Some thoughts about economics and economists
He might be the poster boy for free-market economics, but that distorts what Adam Smith really thought.
It is certainly true that there are similarities between what
Smith called 'the system of natural liberty', and more
recent calls for the state to make way for the free market. But
if we dig below the surface, what emerges most strikingly are the
differences between Smith's subtle, skeptical view of the role
of markets in a free society, and more recent caricatures of him
as a free-market fundamentalist avant-la-lettre. For while Smith
might be publicly lauded by those who put their faith in private
capitalist enterprise, and who decry the state as the chief threat
to liberty and prosperity, the real Adam Smith painted a rather
different picture. According to Smith, the most pressing dangers
came not from the state acting alone, but the state when captured
by merchant elites.
...
The context of Smith's intervention in The Wealth of Nations was
what he called 'the mercantile system'. By this Smith meant the
network of monopolies that characterised the economic affairs of
early modern Europe. Under such arrangements, private companies
lobbied governments for the right to operate exclusive trade routes,
or to be the only importers or exporters of goods, while closed
guilds controlled the flow of products and employment within
domestic markets.
As a result, Smith argued, ordinary people were forced to accept inflated prices for shoddy goods, and their employment was at the mercy of cabals of bosses. Smith saw this as a monstrous affront to liberty, and a pernicious restriction on the capacity of each nation to increase its collective wealth. Yet the mercantile system benefited the merchant elites, who had worked hard to keep it in place. Smith pulled no punches in his assessment of the bosses as working against the interests of the public. As he put it in The Wealth of Nations: 'People of the same trade seldom meet together, even for merriment and diversion but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.'
Second part of Russ Roberts' The Numbers Game animated series discussing the challenges of accurately measuring and understanding the economy and economic policy.
Changes in family structure make it difficult to measure economic progress for the middle class and to get an accurate picture of the effectiveness of the American economy. The rise in divorce and the decrease in marriage rates especially among less-educated Americans distorts the standard measures of economic progress. What’s really going on is more complicated than the standard story of economic stagnation.
Julia Galef, Rationally Speaking podcast.
This episode features Harvard economist Dani Rodrik, talking about the epistemology of economics: Are there any general "laws" of economics that we can be really confident in? Do economists discard models if the data doesn't support them? And why do economists disagree with each other?
Realistically, this has less to do with the failings of economists than with the futility of the task itself. Sen et. al. suggest that all the rational data in the world is rendered useless by the irrationality of human behavior. They pinpoint "the inherent difficulty in anticipating the results of interactions of millions of human beings with different values, objectives, motivations, expectations, endowments, rights, means and circumstances, dealing with each other in a wide variety of institutional settings."