May

22

Economics is in a far earlier stage of evolution than physics. Unfortunately, it is often poisoned by political wishful thinking, just as medieval science was poisoned by religious doctrine. Taxation is an important example. The interactions among the myriad participants in a tax system are as impossible to unravel as are those of the molecules in a gas. D. Ranson in WSJ.

 "Medieval science" (sic) was not "poisoned by church doctrine". It existed because of church doctrine and because of church money. Galileo got in trouble not for his science but for deciding that he should tell the Pope what Catholic theology should be.

It is true that the "interactions among the myriad participants in a tax system are … impossible to unravel", but it has nothing to do with physics. Physicists have reached the point where they have sufficient understanding of "the molecules in a gas" that they can model the origins of the universe itself from the cosmic egg that awful Papist Georges LeMaitre hypothesized in the 1930s. It is, to me, one of the delicious ironies of the history of science and religion that Einstein found LeMaitre idea so deeply offensive to his theology of physics that he refused to even consider the idea of the Big Bang. It is a measure of LeMaitre's greatness that when Pius XII decided to do a Galileo and use LeMaitre's science as justification for the Pope's theology, LeMaitre wrote to him and told him ever so politely to cut it out, that physics could not and should not be used to address our questions for God.

Neither should physics (or biology, for that matter) be used to address the questions of economics. As a study of people and what they do with their money and things, economics can only hope to match history as a discipline; it can never "evolve" into a predictive science because human beings are, as Mises reminds us, far more fickle than any of the wave/particle uncertainty. Molecules are easy; the human comedy is hard.


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5 Comments so far

  1. Rob DiDomenico on May 22, 2008 10:00 am

    E.O. Wilson's Consilience does a great, concise job of demolishing the hopes of anyone who thinks economics will one day soon become a science. It also puts physicists in their place. Physicists love to bash biologists and the like, claiming their science is not rigorous enough, or that their knowledge of mathematics is poor. Well, it is much easier to measure things about a few atoms than anything about a plasma membrane or genetic material. And economics? Please. Their models are woefully inadequate, and we will all pay for that with taxpayer money. Hopefully all those PhDs working at hedge funds are eating a nice fat slice of humble pie, but I doubt it.

  2. Eric Nilsson on May 22, 2008 2:17 pm

    I rather like Bill Bonner’s take on the pretentions of economists in his article “The Means Are The Ends” in John Maudlin’s book Just One Thing. Bonner says that even referring to economics as the “dismal science” is “fraud and flattery. Economics is dismal, but it isn’t science.”

  3. John on May 22, 2008 4:06 pm

    To equate the gap between the study of the supernatural world and the natural world to the gap between the study of physics and economics is, in my view, wrong. The gap between the supernatural world and the natural world is that we cannot observe with any of the five senses the supernatural world. Nor can we create an instrument or tool that would allow us to observe the supernatural world with our five senses. If we cannot observe directly or indirectly the supernatural world, we cannot test it. If we cannot test it, we can neither support, nor refute a hypothesis about it. If we cannot hypothesize about, test and observe something, then it falls outside the realm of science. We can hypothesize about, test, and observe the natural world. The gap between economics and other scientific disciplines is not that the scientific method is insufficient to understand economics. Rather, it is that the set of tools and data that are currently available do not provide sufficient resolution for our models to achieve the level of accuracy and precision as the other sciences have to date. As the tools and the data they produce improve in resolution, so will the accuracy and precision of our models as has happened in every other area of scientific study.

  4. Gregory Rehmke on May 22, 2008 5:08 pm

    Speaking oftThe “dismal science” — the name had this origin: “It was this fact—that economics assumed that people were basically all the same, and thus all entitled to liberty—that led Carlyle to label economics “the dismal science.” … That Ruskin’s enemy would be reading economics is no surprise. Ruskin’s own attorney believed that the cartoon was simply giving graphic form to “Mr. Ruskin’s well known antipathy to political economy.”2 But why is the enemy, with his ape-like face, sharp pointed teeth and tail, so obviously a caricature of an African? What do Africans have to do with Adam Smith and “The Dismal Science”?

    To answer these questions, we need look no further than the essay in which Thomas Carlyle first labeled economics the “dismal science”. ”

    http://www.econlib.org/library/Columns/LevyPeartdismal.html

  5. Jeff Watson on May 22, 2008 8:41 pm

    My field of study in Chemistry was in kinetics, which I found very little of use in trading. The rigorous application of the scientific method as applied to markets has had many benefits, and that’s the only thing of value I derived from my studies. However, as you so eloquently put it,”Molecules are easy;the human comedy is hard”…..is so true.

    Jeff

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