Soothsaying Our Way to Economic Prosperity


In a previous post examining the scientific pretentions of many atheists, I briefly mentioned that “in economic science, we are constantly confronted with theories and policies based around a denial, dismissal or subversion of the spiritual side of man and nature.”

F.A. Hayek would call it “scientism,” which, in The Counter-Revolution of Science, he describes as a “slavish imitation of the method and language of science” — one that improperly conflates the physical and the nonphysical. (Hayek would be unlikely to use the word “spiritual,” as I most often do.)

This week at The American, Arnold Kling explores the approach as it relates to your typical economist’s faith in macroeconomic models (and the media’s lemming-like trail behind him).

How many jobs will the latest stimulus package create? What will it do to GDP?

For answers to questions like these, the press always turns to the usual suspects: the proprietors of macroeconometric models, which are maintained by some economic consulting firms and by the Congressional Budget Office (The Federal Reserve Board also maintains a model, but the Fed tries to refrain from injecting its model into fiscal policy debates.)

I think that if the press were aware of the intellectual history and lack of scientific standing of the models, it would cease rounding up these usual suspects. Macroeconometrics stands discredited among mainstream academic economists. Applying macroeconometric models to questions of fiscal policy is the equivalent of using pre-Copernican astronomy to launch a satellite or using bleeding to treat an infection.

If you aren’t aware of the “intellectual history and scientific standing” of the models, Kling is glad to inform you, and does so with precision. His conclusion: “economists must be more forthcoming about what they can and cannot estimate.”

This means no more guarantees of “X number of jobs by year Y-thousand.” This means no more predictions of “gas at $Z per gallon” if you choose candidate W. This means no more manufactured certainty (gasp!).

Kling closes with this handle:

Imagine if somehow we knew how to launch satellites but still believed in pre-Copernican astronomy. We would have no choice but to send satellites into space using calculations that assumed that the earth is the center of the universe…

Until the press, the public, and policy makers understand the utter unreliability of macroeconometric estimates of the impact of policies on employment and growth, the answers provided by the usual suspects are worse than nothing. They give policy makers the illusion of precise control over the economy, based on methods that are no more reliable than soothsaying or entrail-reading.

So when, might I ask, are we going to hear President Obama questioned on his “anti-science” approach to economics?

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  • http://twitter.com/remnantculture/status/116612283295211521 Remnant Culture

    When are we going to hear President Obama questioned on his “anti-science” approach to economics? http://t.co/vjeDYllz #scientism #Hayek

  • http://twitter.com/remnantculture/status/116871543077863424 Remnant Culture

    Why are politicians asked about being "anti-science" when it comes to biology, but not economics? http://t.co/vjeDYllz

  • http://twitter.com/aaronmansfield2/status/116872171317501952 Aaron Mansfield

    Why are politicians asked about being "anti-science" when it comes to biology, but not economics? http://t.co/vjeDYllz

  • http://twitter.com/justitia_mt/status/116874126626533376 tlelam

    RT @RemnantCulture: Why are politicians asked about being "anti-science" when it comes to biology, but not economics? http://t.co/NtYBiJ5q

  • http://twitter.com/valuesandcap/status/116913904084455424 Values & Capitalism

    RT @RemnantCulture: Soothsaying Our Way to Economic Prosperity http://t.co/H3Uho7RN

  • http://twitter.com/remnantculture/status/116934139940319232 Remnant Culture

    Applying macroeconometric models to fiscal policy is like using pre-Copernican astronomy to launch a satellite. http://t.co/vjeDYllz

  • http://twitter.com/josephsunde/status/117235190958538752 Joseph Sunde

    When is Obama going to be asked about his "anti-science" approach to economics? http://t.co/r7H0S5nC

  • http://twitter.com/remnantculture/status/119426841059663872 Remnant Culture

    Soothsaying Our Way to Economic Prosperity http://t.co/Iqh28t9Z

  • http://twitter.com/jeffwrightjr/status/119427300231090176 Jeff Wright

    Soothsaying Our Way to Economic Prosperity http://t.co/Iqh28t9Z

  • http://twitter.com/jeffwrightjr/status/119427716939395072 Jeff Wright

    "So when, might I ask, are we going to hear President Obama questioned on his 'anti-science' approach to economics?" http://t.co/FnKb1MTr

  • http://twitter.com/josephsunde/status/119439789979222016 Joseph Sunde

    "So when, might I ask, are we going to hear President Obama questioned on his 'anti-science' approach to economics?" http://t.co/FnKb1MTr

  • http://twitter.com/josephsunde/status/119489124645355520 Joseph Sunde

    @KennethPGreen My question: Why don't we start questioning Obama's "anti-science" approach to economics? http://t.co/nBDZ5N3Y

  • http://twitter.com/kennethpgreen/status/119491115954085888 Kenneth P. Green

    @KennethPGreen My question: Why don't we start questioning Obama's "anti-science" approach to economics? http://t.co/nBDZ5N3Y

  • http://www.facebook.com/people/Theo-Gagner/74600918 Theo Gagner

    I don’t believe that any politician (or citizen for that matter) as any sort of “science-based” approach to their economic policy opinions.  Politicians are promoting more fiscal conservatism to reduce the deficit, but they are promoting jobs policies.  You know what I want?   I want to do a hardcore workout tomorrow morning while I am fast asleep.  You know what I want?  I want to take money out of the economy while adding more jobs.  Unfortunately, since no one in this country has 2 cents worth of economic sense – they get away with it.

    Conservatives are giving the self-satisfied “told-ya-so” to the Dems right now.  I have a facebook like of yours in mind where the author was on his own “told-ya-so” tack – gosh they were right all along, low government spending and tax cuts are the answer.  But wait, the first thing President Bush and his Republican legislature did when he took office was to cut taxes: the debt was low so Americans should have some tax relief.  It immediately added $70B to the deficit.  In fact, every cost-cutting measure was following by a larger, debt-creating tax relief bill.  Under conservative control domestic and international government spending exploded and shifted from student-loan programs and similar to war spending and boondoggle federal senior prescription plan.  I guess I am just worried that conservatives have spent too much time critiquing liberal spending while there own record on jobs and deficit in the recent has failed in an incredibly impressive way.  Were they only to improve their own economic skills – say from a pre-school level to a 2nd grade level – they could hold control of the government for longer than 2 years.

  • http://www.remnantculture.com/ Remnant Culture

    We consistently see politicians of all stripes pointing to macro-economic models as a way to predict things they simply cannot(/have not) predict(ed). I agree with Kling that this is not *really* “science-based,” but that is how it is framed, and I trust that is what many of them truly believe, particularly many of the economists who push them.

  • http://twitter.com/remnantculture/status/121411943113310208 Remnant Culture

    Soothsaying Our Way to Economic Prosperity http://t.co/nFRaqDje

  • http://twitter.com/remnantculture/status/121412313667473408 Remnant Culture

    "Applying macroeconometric models to questions of fiscal policy is the equivalent of using pre-Copernican… http://t.co/vZ1xQhCX

  • http://twitter.com/remnantculture/status/121425607652409345 Remnant Culture

    RE: We consistently see politicians of all stripes pointing to macro-economic models as a way to predict things they … http://t.co/jtypQuYT

  • http://twitter.com/remnantculture/status/183202902788149248 Remnant Culture

    When are we going to hear President Obama questioned on his “anti-science” approach to economics? http://t.co/uaWyXvC4

  • http://twitter.com/cody_hoss/status/183207690892345346 Cody Hoss

    When are we going to hear President Obama questioned on his “anti-science” approach to economics? http://t.co/uaWyXvC4

  • http://twitter.com/rjmoeller/status/183261970412208128 RJ Moeller

    When are we going to hear President Obama questioned on his “anti-science” approach to economics? http://t.co/uaWyXvC4