Topic: Economics is not fulfilling its true potential as a science - page 2. (Read 451 times)

This is true, there are a lot of professors who have shown how we could get out of the current situation we are in and nobody cared about what they said as well. It's just a shame that people spend decades into mastering one thing that can decide the lives of tens of millions of people and they are not cared about.

Why did this person learned it so much if we are not going to care about them anyway. It makes no sense that the people in power are not the people who have the information that we need, and the ones who have the information that can make our world better, are not the ones who are in power. This causes the ones who have the power, to ignore the ones who can make the nation better and causes the nations to get worse.

Why would Banks worry over someone else's money? The deposits are not their money.... so they can be reckless with their lending practices. We saw what happened with the fractional reserve banking in the previous crisis... Banks simply created "money" out of thin air and they gave loans to people that were not able to pay it back.

The governments look the other way, because they use tax payers money to bail out the Banks when they f@#$k up. The CEO's and managers got bonuses for the way that they supposedly "saved"  the Banks. 

Economics is not a topic to just discuss without considering some other elements that also constitute it progress, there are so many people who think that this should be vested on one side than allowing the general participation of everyone being involved in the exposure we give to the economy, we are all interdependent of each other in an economy, for economical growth to occur, we must not rely only on the economist alone to sustain an economy.

It's not fair to lump all economists together. Economists like Milton Friedman and Thomas Sowell have been opining on the failure of government to follow basic economic principles for decades. Meanwhile, so called economists like Paul Krugman, conflate economics and politics, praising liberal failures in fiscal policy.

Economists opine on matters related to monetary/fiscal policy. The politicians act within their own whims, and it's entirely up to these politicians on who they choose to listen to. Economists are not in the position to form public policy, that's the job of the congress.

The western centered world financial structure effectively collapsed in the 2008 Crisis. The Federal Reserve Bank of the United States saved the system by printing money. The printed money was given to big banks and these failed banks were made to look as if they had not failed. This money printing operation was gigantic. In its 200 odd year history, the US had only printed around 825 billion dollars of money until 2008. America's huge industrial infrastructure, mega cities, two world wars, the cold war, the Vietnam War, the Iraq War, major scientific breakthroughs and the Moon Landing Project and so on... All of this was done with a monetary base of 825 billion dollars.

In 2008, in order to make it look like the crisis did not happen, the US printed 3.3 trillion dollars of money in a few years, about four times more money than it had printed in 200 years. Following the FED, the central banks of other developed countries also started a race to print money one after the other. If the field of economics is based on printing money in every crisis to cover the negativities of the system, then we cannot talk about economic development, growth and poverty reduction. The world is not the old world and crises are no longer experienced in the style of the Great Depression. I wish they were like that and it would be possible to come out of the crisis in a V shape, but the crises we are experiencing today are crises that spread over many years and are difficult to return.

With each passing of time, there is really innovation in all countries, where the old way is no longer used because the civilization that exists in each country has been upgraded. That's why we are living in modern times now that we have modern technology.

Today, the beauty of the economy of each country depends on whether the good economists who give advice to their leaders in each country will follow it. If they do, there will surely be a good result or growth in the country, but if a leader does not follow the good advice of an economist, the country will for sure have a crisis. That becomes the role of an economist in a country.

I just thought of a way to explain to OP the difference between theory and the economy as a model of study and real-life application.

You can build a car that is perfect, it runs smoothly it can drive at any time anywhere, it has a billion sensors, the car will be great except the moment you're driving legally and carefully and a drunk driver is swerving on your line coming 200 km/h at you and totally destroys you!
It was not your fault, not your car's fault and nothing could have prevented this from your side of the story.

Same here, there is no way to prevent some of those things, if you go into 5 or 10 years bonds, how can you make sure
- a virus doesn't screw the whole economy
- a war doesn't start
- an asteroid doesn't hit the earth
- Hitler's grandson doesn't become president of Bartovia?


It's the doom and gloom section, haven't you got used to it?

Economics is a social science, not like physics, where there tends to be more consensus, and yet in physics there are paradigm shifts. To this we have to add the fact that ideology is imbricated in economics, which makes objective knowledge more difficult, so to speak. But there are things on which there is consensus and they work, such as, for example, that raising interest rates serves to lower inflation, and lowering them to stimulate economic growth.

Regarding the meltdown you ask about, it is relative because a left-wing economist will tell you that what is going wrong is because not enough regulations and state control have been established and someone on the right will tell you the opposite, precisely that the economy is going wrong because it has not been deregulated and liberalised enough.

What meltdown? The global economy is growing, global poverty is declining, developing countries are developing. We just recently had a global pandemic and we handled it quite well, it didn't become a Great Depression 2.0.

So far all the dooming about the repeat of 2008 crisis has been proven wrong. This of course doesn't mean that there will never be a crisis, but to say that the field of economics is useless and yielded no results sounds absurd to me. Today's economy seems more resilient because the hard lessons of crashes were learned.

I do not think they are to be blame for the economic distress. Economists are here and have knowledge about the economy but they don't have the power to implement what they know.  Remember, the one with the power are those who are sitting in the government.  So do not blame them for the economic meltdown.  The situation is the same with a company that is getting bankrupt and you happen to know the situation and know the solution but you are unable to help because you are not affiliated with that company thus you have no rights or authority to fix such a problem.

Even while driving, you’ve got to hit some bumps on the road. It’s the way it is in my country. You can never win all the wars you fight, it’s a profit and lose market. You win some and you lose some. You can only hope that your profit out weights your loses.

Being an economist doesn’t make you a perfectionist that can solve all the problems arising in your immediate environment. You can only solve a few and maybe some theories would not apply but then, there are other theatrics that do applies in other aspects to living.

Like we can see in demand and supply curves,
Economies that produce more of what they consume and do more in export other than import would always have a fairly stable standard of living. These are some bases to stability and humanity is sure to create its own problems. We could only try!

Maybe a new way of doing things may take note of the new infiltrations in the system which now bring about the modern economy that needs to be study and solutions provided. The old methods should have kept providing and contributing to positive change but it is yet to accommodate the new models which is now the realities of life because in the past, certain circumstances never was occurring like it is today. Certain factors can be responsible to divert the economic policies of government like war, COVID-19 to date is a major set back in country's economy as budgets for economic projects were used to fight COVID-19 pandemic, to execute different wars, terrorism compacting etc which were very minimal in the past. Therefore, those have to be considered to see the reason old mettod doesn't contribute to positive change anymore.

Economist can only do the much they can do. There is no world order yet so every country is in charge of their economy, and the head of the country makes the hard decision many of which are motivated by the advice he gets from those that surrounds him.

The government appointments individuals to advice them in various sector and if they gave the economy role to a substandard individual then the country may not grow. The countries with good economy worked for it starting from the government economy enhancing plans and programs and also their relationship with the human resources the country has.

Theory is often at odds with practice, it's true. But without theory, it is difficult to achieve much ecocnomic success. Understanding of economic cycles and interrelationships helps to conduct more complete analysis and make more accurate forecasts of the development of the situation

Yes, I know that people who have tactical behavior are able to solve every problem directly in the field without requiring long, complex planning and discussions to make decisions to solve problems. But again, this depends on the problem, sometimes to solve a problem you need a theory to solve it and this needs to be formulated and considered carefully.

You need to know that when someone is involved in the world of economics and has a lot of experience, they work tactically, but in their brain they already have a formulated road map to take and that is the theory they got from their experience.

What OP said about the discussion on how to stop the world economic crisis, I think it is very heavy and quite broad in scope, because talking about economics, there are many connections, such as currency, politics, policy, trade, cooperation, and many more that can influence economic crisis, so naturally they (the experts OP mentioned) don't say much.

Sometimes the theories and views of economists do not match what is happening in the field. They are drafters, not implementers.
Those who can change the economy are those who are directly involved in the economy who do not only rely on theory but they also rely on the experience they have gained in dealing with economic problems. Those who have been involved in economics for a long time and have sufficient experience tend to work tactically and sometimes don't care about theory.

Career courses should be able to shape the thinking and improve the problem finding ability of the people who study it. They should be able to find solutions to challenges with the principles of what they have studied and expand the solutions that they can offer far outside what has been documented in their old textbooks. The problems found in those textbooks, are problems that solution has been found for, it does not contain all the future problems like some of the problems facing the economy these days, and there is no solution for it, just principles to guide thinking to create solutions for this new problems.

Some economist are masters of the theoretical, they are not good at thinking outside the boundary of what they have learnt  and within the principles guiding their course to find new practical and applicable solutions, so the old methods that they know yield no positive results and are not helpful.

If even a giant organization like the government cannot prevent a crisis, then what are those economists? You need to remember one more thing, they are talented, they have great research works but that does not mean they know everything in this world and can solve all problems.

I am sure that even when you are having difficulties in life and you go to financial advisors. They can't even guarantee that they'll get you out of trouble, let alone a country's economy. What they can only give you are the ideas they learned from books and whether it will help you succeed or not, they themselves don't know anything.

No, they can't just fix the economy by knowing how to fix it, they don't have the power and resources. Fixing a macro economic problem required huge political power and resources, even in a scale of a country, let alone a global economy. Just like all those scientist, both Economist and Scientist can only make a suggestion and expert analysis on the matter, they still need to push government and people who has the political power to actually execute a possible solution.

All they can do is speculate or predict or project, but to implement is more the work of the government and a willingness on the part of the government.

The economy of a country or state is a direct correlation of the decisions the CBN of the state makes.
 A good economist like Dr Okonjo Iweala, who is the director general of world trade organization and one time minister of finance in Nigeria may  have done well to provide a good financial service to the nation in terms of her knowledge, application and models she set in place before exiting office and landing a big financial role of director general.

I think it is not all in one bracket to say economists are not fulfilling the true potential of it as a science. Good economist know what and how to go about it. The ones who have no idea just blab and state theories that are outdated.