ACA Repeal/Replace: Progressives Face Moral Dilemma

[David Horn]

(09-10-2017, 09:41 PM)Warren Dew Wrote:

(09-10-2017, 11:17 AM)David Horn Wrote:

(09-09-2017, 09:02 PM)Warren Dew Wrote: If you're going to understand the quantitative aspects of economics and understand how the economy actually works, you have to use algebra, and in the case of understanding Georgist land taxes, an understanding of calculus is pretty necessary as well.  If you don't think of economics in mathematical terms, you're not really using economics at all; you're just making political arguments couched in misused economic terminology.  I do understand that the left is often happy to misuse economics in this way, but the truth is, economics without math is as worthless as physics without math.

This is an incredible statement.  Yes, economic models need some level of math to create and use them, but the most complex models tend to fail more often that their more simplistic cousins, because they assume a level of precision impossible to obtain in a social science.  Humans act rationally and irrationally, but most importantly, without an easily quantifiable pattern.  Chaos Theory is a much better tool to deal with economics: precision decays as the predicted future becomes more distant from the present.

Your post again fails to understand mathematics - and modeling.  In fact, using more advanced mathematics normally results in a simpler model, rather than a more complex one.  For example, Kepler used some ideas from calculus to come up with a model of orbital mechanics which was much simpler than the previous Ptolemaic and Copernican models that relied on scores or hundreds of epicycles, and when Kepler's model was rederived using Newton's fully calculus based theory of gravitation, it became simpler still.

Economics is not physics.  It's a social science.  Because humans can and do act irrationally, the two fields are essentially different.

Warren Dew Wrote:

David Horn Wrote:And fwiw, the most successful modeling exercises in the post 2008 period have been old IS-LM models used by the classical Keynesians.  They focus on trends rather than specific conclusions.  Along with most of the freshwater economic schools, neo-Keynesians tried the higher precision route too.  It lead them astray.  Behavioral economics finally broke the rational-actor bubble, that held firmly to the idea that people act rationally in economic matters.  They don't, so markets don't either.

Actually, it was only by retrofitting parameters for the IS-LM model after the fact that it could be made to look even qualitatively accurate.  And that didn't explain why the parameters varied so much over the last three quarters of a century.  Of course, any model could be made to look accurate with the right parameters.

Incidentally, the IS-LM model also requires rationality of the actors.  But then, people have not been shown to act irrationally on average, only as individuals, which is irrelevant for the purposes of the models.

Economists like Greg Mankiw, among many others in the freshwater school, believed complex models that postulated that the massive expansion of the money supply in the post-2008 period would trigger high inflation and higher unemployment.  It didn't happen did it?  On the other hand, the saltwater school predicted no inflation and slowly declining unemployment.  They also argued for a huge stimulus to expedite the recovery, but the GOP rebuffed that entirely, preferring their typical tax cut method, which did nothing of note.