Lee Smolin: Physics Envy and Economic Theory
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- Опубліковано 2 чер 2013
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Economics has suffered massively from a desire to look like a hard science. Instead its incredibly complicated and can't be reduced to laws. Path dependence, complexity, disequilibrium are all part of what is taught in (most) graduate schools these days, but this is a very elite group. The majority of the profession are undergraduate degree holders that do not appreciate that they only have illustrative models rather than complete solutions when they try and apply their skills in government.
A lot of comments about his hand motion. Such a brilliant and witty observation internet! You might want to pay attention to what he's saying. This is not a stupid man.
Even with the sound off, I understood everything.
It is the fucking internet we like to have fun .
Yeah, "We' - mean spirited ridicule - is so much fun. I did not realize the entire internet was just one big laugh riot.
That's nervous what moves his hand and also his thinking and speaking simultaneously.
I would have been like that too, not being too used to public speaking.
I didn't know he could speak Italian
2:00-2:43 One thing I understand is that you don't haft to make someone elses life worse to make yours better. It benefits to make their lives better to make yours better.
I couldn't agree more, with all you're comments. Anyone not in physics or math cannot even begin to comprehend how difficult these subjects are. And I've seen it first hand, physicists and mathematicians are generally good in all fields of academia (probably due to high logic skills require to do them).
One of the more interesting Bigthinks in a long time. I too had the experience of "prior knowledge" of the economic crisis of the early 21st century. I had the privilege to speak to a CEO of private equity of a big London bank around 2007. In a silent moment he kind of sighed and said; "We're really just waiting for the sky to fall down on us here."
It didn't matter that he told me. Nobody would have listened to little me anyway.
The neoclassical model is just the benchmark model. It is the simplest one. It helps you understand some things. What people from the natural sciences might not understand is that our models are not perfect descriptions of reality. We know that. They are very imperfect descriptions of a certain realm we are studying. If you are thinking about financial crisis, you add some more structure. If you want to think about monopolies, you add a different hypothesis on your market structure.
The problem with economics is that we have a plethora of models, but we don't always know exactly which one to use in each circunstance.
We still need to better provide validity to the assumptions we make, test the theories using our newly acquired and decent statistical techniques (RDD, diff-in-diff and IV), replicate more studies and throw away the models that don't work well.
We are still a scince in the making, on the transition between a philosophical, assumption-based field, to a scientific, empirical-driven field. We have some very good results in some areas: we know for certain some things about trade, about demand and relative prices, about aggregate demand and recessions, how to do an auction and how to evaluate public policies. But we still don't know for sure a hell lot.
c'mmon, everything is debatable in economics...will you put your entire fortune on some economic theory that it is going to work everywhere regardless of the environment?
@@emmanuelameyaw6806 I don't get your point. Economic theories are context dependent. There are no invariant fixed parameters nor an invariant number of variables interacting. Still, we can develop some general models who can get us closer to qualitative results, and some times to a reasonable range of magnitude. That's what's possible for now.
No economist think he can predict the exact path of any economic variable.
I'm completely open to any help from outside the profession. Smolin argued that gauge theory could help develop better models some time ago. That's great.
@@Guizambaldi Yh, I agree...general economic models and quantitative results are not invariant...it depends on data, fixed parameters (in some models), methodology, and even the researcher himself. So there is always going to be some form of debate due to this variability in research results...and no one wins the debate though. If you are a policymaker, you need to take sides:)...it doesn't mean the side you take is correct, it is correct just in your own opinion.
@@emmanuelameyaw6806 More or less. There are degrees of certainty. Some research designs are more powerful than others, and some areas of economics are more succesful in understanding the general rules than others.
A different idea which is wildly speculative and still hasn't gathered a lot of data supporting it in some instances shouldn't go directly into policy, in my opinion. It should gather some support in academia first, and try to build some consensus on its results.
I'm typing from Brazil, a place where mainstream economics is not taken seriously enough, sometimes with disastrous consequences.
Let the mainstream be open to criticism and paradigm shifts, but in a disciplined way.
@@Guizambaldi Yh I agree, there is some degree of certainty about some findings, for example, you don't raise cooperate taxes if your sole goal is to reduce unemployment. Maybe economists should start reducing internal debates (somehow) to make the profession a little bit unified:). There are so many theories and one that even won a noble price but it does not really support the data in my country...some of these theories may need to be retarded, perhaps should be country-specific. It will bring some credibility to the profession, maybe....:). Anyway...nice talk.
The economy should be looked at as a complex adaptive system. Every attempt to observe the whole system, its behaviour or outcomes will ultimately chance the whole systems or groundings on which I based my attempts to change it in the first place. People are part of the economy and that is also why it is so completely different from Physics (although I don't know much about physics). And that is also, in my opinion, why the contemporary upcoming of the connections between psychology, behavioral sciences, neurosciences and social sciences with economics are very important. Interpretation is key.
I'm sorry that's bullshit. Physics is exactly made to be over the problem you're exposing
@@BooyahL No, that's why economic is different from physics. A molecule can't give 2 fucks about what you think of it. But if the people expect the inflation to be 110% next year and negotiate their wages accordingly, then the inflation will rise to a much higher level. So you cannot treat economics like physics.
I remember back a few months ago, it seemed like everyone was begging for videos that were only Michio Kaku and Neil DeGrasse Tyson and only watched those ones and challenged Big Think to upload more of those videos and Big Think said "No, we won't. But we will make other videos a lot more interesting." And the very much succeeded. I'm normally not into videos about economics, but this was a really good video.
But in the same vein an economist can accurately predict how the sales of a product will change with the price.
Newton had to invent calculus in order to work with more complex systems than physics understood until then.
Economics needs a similar advance.
Everything in the economy follows a pattern. The same way the weather systems follow a pattern. The issue is we haven't got the skills to accurately predict the patterns because they get so complex.
He is very dedicated hand-jiggler but he is also a great physicist. Even one of the most inspiring and open-minded in my opinion. If you are interested, I suggest you read his last book "Time Reborn" where he's more eloquent on the economics' subject and how it's related to both his own scientific field and to this new vision of time.
I'm glad to see you watched the video. Might want to do it again.
very interesting, i never would've thought that the style of newtonian physics could've affected something as different as economics o_o
Lee the supply and demand classical model with flexible prices is hundreds of years old. There is no physics envy, imo.
Modern free market economics is an ideology with equations. It begins with the ASSUMPTION that efficiency/profit is the #1 priority and goal, then it constructs mathematical models that show how to achieve that efficiency/profit, then it claims "ergo: deregulation, etc. -- we have arrived at the scientific economic system!". The whole thing is a circular logic loop. You have to agree with its value-based assumptions before you even begin. This serves elite interests, of course.
Careful... The wandering hand could attack at any second
*smacks poor student asking questions in his office*
It's as if he needs to wave his hand in order to be able to talk
😂😂😂😂😂😂👌👌👌👌👌
Wow, so eloquently said!
What political economists such as Henry George understood but too many modern economists have ignored is that the laws governing the production and distribution of wealth are laws of tendency. Outcomes are subject to powerful externalities, the most powerful of which is how government raises its revenue. George expanded on Smith and Ricardo and Turgot to apply the law of rent to all of nature. Rent is societally-created by aggregate demand. Rent is public revenue. (continued)
He should have used more repetitive hand gestures because then the message would be much clearer.
if you correctly predict future changes in market conditions and buy or sell inorder to head off this change you help to price in this change sooner rather than later. so imagine that you correctly predict that there will be a supply shock to oil in the future so you buy up a bunch of oil and sit on it waiting to sell it when the shock comes. by doing this you help to ensure that oil will be available during the shock when it otherwise might not have been.
Perfect competition and market equilibrium exists like angels. These are only benchmark for economists.
As long as free market is concerned, yes invisible hand is effective but this hand needs to be back by rule of law which was not the case during the financial crisis.
One seems to recall it was somwhere on the back cover of Richard Buckminster Fuller's book " Grunch Of Giants " ..the observation " no where in this book will you find the word " economics " .
One also recalls reading the book like a fiend and never finding the aforementioned word .
( At one point was about to say Ah Ha ! ..however it was a false alarm ) .
Richard Buckminster Fuller was Head Engineer for Economic Cold War Fairing during World War Two from the beginning to near middle forties .
Fuller was an American pragmatic Transcendentalist .
I think the take-away from 2008 should be that "financial insurance", highly leveraged investments, and deception really fuck with economic equilibrium. Regulation is needed, but it has to be good, simple regulation and not so overly complex that it gives an advantage to large organizations who can better afford to the costs of the added complexity (regulatory capture).
If Lee ever loses his 'speaking hand', or if someone glues it to his hip you just know he'll fall mute.
I think this is exactly right. What people forget is that ALL laws are regulation. McDonald's could make much more profit and sell a cheaper product if it were allowed to employ slave labor, Corporation A could more effectively compete if it could hire mercenaries to destroy the assets and kill employees of it's competitors, ect.
LOL That hand!!!
Very interesting. Thanks.
I think I know part of the proplem and part of the solution : the problem is that we created a bubble of debt represented in fiat money, bonds which is based on debt explained in the wrong equation (liability +owner's equity =assets) (liability =debt was never an asset but a borrowed time and effort from the future to be spent right now and it's not a real value added in the economy, we should spend real time and effort to create an assets with intrinsic value but we did not, we just created a bubble of assets exploded in every Era of time line
Try turning up the volume.
Whilst I agree with you (for different reasons), I feel the need to remind you, you're citing an obvious argument from authority fallacy.
I got hypnotized by his hand and his monotone voice.
his hand sorta keeps timing like a metronome, it is awesome.
I agree, I also think one of the largest problems with the species is thinking that the entirety of model based sciences are the end all be all of explanations. Compartmentalizing these vastly complex issues into one or two variables shows the flaw of applying Occam's razor ad infinitum. The acceptance of these models and the lack of scrutiny placed upon them just shows the deadbeat demeanor of many academics (not just economists) who are really posing as true scientists.
I think that is a rather crass generalization of physicists. Many physicists have a good broad knowledge of science, particularly within the domain of chemistry. Although, even if all physicists did have little understanding of the other sciences, just how much of an understanding do the other scientists have of physics?
The statement that all government economic regulation is costly is equivalent to the statement that it is impossible for any organization to increase the efficiency of a real-world economic system. Since arbitrage does precisely this, I cannot comprehend how anybody can still defend such a strict neoliberal view.
If you study economics, you'll find yourself that many regulations are fairly well justified. With that said, I still agree and feel like we have too many regulations in certain areas (and not enough in others). Every market is structured differently and runs optimally wish differnet pushes, it's more an issue of politics than anything for when we have too many or too little regulations. (It takes so long to make changes, and those changes are being voted on by politicians...)
I'm not disputing that. In this instance, Smolin's expertise in Physics has merit. Economists boast that their models are mathematical science... so who better to have academic high ground to test that than the masters of predictive mathematical models in science? John Nash was a mathematician, but I think his example lends to my point quite cleanly.
What the doctor has described is the "efficient market' Theory which indicates that the market is never wrong and will discover the value through the balance of investor sentiment. He aludes to many equilibria, which is the market in different cycles of the economy. At times the market has ascribed to "the greater fool" theory which indicated perpetual growth. Stocks could be purchased anytime and someone else would eventually pay more. Now the economy seeks the discounted future value.
His left hand has a mind of its own.
amazing video!
2:09 Not necessarily. What you just described is competitive equilibrium. In Nash Equilibrium, not everyone is happy. But no one wants to change it. Its like that one line from South Park: "Everyone is sick of it. But everyone is waiting for everyone else to stop." The important thing here is that markets don't necessarily maximize happiness. They only equalize quantity supplied and quantity demanded.
The economy is a very path-dependent system. But it almost doesn't matter. What path you go down is in and of itself a function of what you learn. You can't predict what you will learn, that would imply that you have all ready learned it.
Also, you hinted at this problem. But you didn't bring it into the open. Even knowing that there are vast numbers of equilibria, we don't actually get to choose which one we live in, at least not directly. When politicians craft and implement public policy, they are not choosing between equilibria, they are choosing between different social arragements. So knowing which equilibria are possible only helps if you know which social arrangement corresponds to which equilibria.
Brilliant man. Interesting talk.
Even before neoclassical economics, there were classical economists with the same beliefs but they were not physics-envy, I guess...like Adam Smith and co. The debate in macroeconomics has always been whether or not the government should intervene in the market economy though...
To further your point techfighterminal. With the limited ability for new oil companies and refineries to exist because of choking regulation there is very limited competition in the petrol market today. We have the largest surplus of oil in many years yet gas prices stay high. This is because of the monopoly large oil companies have over the market and can fix prices to keep sales and in turn margins high.
"economics" (hand), "equilibrium" (hand), "mathematics" (hand)
I'm happy for both of us.
0:06 I lost it when the camera cut into the side view. His hands are so funny,they should do comedy.
While the equilibrium theory is good at convincing politicians that we don't need regulations, it is not good at convincing politicians that business cycles are normal and desirable. We want to stay away from equilibrium as much as possible, and produce large swings in the business cycles as much as possible. Otherwise, we get the much dreaded "stagflation." I suggest we pursue the following program:
1) Reduce taxes and regulations in order to produce inflation and high asset prices.
2) The rich should then sell their inflated assets to unwary buyers and complain that we must do something about inflation.
3) The Federal Reserve should then raise interest rates to crash the economy.
4) The rich should then complain that we should cut taxes even more, lower interest rates, and increase government spending, to get out of the depression by re-inflating the economy.
5) The rich should then buy up the depressed assets using money borrowed at low interest rates. (Only the rich are qualified to borrow at this time in the cycle.)
6) Repeat the above, endlessly.
Well in our society I think we generally look at social relations from a competetive standpoint rather than a cooperative one.
Every one is noticing the movement of the hands, but how about the elegance of the hands themselves...
But really, I'm paying attention to what he's saying.
You couldn't be more wrong.
Physics, from its very beginning, has been able to accurately predict future events such as: this amount of force will move this amount of weight. Since Newton all the laws of motion are fully understood but that doesn't mean that before his synthesis physics was unable to predict future events accurately.
What I'm stating is that human beings have individual motivations that are hidden from social scientists. As to determinism derived from 'knowing every particle and its trajectory through spacetime' - that concept ignores quantum probability, i.e. it contradicts modern physics.
As much as I agree with your sentiment all sciences work like that.
If physics never revised itself after predictions it would still be in the dark ages.
If meteorologists never changed their predictions the weather forecast would always be wrong.
Just because your prediction didn't come to the right conclusion doesn't mean it was a mistake. It means that you just didn't have all the information necessary to make a prediction
Fourth, money isn't quantifiable in terms of it having an absolute value.
I don't think it is as much about more or less regulation as it is about smart regulation. Most regulation these days seems to be about balancing a market back in some one's favor as opposed to preventing the underlying causes of market instability. Whenever some people are making profit by producing no goods or services, there will be problems.
"certainly smarter than any economist"
That's a rather bold claim. I have no reason to doubt this man's intelligence, nor his expertise in his field. His grasp of the complex field of economics, however, is lacking.
Signed, an economist (probably one of the ones who are certainly not as smart as this fellow).
Baseline: When we could find the blueprint for economy itself we'll be able to fix it for the benefit of everyone. But how do you fix a system based on maximum growth and financial death battles?
Idk about you guys but i like the physicists videos much more, they are the ones that actually make me think
Crony capitalism (lobbying, the revolving door, etc.) is what caused government supported loans. He is not speaking specifically to what caused the financial crisis, he is speaking to a fundamental flaw in the basic theory of neo-classical economics. Like he said in the beginning, this is not new knowledge. This has been *known* since the 70's, and acknowledged by many of the contributors to the development of neo-classical economics.
I agree with that statement, I just think you overvalue formal learning is all.I agree with the main message of this video.
The fascination with these self adjusting Economic forces drove me to study economics and even get two masters in it. But the more I studied the subject it has become apparent that economists must understand that to get a model that is completely accurate about how the real world works you will have to account for all the variables in the universe ! This is simply impossible no matter how much computational power you have.
To get over this problem, economists use a neat trick called econometrics which is basically using statistics to approximate economic models. Economists have gone to great lengths to make their work sound fancy by adding complicated math from STEM fields but this is just like putting up some make up to hide the ugly truth beneath.
But that's saying "Before Newton Physics could predict it but people could not" Which is exactly the same idea as "Economics can predict things, but as of yet people cannot."
Maybe economics just hasn't had it's Newton yet
You can tell he's a great physicist by the way he waves his hands
There is a direct correlation between hand jiggling and intelligence.
4:31 here's what his hand thinks of your comment
X-Hit Combo!
(With his hand)
Lee Smolin's hand is trying to escape!
If there is no law requiring the disclosure of how the hamburger was made, how would you know?
The hand is mesmerizing.
Equilibrium is built by arbitrage. Look up Austrian economics. In a single day or weekend a market obviously cannot reach equilibrium, but financial intermediation and arbitrage maintains an intertemporal equilibrium of the long-term. People are confused by neoclassical equilibrium because it eliminates profits from prices, but Austrians understand that originally interest (normal profit / interest) is a necessary component of equilibrium prices. Intertemporal equilibrium, after all, can only be maintained by intertemporal exchanges like loan banking, arbitrage and capital investments.
Agreed, first of all, the idea or stereotype that physicists are ignorant of other fields is ridiculous. Any citations on that, lol?
Secondly, physicists are often requested by experts in other fields (like economics in the video above, chemistry, biology, geology, climate change, engineering, comp. sci., NASA w/ Feynman, just to name a few) to analyze certain data because physics brings a rigorous, mathematical and "axiomatic" approach that other sciences lack.
Left us with an unsupported claim there at the end. "X causes Y, ... Well I'm not an economist so I don't have to give you the reasons why that is. Instead here are some analogies that apply to the rest of my talk.". Correct me of I'm wrong and I will thank you.
I agree with Lee, however streamlining is at the heart of this problem. The goal of capitalism is for people to be able to act and trade freely. And the true goal of businesses is not profit, but it's creating value [and avoiding capital destruction]. The way to create value and stay capitalist is to let people create this value so that they can obtain freedom to act.
Another issue is that value is completely subjective, if people are of the opinion that something is worth less it is actualized.
physics envy actually makes it harder to teach finance. i wrote a paper about it and posted it to ssrn. my ssrn author id is 2220942 or just google "simulation as a teaching tool in finance"
Jamal Munshi you're just a poor academian
RAWR yes i am poor but i did not know that i was an academian.
what resolution do you see for this issue?
Davis A.J scrap the assumption that kids need to learn algebra. teach them numerical methods and the arts of problem solving and logical thinking.
But, how are they going to solve problems without these exceptionally powerful modelling tools (algebra, calculus etc).
Lee's assumptions are 100% correct, and he can only say them because he's not an economist.
He's basically stating that arbitrage creates nothing, it just takes, and this is what throws simple buyer/supplier markets out of equilibrium.
Of course, if you make your money through arbitrage or speculation you don't want to hear this. You'll immediately rationalize your actions by saying the market will re-balance itself, so you can continue to make money while contributing nothing of value.
We've known about this 'micro-equilibria conflated as macro-equilibria' misappropriation for decades. There has been no honest appraisal of this system of economics for so long and the people that propagate(d) this misunderstanding (or who themselves didn't/don't understand the conflation) continue to set policy regarding economics and economies around the world. At some point this whole ideology will collapse because an inability to embrace reality just can't sustain itself forever.
The failure of societies to treat rent as public revenue has resulted in societies dominated by landed interests, hoarding of natural resources (including prime building sites in cities and towns) and intense speculation. This diverts scarce financial resources from productive investment in capital goods in favor of a financial transactions economy. Deregulation exacerbated but did not create the fundamental problem. See Mason Gaffney's writings for an in-depth analysis.
By public revenue do you mean government controlled?
He mentions why at 0:25. Albeit I'm not sure the validity of his statement.
I think you're right, but maybe the point here is that economics was (and may still be) pretending to have a scientific veracity it could never have, whereas the other examples you quote all have a degree of self checking built in to the process. So, whilst physical sciences get more accurate (possibly!) over time, economics cannot.
i agree, it does not make him smarter than us, but it DOES make him more versed in understanding and applying the scientific method. He was stating that economists tell the world they apply the scientific method to their theories, when in fact, they actually don't. For example, have you ever heard the economic term of "invisible hand" in economy? From a physicist point of view who learns economy, that is a load of bullshit!
The real issue is that every economic model is inevitably flawed. There are just too many ever changing variables
Justin King so what? For finance we can model, for lets say future value of an investmnet, adjusted for inflation for 5 years. Will the model be correct? Almost definetly not, we do not know the inflation for the next 5 years, or what happnes to our investment in those 5 years. But that does not mean that the model has no purpose, and its the samer thing with economics.
Justin King the same could be said about physics and lets remember a lot of stuff we take as truth in physics is just theory.
Justin King Lay man words, nothing more.
Justin King You said that because you don't know math
Kevin fuller
That you wrote "just" theory really shows me that you don't understand the usage of the word theory in science. You have nothing to add here if you don't even know the basics of what you're criticising.
Furthermore scientists don't take theories as truth. We see theories as more or less accurate descriptions of our world that could at any time be improved by new theories. That doesn't make the previous theories less accurate or less usefull though.
Example: We know now that Newtonian physics can not describe the whole world yet we still use it. It's still immensly usefull and still yields highly accuarte results if you know when to use it.
You are referring to the Milgrams experiment when you describe your 'Authority Fallacy' invention. Smolin isn't influencing outcomes like Milgram's did, he is using his expertise. In the realm of argument, expert assessment has powerful value. Smolin's point is that he observed that economics has attempted to be a mathematically modeled science like physics (which Smolin is a proven champion of) and when tested, in fact economics is NOT scientific or mathematical by any known models. Do u see?
You actually expect politicians to pass regulations that are not in someone's favor? Most likely every regulation that's passed someone lobbied for it.
:)
I have to admire your attempts to try and talk sense into these people in a youtube comment section. But to be honest, if people are using words like pseudo-science and indoctrination, and then blaming others for not saying anything, it seems rather useless to me.
It is disingenuous to say no one knew. There are realists in economics too and they are the Austrian school and they/we predicted it. The rest (Keynesian /Monetarist) is woo.
That's not what he's saying about arbitrage. He's not implying that arbitrage is inherently good or bad.
Arbitrage is a mechanism for creating equilibria in free markets. Note: this is not an opinion; but rather a description of aspects of the neoclassical model. Once a market reaches an equilibrium state, no further arbitrage is possible in theory. Thus he is saying that the models do not correspond to reality because we know arbitrage opportunities exist. That's it.
No, it's used to provide ESTIMATES, most of which are geared to suit the motivations of those who are paying the economist in question.
The thing is neoclassical model is a very simple method to teach people how to think like economists and solve optimization problems. Economics is at the end of the day about optimization. Given a set of simultaneous equations in the form y=AxB or even nonlinear equations how do you find a set of or a single solution that finds a solution to all the values of y. Thats real economics, but to be able to add forward looking behavior, behavioral traits, game theory etc, requires one to first understand the basic model. Just like you learn algebra in math before learning calculus, you learn the basic econ models ISLM for example and Profit/Utility maximization to build that basic understanding of how systems of equations relate to each other to then extend into more complex systems of equations. Kind of like in physics you start with newton you dont go into relativity immediately. Modern Economic theory is based around not one equilbrium but a changing equilbrium point that is affected by impulses or shocks. It examines the movement of the curves from one equilbria to another over time(dynamic) or it examines the effects of an external shock on the movement of an equilbrium from one point to another(static). Thats really what economists do is solve a series of simultaneous equations which in turn are built based on a set of axioms/proofs which find support from empirical real world data analysis and probability/statistical theory. Of course when politics comes into the picture the equation changes but real economists try not to get involved in the politics and focus more on understanding the theory or empirics.
If the simple model was a reasonable approximation of reality, then it would be worthwhile. But what actually happens is: even small deviations lead to huge differences in outcomes.
For example in a perfect free market, it would be fine if the top 0.1% owned 70% of the wealth. But as soon as there's even a tiny bit of corporate lobbying, the market stops serving the needs of the people.
What are your qualifications? Nothing he said here regarding equilibrium is new. As he stated, these ideas have been known and acknowledged since the 70's by, and not limited to, many people that contributed to the development of neo-classical economics. This isn't controversial in any way. You could argue the physics envy aspect as it is not really objectively verifiable, but that would be pointless in any case.
I put these videos in a background tab just listening.
Its bad video when i zone out while listening and a good video when i go back and watch the video
I zoned out in this video.
I think watching his hand instead of his eyes is better.
4:33 - he doesn't seem to care at all...
Well, I guess I should listen better. I understood a few of his points, but most of it was 'blah blah bleh blur' to me. Thanks for clearing that up.
(cont) and that's why we had the crash of 2008, because people knew quickly that the economy was going to crash.
Yeah, you have that kind of instability in a capitalism where the government doesn't intervene, but not like the big recessions and depressions we've had since the fed.
Moral of the story: economics is not a strong science like physics and chemistry, it's a social science and it depends on power, history, war, society and there are no laws, you can just highlight tendencies
There are laws...the laws of demand and supply, for example. If a lot people move to the city, rent goes up. It is true whether you live in jamaica or US. You can predict some form of human behaviour. If people get a raise in their salary...they are happy, their utility goes up. If the government raises taxes...people are sad...if the tax is too much, they will stop paying (laffer curve). There are a lot of facts about human behaviour and firm behaviour, and entire economy. It is not random event that caused srilanka to collapse. If you don't obey basic macroeconomic laws, your economy would be like zimbabwe or srilanka.
I remove it within the sentence. So, it changes from 'He took my wife and me out to dinner' to 'he took me out to dinner'. Still proper. But, if you take out 'my wife and' from 'He took my wife and I out to dinner', It becomes 'He took I out to dinner'. Not proper.
Hopefully I've been more clear here :)
Funny. I remember my high school economics teacher brought up the same argument.
The last time I saw this much hand movement I was having a conversation with a Cuban
That is my kind of humor :)
I wasn't commenting on your point. I was commenting on your comment that he is right because he is so smart.
Some teacher from Chicago School of Economics said that he aspired Economics would be like Physics.
In my OPINION, it is doubtful that will happen: Physics Laws don`t make decisions!
Ditto
There's a book on it.
Physics to economics model
The Physics to Economics Model makes the analogy that wealth is stored energy. Stored energy in economics is money saved where the money was derived from energy. Electricity plus fuel burned is applied as a force to accelerate the economy. The acceleration of the economy is then demonstrated through the change in the transaction rate over time. In The Physics to Economics Model the energy (E) is equal to one half the economy (e) (as the object to be accelerated) multiplied by the transaction rate squared (E=½e(Tr)²).
The Physics to Economics Model not only rejects Keynesian economic theory, but finds a rational solution to measuring input and output by applying the process and logic of natural science. By interpreting the economy through the lens of mechanical physics, PEM establishes economics as a physical operation within the universe and, as such, implies that it’s subject to the laws of the universe. This is the same reasoning behind the concept of energy in physics. Energy cannot be defined, but it is known by what it does. Energy can do work, change its surroundings, alter the state of an object, cause change in a position or speed, or change from one form to another.
Yet, similar to energy, economies are defined by their actions. We understand economies based on what they do and produce. Economies can change the environment and build or alter the form of resources. They have the ability to defend, invent, and provide food, clothing, and shelter. Economies can change form by moving from an activity to wealth possessed. Stored wealth can then change in form back to an activity. This makes economics a concept that is best understood based on what it does. Therefore, it should be represented by a unit, enabling its impact to be calculated and measured where its cause and effect are evident.
Saying that he is smarter and therefore right is a pretty lousy argument. And I say that without pointing to any side and saying: 'they are right'. It's a lousy argument, independent of which sides we're on.