The dismal science can shed little light

Why economics is essentially a fraud in terms of explanation or prediction:

In 1849, the Scottish essayist Thomas Carlyle labeled economics the “dismal science.” Two centuries later [that's a stretch], contemporary practitioners still study dismal choices: Higher prices or fewer jobs? Spend or save? They have also become a smug lot.

Economists take pride in the sophisticated statistical techniques on which they rely to analyze phenomena such as growth, inflation, unemployment, trade, and even the long-term effects of abortion on crime rates. Many are convinced that their methods are more rigorous than those of all other social sciences...

“We do not really know what causes economic growth,” admits François Bourguignon, the chief economist at the World Bank. “We do have a good sense of what are the main obstacles to growth and what are the conditions without which an economy can’t grow. But we are far less sure about what are the other ingredients needed to create and sustain growth.”..

Surveying which economies had the best prospects for success, Harvard professor Richard B. Freeman concluded that in predicting superior performance, “luck seems as key as economic policies.”

A science that relies on luck to explain the fate of billions of people is a dismal science indeed. True, other social sciences aren’t in much better shape, but economists would still be well advised to trade in their intellectual haughtiness for a more humble disposition...

A point well made here:

An old joke: an engineer, a chemist, and an economist are stranded on a desert island with no food source but the ton of canned goods sitting on the beach. (Where'd it come from? I don't know. Doesn't matter to the story.) They are trying to figure out how to open it using only the sparse vegetation found around the island.

The engineer gets to work making a complicated catapault device to burst the cans on impact with the sagebrush.

The chemist gets to work trying to extract acid from the local plants.

The economist, meanwhile, sits on the beach. When the other two ask him what he's doing, he says. "The problem's very simple. First, we assume a can opener. . . "

Posted by markc at April 8, 2006 12:05 PM