaring the recession over/not over, Paul Samuelson, the first American to win the Nobel Prize in economics, died at 94. In a column published during an earlier crisis a decade ago, Samuelson suggested that modesty is appropriate when economists diagnose an ailing economy.
“What we know about the global financial crisis is that we don’t know very much,’’ he wrote. The formula for economic recovery was unclear, and it was worth remembering that “economics has never been a science.’’ In words as apt today as in 1999, Samuelson observed that officials trying to ease the economic distress were essentially winging it. “It would be reassuring and dramatic to declare that they had succeeded. But the duller truth is that we don’t know - and neither do they.’’
In testimony before the congressional Joint Economic Committee last week, George Mason University economist Russell Roberts made a similar point with regard to job creation and the stimulus. “There is no reliable way of knowing whether the stimulus package has averted a worse situation - or whether it’s part of the problem. There is no consensus in the economics profession on this question, and no empirical evidence that can settle the dispute.’’
Most people assume that fixing the economy is the government’s responsibility - that it needs to do something to get the unemployed back to work. “That may not be possible,’’ Roberts said. Government fixes have a habit of generating unintended and unfortunate consequences. Government intervention, far from dispelling economic anxiety, often exacerbates it. “Doing less might, paradoxically, be more successful than doing more.’’
Economics isn’t rocket science or any other hard science, and never will be. Human motivations, appe es, relationships, expectations - the raw stuff of economic life - cannot be perfectly modeled or reduced to an unvarying equation. Unlike the tides or electromagnetic waves or chlorophyll, human beings have free will. Men and women choose for themselves, and no economist or policymaker can ever know with perfect certainty what those choices will be. Roberts quoted Friedrich Hayek, another Nobel laureate, who had that uncertainty in mind when he summarized the economist’s truest function:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.’’
By Jeff Jacoby
Globe Columnist
This leapt out at me.Economics isn’t rocket science or any other hard science, and never will be.
Both are giving a political answer, they just haven't agreed on the best political maneuver to appeal to their target Americans.
It's a point of guile to be two faced. One face or the other can usually be verified as genuine after the fact.
Too many jobless folks to say it is over.
How little Jeff Jacoby knows
How little I know.
I've seen the name. Boston Globe, right?
Who the eff is Jeff Jacoby?
I don't really know. I saw his name at the bottom of the article.
Clearly, the Obama administration has not found the one-armed economist that Harry Truman kept looking for to no avail.
No decent politician in either party is going to claim that the recession is over as long as jobs are as bad as they are. But, Larry Summers, being an academic sort of ass, fails to understand that the metric assessment is not what regular folks are looking at.
Summers saying what he did reminds me of Phil Graham's comment last summer ('08) essentially saying that Americans were wusses for being nervous about the economy, that it was structurally very sound, blah, blah, blah. This was about 3 months before the bottom fell out.
Well, he's not the one trying to "fix the economy" using others people money.
How else does one run a government?
As Hayek recommends.
How's that?
One of this days I'll make a short bibliography for Hayek as I did for Von Mises.
Knock on the door and run away.
We had a colorful expression for this, growing up in San Antonio, TX. It involves knocking. I only ever saw white kids doing it, but surely the pastime is more general than that.
So 'the economic team' was wrong and Obama is too blame....is that your logic? So, Bush was to blame for 9/11 because his security team assured him that a warning en led 'Osama intent to attack America' was just terrorist machismo? right?Back in January, the incoming Obama administration warned that passing an immense “stimulus’’ package was an urgent priority if unemployment was to be held below 8 percent; without it, the economic team forecast, unemployment would climb as high as 9 percent. Congress gave the new president the stimulus he wanted - at $787 billion, it was the largest spending bill in US history - yet the share of the workforce without jobs rose well above the promised 8 percent. By November it had reached 10.2 percent, the highest level since 1983, before dipping to 10 percent in December.
Depends on your definition of recession.
What is your definition of recession?
What is Jacoby's?
I feel your pain, but I have work to do, classes to prepare, books to read... really don't have the time to write lectures on limited government, liberalism and the Austrian School in a message board. And it's not like that kind of in-depth, scholarly posting is the rule around here.
....yet there are more than a few MBAs here..
When exactly has Bush's security team, whatever that may be, assured him that a warning en led "Osama intent to attack America" was just terrorist machismo? Do you have a link?
In any case, what's exactly the point you're trying to blame? That the administration was wrong but Obama doesn't deserve the blame? That Obama can do no wrong?
What is your definition of recession?
A quick little nuts would suffice, just to give us a correct idea of what you're talking about.
Have pity on us: your style is not pellucid, Maestro.
I call upon your magnanimity to forgive this message board for not being on exactly the same page as you, and for being somewhat less well acquainted with your own hobby horses than you are yourself; and to answer my legitimate request for clarification of your post, just as you demand others do from time to time.
You know, the reciprocity thing. If you don't do what you ask of others, you can lose it.
Last edited by Winehole23; 12-17-2009 at 06:19 AM.
What, are you rationing your words all of a sudden, mogrovejo?
@ the "I don't have time excuse"
Because typing the excuse was so much faster.
As far as the OP, I stopped reading when the author took two quotes completely out of context in order to make it seem as though both economists disagree on the current political situation. All this from the same Mojogrovo who was so upset over Harry Reid's supposed lack of civility just a week ago?
Hilarious.
I think its plainly obvious to anyone with more than 2 objective brain cells that Larry Summers gave a technical economics answer while his counterpart gave a political answer. Yes, the recession is over. Yes, economic times are still very hard. Neither are exclusionary statements.
Zapped.
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