What Good Are Economists Anyway??

http://www.businessweek.com/magazine/content/09_17/b4128026997269.htm

In this article the author correctly questions the profession of economics and the usefulness of "regular" economists.

http://mises.org/story/3436

In this other article, Austrians (although I don't like them much they are right about this matter) support the article from businessweek and explain a little on their own perspective.

I would like to share with you my own experience. Back in 2006 I was an Economics student, working on my BS in Economics from the School of Business. Housing prices in Miami were really inflated and I took my though to class that a major foreclosure stampede was coming for Miami. (I really did not know it was a National problem). My instructor (now chief economist for the Miami Dade County) did not see it coming and obviously did not take me seriously at all.

ONE THING I DO LOVE FROM AUSTRIANS. "HUMAN LOGIC"

 

A) Somebody who can be a perpetual optimist.
B) Somebody who can explain yesterday's news.
C) Somebody who tends to agree with and form a bogus "consensus" with other economists.
D) Somebody who tends to extrapolate yesterday's news into the future.
E) Somebody who is always caught off guard by events that are "different" from the historical average.
F) Somebody who wishes they were an equity analyst earning "equity analyst money".
G) Somebody who is good with doling out flattery to others.
H) Somebody..........

 

Galbraith is always a good read:
Causes of the Crisis

"Leader Armey spoke to you of his admiration for Austrian economics. I can’t resist telling you that when the Vienna Economics Institute celebrated its centennial, many years ago, they invited, as their keynote speaker, my father [John Kenneth Galbraith]. The leading economists of the Austrian school—including von Hayek and von Haberler—returned for the occasion. And so my father took a moment to reflect on the economic triumphs of the Austrian Republic since the war, which, he said, “would not have been possible without the contribution of these men.” They nodded—briefly—until it dawned on them what he meant. They’d all left the country in the 1930s."

lol

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In Economics Departments, a Growing Will to Debate Fundamental Assumptions

Although the meaning of the term is slippery, Frederic S. Lee, an economist at the University of Missouri-Kansas City who edits the Heterodox Economics Newsletter, says it refers to those who reject the neoclassical model, which Milton Friedman helped create, and which Ronald Reagan championed when he took over the White House.

Mr. Reny and others point out that the increasing popularity in the mainstream of behavioral economics, which looks at people’s complex psychological reactions to events, has offered a fuller picture of how consumers operate in the marketplace. Still, Mr. Lee criticizes neoclassical economics for maintaining that the market, if left alone, would ultimately find a happy balance. He also takes the discipline to task for relying on abstract theories and mathematical modeling instead of observation and sociological analysis.

In Mr. Lee’s view, for example, oil companies — not the natural workings of the market — determine gas prices, and the federal deficit is a meaningless term because the federal government prints money in the first place.

......Heterodox economists complain that they are almost completely shut out by their more influential neoclassical colleagues who dominate most American university departments and prestigious peer-reviewed journals that are essential to gaining tenure. There are a few university departments where these iconoclasts are welcome, like Amherst in Massachusetts, the New School in New York and Professor Lee’s home, the University of Missouri-Kansas City, but these are exceptions.

The experience of Mr. Card’s graduate students suggests how the process can work. Mr. Card is by no means on the fringe, but he said his research on the minimum wage in New Jersey “caused a huge amount of trouble.” He and Alan B. Krueger, an economist at Princeton, found that contrary to what free-market theory predicts, employment actually rose after an increase in the minimum wage.

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The real world differs greatly than that of whats written in the Economic Bibles.

 

More Galbraith:
The Populist

What does that say about the field of economics, which claims to be a science? It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.

Economics is probably one of biggest fraudulent fields of study next to psychology. Although with psychology you can talk with a german accent to make it more interesting. ie. Vut vee hav heer ist a boolsheet field ovf study known ast ekonomiks.

 

You need economists in CBs so they can use monetary policy to create ridiculous bubbles and crashes that we can trade.

 

Except Levitt...

 

What percentage of money managers are good? What percentage of traders are good?

My answer: about the same percentage of economists that are good...

 

For those who continue to bash, but know nothing about ‘regular’ economics or ‘regular’ economists:
Professionally I don't know an economist that uses any style of macroeconomic theory in their role at the office. I only see university economists and non-economists having the luxury of opinions about any of the macro garbage you read in the newspaper. If I espoused my opinions (which is all anyone could have about macro theories) I would not last long. Whether you are classical or neoclassical has no impact on the micro decision making for a project or firm, and thus no impact on navigating/making decisions/asset allocation while confronting the unknown which is the real responsibility of an economist. Not to be your central planner (i.e. God).

We do not interpret what happened yesterday (we are concerned with point forward analysis as yesterday has come and gone). We are not optimists (without signifigant technology we will deplete all needed resources to the point that most if not all life will die). There is nothing to agree about as there is nothing known (even the past changes daily).

This IS our religion. There is one best answer. We live by it. Don’t insult us.

I argue you know no ‘regular’ economists as this all would be evident.

BTW, in economics school they don’t tell you to be any way at all, from the very beginning of macro training they present the problem of government deficit and monetary and fiscal policy and do not instruct you which one is better. If anyone finds this to be different, change schools immediately. A good economist stays away from these types of debates since they are elementary as there is little to make a basis for this type of argument.

 

A lot of traders like to think their world is much more well-defined than the world of economics, but that is an illusion imo...

 

"If all the economists in the world were laid end to end, it wouldn't be a bad thing.” - Peter Lynch