No, I do not mean that they are exceptionally good, they are just impossible to believe. Today’s news has an article by a professor of economics at MIT that amounts to the best example of egregious sophistry I have seen in some time. He “calculates” that a tax on certain health care plans, the so-called “Cadillac” plans, that provide more than basic services, is not a tax, but a pay increase. I will spare you all the chicanery, suffice it to say he states that taxing these plans will induce employers to provide less expensive health insurance and pay the difference saved by the employer to the employee in salary. Did this guy work for Enron?
Then there is an article by America’s most recently baptised Nobel Economics laureate Paul Krugman in which he calls the first decade of the second millinneum the “Big Zero.” He contends that we did not move an inch forward during these last ten years, at least in economic progress.
Well if an old boy living on a pension like me did well, then I have a hard time following his line of reasoning. Yes, my pension is adjusted for inflation and I did go on to Medicare thus lowering my cost of health care (Medicare does cost too), or to put it another way, I got another straw into the public trough. And I did pursue several business ventures, starting with a wine business that went under and winding up in a “tanked” real estate business. I didn’t lose much money or make much, but I did come away with priceless experiences in fascinating businesses. So if I did well, what happened to the rest of you?
I am dispondent about the low level of credibility those in my chosen field of study have achieved. Can you believe any of these guys? And why has this happened?
I would first point to the fascination, if not fixation, economists have with numbers. Perhaps worse, the general public is convinced that any economist who cannot conjure up charts and graphs with lots of complex numbers is unworthy of attention. That is why so many worship at the altars of bankers-come-economists such as Allen Greenspan. And if they are not worshipping a banker, it is a finance man who fed them a rich diet of “toxic” assets. As far as I am concerned they might as well listen to a good bookie who can calculate complex odds sheets faster than I can add the bill at the grocery store.
Economics is not numbers. However, the classic definition of economics, “the allocation of scarce resources,” leads to this conclusion. You have so many components from which you can produce so much product. This was the base of the socialist economies and it is no surprise that the Russkies invented “econometrics,” the “science” that reputedly could reduce all economic decisions to simple computations.
No, economics is much more than numbers. It is concepts, ideas, aspirations, goals and more. It is why my own definition of economics is, “satistying the perceived needs of the people,” with emphasis on the word “perceived.” We must go beyond the simple task of allocating the resources at hand to finding the resources we need to do the job.
Meanwhile, I pray that practioners in my field come up with some more credible ideas.