This (semi-)post will meander.
The website mindful money followed up on its recent post about ‘New Economics’ sites, in which I was happy to be mentioned, with interviews with some of the bloggers, including Steve Keen and me. Here is the interview ‘home page,’ and here is my interview. A brief excerpt, sure to be hated by economists:
In economics, the elephant in the room is, and always has been, assumptions…many economic models are invalid before we even begin, simply because the assumptions don’t resemble the real world at all.
Vaguely related, I recently claimed on twitter that Bob Solow was the most quotable economist of all time. My above point about assumptions reminds me of another of his – on why he doesn’t engage neoclassical economists:
Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the Battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon Bonaparte.
To this end, Miles Kimball – a guy who is so nice and open minded I feel like I am kicking a puppy by daring to disagree with him – has a post on economic models that I would surely be excoriated for (‘straw man’) if I were to post it as a parody:
The closest we can come to treating consumption, leisure and the public good in this model as ordinary goods is if we imagine a social planner…in other words, the social planner I am talking about is not a fallible human, but the Invisible Hand.
I’m sure Gavin Kennedy would take issue with the use of the Invisible Hand metaphor, but seriously? There is an obvious chicken and egg problem if we are to invoke the ‘free market’ as a mechanism before trade takes place. I mean, I also object to the idea that there is some sort of magical omnipotent force making everything perfect in a market economy.
In other news, OWS have a video in which Raghuram Rajan repeats various crap and John Cassidy is unable to escape the governments versus markets mentality. Nonetheless, I am glad to see it. Anyway, I could ramble on for a while but I’ll stop here.