Good work, sam

Empirical evidence has shown that minimum wage increases and decreases unemployment. So tell me based on empirical evidence which view is right?

The empirical evidence is not as clear cut as you would think. If every time you did an empirical test the results came out the same I would agree with you. However, it doesn’t work that way with social sciences.

Mises’s theories have not been proven wrong empirically or logically; they have been ignored. On the other hand, everything Marx ever wrote has been proven wrong both logically and empirically, but that doesn’t bother his followers.

Anna: “Some of you have mention that everything Marx said was wrong. That’s just hate. I doubt any of you ever bothered to learn about him. Even if his economic theories were wrong his views on religion were not.”

I have read Marx and his supporters for two decades and not found anything that he wrote that was correct, whether economics or religion or anything else. I wouldn’t trust Marx to describe a cup of coffee. But there’s always a chance that I’m wrong, so I welcome the opportunity for you to show me where I’m wrong. Please post any statement or prediction of Marx that you think particularly shows his brilliance.

The author thinks that Samuelson fell into a contradiction for requesting both empirical support and logical rigor for economic theories. I think both tests must be passed by any theory. Otherwise theories that can be proven false empirically and logically would survive, like those of Marx and Mises.

Some of you have mention that everything Marx said was wrong. That’s just hate. I doubt any of you ever bothered to learn about him. Even if his economic theories were wrong his views on religion were not.

d(b)/dt = f(e)+C

The rate of change of computer bugs per time is equal to some continuous function of electrons per unit time plus a constant (C is the bugivity constant that all programmers exhibit by natural law – found by physical experiment). And this only concerns single isolated computers operating in an equilibrium, not networked together.

Just as computers are layers and layers of complexity on top of physical laws, so too are humans in society many layers above the physical elements. If we can’t describe computers with an “equation of computation” then how is an equation of exchange and it’s derivative functions going to model the complexity of humans, in a marketplace.

But then at least electrons don’t change their buying patterns because they hate the sellers.

If we can’t even model a subset of economics, e.g. the stock market with any accuracy, then how do we model the entire show, and with one equation no less.

http://www.veritasnoctis.net/docs/aristotelianapriorism.pdf

the problem with mathematrically rigorous economics a la Samuelson is that people, the elementary particles of economic science, are not like the elementary particles of the physical sciences, whereby each electron is identical to another and each proton is identical to all othe rprotons. Neoclassics, whose predecessors were originally inspired by the post-Newtonian rigour of the physical sciences, has built a fantastic ( and it must be said, quite beautiful and internally self-consistent) scientific model of the economic world, by the simple expedient of assuming away all of the parts of humans that make them human ( and for what its worth, all uncertainties and information acess differentials), leaving them ciphers with no discretion or choice, each constrained to behave in EXACTLY the same way in response to any particular circumstance or change decreed by the modeller.

Unfortunately, as rigorous and technical and mathematically pure as it is, it simply doesnt work. It is a model that describes a lot of – Im not sure what – but the one thing it doesn’t describe is economics, namely human interaction to mutual benefit!

Applying clever mathematics and ‘scientific’ rigour to anything involving lots of human brains making decisions yields nonsense. Just like the statistical average quoted to 4 decimal places, its precision is entirely bogus, and can’t even be tested empirically anyway, for the simple reason that any real-world data result cannot be used to invalidate or confirm the predictions of the model, because the very precisely defined assumptions demanded by the model itself cannot be replicated in any experiment involving human brains making choices!

By contrast, Austrian economics, as developed by Von Mises and his successors has only one central axiomatic assumption: At any point in time, a person faced with a set of circumstances, does exactly what seems like a good idea to him at the time ( OK so MIses wouldn’t have put it quite like that, but you get the point). That’s it. The entire Austrian edifice is built on that one ‘assumption’, which puts human beings and the choices they make at the centre of this very human science, rather than the Neoclassical approach of eliminating them!

As for Karl Marx – his doctrines are a tissue of absurdities. Karl Marx added nothing true to the subject of economics.

To return to Samuelson:

Actually his claim that all science is virtually nothing but induction not only contradicts the Austrian school – it contradicts such thinkers as different from Ludwig Von Mises as Karl Popper.

Karl Popper was a great defender of the empirical method in the natural sciences. Which, perhaps, led to his friend F.A. Hayek having rather different opinions to Mises as regards the methods of work in such non natural sciences as the study of human agency in relation to scarce resources that is economics.

However, even Karl Popper made clear that it is deduction (human reasoning) that is important – even in the natural sciences.

Of course, as the article points out, Samulason also contradicts himself.

He bases his support for induction on his supposed respect for physical reality – but rejects Carl Menger real respect for reality, and instead embraces mathematical abstractions.

Perhaps because such mathematical abstractions offer Samuelson such fool’s gold as the magical ability to “predict prices” (in the sense that Owen uses these words).

http://mises.org/daily/2944

The entire section entitled “Mises’ Methodological Dualism” expounds his rationale for his position, as Petrochemist graciously summarized here. But he shouldn’t have had to.

Newsflash. None of your points were pertinent. They were laughable.”

Does anyone need MORE proof that you’re a troll? Confronted with a direct refutation and questioning of your self-refuting arguments, you proceed to saying my points were “laughable”. You sawed the very branch you were sitting on, so of course you’d want them to be “laughable”. Learn how to argue and come back when you’ve actually grasped the essence of epistemological/methodological debates. It has already been explained to you in what sense economics is “complicated” (that is to say, teleological) that the natural sciences are not (they are strictly deterministic.)

Also, Hans-Hermann Hoppe’s booklet “Economic Science and the Austrian Method” provides a good exposition and defense of the Misesian position.

Ofcourse, Mises’ “Theory and History” is devoted entirely to this topic. There’s more depth to it than just a disdain of maths and statistics.

I think there are three main problems with mathematical economics.

1. Non repeatable experiments

2. Econometric studies which contradict each other constantly.

3. Sticking to math models that are obviously flawed . (professors are not truly put to the market test and believe in ideas long after any possibility of correctness has been dispelled)

The last I believe is one of the most important. Professors too often try to squeeze reality into a model rather than trying to model reality. Any excuses are deemed acceptable: ex. this model works if the elasticity of labor is 3, this one works if the relative risk aversion coefficient is 25, this one works if wages are completely flexible, this one works if people become more productive with higher wages, etc.

Instead of approaching problems by saying “let’s try this model, it failed. let’s try another”. The current approach is “let’s try this model and if it fails let’s spend our collective efforts trying to excuse the particular failure of the model for the next ten years.” Models in themselves are almost more respected than their applicability to reality. Certainly many are impressive but this shouldn’t be the goal of economists.

To others: There’s no such thing as an irrational act, provided the person is capable of purposeful action. You may not like what someone else does, even if it’s criminal, but that doesn’t make it irrational.

That is a nice explanation, thanks. You seem to know what you are talking about.

Physical science differs from economics and the other social sciences in the constancy of the parameters in the differential equations of our models. Economics has no such constant parameters, since human tastes and conditions are constantly changing. A good example of this inconstancy of parameters is a recent paper saying that the elasticity of oil demand has changed greatly since the seventies.

If another scientist said that the rate coefficient for the reaction of hydrogen and oxygen had changed over the last twenty years, all scientists would think him crazy, since the constancy of physical relations and constants is the prime apriori axiom of all science.

When I first encountered neo-classical economics I called it the science fiction school of economics. The pretence of being a positive science and the misuse of mathematics makes economics and other social sciences a laughing stock in the meetings of “real” scientists. Just evesdrop on the discussions in any academic physical science department to get an earful of ridicule.

For one thing, Mises observed that in all of the history of economics, nobody had ever discovered any constants, unlike in the natural sciences. That would seem to tell you something, if you were paying attention.