Economics Should Be Easy

“Rank-and-file PhD economist” Kartik Athreya explains why Economics is Hard and “bloggers” like John Stossel, Matt Yglesias, Robert Samuelson and Robert Reich are unlikely to have anything “interesting to say” about economics and “cannot meaningfully advance the discussion on economics policy.”  At least in Stossel’s case, that’s a straw man fallacy.

The key is that macroeconomics, which involves aggregating the actions of millions to generate outcomes, where the constituents pieces are human beings, is probably every bit as hard [as predicting Earthquakes].

Kartik asks why a cottage blog industry hasn’t cropped up to “offer their own diagnosis for what had happened, and advice for how to avoid the next big one [regarding earthquakes],” while such a cottage industry has popped up around economics.

I have some thoughts for Kartik.

First, macroeconomics isn’t every bit as hard as predicting earthquakes, it’s every bit as impossible.

Economist Russ Roberts of George Mason University and blogger at Cafe Hayek has issued a challenge to identify an economics study that has unequivocally set the record the straight on any issue.  I don’t believe such a study has been identified.  Kartick may want to consider that his chosen profession — especially if his focus is macroeconomics — is more like witchcraft than difficult science.

Second, there is a good reason a cottage blog industry has popped up around economic policy and I’m surprised an economist like Kartik doesn’t seem to know that reason:  Supply and Demand.

People like myself demand it.  Folks like Stossel supply it.  I think Stossel has brought more discussion to the masses about good economic policy than Kartik so far.  Maybe PhD economists don’t think so, but most people can’t understand PhD economists.

Maybe Kartrik should consider working on the supply side too.  The cottage industry could use another economist.  It’s folks like me who read Stossel.  If Stossel writes something that is “incoherent” or “misleading”, I’d love to know. Kartrik should start a blog or comment on theirs.   Don’t just try to turn our heads away, especially with an appeal to authority fallacy (just because these bloggers are not economists doesn’t mean what they say is incorrect).

Next, Kartrik might ask, why do folks demand pop econ but not pop tectonics?  Fair question.

My understanding is that Earthquakes, are caused by unpredictable shifting in tectonic plates that have been going on since there were tectonic plates (Pangea) and are very likely not related to policies humans formulate to govern their interactions.  The best we can do is think about where earthquakes are likely to occur and make plans to be safe by doing things like constructing earthquake resistant buildings.

Bad economic outcomes, on the other hand, can be caused by policy. It’s interesting to me to know something about how these policies effect my life, especially come election time.  Kartik contends that the devastation of the Haitian earthquake was far greater than a bad economic policy outcome and thinks we should be more concerned about that.

Yet, I wonder if he recognizes that bad economic and political policy was the reason the devastation was so terrible in Haiti?  If Haiti had the political and economic structure of a place like the U.S., the devastation would not have been near what it was because the buildings would have been built better.

Economists like Don Boudreaux, also of George Mason University and Cafe Hayek, have pointed out that an earthquake similar to Haiti in Chile had a fraction of the fatalities due to better built structures.

With a market-oriented economy, per-capita income in Chile is more than ten times higher than is per-capita income in Haiti.  One result is that Chileans demand and can afford better-constructed buildings.

While I’m open to any valid development in earthquake prediction, but I’ll bet on living in a place with a market-based economy that can afford better structures.  See Kartik.  Economics can even help us out with earthquakes.

Finally, I’ll offer a defense of Stossel, because that’s the one person Kartik mentioned that I read regularly.  Accusing Stossel of not saying anything interesting or advancing the discussion on economics policy is a straw man fallacy.  Stossel doesn’t try to do this — at least not regularly.

Stossel creates a forum to discuss what economists say and how their ideas effect our lives.

So, nice work Kartik. I’ve identified two fallacies (appeal to authority and a straw man) in your paper.  Makes me wonder exactly what they teach you in  your PhD coursework.

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1 thought on “Economics Should Be Easy

  1. Kartik is mad because no one is taking PHd econs seriously anymore. He misses the fame and prestige that he used to hold before the crash. You’d think a economist would understand the effect of being so wrong to reputation.

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