I have a question for you. A lot of hedge funds and investment banks hire economists, who, generally, tend to like empiricism. My question is, under free market Mises Austrianism, will all the hedge funds which hire these economists fail? Has the persistence of empiricism in finance and macroeconomic advisory, (not to be confused with the success of pharmaceutical companies in producing drugs developed using statistical analysis of the most arbitrary trial and error for complex and varied human biological systems), been solely due to state bailouts and implicit guarantees of empirical science-using institutions, while the praxeological ones are suppressed under burdensome anti-logical regulation?
Basically, if empirical evidence doesn't work in economics, why are free market institutions able to survive using it? Seems like a market failure to me.
That's a very good question. I would say that most private financial institutions such as hedge funds rely more on finance than economics, and when it comes down to it they are more likely to listen to someone with a finance degree than a economics degree. (Although I'm not particularly knowledgable when it comes to Austrian economics I would guess that is what people in AE would also say, that hedge funds success are due to good financial instead of economic advice.)
Even if empiricism or the heavily mathmatically dominant economics are inferior as AE says they are, that still doesn't mean that it is completely useless. Accuracy is the problem with mainstream economics, which I believe the better read Austrians would agree. However that doesn't mean that you can't get a very general idea of what will happen, at least in my opinion.
Troll harder, Mustang19.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
I like Serpentis' response better.
So we agree that empirical economics isn't completely useless- actually, that it's used sometimes in free market economics. Perhaps things are different outside GMU academia.
Like his response better all you want. I couldn't care less.
Your trolling is obvious because your strawman is obvious. Austrian-school economists don't dislike empirical evidence per se. Mises himself was quite an economic historian.
Ah, I should stop thinking this forum represents his opinions accurately. Empirical evidence is only valid if it supports Austrian conclusions.
Anyway, I had fun making the thread.
@ mustang
Although Autolykos comes across as rude. He is correct in that AE doesn't hate empirical evidence per se, take Hayek for example.
Mustang19:Ah, I should stop thinking this forum represents his opinions accurately. Empirical evidence is only valid if it supports Austrian conclusions. Anyway, I had fun making the thread.
So you respond to me pointing out your strawman with... another strawman. You must really be getting desperate (or bored).
Serpentis-Lucis:@ mustang Although Autolykos comes across as rude. He is correct in that AE doesn't hate empirical evidence per se, take Hayek for example.
I see no reason to be polite to trolls.
@ Autolykos
It depends on the troll really. If it's of the "youz al suck c***" variety then sure they don't deserve anything other than a boot up their poop shoot. Mustang isn't a troll in my opinion, just dogmatic in his belief in empiricism, if dogmatism = troll then, well pretty much everyone would be a troll it would just be a matter of degree. You aren't likely to be persuaded by what Mustang has to say just as he isn't persuaded by what you have to say. I believe he would actually be willing to change his mind under the right circumstances however, which is why I don't consider him a troll.
How am I dogmatic about empiricism?
mustang19: How am I dogmatic about empiricism?
Well, I for one
heard you're dogmatic about empirical evidence...
No, really. I've discussed both theory and empirics all the time here. I really don't think calling me a dogmatic empiricist is called for.
Serpentis-Lucis:It depends on the troll really. If it's of the "youz al suck c***" variety then sure they don't deserve anything other than a boot up their poop shoot. Mustang isn't a troll in my opinion, just dogmatic in his belief in empiricism, if dogmatism = troll then, well pretty much everyone would be a troll it would just be a matter of degree. You aren't likely to be persuaded by what Mustang has to say just as he isn't persuaded by what you have to say. I believe he would actually be willing to change his mind under the right circumstances however, which is why I don't consider him a troll.
Anyone who makes a post like this one is a troll in my book, even if he's joking.
Okay, I'll just go back to reading reports from successful free market private hedge fund gurus like Mark Zandi showing how ARRA averted disaster.
Because in the Misesian framework the so-called 'economists' you are talking about are actually thymologists and not solely praxeologists (economics being a subset of praxeology). They are making forecasts based on their beliefs about people's future ends based on their understanding of people's past ends. This is a completely different field to the formation of economic theory. Although the latter may be drawn upon by these 'economists', it is by no means the only part of their analyses nor necessarily is it the key part of their analyses.
@ Mustang
In the thread which Autolykos linked to, people corrected you numerous times, you obviously weren't persuaded because you insist on empirical results. I'm also not a fan of the aprior deductive reasoning which most people on this site seem to love, but the posts in that thread raised major issues with the studies you linked to, yet you seem to have continued to find the studies convincing. I may be wrong about you being dogmatic in regards to empiricism but so far you haven't given me a reason to believe otherwise.
This is a completely different field to the formation of economic theory.
Depends on how you define "theory". Certainly things like production functions and liquidity trap theory are used frequently by these banks.
Although the latter may be drawn upon by these 'economists', it is by no means the only part of their analyses nor necessarily is it the key part of their analyses.
Whatever it is that analysts do, it involves making testable predictions on the effects of government activity on the economy (and the conclusions are not usually very libertarian-friendly).
In the thread which Autolykos linked to, people corrected you numerous times, you obviously weren't persuaded because you insist on empirical results.
I gave many theoretical reasons as well (such as Adam Smith's arguments on the topic) which were never "corrected".
You've seen RevLeft right? If you were to go to that site and get banned would you consider it a bad thing or a good thing? Mustang see's the people on this site about the same way we would see people at RevLeft, he believes we are dogmatic in our beliefs, and thus he would consider it a compliment to be banned.
Depends on how you define "theory".
I was referring to the difference between psychology (of which thymology is a very basic kind) and economics.
Name them. In any case, the whole reason Austrians point out the ridiculousness of positivistic economics is that essentially any conclusion can be drawn from them, the economist lacking constants and having only variables.
The main point was that business forecasts are not the same thing as economics.
My apologies if I overlooked anything in that thread, it's very long. I'll look over the thread again.
Serpentis:
It'll be quite a dig. But I can look up some of what Smith said about infrastructure, if you like.
Nail on the head. Although I'd never call you dogmatic. At least just this one time. You did say you were willing to accept empirical evidence.
Had I posted something equivalent on another ideology fanclub site I probably would be banned. I appreciate that you guys are willing to discuss.
Name them.
Zandi is pretty well known.
Moody's, IHS, you name it are all spouting statist lies too.
edit: And PIMCO. "The ECB must, at some juncture in the not so distant future, become a lender of last resort to eurozone sovereigns. And, equally important, it must do so with a transparent and credible plan such that private sector demand for eurozone sovereign debt is crowded back in before it is permanently destroyed."
In any case, the whole reason Austrians point out the ridiculousness of positivistic economics is that essentially any conclusion can be drawn from them, the economist lacking constants and having only variables.
An economist working for one of these banks might disagree. Then again, your defintion of "economist" and "economics" probably differs from my dictionary one.
Do other fields of science derive all variables from constants? Biology? Chemistry? Physics? Is the savings/investment identity not a constant?
Is the savings/investment identity not a constant?
You bring up a praxeological point to argue against praxeology? The quantities of these things are unknown: there are not necessarily any savings, there is no necessary level of savings.
That doesn't negate the quantity. Zero savings and zero investment (or any other value) is still an identity. And this doesn't address how the fact that metal conductivity changes at different temperatures invalidates contemporary thermodynamics.
edit: FWIW, the defintions of "constants" and "variables" in a theory are purely semantic. Any "constant" can be redefined as a "variable, or any "variable" set to a specific "constant", depending on the application of the theory. In this respect, economics is no different from any other mathematical field.
So if all hedge funds hired psychics, that would make being a psychic a correct theory?
These are private industries who are looking at various skill sets in hiring, we can not calculate for them which skill sets are good or bad for them to hire. Moreover we are not even capable of saying if they are "winning" or "losing", it is out of scope.
If learning to "generally like empiricism", or to take certain courses that make you better at interacting with the market a better financial analyst so be it.
I think there is a youtube clip somewhere where some college kid asked empiricist Milton Friedman why he wasn't rich from knowing about markets, his answer was something along the lines of it being a whole different skill set. People with philosophy degrees can become computer scientists or whatever.
Either way, point stands it is not for s to tell what is or is not good for private firms to hire - it is a gibberish question.
will all the hedge funds which hire these economists fail?
No science can predict the future, psychics though.
"The future is unkowable, though not unimaginable" - Ludwig Lachmann
"As in a kaleidoscope, the constellation of forces operating in the system as a whole is ever changing." - Ludwig Lachmann
"When A Man Dies A World Goes Out of Existence" - GLS Shackle
It still seems like something has to be done about these hedge funds. By lending credence to statist economic policy, they're subsidizing those annoying mainstream economists that give you so many problems.
Economists can only give other economists probelms when they discuss economics with each other.
A Monopoly player does not give another monopoly player a problem when he wins at Stratego.
As for "statist economic policy" - that is a political affair
Zandi said that the Obama stimulus was a success. It lowered unemployment and stopped the nosedive in output. Wasn't it evil of him to have said that, even as manager of a financial firm?
Wasn't it evil of him to have said that, even as manager of a financial firm?
That's a moral question, and one I am not capable of answering. Seriously, this is getting really left field
Also:
If your argument is this:
Zandi said that the Obama stimulus was a success. It lowered unemployment and stopped the nosedive in output
You are going to have to rephrase it, because the construction of the sentence is hinged off either Zandi's athority or aesthetic preference and nothing else - so there is no argument there.
Very well. If you ever set up an investment bank on Austrian principles and need someone to buy your default swaps, lemme know.
mustang19:Okay, I'll just go back to reading reports from successful free market private hedge fund gurus like Mark Zandi showing how ARRA averted disaster.
How are you defining "free market"? I don't see how a free market exists in the United States.
mustang19:I gave many theoretical reasons as well (such as Adam Smith's arguments on the topic) which were never "corrected".
Yes they were. I also corrected some of them in this thread. Of course, there is no so blind as he who refuses to see.
Yep, the government is bailing out Mark Zandi so he can write pro-Obama propoganda. We found our explanation.
mustang19:Whatever it is that analysts do, it involves making testable predictions on the effects of government activity on the economy (and the conclusions are not usually very libertarian-friendly).
As I've pointed out elsewhere, there seem to be flaws with those analysts' methodology.
Mild uncertainty is not proof.
mustang19:Yep, the government is bailing out Mark Zandi so he can write pro-Obama propoganda. We found our explanation.
Were you actually replying to me? I don't see how this gives me your definition for "free market".
Sorry, I meant to say that America is communist.
mustang19:Mild uncertainty is not proof.
Perhaps you'd be so bold as to explain in more detail just what in the world this means.