Quotation of the Day…

by Don Boudreaux on July 5, 2011

in Standard of Living, Trade

… is from page 17 of Frederic Bastiat‘s Economic Sophisms:

So true is this that our protective tariffs have no other purpose than to hinder all these things from reaching us, to restrict the supply, and prevent low prices and abundance.

.
Now I would ask, Are the people who live under our laws better fed because there is less bread, meat, and sugar in the country? Are they better clothed because there is less cloth and linen? Better warmed because there is less coal? Better assisted in their labor because there are fewer tools and less iron, copper, and machinery?

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{ 127 comments }

Warren Smith July 5, 2011 at 10:16 pm

The first step in declaring war on a nation is to blockade and otherwise restrict its foreign trade in order to destroy its ability to conduct its domestic economic affairs.

Why would any nation do the same to itself?

jjoxman July 5, 2011 at 10:17 pm

Lobbying by business for special favors is one reason.

vikingvista July 6, 2011 at 3:00 am

It isn’t a nation declaring war on itself. It is a government declaring war on its nation’s citizens. That is what governments do. And most citizens are just little Patty Hearsts cheering on their victimizer and demanding a full assault on any citizen who manages to “unfairly” avoid that victimization.

vidyohs July 6, 2011 at 6:59 am

“demanding a full assault on any citizen who manages to “unfairly” avoid that victimization.”

Tell me about it.

vikingvista July 6, 2011 at 7:07 pm

I’ll never understand so-called advocates of smaller government who salivate at seeing the book thrown at a Wesley Snipes or Nick Cage for tax evasion. Someone who sincerely believed in the destructiveness of government spending and growth would be glad to see as much money as possible withheld from it.

I have no doubt in my mind the country is better off with Wesley Snipes spending his own money than Uncle Sam. I also have no doubt that I am better off with Snipes enriching himself, than enriching the Federal government.

And of course I could never, in good conscience, demand my own victimization upon someone else. Unlike Stockholm Syndrome libertarians, my anger is directed at the victimizer, not the victims.

tdp July 6, 2011 at 7:33 pm

When people don’t pay their taxes, the government takes more from everyone else. There is a whole industry dedicated to helping people avoid repercussions for not paying taxes everyone else paid.

vikingvista July 6, 2011 at 7:47 pm

“When people don’t pay their taxes, the government takes more from everyone else.”

1. Why do you believe that? You really think some government bureaucrats compute the amount of taxes dodged, and spread that out among the remaining tax payers as tax increases? Preposterous. They simply spend as much as they can, and the more they get, the more they can spend. It is that simple. For the same reason, the more people successfully evade taxes, the less government has to spend, the smaller government will be, and the less your taxes will be.

So, in fact, it works just the opposite as you presume.

2. Why does it matter to you? Do you really consider your personal misfortunes to be just reasons for the victimization of innocents?

vidyohs July 6, 2011 at 8:11 pm

Our government depends upon two things for its existence and only two things.

#1. Your permission

#2. Your money.

All evidence points to the fact that both should be withheld by all. That and only that will change our government, which once changed will immediately begin to work at putting you back under the thumb.

tdp July 6, 2011 at 9:24 pm

As recent experience has shown, the government will not spend less when it collects less tax revenue. Tax revenues fell sharply from 2008-2010 and spending increased sharply.

vikingvista July 6, 2011 at 11:56 pm

“As recent experience has shown, the government will not spend less when it collects less tax revenue. Tax revenues fell sharply from 2008-2010 and spending increased sharply.”

As much as you might like to believe in the mystical powers of the US Congress, they cannot defy the laws of physics. There is a limit to how much debt they can accumulate, and what do you think determines that limit?

And anyway, as a correlation with any nation anywhere will show you, government spending (and debt) is tethered to revenue. Try as it might, San Moreno will not be able to spend $4 trillion/year in the near future.

Bob July 6, 2011 at 11:26 am

Bastiat said: When goods don’t cross borders, armies surely will

jjoxman July 5, 2011 at 10:18 pm

I am making certain Bastiat works required reading for my macro class. Others will be recommended.

EG July 5, 2011 at 11:14 pm

Some days ago my native country announced that they were getting rid of all tariffs on automobiles. This was quite a shock, and a huge relief for everyone. Days prior to this, I was trying to sell a car I had shipped over there, but the latest deal fell through because the tariffs would have run about 5,000 euros and the buyer couldn’t afford that much extra.

No better economic lesson than life. Of course, its not much of a lesson for politicians who know no other life other than government.

tdp July 6, 2011 at 7:34 pm

Which country would that be?

Dan J July 5, 2011 at 11:47 pm

Many on here elude to their careers as educators or having been employed in the wonderful world of juggling numbers for a living such as on Wall Street. I am fascinated. Thanx for your participation and insights.

vidyohs July 6, 2011 at 7:03 am

I believe the word you wanted was allude not elude. I think you have said you’re a fairly young student, while I will be 70 the 28th of this month, and I appreciate them to the same extent as you do.

I’ll be honest, with me it is probably a lot more bias confirmation than with you. :-)

Eric Hammer July 7, 2011 at 10:29 am

Happy birthday to you sir!

I appreciate your comments as well, and indeed all the great commenters here. Most sites’s comments sections are best ignored, but there are often new and insightful views and arguments made here.

Dan J July 7, 2011 at 9:03 pm

Spellcheck, often chances my words. Fairly young, compared to you, indeed. I am 36. Grew up on welfare, divorced parents, little parent participation in pushing school, made poor choices between paths of leisure and education. Grew up in union supporting Detroit which heavily favored democrats and the idea that wealthy people needed to be knocked down a rung or two by govt.
I enjoy this site.

Dan J July 7, 2011 at 9:04 pm

Have since grew up and changed views, dramatically. Economics has been the vehicle toward much of that change.

ajk.econ July 5, 2011 at 11:48 pm

Restricting trades so “Americans” can keep their jobs and wages is not only counterproductive but also pure tribalism. The current issue on immigration is a no brainer, and yet we continue to use defenses that have no truth. Immigration increases productivity, therefore reduces costs for consumers. The comparative advantage by David Ricardo is more than enough justification of how an economy benefits from trade.

Spike July 6, 2011 at 1:22 am

“Immigration increases productivity, therefore reduces costs for consumers”

Only if their productivity exceeds their use of Liberal “entitlements”

I would offer amnesty immediately, if ALL immigrants waived their access to any, and all entitlement programs for a period of 10 years. 5, if they move to any state, not bordering Mexico. 0, if they serve i the Military.

We can have Liberal Social policies, or open borders. Not both.

DG Lesvic July 6, 2011 at 5:00 am

You can’t have the social policies without the open borders. For, if you’re going to pay people not to work, you’ve got to have an illegal work force to do the work that you pay the legal workers not to do.

Sorry that I don’t have any graphs or equations to back this up, just plain words, like Bastiat, and Boudreaux too, our modern Bastiat, when he’s at his best.

vidyohs July 6, 2011 at 7:07 am

Actually DGL and Spike, Re; immigration, the nation would be much better off across the board if we had no welfare, no entitlements, given to anyone, native or immigrant.

Then when people came here you’d know they were sincere in wanting to be gainfully employed in some manner, and not looking for the “cushy safety net” this nation gives out.

DG Lesvic July 6, 2011 at 11:54 am

Thanx for stating the obvious.

But it is still true that if you’re going to have “welfare”, it’s better to have workers than non-workers using it. And the fact is that the illegal immigrants want to work and the legal workers at the lowest levels don’t.

I can remember a time when every lower middle class household had a maid. Today only the richest do.

There are no more maids for the lower middle class for they’d rather be paid for not working than for working.

vidyohs July 6, 2011 at 8:12 pm

Obvious to you and me but evidently not obvious to the majority of Americans, not even those who frequent this Cafe.

Scott July 6, 2011 at 8:36 am

Immigration alone cannot increase productivity. They’re not making anything quicker. Sure it can reduce costs, but at the risk of someone else (consumer A) losing a job. The net result must, in the end, be neutral, all you did was swap consumers.

STATISTICULOUS July 6, 2011 at 10:24 am

I disagree. When cost is reduced, more resources are used to innovate or expand. Both innovation and growth increase productivity through investment in technology and research in the first place and economies of scale in the second. These also create new jobs for those displaced by immigrant workers.

DG Lesvic July 6, 2011 at 11:56 am

Scott,

The free market increases productivity and interference with it reduces productivity, for employers don’t hire anyone unless doing so increases his productivity.

Scott July 6, 2011 at 5:52 pm

Ok, let me ask you this: how do you define productivity?

Scott July 6, 2011 at 9:13 am

ajk.econ:

I think comparative advantage by David Ricardo is misused in the cheaper labor argument, whether that be the immigrant or asia. It only works the way Ricardo explained it if there is a reason why a certain product can be made cheaper comparatively, not across the board, usually due to location or differing technology. If all products from a nation are all equally less expensive this is not comparative advantage.

John Dewey July 6, 2011 at 9:38 am

Scott,

I think you need to relook at the explanation of comparative advantage. The Library of Economics and Liberty might be a good place to start. Here’s a couple of key points from their explanation:

“Amazingly, everyone always has a comparative advantage at something. ”

“Someone may have an absolute advantage at producing every single thing, but he has a comparative advantage at many fewer things, and probably only one or two things.”

“The moral is this: To find people’s comparative advantages, do not compare their absolute advantages. Compare their opportunity costs.

DG Lesvic July 6, 2011 at 12:00 pm

John,

It is my impression of you, forgive me if I’m wrong, that there are times when you are a first rate economist and other times when you disagree with me.

Scott July 6, 2011 at 5:50 pm

I agree “everyone always has a comparative advantage at something”, but I am saying that comparative advantage fuels only some of the trade the US has with low wage countries.

Scott July 6, 2011 at 12:31 am

The only caveat to this is that if there is a trade deficit, you will eventually inherit the other country’s standard of living and nominal wage rate.

In the US’s case, this can be forestalled by utilizing public and private debt to the maximum extent possible.

geoih July 6, 2011 at 6:24 am

Individuals trade, not countries. The trade deficit argument is a red herring. The only hazard is government deficit spending that could be financed through foreign borrowing. In which case the problem isn’t a trade deficit, but the government deficit.

vikingvista July 6, 2011 at 12:30 pm

Government deficit spending might also increase sugar production. That doesn’t mean sugar is bad or that sugar is debt.

Don Boudreaux July 6, 2011 at 6:30 am

Not so. A U.S. trade deficit is another term for U.S. “capital-account surplus” – that is, investments flowing into the U.S. Such inward capital flows are good for the U.S. economy, not bad. (And, yes, this fact remain even if those inward capital flows are for purchases of U.S. government debt; without such inward capital flows, more domestic resources would be consumed to satisfy Uncle Sam’s ravenous appetite.)

Scott July 6, 2011 at 7:26 am

I just can’t buy that all types of inward capital flows are “gender” neutral. That’s like telling a business it doesn’t matter if your capital comes from profits or financing.

Call a trade deficit what you will, but to me it is borrowing against your future.

I agree “more domestic resources would be consumed to satisfy Uncle Sam’s ravenous appetite”. And yet, that’s the whole problem.

John Dewey July 6, 2011 at 9:01 am

Scott,

When a young couple buys a home by obtaining a mortgage, they are “borrowing against their future”.

When an 18-year-old young man obtains a student loan to pay for his college education, he is “borrowing against his future”.

When the school district in which I live builds a school by issuing municipal bonds, they are “borrowing against their future”.

When the airline for which I work obtains an additional aircraft through a sale-leaseback agreement, they are “borrowing against their future”.

Do you believe all these borrowers are wrong to borrow this money and invest it so? Do you believe they are not realizing returns on their investments?

Or, perhaps, you believe the borrowing is wrong because the lender is not always a U.S. citizen. Is that the source of your problem?

Scott July 6, 2011 at 5:45 pm

John, the source of my concern is not whether those funds are borrowed from a foreign entity. My concern is that the borrowing is simply to fund increased consumption. Borrowing is great if you can realize a return on your investment that is greater than the cost of the financing, but it is very poor business to borrow simply to consume items that quickly depreciate and hold no promise of creating future profits.

Sometimes, even borrowing against a house is not a wise move depending on the various factors involved.

John Dewey July 7, 2011 at 9:15 am

Scott: “My concern is that the borrowing is simply to fund increased consumption.”

Then argue that and stop making comments about the current account deficit. The borrowing is going to happen regardless of who the lender is. All the current account deficit shows is that foreigners invest/lend more to the U.S. than the U.S. invests/lends to foreigners.

Scott: “it is very poor business to borrow simply to consume items that quickly depreciate and hold no promise of creating future profits.”

If you are referring to households, then I disagree. I see nothing wrong with households attempting to equalize their consumption over their lifetimes. That would mean borrowing when young, saving more when middle aged, and liquidating savings when old.

vikingvista July 6, 2011 at 12:27 pm

A trade deficit isn’t borrowing of any kind. If you believe apples are puppies, that is your own personal internal problem to deal with.

Scott July 7, 2011 at 1:36 am

Granted, a trade deficit isn’t borrowing by definition, but it ultimately is a result of either borrowing or the sales of assets.

vikingvista July 7, 2011 at 11:58 am

Not borrowing, *just* the sales of assets. To say it is the result of borrowing, you might just as well say it is the result of production or labor or nation states or an oxygen atmosphere.

tdp July 6, 2011 at 9:27 pm

There is no such thing as a trade deficit. Trade is defined as balanced and voluntary exchange of goods and services for other goods and services or for cash. When we buy things from China, we get goods and services and they get increasingly useless dollar bills. Who gets the better out of this deal?

vikingvista July 7, 2011 at 12:15 am

Or rather, the way economists define it, and given the arbitrariness of political borders and time intervals, ALL trades are in deficit, for all parties. When x is traded for y, one person incurs a trade deficit of x, and the other of y.

vikingvista July 6, 2011 at 12:33 pm

You must have a strangely twisted understanding of comparative advantage.

SheetWise July 6, 2011 at 2:56 am

“Now I would ask, Are the people who live under our laws better fed … [better clothed] … [Better warmed] … [Better assisted]?”

And what would make him think that was the objective? Because the advocates said so?

DG Lesvic July 6, 2011 at 3:14 am

Don Boudreaux addressed the following to me about a week ago:

“Give me a break. Graphs – even mathematics – are means both of organizing our thoughts and of communicating. Just as words are. It’s ludicrous to arbitrarily declare that only words – or only mathematics, or only graphs, or only watercolor portraits, or only any other single means of human expression – are ‘the’ appropriate way to do science and other species of human inquiry.”

I would love to see how one might improve upon Bastiat’s simple logical and literary exposition, or even equal it, with any other “means of human expression,” especially mathematical or graphical.

And this is your chance to, as they say, “put up or shut up” about the whole thing.

Prediction #1: neither Don nor Yet Another Dave nor any other of the ardent defenders of “other means of human expression” will put up.

Prediction #2: they’ll still jump all over me the next time I object to their circumlocutions.

vidyohs July 6, 2011 at 7:11 am

I can’t help it, but for very real reasons almost every time you post, my mind brings up an image of a Cholla Cactus.

DG Lesvic July 6, 2011 at 11:57 am

Vid,

Put up or shut up!

yet another Dave July 6, 2011 at 12:51 pm

Since you mentioned my specifically,

I would love to see how one might improve upon Bastiat’s simple logical and literary exposition, or even equal it, with any other “means of human expression,” especially mathematical or graphical.

No you wouldn’t – that’s a flat-out lie. Several on this blog have shown you such examples, but you’ve rejected them out of hand, sometimes without even bothering your dainty little “mind” with actually looking at them.

Why, one might ask. Good question, I’d say – I have a theory:
- 1) You are too stupid to understand mathematics.
- 2) You are too lazy to make ANY effort to improve your understanding.
- 3) You are too arrogant to allow yourself to believe you might be incorrect.

So, to summarize: others have “put up” so why don’t you shut up.

My apologies to the proprietors of the café for my rudeness

DG Lesvic July 6, 2011 at 1:13 pm

Dave,

I asked for examples, not links or references to examples, which is all you ever gave me. But here’s your chance now, since you won’t shut up, to put up.

Show us how, with your mathematical mumbo jumbo, you would improve on Bastiat’s plain words.

Prediction #1: from Yet Another Dave there will be nothing but Yet Another Evasion, perhaps more links or references, but no actual example.

Prediction #2: he will still jump all over me.

yet another Dave July 6, 2011 at 2:30 pm

Hey clueless – I never gave you links or references or examples. I just pointed out the obvious fact that you don’t know squat about mathematics (and it is really obvious) yet you drone on incessantly about how worthless it is. That’s it, that’s all. You don’t even pay enough attention to remember who did what, yet you drone on incessantly anyway, doing mortal battle with the voices in your head.

Other posters here did give you links to examples and references. But that would require you to lift your lazy little finger and press a mouse button in order to read the thing you claim you wanted to see, so you moved the goalposts then. The fact that you wouldn’t even make the tiniest slight bit of effort to see something combined with your completely transparent goalpost moving tactic proves beyond a shadow of a doubt that you are dishonest and disingenuous. You just want to drone on incessantly with more ignorant drivel while claiming nobody has ever risen to the challenge of the great and brilliant DG Foulstink.

Another point, dimwit: I wouldn’t use mathematical representations to improve on Bastiat’s writing – his writing is awesome just like it is, a real thing of beauty. Of course that’s not what you asked before; just another example of goalpost moving. So transparent, so obvious, so not-that-bright – kinda reminds me of muirgeo.

One last thing, moron: I think you’re incapable of learning and don’t care if you ever do learn anything about anything, but I’m not evading anything – I never offered to show you anything mathematical about anything. I’m not an economist, so I’m the wrong guy to ask for those things. I do understand mathematics though, so it’s obvious to me how absolutely clueless you really are.

Whatever contribution you might make to the world in some capacity, on the subject of mathematics you are dumber than the most blithering of idiots. So dumb in fact that you have no idea how incredibly stupid you look to anybody with half a brain. Do yourself a favor and STFU before you embarrass yourself more than you already have.

I again apologize to the proprietors of the café for my rudeness and now await your next clueless claim of victory and yet another evasion and etc, even though that has nothing to do with the conversation you and I have had on this topic. But don’t you worry your senile little addled brainlet about that Dumb Guy.

DG Lesvic July 6, 2011 at 5:05 pm

Dave,

You got class.

Methinks1776 July 6, 2011 at 6:31 pm

DG,

Do we agree that economics is the study of trade-offs? I think we do.

So, please explain to me how I solve the following problem without math:

There are two very large jars filled with with normal sized red and white marbles.
One jar is filled with only red marbles. The other is filled with a 50/50 mix of red and white marbles all mixed together.

You will be blindfolded and you will choose three marbles out of the same jar. If you choose three red marbles, you win $1.00. If all three marbles you chose are not red, you win nothing.

What is the maximum amount you would pay to play this game once? If I offered it to you for $0.72 would you pay to play?

If you think this is just a silly, very basic and totally irrelevant little example from an intro statistics class, you are wrong. Every single decision you make has a probability distribution and a pay-off associated with each probability in the distribution. If you overpay (commit too many resources), you are using resources inefficiently. You are wasting them and you will soon be poor. In reality, you will have many “games” available to you and you will be able to allocate your resources amongst them. But how can you choose which ones are the best deals if you don’t have the math skills to figure out the value of any of them?

vikingvista July 6, 2011 at 7:15 pm

Good post, but it is no use trying to penetrate that sclerosed part of his brain. Either he never took the SAT, or he did and is suffering from PTSD.

DG Lesvic July 6, 2011 at 7:55 pm

Methinks,

In the first place, I have never said a word against mathematics per se, but only against its confusion with economics.

Economics implies constant relations between cause and effect, and mathematics between the magnitudes of the causes and effects. And since there are no such constant relations in economics, they and mathematics are irrelevant to it.

Again, I ask for an example, not for references or links to examples, but an example of constant relations between magnitudes in economics.

If you can give me even one, I shall depart this scene never to drive Dave bonkers again.

Methinks1776 July 6, 2011 at 8:13 pm

Economics implies constant relations between cause and effect, and mathematics between the magnitudes of the causes and effects. And since there are no such constant relations in economics, they and mathematics are irrelevant to it.

Either I’m too stupid to understand what you’re saying or what you’re saying is total rubbish.

dumb it down for me. What does that mean?

DG Lesvic July 6, 2011 at 8:31 pm

Methinks,

While economics tells us that a rise in the price of potatoes will be followed, ceteris paribus, by a fall in the demand, it doesn’t tell us to what extent the demand will fall. For, a rise in the price of 10% followed by a fall of 8% in the demand is a unique historical event, not a constant numerical relation, a datum of history, not a law of economics.

Methinks1776 July 6, 2011 at 9:28 pm

I still don’t understand your complaint.

Nobody ever claimed that supply and demand is a constant numerical relationship or that the particular numerical relationship is a law of economics.

And, seriously, do you even understand the example I gave you?

yet another Dave July 7, 2011 at 11:31 am

DG,
You said:

Economics implies constant relations between cause and effect, and mathematics between the magnitudes of the causes and effects. And since there are no such constant relations in economics, they and mathematics are irrelevant to it.

If I understand your strange wording, you have points you’re using to contrast economics and mathematics.

DG Point 1 is: Economics implies a constant relationship between cause and effect.
I think what you’re saying with this is illustrated with your favorite example: if price goes up, demand goes down.

DG Point 2 is: Mathematics implies a constant relationship between the magnitudes of cause and effect.
I think what you’re saying with this is that mathematics requires a specific, defined, and constant numerical relationship between cause and effect. Because of that requirement, mathematics is incompatible with economics because economics has no specific, defined, and constant numerical relationship between cause and effect.

This belief reveals a fundamental misunderstanding of mathematics.

Simply put, mathematics DOES NOT REQUIRE a specific, defined, OR constant numerical relationship between cause and effect. Mathematics is perfectly capable of dealing with proportionalities between different variables without quantifying them. Mathematics comfortably deals with variables whose numerical values are unknown and affected by numerous other variables, some or all of which are also unknown.

Your continued insistence to the contrary, however passionately you believe it, does not change the fact that you are wrong. Because you continue to proclaim such an obvious error, you make reveal your ignorance every time you discuss this topic. Because you refuse to even consider that you might be wrong, you make fool of yourself.

Many things you say with (sometimes difficult to understand) prose can be elegantly expressed using some form of mathematical representation without defining specific numerical values for the variables involved. An x-y graph with no numbers on the axes is an example of just that – it illustrates the proportionality without implying anything about numbers. To many people, the graph conveys the concept more quickly and clearly than your best verbal explanation.

tdp July 7, 2011 at 11:44 am

@YAD

Apparently he missed the development of Algebra, Trigonometry, and Calculus

vikingvista July 7, 2011 at 12:00 pm

tdp,

He thinks mathematics is arithmetic. He doesn’t even make an attempt to learn what mathematics is.

Methinks1776 July 7, 2011 at 12:08 pm

Guys, he can’t perform the basic arithmetic in the problem I presented to him. I think you give him too much credit in assuming he can do arithmetic.

yet another Dave July 7, 2011 at 12:36 pm

You might be on to something Methinks. Like he just never got arithmetic – it was just too hard. All he knew about was counting, even though he wasn’t very good at it. But he did know what numbers were. Since arithmetic used numbers, he figured it must be just some weird form of counting.

Then one day he heard this news story about a bridge to nowhere and thought to himself, “Hey, mathematics leads nowhere, so it must be a bridge to nowhere, too. Yeah, that’s it! Math is a bridge to nowhere and a weird form of counting. What does that mean? I know it means something, let me think…

… still thinking…

…wow, this is really hard…

Eureka!! I’ve got it! Math is abridged form of counting!”

Methinks1776 July 7, 2011 at 12:45 pm

That is Nobel worthy, YaDave!

vikingvista July 7, 2011 at 1:18 pm

“Math is abridged form of counting”

Yad,

Nicely put. And for anyone not following DG’s posts, Yad was here using DG’s words.

The situation is clear. DG doesn’t understand (a biblical understatement) mathematics, and therefore hates it and wants to never have to encounter it. He then (mis)reads Mises’s criticisms against empirical economists, and against similar economists who err by deliberately ignoring fundamental economic principles. His bizarre conclusion is that the expression of any idea in a discussion of economics that is not entirely expressed by the English alphabet (sans numerics) arranged in a grammatically correct order, is false, meaningless, and should be attacked at every turn.

The only means of communication that should be permitted, are those that DG understands.

vikingvista July 7, 2011 at 1:26 pm

Yad

“Mathematics is perfectly capable of dealing with proportionalities between different variables without quantifying them.”

Not just proportionalities, but also ordinals, and any relation of abstract quantities. As Methinks pointed out to an oblivious DG, almost all of mathematics has long ago been reduced to logic.

DG apparently thinks lies and misconceptions discriminate between different modes of communication.

SheetWise July 8, 2011 at 12:29 am

I think the relationship between math and economics is strained by the stark reality that all people are not objective. To many people, creative fitting is a sport. Another problem is that the government is the source of most data — which means it needs to be vetted, sanitized, and given a reality check before it’s incorporated into any model. And the most important thing about economic data to me is — who cares — and why?

DG Lesvic July 6, 2011 at 9:32 pm

Methinks,

You wrote,

“please explain to me how I solve the following problem without math.”

Please explain to me how it is a problem of economics.

Methinks1776 July 6, 2011 at 9:33 pm

Please explain to me how this is NOT a problem of economics.

DG Lesvic July 6, 2011 at 10:12 pm

Methinks,

You asked,

“What is the maximum amount you would pay to play this game once?”

In other words, how much would I gamble?

Then you asked how this is not a problem of economics?

In fact, it’s not even a problem of mathematics.

Gambling is gambling, and mathematics can’t change that. It can’t turn a gamble into a calculation. If it could, the mathematicians would have driven the casinos out of business a long time ago.

Adam Smith explained the market, not the casino, and not even how to succeed in the market, any more than the casino, but how the market itself succeeds better than the alleged alternatives to it.

His great work was entitled, The Wealth of Nations, not How to Beat the Odds.

Methinks1776 July 6, 2011 at 10:44 pm

I am asking you to calculate expectancy.

If you are going to allocate capital to a project, you have to calculate how much you expect to earn so that you do not pay $1.00 for something that is worth $0.15. Allocation of capital is absolutely an economic decision.

If you understood the basic math you were looking at in that problem, you wouldn’t be so confused about it. If basic math problems confuse you so, then I don’t see how you can make proclamations about the supposed irrelevance of math.

Adam Smith and Casinos have nothing to do with it. Did Adam Smith ever say it doesn’t matter if you overpay for assets? No.

DG Lesvic July 6, 2011 at 10:29 pm

And don’t confuse speculation in the market with gambling in the casino. The speculator, like the gambler, takes a chance, but based on business intelligence, not blind dumb luck, which is all the gambler ever has going for him. There is no law of averages at work for him, nor even any greater or lesser probability of success, nothing that could be called intelligence.

The speculator, to the contrary, does not just throw his money to the winds and hope for the best, but targets it according to business intelligence.

He takes a chance, he speculates, but does not, in the strict sense of the term, gamble.

You’re in the investment business. Do you act according to any law of averages or to intelligent assessment of the historically unique facts before you and intelligent appraisals of what they will become?

Do you just throw darts blindly at a board, on the assumption that sooner or later, your time will come, or take careful aim with each and every throw?

Methinks1776 July 6, 2011 at 10:54 pm

The speculator, like the gambler, takes a chance, but based on business intelligence, not blind dumb luck, which is all the gambler ever has going for him.

That is the most clueless thing I’ve ever seen from you. You’ve never played Poker, have you?

That “business intelligence” you’re so cluelessly talking about is called “expectancy” and that’s exactly what I asked you to calculate. And yes, that’s exactly how all of us make decisions – both about how much to pay for a security in the market and how much to bet on a hand in Poker.

Without the ability to calculate expectancy, you really are just throwing darts blindly. Which, since you can’t do basic math, is all you’re capable of.

It’s true that math is over-used in economics. It’s overused in finance too. But, you are on the opposite end of the spectrum. You undervalue it to the point of foolishness.

DG Lesvic July 6, 2011 at 11:26 pm

Those who say they can “calculate expectancy” betray themselves every time they get up to go to work in the morning, like the rest of us. For, if ytheycould really calculate the future with mathematical precision, they would all be stock market gazillionaires.

As I understand, you’re still working for a living, and so are the rest of the mathematical economists, for economics is not a predictive but explanatory science.

Methinks1776 July 7, 2011 at 12:10 am

expectancy is not precision, it is probability. Though you obviously don’t know it, you think this way every time you make a decision. Each decision involves a trade-off and you think about the distribution of outcomes for each decision before you make it.

Now, I suppose you’re going to tell me trade-offs are not economics?

vikingvista July 7, 2011 at 12:27 am

Let me give you some insight into the mind of DG…

DG economic expressions:

“The total amount of fruit that Fred supplies for sale is the sum of his apples and his bananas.”

“The price increases monotonically with the quantity.

DG noneconomic expressions:

“f = a + b”

Click for image.

Methinks1776 July 7, 2011 at 12:35 am

Viking,

Awesome.

I should have listened to you.

DG Lesvic July 7, 2011 at 1:00 am

Methinks,

Economics is not about the conditions in the market that constantly change and are the object of our actual action in the market, but of the laws that never change, and are the object not of action in the market but of thought about it.

Again, you are confusing actual action in the market with thought about it. Calculation is essential to the action but no part of the thought about it, the philosophy of the market, the discovery and elucidation of the laws, that never change, as contrasted with the business conditions, that constantly change.

You need to grasp the difference between “economic” forecasting and economics, between what constantly changes and what never does, the actual state of the market and the natural laws that govern it.

That is the root of your problem, your misunderstanding, and impatience with me. Calculation is an essential tool of the entrepreneur planning his actions in the real world, but not of the economist explaining them. For you cannot derive the laws from the data of the market, what never changes from what constantly changes.

All of the talk of mathematics in economics confuses the passing data of econometrics with the eternal truths of economics. Since there is none of the passing data in the eternal truths, there are no quantities and no mathematics. It is irrelevant to economics, and, its only effect, to obscure and distract from it.

As Mises put it, “The mathematical method must be rejected not only on account of its barrenness. It is an entirely vicious method, starting from false assumptions and leading to fallacious inferences. Its syllogisms are not only sterile; they divert the mind from the study of the real problems and distort the relations between the various phenomena.”

vikingvista July 7, 2011 at 1:02 pm

“The mathematical method must be rejected”

I encourage everyone to read _Human Action_ Chapter 16 section 5 and to please ignore everything DG ever says about Mises. Reading Mises, is clearly not the same as understanding him, not even superficially.

The “mathematical method” is NOT, as DG would have you believe, referring to any and all use of the tools or symbols of mathematics in understanding economics. Mises is specifically referring to the errors caused by ignoring market processes such as subjective valuation, the ordinal nature of preferences, and the deducible processes underlying empirical economic observations. Mises was not, as is DG, an extreme philosophic English language bigot.

DG Lesvic July 7, 2011 at 12:03 am

Methinks,

You wrote,

“You will be blindfolded and you will choose three marbles out of the same jar.”

You were correctly describing gambling, but is that how you speculate?

The application of eyes wide open intelligence is precisely what distinguishes speculation from gambling. The gambler does not apply any intelligence to his action, and could as well roll the dice “blindfolded,” as you said, as with his eyes wide open.

You are confusing “economic calculation and forecasting” with economics.

Strictly speaking, “economic forecasting” is really business forecasting, and not the same thing as economics.

Adam Smith and Ludwig von Mises didn’t set themselves the task of calculating and predicting any of the changing conditions in the market, but only of explaining the unchanging laws that govern them.

How could you observe the Invisible Hand, and, if you couldn’t observe it, measure, count, or calculate it?

Smith didn’t calculate but explained it.

Mises likewise, explaining the essential role of economic or business calculation, wasn’t actually engaging in any. He didn’t pick any winners and losers for us in the market, but explained how the market itself, through the actions of entrepreneurs, does so.

For economics is not a predictive but explanatory science.

.

Methinks1776 July 7, 2011 at 12:30 am

Adam Smith and Ludwig von Mises didn’t set themselves the task of calculating and predicting any of the changing conditions in the market, but only of explaining the unchanging laws that govern them.

Are you under the impression that they told you to stumble around cluelessly in the dark, unable to figure out how to make decisions and insisting that this is “economics”?

Your posts are weird drivel and you clearly have no idea what I’m talking about.

I’ve avoided even reading most of your posts complaining about math and graphs in econ, so I did not know the depths of your craziness. You obviously don’t know enough basic math to even have this conversations, so I’m just going sign off and allow you to marinate in ignorance – something you seem to enjoy.

Cheers.

DG Lesvic July 7, 2011 at 12:42 am

Methinks,

I made a deal with you. I promised to leave the Cafe altogether if you or anyone else here would furnish us with an example of math in economics, an economic law derived from math rather than logic or better explained through math than through words. I’m still willing to live up to my end of the bargain, but, without any takers, I’m afraid that I’m just going to stick around and continue to remind you of the challenge you have not been able to meet.

tdp July 7, 2011 at 6:18 pm

How can you explain something without proof? You are being willfully stupid. Every time somebody explains in language so blunt and obvious as to be patronizing that “unchanging laws” are derived from empirical observation, and that Adam Smith would never have published his theories if he hadn’t seen evidence of them at work that could be quantified by NUMBERS. I refuse to accept any explanation from any economist unless he can show me that it actually occurs.

We know free trade is good because every time countries liberalize trade policy, their citizens become wealthier. The nominal and per capita GDP rises, the PPP rises, and the poverty rate falls. We do not know that free trade works because Adam Smith told us it works. If people had gotten POORER, we would know it didn’t work, no matter what Adam Smith said or how logical it seemed.

Also, you refuse to accept evidence as grounds for believing anything, yet at the same time demand evidence from us. You refuse to accept calculations supporting the ideas of Smith and Mises while claiming that they are always right just because you said so.

Methinks1776 July 7, 2011 at 12:50 am

an economic law derived from math rather than logic

LMAO! Rather than logic? What the hell do you think math is?

Don’t answer that. I shouldn’t have even replied. Buddy, you don’t know enough basic math to even judge whether or not anything is “better explained” through math.

DG Lesvic July 7, 2011 at 1:09 am

What is LMAO?

You’re implying that math is logic.

They’re both branches of reason, but there is difference:

Math: 2 plus 2 is 4.

Logic: you may prefer A to B or B to A, but not both A to B and B to A.

The third branch of reason, Praxeology: quantity goes down as price goes up.

The difference is that while math and logic are out of time and space, praxeology is within it, the science of human action always through time and space.

yet another Dave July 7, 2011 at 10:38 am

DG seems to think that arithmetic is the sum total of mathematics. He also seem to know little of formal logic. Add to that his religious conviction that he’s right and he won’t even consider the possibility of his ignorange.

Methinks1776 July 7, 2011 at 11:16 am

YaDave,

I now totally understand your last two responses to him. Sadly, that problem required only arithmetic – as you can see, the problem is simple enough to not even require the use of exponents. So, I’m not sure DG has a firm grasp of 1st grade arithmetic (is that when American schools start teaching kids multiplication?) either.

yet another Dave July 7, 2011 at 11:28 am

Yeah – I went a little over the top, but I’ve been having this conversation with him off and on for a while now.

At least I made sure one thing he said here was correct (“Prediction #2: he will still jump all over me.”).

It was the least I could do. :-)

Methinks1776 July 7, 2011 at 12:05 pm

Oh, I thought you were rather restrained, given the circumstances :)

DG Lesvic July 7, 2011 at 1:20 am

Viking,

You wrote,

DG economic expressions:

“The total amount of fruit that Fred supplies for sale is the sum of his apples and his bananas.”

“The price increases monotonically with the quantity.

DG noneconomic expressions:

“f = a + b”

Sorry but I don’t recognize myself in any of that and have no idea what you’re trying to get at.

Was there supposed to be an example of mathematical economics contained in that? If so, I missed it.

tdp July 7, 2011 at 11:40 am

Right. Let’s ignore all empirical evidence measuring past economic performance and stop judging policies by their actual effects. The best economic ideas are whatever theory sounds best, regardless of whether or not it works in the real world. NUMBERS ARE BAD!!!!!!!!!

Bob is buying clothes. He can buy 1 polo shirt for 15 dollars and 1 t-shirt for 15 dollars or 2 shirts of the same kind for 20 dollars. 15/1= 15, while 20/2= 10. If Bob needs two shirts and does not care whether they are polos or tees, which deal is better? By doing MATH, Bob decides that paying $10 per shirt is a better deal than paying $15 per shirt. He has made an economic choice and his decision was influenced by his use of mathematics to calculate the most advantageous and efficient allocation of his resources.

Of course, you will claim that this is not math and/or is not economics, and your refusal to accept any evidence by stubbornly denying that any evidence has been presented means you will never go away. I used to wonder how creationists could ignore all the evidence in favor of evolution, but then I started reading your posts.

DG Lesvic July 7, 2011 at 12:28 pm

tdp,

You are making the same mistake as Methinks, confusing market action with thought about it, entrepreneurship with economics, the role of the market actor or entrepreneur with that of the economist, and, of course, the different methods they must use.

They both must think, but about two different things. The market actor or entrepreneur must think about the passing data of the market and the economist about its eternal truths. Since he cannot derive its eternal truths from its data, what never changes from what constantly changes, the empirical facts of the market are irrelevant to his task. He must look inward, not outward, to his own human nature, not to the facts of the world around him.

Since there are no actual real world facts and data in his thought, there are no quantities and nothing to calculate. His subject matter is cause and effect relations and not the magnitudes of the cause and effect relations. He grasps the universal, eternal, and immutable truth that the market tends toward equilibrium and interference with it toward disequilibrium, but not how fast and how closely it closely it tends toward and interference tends away from equilibrium. Those are quantitative questions beyond the scope of economics and matters of judgment on which men may disagree.

But no reasonable man can deny that the market tends, however fast or closely, toward equilibrium, and, interference with it, toward disequilibrium.

And no reasonable man can deny that that is something worth knowing.

Economics doesn’t tell us everything we want to know. It’s theory is just aone tool for dealing with the real world. It is an indispensable tools. There are others as well. Mathematics is surely one.

But they are different, serve different purposes for us, and to confuse them is to vitiate them, and, as Mises said, is “vicious.”

vikingvista July 7, 2011 at 3:11 pm

“The best economic ideas are whatever theory sounds best, regardless of whether or not it works in the real world.”

If that were DG’s criticism, I would have no argument. People who think economics can be understood merely by what “works in the real world”, cannot hope to understand economics. The deductive and apodictic truths about economics are not superfluous to empirical observations, and cannot be rationally contradicted. You are wrong in this matter.

DG’s criticism isn’t so profound. It is exceedingly silly. It is that even a true and rational idea in economics must not be expressed in any manner other than English words.

DG Lesvic July 7, 2011 at 5:49 pm

Then why are you just telling this in English words?

Methinks1776 July 7, 2011 at 6:38 pm

Probably because you wouldn’t understand the math.

John Dewey July 7, 2011 at 12:16 pm

Someone above suggested that DG Lesvic is a fool. I do not know whether he is or not. But I do know that most of you who are arguing with him are pretty smart. And I can see that somehow DG Lesvic has manipulated you into wasting time in a debate with him.

My suggestion: show yourselves not to be fools and ignore this guy.

DG Lesvic July 7, 2011 at 12:30 pm

That’s fine, John, but before you go, how about facing my challenge.

vikingvista July 7, 2011 at 3:16 pm

John,

It isn’t about DG, who is a lost cause. The problem is that he presents himself as a disciple of Mises in general and _Human Action_ in particular, more so than anyone else on this forum. Readers unfamiliar with Mises would be led by DG to believe that Mises was a buffoon, instead of the genius he was. I don’t know that anyone can do better than _Human Action_ for understanding the fundamentals of economics. Everyone should read it–and ignore DG.

DG Lesvic July 7, 2011 at 5:48 pm

Where on these issues do I differ from Mises?

DG Lesvic July 7, 2011 at 12:45 pm

You good folks dismissing me are just a bit disingenuous about it. If you were completely honest, you would dismiss Rothbard and Mises along with me.

From Observing the Invisible Hand at http://econotrashtalk.org/#Observing_the_Invisible_Hand:

For Mises, economics began with introspection, “observation” of our own human nature. Knowing ourselves, we would know others, on the assumption that they were human like ourselves.

“It is impossible to provide conclusive evidence for the propositions that my logic is the logic of all other people and…that the categories of my action are the categories of all human action. However…these propositions work.”

For, we can, in fact, coexist and not just collide with one another

DG Lesvic July 7, 2011 at 1:50 pm

To my good friend, John Dewey, whom I admire very much, though of course not nearly as much as I admire myself, this challenge before he completely turns his back on me.

John,

How could you derive the eternal truths of the market from its passing data, what never changes from what constantly changes? And, without its passing data, what is there to calculate?

How could you observe the Invisible Hand, and, if you couldn’t observe it, measure, count, or calculate it?

And, oh yes, of course, lest we forget, where is your example of a law of economics derived from mathematical, quantitative data, of something never changing from what constantly changes?

John Dewey July 7, 2011 at 3:00 pm

“whom I admire very much”

I appreciate that. But I have no interest in the challenge you issued. Sorry.

DG Lesvic July 7, 2011 at 5:51 pm

It’s the challenge of economics.

If you have no interest in it, what are you doing here?

Dan J July 7, 2011 at 3:36 pm

You push, too hard. Charts and graphs (numbers) may not be necessary to getting a basic understanding or for an intermediate learner into economics. But, in a businesses operations those charts and graphs are a must. And, to have the full understanding of economics and to prove statements, I do believe, it is absolutely necessarty to incorporate those numbers, charts, and graphs.

An economic advisor to a business must be able to use those charts and graphs. As profits are squeezed into low single digit percentages, they must use those numbers.
Was there not a trend in housing (valuation) until govt intereference? How was that trend recognized? Even, in very low valuation growth periods, the numbers helped to recognize the continued trend.

DG Lesvic July 7, 2011 at 5:47 pm

Dan,

Business is about magnitudes. Economics isn’t. It’s about logic.

tdp July 7, 2011 at 6:02 pm

So we should just make up all economic policy because evidence, facts, and data are useless. I can claim making tax rates seventy bajillion percent for every man, woman, and child in the US is good for the economy, and I would be right by your logic because any numbers, data, or facts you could use to contradict that are irrelevant because all that matters is, as you put it, “logic”.

Well, it would seem “logical” to some people to have government take care of all the needs of its citizens so nobody would ever have to worry about anything, a la 1950s Britain. Except DATA showed that that LOGIC didn’t work. Logic is no good if you have absolutely no proof of it being applicable in the real world.

How do you prove a law of economics is a law? You furnish EVIDENCE of that law in market transactions in the form of empirical data. You can say when supply goes down, demand goes up, but unless you have DATA about the prices of various objects in relation to their supply in multiple instances, you have no proof. It doesn’t matter how much the demand rises when supply falls or if if the amount by which it rises changes. What matters is that you have NUMBERS to prove that it happens, at whatever magnitude.

DG Lesvic July 7, 2011 at 7:32 pm

tdp,

“Action and reason are congeneric and homogenous…two different aspects of the same thing. That reason has the power to make clear through pure ratiocination the essential features of action is a consequence of the fact that action is an offshoot of reason…Logical thinking and real life are not two separate orbits. Logic is for man the only means to master the problems of reality. What is contradictory in theory is no less contradictory in reality.”

Mises

You asked “How do you prove a law of economics is a law?”

That’s like asking, how do you prove reason is reason, logic is logic, math is math? How do you prove self-evident truths?

You don’t. They’re givens, and you either get them or you don’t.

DG Lesvic July 7, 2011 at 6:58 pm

VikingVista implied that Mises was against the analytical but not the linguistic aspect of the mathematical method in economics.

But since injecting the language of mathematics into a non-mathematical subject could only confuse matters, of course he had to be against the one if he was against the other, as, indeed he was.

“What the logical economist sets forth in words…and what the mathematical economist himself must describe in words before he embarks upon his mathematical work, is translated into algebraic symbols. A superficial analysis is spun out too long, that is all.”

Human Action, P 355

In other words, since the mathematical no less than the logical economist must begin with words, translating them into mathematical symbols simply compounds the original error.

Granted that it is not the strongest argument against the mathematical idiom. Rothbard presented a much stronger one. Nonetheless, Mises was not indifferent to it. He clearly disliked it, just not as clearly as Rothbard.

vikingvista July 7, 2011 at 8:38 pm

No, that is not “in other words”. He is specifically writing about what he calls “the mathematical economist”, not what YOU call “the mathematical economist”.

You don’t understand Mises, and you misrepresent him all the time.

And Rothbard, whom you apparently have not read, made effective use of graphs in his magnum opus.

Your whole thesis is completely idiotic, and you defame brilliant men by ascribing your nonsense to them.

DG Lesvic July 7, 2011 at 9:31 pm

Vike,

You’re right about Rothbard. As I pointed out in The Austrian School of Geometry, he was inconsistent on that subject, speaking out against the mathematical idiom and still utilizing it.

But I don’t see how you can draw any comfort from Mises.

Where does he ever say a word for the mathematical idiom or use it? You seem to infer his indifference to it from his focus on the analytical evils of math in economics. That seems to me to be a non-sequitur. He does speak out against the idiom, even if not as emphatically as Rothbard, and nowhere that I could see did he ever say a good word for it. So I still fail to see how I have misrepresented him.

DG Lesvic July 7, 2011 at 9:32 pm

Also, you said here is something else Rothbard said.

Your link didn’t work, so why don’t you just tell it what it was.

DG Lesvic July 7, 2011 at 9:38 pm

But Vike, apparently we do now have you in the camp of those who oppose the analytical role of math in economics, and all you’re still advocating for it is a linguistic role.

Why then, I wonder, are you still conducting this discussion in English? Since your words aren’t getting anywhere with me, why don’t you try some squiggly lines?

And I know the answer to that. It’s because you know that I am too deficient in math to get them. I and a lot of other people. Do you really think you’re going to save liberty with squiggly lines?

DG Lesvic July 7, 2011 at 9:39 pm

And, by the way, when did Don ever resort to your squiggly lines, except when he himself was confused, as, at that point, he clearly was?

DG Lesvic July 7, 2011 at 7:03 pm

Here is Rothbard’s much better treatment of the subject.

“…it is the great quality of verbal propositions that each one is meaningful. On the other hand, algebraic and logical symbols, as used in logistics, are not in themselves meaningful…to develop economics verbally, then to translate into logistic symbols, and finally…back into English, makes no sense and violates the fundamental scientific principle of Occam’s razor; which calls for the greatest possible simplicity in science and the avoidance of unnecessary multiplication of entities or processes.”

vikingvista July 7, 2011 at 8:44 pm

Here is something else Rothbard said.

I hope you secretly despise Rothbard and Mises, because you do a fine job detracting from them.

vikingvista July 7, 2011 at 8:47 pm

Here is something else Rothbard said.

I hope you secretly despise Rothbard and Mises, because you do a fine job detracting from them.

ref mises.org/rothbard/mes/chap2b.asp#_ftnref6

DG Lesvic July 7, 2011 at 10:05 pm

After all the baby talk, here is what it’s really all about.

“During the time when Samuelson was a student, the tone was being set by others. In a lecture delivered in Japan in 1931, Joseph Schumpeter argued for not only the logical superiority of mathematical forms of reasoning in economics, but that economics would have become a real science when the ordinary, informed and interested reader could no longer understand what the economist was saying.

‘The severance from every day forms of thought is perfect (with the full mathematization of economics), and the general reader is made to realize that the thing is beyond his reach,’ Schumpeter said.”

Richard Ebeling

DG Lesvic July 7, 2011 at 10:22 pm

By the way, I just noticed quite a lot of comments directed against me that I missed at the time. Just to let you know that I didn’t shy away from them but hadn’t seen them, and, now, don’t see how, in the light of all else that has followed, they change anything.

DG Lesvic July 7, 2011 at 10:35 pm

Here is my response to those criticisms above, which I had missed, and seem to boil down to the proposition that there is a non-numerical as well as numerical economics.

The mathematical economists can never give us any examples of constant relations between magnitudes and calculation with actual numbers. They give us xs and ys, but they are no substitute for actual numbers, for you can calculate by means of the numbers but not the symbols. They give us ordinal numbers, first, second, third, but they are no substitute for cardinal numbers, one, two, three, for you can calculate by means of the cardinal but not the ordinal numbers. They give us constant relations between magnitudes in a recipe, one cup of sugar, two of flour, but economics is Political Economy, not Home Economics, human action, not chemistry, Adam Smith explaining the market, not Ma Kettle baking a cake.

They may illustrate a point with cardinal numbers, but that is not the same as proving it with them. The illustrations are merely incidental to the proof, and economics is defined by what is essential, not incidental to it, distinguishing, not common, by its logic itself, not their illustrations.

They tell us that there is a non-numerical as well as numerical mathematics, which is to deprive it of its meaning, and admit that you don’t have any. The fact that the formulas are literary or symbolic rather than numerical doesn’t mean that there is a non-numerical mathematics. For there are still no applications of the formulas and actual mathematical operations without actual numbers.

Finally they’ll tell you that mathematics is a better means of communication than English, and, with a perfectly straight face, in English rather than mathematics.

The foreign language of mathematics is simply a means to the trade unionization of economics, a barrier to entry, and license to practice economics.

That is the dirty little secret of the profession.

“It is a long time…since there were economists willing to say the following…

In 1932, Dr. Broadus Mitchell, a professor of political economy at Johns Hopkins University said in his, ‘Preface to Economics’…1932…p. 96:
‘I hate graphs, anyhow. They are the only pictures economics books have in them, and they are mighty poor substitutes for comic strips. And the letters and symbols with which they are generally encumbered get me all mixed up. You see things like this: ‘Drawing a straight line from the point K on the vertical axis OY, to the point of intersection P, and dropping a line from P to the horizontal axis OX, we clearly perceive that the quantity demanded, etc., etc.’. . .

I clearly perceive nothing except that the author has failed to realize that I have something better to do than to look up his old big letters and little letters and big italics and little italics. As though this were not enough, he often uses not only the ‘line DD’, but ‘the line D’D',’ and ‘D”D”.’ The last is beyond human endurance.’

Not only did people like Samuelson and, still, Lucas consider mathematics to be the only appropriate language of economics. During the time when Samuelson was a student, the tone was being set by others. In a lecture delivered in Japan in 1931, Joseph Schumpeter argued for not only the logical superiority of mathematical forms of reasoning in economics, but that economics would have become a real science when the ordinary, informed and interested reader could no longer understand what the economist was saying.

‘The severance from every day forms of thought is perfect (with the full mathematization of economics), and the general reader is made to realize that the thing is beyond his reach,’ Schumpeter said.”

Richard Ebeling

DG Lesvic July 8, 2011 at 11:00 am

typo again

I said non numerical as well as numerical economics.

I meant mathematics.

DG Lesvic July 7, 2011 at 11:49 pm

Let’s see, the morons now include Mitchell and Ebeling, along with Rothbard and Mises.

Not such bad company for this moron.

But you all still have Samuelson. Hope you’re comfortable with him, because you’re tucked right in with him.

DG Lesvic July 8, 2011 at 3:39 am

Let me try to sum things up, to this point, and perhaps even wrap them up.

The case here for the mathematical method in economics has suffered a severe setback by VikingVista’s retreat from it.

It had consisted of two parts, the analytical and the expository. It was supposedly superior in both ways to the logical and verbal method.

But Viking has retreated from the first of them, the analytical, and it’s hard to see how he could hold on to the second without the first. If mathematics is no longer an appropriate tool of analysis, how could it still be an appropriate tool of exposition? What would be the advantage of a mathematical over a verbal exposition of a non-mathematical thesis?

It’s more precise?

Mathematical precision is no greater than logical precision, and mathematical expression no more precise than logical expression. Each is more precise in its own field and less so in the other, logical less so in mathematics and mathematical less so in logic.

Mathematics is at best a foreign language, and a necessary evil, appropriate only where necessary, and that is only in mathematics itself.

In all else, it is just, as Mises said, “vicious.”

Unless something very effectively to the contrary is said here, I am going to file this away and bring it up every time this issue is raised.

DG Lesvic July 8, 2011 at 4:03 am

And, by the way, I have filed away Viking’s quote, too, so he is not going to be able to deny his own words. Vague as they were, there was only one way to interpret them, so he has been nailed to a cross of “English language bigotry.”

DG Lesvic July 8, 2011 at 11:11 am

And for what will hopefully be the final nails in the coffin of Cafe Hayek’s forays into the mathematical method:

Even the schools most steeped in mathematics cannot start out with it. It is the last refuge of an artificial authority, running and hiding from logic, and, the prestige of its adepts, a demonstration once more that the best way to become an “expert” is by saying something with absolutely no meaning.

“What they are doing is vain playing with mathematical symbols, a pastime not suited to convey any knowledge.”

Mises

“…how do you mathematically model…entrepreneurship?”

Ebeling

How could you calculate the intangibles of human action?

Lesvic

“The…marketplace is permeated by uncertainty, and…there is no way that uncertainty can be compressed into determinate mathematical models.”

Rothbard

“Ortega y Gasset wrote a famous essay on the expulsion of man from art; today we might well add a study on the expulsion of man from economics…the economic process is treated as an objective and mechanical movement…predicted by…mathematical and statistical methods. The economy takes on the appearance of a giant pumping engine, and…the science…a sort of engineering science. Equations proliferate, while the theory of prices falls into oblivion…When one tries to read an economic journal nowadays…one wonders whether one has not…picked up a journal of chemistry or hydraulics.”

Wilhelm Röpke

Economics is fundamentally the same as in the days of Smith and Ricardo, and mathematization not a maturing but a blurring of it.

Lesvic

The rest of you may stand with Samuelson and Schumpeter.

I’ll stand with the morons above.

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