Comments (15)

• Raja

  Why would you actively seek recognition and approval from those you know to be pseudo intellectuals and cranks?

  For that matter, would you accept the Nobel prize knowing that it was year after year awarded to crank after crank?

  Published: April 8, 2009 7:25 AM

• Jason Gordon

  Is reason (logic) more (academically) contagious than unreason?

  In the long run, the fewer barriers* to entry presented by Austrian economics will engender wider study and adoption.

  *Barriers not limited to abstruse mathematical models, but acceptance of dogmatic logical contradictions and assorted intervention justifying sophistry.

  "It is not by confining one's neighbor that one is
  convinced of one's own sanity."
  ~ Dostoyevsky, DIARY OF A WRITER

  
  

  Published: April 8, 2009 8:26 AM

• Bruce Koerber

  Divine Economy Ethics
  Wednesday, April 8, 2009

  Interpretive Error In Economics Leads To An 'Ivory Tower' Attitutde.
  
  Without an honest assessment of the economics profession what good is such advice?

  This is more of the same - economics without ethics. I suggest "ETHICS of the Divine Economy" (2007) to those who still think that ends and means are wholly separable and that economics cannot encompass ends.

  The reason such an economic interpretation is not true is because ends and means are both virtues-based.

  Published: April 8, 2009 8:36 AM

• pussum207

  " Larry White's article on how the econ profession is in bed with the Fed"

  Is there a link for that article?

  Published: April 8, 2009 8:59 AM

• Cynic

  I found it very disillusioning to realize that making a career in academia is essentially no different from making a career in government or any similar large bureaucracy. That is, the point is to play politics, climb the ladder, and make sure the right people like you; doing original, high-quality work is rather secondary to that. I left a pretty highly-regarded PhD program after I figured this out. I could do all the math (as can anyone willing to put in the effort to learn it), but I realized that, in questioning many of the theoretical assumptions I was being taught and wanting to explore unconventional lines of research, I was paving a very difficult road for myself. I'm happier in industry, where (a) I can actually produce something other than a journal article no one will ever read, and (b) good work is actually appreciated on its merits.

  Published: April 8, 2009 10:31 AM

• prettyskin

  Co-sign with Cynic.

  Published: April 8, 2009 11:19 AM

• fundamentalist

  This makes clearer why academia has not adopted Austrian economics. The demand for economists comes from socialists, so academia supplies socialists.

  Published: April 8, 2009 12:03 PM

• Jeremy H.

  @pussum207

  I believe this is the White article referred to by Greg Ransom:

  http://www.econjournalwatch.org/pdf/WhiteInvestigatingAugust2005.pdf

  @everyone else

  Since Larry White was brought up in Dr. Ransom's comment, it seems fair to point out that Dr. White has chosen to take on mainstream economists in their own journals (AER, JEL, JMCB), and has done quite well professionally because of this. So it is possible to retain the Austrian label, criticize the system, educate young students (at FEE, Mises, other venues), yet still try to contribute to the discipline in a more traditional manner.

  This holds even if we think Stigler is crazy to claim that the market for economists works just as efficiently as the market for waiters.

  Published: April 8, 2009 12:19 PM

• phaesed

  I disagree. I believe the so called "academics" reject Austrian theory because of it's inability to adequately prove the assumptions and conclusions in their eyes, even if it's obvious to the simplest child. I work in a financial management firm and have a degree in mathematics. I can tell you one thing, they all want numerical proof even if they don't understand the equations they are using or the results it yields. I think the move to Austrian theory will come, but only after a revision in its ability to adequately describe what is common sense to everyone else but the so called "academic"

  Published: April 8, 2009 12:32 PM

• Cynic

  @phaesed: There's the rub. Economic theory tends to be soundest when it's developed using formal logic. I.e., you state your premises and demonstrate how your conclusions follow from your premises in a rational manner. Employing symbolic logic in this manner can be very useful, insofar as symbolic arguments can reveal logical relationships that might not be obvious if you're just writing text. So, it's not that math can't be a very useful tool in understanding economic phenomena.

  The problem arises when you start developing the math at the expense of the underlying theory. This is really the epitaph of mainstream econ: take a theory, simplify it to the point where it's a mathematically tractable system of equations (regardless of whether it reflects the underlying theory), then manipulate the equations about 20 or so times, and describe what you've "found".

  Published: April 8, 2009 1:24 PM

• phaesed

  Oh I absolutely agree. The idea that you can hold employment static or consumption static and determine variable relationships is ridiculous and I laughed out loud every time I saw one of those stupid two line charts in my economics class. Simply adding more letters to a variable does not make it more complex.

  But perhaps there is a way to adapt the equations to functions to the markets and psychology as to measure the extent of the damage and I believe that should be a central focus to modern day Austrians so that we may supplant the current regime of ignorance. But using a mathematical model to predict the future? Only Fibonacci and Elliott ever got that right. I'll leave the overly complexified variable equations to the neo-classical economists and their preference for nominal terms rather than truth.

  My favourite quote from a co-worker currently attempting to develop some of these predictive models (who went no further than algebra in college) was "I only know what the analysts tell me".

  Published: April 8, 2009 1:42 PM

• Cynic

  To say nothing of, well, everything you learn in advanced macro. "Who cares if the theory doesn't make any sense, look at the dynamic equilibrium I just solved for!"

  Published: April 8, 2009 2:38 PM

• Mac

  @fundamentalist:

  Your comment is unwittingly funny and the funniest thing I have heard today. :D

  Cheers

  Published: April 8, 2009 6:07 PM

• newson

  phaesed says:

  "But using a mathematical model to predict the future? Only Fibonacci and Elliott ever got that right"

  i beg to differ. elliot wave analysis is like making out pictures in clouds - i see a casserole pot, you see bob marley. having worked with elliott wave adherents, i'm amused at how often their wave counts get constantly revised (in the light of failure).

  plenty of traders make fortunes by going on gut feeling alone, and i can't knock that. none would say they knew the future, just had a good feel for the odds and market psychology.

  Published: April 8, 2009 7:31 PM

• phaesed

  Oh absolutely, Elliott wave is a pain in the ass for trading, I use sound reasoning and tight stops. But you still cannot deny the ability of it to predict relations. Just like everything else in the world, truth is constantly in flux, but action has a reaction. That's what Elliott pushes, just like Austrian theory. The bigger the boom, the bigger the bust. Difference is, Elliott is mathematical and uses common sense. Neo-classical economic theory is mathematical and makes no sense.

  Published: April 8, 2009 7:49 PM