be able to tolerate the ambiguity the models should inspire if they
are not taken as gospel. I'd expect my better students to be able to
do more than liturgy - a bit like the following:
Ten Principles of Responsible Economics
1) In theory, rational people think at the margin. In reality, these
people are a fiction that exist only in mathematical models
You are not a "rational" actor—not in the economic sense of the term.
The newcomer to economics, well-intentioned as she is, surely wants to
be rational in the everyday sense. Having learned from her textbook
that, without qualification, to be rational is to be a self-interested
utility-maximizer, she learns to emulate such behavior. So begins the
process of learning to deprecate non-market values—which are
"irrational," after all—and rely exclusively on self-interest to
justify and understand action. This naive economism's implicit
justification for selfishness is that acting in one's self-interest at
the margin is "only rational." Inside the fictional world of an
economic model, this is tautologically true. Outside of it, we still
call that sociopathic greed.
2) In theory, there is no difference between self-interest and greed.
In reality, economists aren't typically trained in moral philosophy
Spend enough time studying economics, and you might eventually feel
greed become empty of meaning. You've learned that acting in your own
self-interest is not only rational but virtuous—it creates better
outcomes for everyone—and surmised that greed is perhaps merely an
expression of envy or an atavism from a benighted age of religious
taboo. You would be wrong. In the real world, greed exists. As a crude
approximation: acting in your own self-interest just means "not
shooting yourself in the foot." You can think of greed as shooting the
other guy in the foot so you can get away with his wallet.
3) In theory, voluntary trade can make everyone better off. In
reality, it's often not so voluntary, makes some people better off
while making others worse off, and empowers the beneficiaries to make
sure they get to keep their gains
"Free market" reforms generally improve aggregate outcomes while
increasing inequality, so that poverty increases even as overall
wealth does. Basic economic analysis treats distribution as a
secondary concern—it assumes that once the market maximizes benefits
in the aggregate, the political system can ensure that they'll be
redistributed in an equitable way. But as we've been learning all too
well, with greater wealth comes greater control over the political
system.
4) In theory, markets are usually a good way to organize economic
activity. In reality, "markets in everything" has a way of sliding
into "everything into markets"
There's a difference between thinking about a real-world interaction
as if it were a market—market analysis—and transforming that real
interaction into an actual market—marketization. The latter is a
natural seduction once you've gained some facility with the former,
and some people seem to reflexively think organizing any activity as
an actual market would be an improvement over the status quo. We can
think of these people as blowtorch-wielding pyromaniac children
playing in a barn, but they are not, of course, actually blowtorch-
wielding pyromaniac children playing in a barn.
5) In theory, market models assume that the existing distribution of
wealth is just. In reality, poor people exist
Hiding in plain sight in many marketization proposals is something of
a dirty little secret: When you apply an idealized market model to the
messiness of reality, some people, those without enough purchasing
power to enter the market in the first place, will have to go without
in the name of efficiency. Famine, thirst, and lack of access to
education can be effective market solutions.
6) In theory, people respond to incentives. In reality, different
people respond differently to different incentives, and not always the
way you hoped for
"Pay for performance" is sold as "more money for better results" but
typically results in "gaming the metrics to get that cash money now."
The people who respond best to monetary incentives are the people who
value money the most, not necessarily the people who value education
or innovation or whatever you'd like them to value the most. Such
incentive schemes also tend to result in sacrificing long-term or
substantive success in favor of superficial short-term gain.
7) In theory, governments can sometimes improve market outcomes. In
reality, sometimes sometimes means often
Real markets are always imperfect and intrinsically tend toward
monopoly, a market failure. Introductory textbooks make note of such
market failures, but typically only in a way that makes them seem like
outliers. They are in fact the norm.
8) In theory, there's a distinction between "positive" and "normative"
economics. In reality, the positive is at once fictional and normative
in effect
Ostensibly, "positive" economics refers to the description of economic
reality—the "is" questions–while normative economics deals with policy
prescriptions—the "ought" questions. But in the context of
neoclassical economics, the only reality we have access to is a set of
rather crude idealizations—in a sense, we study the reality of a
fiction—and since studying positive economics clearly has an effect on
people's behavioral patterns, it is de facto normative.
9) In theory, models are just aids to reasoning—the map is not the
territory. In reality, it's just so easy to reify
Many lesser economists have a habit of justifying the strong modeling
assumptions of economics by claiming they're "generally true" or
excusing them with a wave of the hand and a "well, there are always
exceptions, right?" This is a telltale marker of someone who takes his
models too literally. Properly understood, the toy models of economics
are tools for organizing thought, testing intuition, and generating
sets of hypotheses to be tested against data—not objective
descriptions of reality.
10) In theory, economics is a science. In reality, economics is a
science the way Ayn Rand is a literary luminary
To casually label economics a science is at best aspirational, at
worst manipulative, at a minimum misleading. At the introductory
level, the issue at stake is less one of methodology than of how
deferential the layperson or novice should be to the authority of
expert or policy entrepreneur appeal to economic theory. Skepticism is
always a virtue. When evaluating claims based on simple economic
models, it's self-defense.
I would reward such scepticism with good marks - but more importantly
try to help the unease of the quest of thinking for yourself. There
is a point at which one needs to understand this form of scepticism is
not relativism but about openness to and respect for evidence and
other points of view. Most students can't get this far - and there is
a long way to go to the kind of informal and defeasible logic that
justifies the position. The 10 points here are from a US student.
It's some way after this that an understanding of how much that is not
fact is maintained as such through religious habituation in thought.
The big question becomes how we differentiate dogma from reasoned
action.
On Dec 26, 12:00 pm, Allan H <allanh1...@gmail.com> wrote:
> I must confess I am among them that do not know though I know there is a
> connection between religion and economics,, I have never really been able
> to express it with clarity.
> Allan
>
>
>
>
>
>
>
> On Mon, Dec 26, 2011 at 4:56 AM, Vam <atewari2...@gmail.com> wrote:
> > So here's something... notwithstanding everything else in the
> > background.
>
> > Historically, coming of age through its animal and alpha culture, it
> > was ( eastern ) religion that declared to man :
>
> > " Do not be too concerned with raising power, great wealth and
> > property. Raise enough to raise great virtues, great human beings,
> > instead. " Humanity failed to heed the advice.
>
> > Cut to the beginnings of modern age, with growth of science and East
> > India Company, the economist declared :
>
> > " Create great wealth. That alone serves to raise your greatness.
> > Therein alone lies your greatest virtue. " Humanity readily took to
> > the suggestion, largely because it gave free reign to its predatory
> > instincts and alpha tendency.
>
> > Until 20th Century, when economics has practically replaced religion.
>
> > Cut to 21st Century, in times when we know that growing GDP infinitely
> > is impossible because the environment is finite and sustainability
> > limited... which of the two declarations better serves your concerns
> > for humanity, environment and sustainability ?
>
> > It is a Buddhist nation, one of the poorest, that still places
> > economics in perspective. A 2010 survey confirms only 8% with Poor /
> > Very Poor psychological well - being and about 55% with Good / Very
> > Good. On first hand account, it has an environment that could be the
> > envy of every other nation on the planet !
>
> > I suspect, very few people actually know what religion and
> > spirituality is all about !
>
> >http://www.grossnationalhappiness.com/
>
> > On Dec 23, 5:00 am, archytas <nwte...@gmail.com> wrote:
> > > Vam is right (elsewhere) that I'm stuck in a rut on this - I often get
> > > this way as there seems little to do other than bang one's head
> > > against the walls of language. This isn't my particular rut as I
> > > concluded long ago something not unlike Edward above. There are many
> > > such critiques of economics - notably critical theory. Don is right
> > > that lots of these "alternatives" seem to lead to rather silly
> > > practice, demanding too much "virtue" and selfless activities.
> > > I usually work until my head bleeds, take some space and see if I
> > > understand anything differently. I only have glimmers at the moment
> > > and suspect the big change may be that our own systems have led to
> > > just the situation Don talks about above.
>
> > > On Dec 21, 4:49 pm, Edward Mason <masonedward...@gmail.com> wrote:
>
> > > > "In the context of history, religion has often been concernedwith
> > > > economics and particularly freedom from debt."
>
> > > > At least one particular view of history tends to indicate that the
> > > > Builders ( like Nimrod, whose system is in practice and strongly
> > > > applied today ), institutes religion and politics to mass absolute
> > > > control. Economics is simply a heartless result.
>
> > > > Which is why I advocate establishing a relationship with that creative
> > > > force within us, by what ever terms we recognize it. That energy will
> > > > evolve the human race beyond their needs as long as the individuals
> > > > remain properly charged and teach Men (Humans) to do so. We get to
> > > > this level by two simple Rules or Laws; i.e., Keeping this Energy ever
> > > > before us and insure that our decisions are moral and just, especially
> > > > in those heated and pressured moments. Societies have gotten lost in
> > > > ancient attempts to test or defy these rules, because the language
> > > > was lost, so to speak. Then what Knowledge was found was keep secrete
> > > > from all but the few. The few gives the rest of the world Religion and
> > > > Politics.
>
> > > > On Wed, Dec 21, 2011 at 5:53 AM, rigsy03 <rigs...@yahoo.com> wrote:
> > > > > We can only change ourselves, alas.
>
> > > > > On Dec 20, 9:07 am, Allan H <allanh1...@gmail.com> wrote:
> > > > >> I was watching a program on the Mayans and the writings about the
> > > > >> milkyway being on the horizon.
>
> > > > >> What I am seeing is the guilt complex where people know what is
> > going on
> > > > >> is wrong with the waste of resources are looking for a super natural
> > > > >> solution to these problems. It seems they are wanting to say they
> > saw I
> > > > >> coming rather than doing what they can to change it.
> > > > >> Allan
> > > > >> On Dec 20, 2011 2:32 PM, "Molly" <mollyb...@gmail.com> wrote:
>
> > > > >> > On second thought, I was thinking of Thomas Mann when I wrote
> > this,
> > > > >> > and it has been a few decades since I read him. It has only been
> > a
> > > > >> > decade since I read the Moore work and his ideas on soul.
> > Refresh my
> > > > >> > memory, I am thinking you meant there is not enough evidence of
> > soul
> > > > >> > in the world, as many are not in touch with it.
>
> > > > >> > On Dec 20, 7:57 am, Molly <mollyb...@gmail.com> wrote:
> > > > >> > > Thomas Moore was an interesting guy. Very poignant writing yet
> > ended
> > > > >> > > up following hitler in the end, and his art fell apart, having
> > lost
> > > > >> > > his soul maybe.
>
> > > > >> > > On Dec 19, 1:05 pm, archytas <nwte...@gmail.com> wrote:
>
> > > > >> > > > I could not disagree with that Molly - though something of the
> > > > >> > > > "invisible hand" spooks me in all argument. I'm as sure as
> > Thomas
> > > > >> > > > Moore that we lack soul, but want something that
> > differentiates mad
> > > > >> > > > people like Ayn Rand and reason.
>
> > > > >> > > > On Dec 19, 11:31 am, Molly <mollyb...@gmail.com> wrote:
>
> > > > >> > > > > Morals and ethics that are entrenched in right and wrong
> > and exclude
> > > > >> > > > > or separate are human indeed, but have not yet seen the
> > light of
> > > > >> > > > > spirit. Much of religion, the "religion" mentioned in this
> > discussion
> > > > >> > > > > is of this. The individual journey of the heart to the non
> > dual
> > > > >> > > > > experience reaps the knowing that spirit includes and is
> > revealed
> > > > >> > > > > between the opposites, uniting them. Once this becomes the
> > > > >> > individual
> > > > >> > > > > view, the world of the non dual and all who share it is
> > revealed.
> > > > >> > > > > Words can only point the way and always fall short if the
> > reader
> > > > >> > > > > cannot connect the opposites with spirit. It takes a
> > transcendence
> > > > >> > > > > that can then forever be remembered. It makes time and
> > space and
> > > > >> > > > > opposition poignant and irrelevant. They don't disappear,
> > but are
> > > > >> > not
> > > > >> > > > > important (or more automatic to be precise). A different
> > ethics, one
> > > > >> > > > > that is innate but forgotten, emerges. One that is not
> > concerned
> > > > >> > with
> > > > >> > > > > right and wrong as it has been unified in spirit, aspects
> > of the same
> > > > >> > > > > element. One that unites, and sees conflict for what it
> > is, the
> > > > >> > realm
> > > > >> > > > > of death (that is integral to life.) All of this is
> > already present
> > > > >> > > > > everywhere. It is the view that changes our experience,
> > relationship
> > > > >> > > > > and dynamic of it.
>
> > > > >> > > > > On Dec 19, 2:45 am, archytas <nwte...@gmail.com> wrote:
>
> > > > >> > > > > > There's a tedium in academic writing we don't have to
> > suffer here.
> > > > >> > > > > > Rigsy is right that most words are hidden behind, though
> > I'm not
> > > > >> > sure
> > > > >> > > > > > the smell is sweet! Academe seems to have entirely
> > failed in
> > > > >> > > > > > providing us with some general way of reliable
> > interpretation of
> > > > >> > how
> > > > >> > > > > > the world works and how we can control this in a
> > reasonable way. I
> > > > >> > > > > > broadly agree with Hitchins on religion - dated stories
> > with too
> > > > >> > much
> > > > >> > > > > > current influence when we could do better etc. I
> > suspect, though,
> > > > >> > > > > > this neglects something of religion as a challenge to
> > much bad in
> > > > >> > > > > > feudalism and debt peonage - and, of course, there is
> > something
> > > > >> > wrong
> > > > >> > > > > > with assuming the spiritual means believing in talking
> > snakes and
> > > > >> > the
> > > > >> > > > > > rest of the fables. A book by David Graeber (Debt: the
> > first 5000
> > > > >> > > > > > years)touches on this several times and surprised me in
> > that many
> > > > >> > > > > > religious words and freedom words stem from 'debt
> > freedom'.
> > > > >> > > > > > I don't know about a happy medium rigsy (perhaps Molly is
> > one -
> > > > >> > LOL -
> > > > >> > > > > > no I know that's not true) - but something happier is
> > indeed
> > > > >> > > > > > required. The moral aspect worries me because moralising
> > so easily
> > > > >> > > > > > closes to totalism - yet economics so often looks like
> > the most
> > > > >> > > > > > dreadful examples of cults that will do anything for what
> > they
> > > > >> > claim
> > > > >> > > > > > is a greater good. "Austerity" is clearly a nonsense
> > with sucker
> > > > >> > > > > > appeal and is full of moral urging.
> > > > >> > > > > > It all looks like a can of worms at the moment.
>
> > > > >> > > > > > On Dec 18, 2:52 pm, rigsy03 <rigs...@yahoo.com> wrote:
>
> > > > >> > > > > > > Consider Steve Jobs and the stories that have surfaced
> > about his
> > > > >> > > > > > > "conflict" resolution style versus his contribution to
> > > > >> > technology. And
> > > > >> > > > > > > I could add many names from history/economic
> > development that
> > > > >> > > > > > > discarded drawing room manners for sheer autocracy-
> > > > >> > > > > > > belligerance,included. Religion has been concerned with
> > an
> > > > >> > alternative
> > > > >> > > > > > > to real life that the masses could cling to. There is a
> > happy
> > > > >> > medium.
>
> > > > >> > > > > > > On Dec 17, 4:00 am, archytas <nwte...@gmail.com> wrote:
>
> > > > >> > > > > > > > We have rules on ad hominem
>
> ...
>
> read more »
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