Complex Society and Avoiding Simplistic Notions

by Don Boudreaux on July 28, 2011

in Complexity & Emergence, Curious Task, Myths and Fallacies, Scientism, Trade

On the complexity of society and social sciences – here’s my latest column in the Pittsburgh Tribune-Review.

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Don Lloyd July 28, 2011 at 9:27 pm

“…Over the past two-plus centuries, economists have made real progress in the quest to explain economic activity in ways that meet scientific standards and to enhance our understanding of the economy….”

Over the past two-plus centuries, economists have made real regressions in the quest to explain economic activity in ways that meet scientific standards and to muddle our understanding of the economy.

Depending on who, when, and where, I would think that the second paragraph would tend to be about as valid as the first.

Regards, Don

Kirby July 28, 2011 at 9:34 pm

Progressivism/Keynesian economics nonwithstanding, the first paragraph is correct.

W.E. Heasley July 28, 2011 at 9:41 pm

“What are some of the other things that we know about the 19th-century U.S. economy? For starters, it was a giant free-trade zone. From Miami to Seattle, from San Diego to Caribou, Maine, men and women traded freely with each other. States — tempted as governments always are to shield producers within their jurisdictions from competition — were stopped from engaging in such protectionism by strict application of the Constitution’s Commerce Clause.” – Dr. B, Pittsburgh Tribune-Review

Economic agents [you] act in their own self interest with in a free economy. Within the free economy economic agents [you] attempt to make optimal decisions, not given unlimited and total knowledge, but given limited and best available knowledge. Yes, errors occur in a serially uncorrelated process. However, given the best mundane knowledge available and the best up to the minute limited knowledge available to the economic agent [you], the economic agent [you] who is decentralized in the vast economy……makes a decentralized optimal decision. The decentralized optimal decision happens to occur at “exchange”.

“Mixed in with all these private-sector activities are the actions and reactions of politicians, government administrators, judges and jurors, each of whom — sometimes individually, more commonly in groups — can alter the rules that govern private-sector economic activities.” – Dr. B, Pittsburgh Tribune-Review

Economic agents [you], making decentralized optimal decisions, can and will be impeded. Sorry, but all markets do clear. Impediments, cause the concept “will clear”, to suddenly become distorted and elongated. Distortion-intervention by exogenous bodies [ rent seekers through politicos through the mechanism of government, politicos through politicos through the mechanism of government, bureaucrats through a shadow mechanism of government] (by-the-way NOT you) impede the economic agent [you]. The impeded economic agent [you] consequently impedes the clearing of markets.

Not so simple.

Now take the above information, multiply it by several hundred billion economic decisions per day. Do you have a plan to organize it? Yet spontaneous order relying on the price system appears to work quite nicely but never without serially uncorrelated errors. If you plan on fixing the serially uncorrelated errors, you impede the spontaneous order.

Ah, the evil of it all.

T. Amazing Kreskin July 28, 2011 at 9:46 pm

“But this real progress does not mean that economists can make predictions as precise as those made by, say, astronomers.”

But if one were to rank economists by their accurate predictions, Boudreaux and Roberts would be farther from the top than Paul Krugman.

Ken July 28, 2011 at 9:59 pm

Can you give some examples?

Regards,
Ken

W.E. Heasley July 28, 2011 at 10:00 pm

Do they produce less accurate predictions? Boudreaux and Roberts strike me as positive economics not normative economics.

Please show us your empirical evidence to back up your notional claim.

A. Famous Historian July 28, 2011 at 10:27 pm

Info on Krugman is easy to get, here’s a brief start:

http://ideas.repec.org/top/top.person.all.html

Since you and Ken seem to be local gadflies, why don’t you provide info on Boudreaux and Roberts? I’m not your personal google, after all.

P.S. The comment system does not know how to spell Boudreaux, maybe an admin could update the dictionary.

Ken July 28, 2011 at 10:37 pm

“Since you and Ken seem to be local gadflies, why don’t you provide info on Boudreaux and Roberts?”

We’re not the ones making accusations, dick. The burden of proof always lies with the accuser.

Regards,
Ken

W.E. Heasley July 28, 2011 at 10:58 pm

Wow, a famous historian gives us no evidence. Very nice!

A. Famous Historian July 28, 2011 at 10:27 pm

Info on Krugman is easy to get, here’s a brief start:

http://ideas.repec.org/top/top.person.all.html

Since you and Ken seem to be local gadflies, why don’t you provide info on Boudreaux and Roberts? I’m not your personal google, after all.

P.S. The comment system does not know how to spell Boudreaux, maybe an admin could update the dictionary.

Ken July 29, 2011 at 12:10 am

W,

You noticed it too, huh? The rankings, nor the website, had anything to do with accuracy of predictions. This “historian” guy really isn’t very good at research.

Regards,
Ken

A Famous Historian July 29, 2011 at 12:45 am

STUDY: Paul Krugman, Liberal Columnists Make Better Predictions Than Conservative Ones

http://www.businessinsider.com/paul-krugman-mike-huckabee-tom-friedman-maureen-dowd-liberl-conservative-columnist-2011-5

Ken July 29, 2011 at 1:15 am

A Pretty Weak Historian,

I don’t see Russ or Don mentioned in this study. All you’ve shown is that Krugman allegedly rated as a better predictor than someone else. This thread started with the statement that Kruggy is better at prediction than Russ and Don and you’ve still failed to prove it. Maybe you shouldn’t be a historian if this is all you can muster for research and “evidence”. I certainly hope you’re not attempting to be a teacher.

Regards,
Ken

Seth July 29, 2011 at 9:20 am

Your initial claim was ranking of economists. Your latest link is a study of newspaper columnists.

Sam Grove July 29, 2011 at 3:34 pm

“A. Famous Historian” – Argument from implied authority.

a_murricun July 28, 2011 at 10:14 pm

It’s good to see a practioner of the “soft” sciences admit to lack of precision. Unlike Isaac Asimov’s Hari Seldon, we can’t really measure all the inputs to economic activity which might lead to prediction. Heck, we can’t even explain results in terms of inputs.

That said, it seems fair to say that 19th century growth was fed mainly by vast quantities of free land and a steady supply of immigrants to work the land, not any particular economic policy..

Richard Stands July 29, 2011 at 1:10 am

So central planning and a command economy would have grown just as much?

Kirby July 29, 2011 at 11:23 am

What he is saying is that if we prevented as many immigrants from coming in and discouraged people from buying land with high tax rates, but encouraged demand by paying people to stay and work in new England, society would be better off.

Ken July 29, 2011 at 1:25 am

a_murricun,

“it seems fair to say that 19th century growth was fed mainly by vast quantities of free land and a steady supply of immigrants to work the land”

Why is it fair to say that? Much of the world at that time was in the same situation with vast tracts of land and labor, yet they all failed to bring about the prosperity the US had.

Regards,
Ken

A. Famous Historian July 28, 2011 at 10:16 pm

“What are some of the other things that we know about the 19th-century U.S. economy? For starters, it was a giant free-trade zone.”

Well, there was that blockade. Against the South. During the Civil War.

Sam Grove July 29, 2011 at 12:04 am

Which lasted how long?

Ken July 29, 2011 at 12:08 am

Four years of a blockade out of a hundred years somehow discredits Don’s statement how? If you really are a famous mathematician, no wonder the humanities at higher ed is falling apart.

Regards,
Ken

A Famous Historian July 29, 2011 at 12:51 am

Gibbons v. Ogden wasn’t ruled til 1824 – there goes another few years in the century of the ‘giant free-trade zone’.

Ken, I honestly think you don’t bring any knowledge to the table. Can you contribute something useful?

Ken July 29, 2011 at 1:23 am

An incredibly funny Historian,

First the Articles failed so badly because of the power of the state and the restrictions they imposed on others in turf wars. The Constitution solved many of those problems and were REAFFIRMED in Gibbons v Ogden. New York over stepped it’s bounds, as governments often do. The primary purpose of the commerce clause was to ensure that the federal government had the power to do what it did in this case.

You might not think I don’t bring any knowledge to the table, but for someone claiming to be a historian, and a famous one at that, you’re awfully bad at this stuff. And your critical thinking is pretty weak too. Oh well, practice makes better, right? So get crackin.

To sum up: so far you’ve failed to show the US wasn’t a giant free trade zone outside of the four years of the Civil War AND you’ve failed to provide evidence that Kruggie is a better predictor that Don and Russ, having only provided information on Russ’s or Don’s predictions. Just made some dubious justification that Kruggie did better than Gingrich, ergo must do better than Russ or Don.

Regards,
Ken

A Famous Historian July 29, 2011 at 1:44 am

Go to bed, Dad. You’re drunk.

Ken July 29, 2011 at 10:56 am

Look at all that knowledge you bought to the table! And those critical thinking skills… Whoa…

Regards,
Ken

Sam Grove July 29, 2011 at 12:32 pm

Must be a “progressive” famous historian.

Is there interpretation in history?
Oh, yeah.

Ken July 29, 2011 at 1:39 pm

Maybe he’s famous the same way the historian Michael Bellesiles is famous.

Regards,
Ken

Greg Webb July 29, 2011 at 4:22 pm

A Famous Historian is to history what DG and George are to economics…despicable and disingenuous…

muirgeo July 28, 2011 at 10:16 pm

“If free trade discourages economic development, it’s difficult to explain the economic growth that took place in the 19th century among the tariffless U.S. states spanning a huge continent.”

Read more: Not so simple – Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/opinion/columnists/boudreaux/s_748511.html#ixzz1TSJN5soh

The clear fallacy here is that you equate interstate trade with the global free trade of either the past or the present. That’s a fallacious comparison and the very reason interstate trade worked was because it was protected from unequal trade across national borders. Interstate trade was between states that had common federal laws, common labor laws and common environmental laws, taxes ect……. If we had similar rules between national borders as we do between state borders trade would be free and more equal and more beneficial. Our trade rules are set up specifically to benefit a few over the many and that you never point that out and instead hold it up as some example of Ricardian Comparative Advantage ignoring the results for our country and the real world is incredibly inconsistent with what you claim to be and what you claim to believe in.

The reason the area you live in around the DC area is so wealthy is in large part due to the ability of the “Fee Trade people” to lobby the government and bring in all the rent that makes yours the richest area in the nation. You are living off that very rent seeking you claim to despise yet your words promote and protect it.
Our wealth is a nation has decidedly NOT increased as fast now with so called free trade as it did when tariffs and protectionism were more in effect.

juan carlos vera July 29, 2011 at 4:56 am

Dear muirgeo
“You are living off that very rent seeking you claim to despise yet your words promote and protect it.”
Are you a sort of powerful clairvoyant? or Do you own and control all life and feelings of Don?…

If tariffs and protectionism is your prescription for prosperity, I ask you to try convince me with your own example: acquire an orbital capsule, position yourself within it, closure all doors, hire a service to put the capsule into orbit of the earth, and sit you enjoy your eternal prosperity placing all sorts of restrictions on your trade with the rest of the men of the earth… Oh!!!, do not forget to reject any type of gift you get from the earth…

Stone Glasgow July 29, 2011 at 12:10 pm

What is “unequal trade?”

Pom-Pom July 29, 2011 at 1:58 pm

All trade, I suppose. Everyone gives up something they value less for something they value more.

Gil July 29, 2011 at 1:26 am

John Lott Jr. would argue for the notion that denying women the vote was a big reason the 1800s was rather Capitalistic.

Kirby July 29, 2011 at 11:28 am

Kirby would argue that voting itself is not capitalistic.

Ken July 29, 2011 at 3:03 pm

So? Are you claiming that too, or are you just throwing out random quotes again?

Regards,
Ken

Dan Drechsel July 29, 2011 at 8:47 am

My favorite thought on this problem. Primarily used when people connect simplistic thinking to policy.
“For every complex problem there is an answer that is clear, simple, and wrong.” – H. L. Mencken

Dan Drechsel July 29, 2011 at 9:14 am

Sorry, corrected and cited: “There is always an easy solution to every human problem–neat, plausible, and wrong.”

“The Divine Afflatus,” 1917

vidyohs July 29, 2011 at 8:48 am

My stepdaughter sent the below to me yesterday, obviously it is something going around, but some really good ideas are simplistic in expression and this fits that description:

These are possibly the 5 best sentences you’ll ever read:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Can you think of a reason for not sharing this?

I couldn’t, so I just shared them wih thousands of others.

Stone Glasgow July 29, 2011 at 12:11 pm

Excellent. Who wrote this?

Ken July 29, 2011 at 3:06 pm

This is a good time for this Heinlein quote (well just about any time is a good time read this quote):

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded- here and there, now and then- are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as ‘bad luck.’” — Robert A. Heinlein

Regards,
Ken

Seth July 29, 2011 at 9:22 am

Harry Truman might like to be President now. There appears to be no shortage of one-armed economists now.

Stephen A. Boyko July 29, 2011 at 11:40 am

If there is complexity, there is uncertainty. Policymakers have to move beyond risk management to randomness governance of both determinate and indeterminate underlying economic conditions. Trying to govern both risk and uncertainty with the legacy, one-size-fits-all deterministic regime is analogous to having one set of driving instructions for both the U.S. and U.K. The result is non-correlative information with larger and more frequent boom-bust cycles.

See:

“Parallel Paper Economy” http://taffywilliams.blogspot.com/2011/05/parallel-paper-economy-by-sa-boyko-and.html

“Beyond Rumsfeld” http://taffywilliams.blogspot.com/2011/04/beyond-rumsfeld-by-stephen-boyko-and.html

Working for Liberty July 30, 2011 at 6:39 am

“The more complex the economy, after all, the more we must rely upon localized individual decision-makers and less on centralized, collective plans to keep it going and growing.”

Why is this so?

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