What's wrong with Austrian Economics???

[jueco2005]

A couple of weeks ago I was talking to my instructors about economics. One of them knew that I like Austrian Economics and asked me about them. Soon a whole conversation developed about Austrian Economics.

Most of them found the Austrian view very interesting but called the school a:

"Doctrine"
"Anarchists"
"Extremists"

I think I have to agree.

 

[dandxg]

I often wonder too, with Ron Paul seeming very extreme on some issues like most Libertarians.

Think the RE bust was bad, how about if no one received unemployment? Sure less debt but then you neighborhood maybe really tanked then with even more foreclosures. I don't know and no one does. It's all theory and models until it's history as we know.

Remember Greenspan admitted his models were wrong and the Fed spends big money on them as we know.

 

[MKTrader]

Quote from jueco2005:

A couple of weeks ago I was talking to my instructors about economics. One of them knew that I like Austrian Economics and asked me about them. Soon a whole conversation developed about Austrian Economics.

Most of them found the Austrian view very interesting but called the school a:

"Doctrine"
"Anarchists"
"Extremists"

I think I have to agree.

Well, academic economists are wannabe physicists and engineers. They come up with all kinds of econometric models and other arcane garbage with no real value or grounding in the real world. See Paul Krugman and how terribly wrong he's been over the years for example. (And to think he got a Nobel prize?) It's no wonder they're so defensive when a rather rogue school of economists were so accurate on the Great Depression (Mises) and the last crisis (most Austrians).

That said, Austrians aren't necessarily great at timing--nor is any other econ school. But their use of deductive reasoning instead of fantasy math models seems to do a better job of explaining how the economic world works.

As for his labels, they're all either relative (extreme compared to what?) or ad hominems. A college prof should know better, but it shows you the current sad state of academics.

 

[sjfan]

The problem with Austrian economics is that it's not falsifiable and thus fails the criterion of being "scientific". It has the same problem as Freudian psychology - attractively intuitive, somewhat descriptive, not at all testable

Quote from MKTrader:

Well, academic economists are wannabe physicists and engineers. They come up with all kinds of econometric models and other arcane garbage with no real value or grounding in the real world. See Paul Krugman and how terribly wrong he's been over the years for example. (And to think he got a Nobel prize?) It's no wonder they're so defensive when a rather rogue school of economists were so accurate on the Great Depression (Mises) and the last crisis (most Austrians).

That said, Austrians aren't necessarily great at timing--nor is any other econ school. But their use of deductive reasoning instead of fantasy math models seems to do a better job of explaining how the economic world works.

As for his labels, they're all either relative (extreme compared to what?) or ad hominems. A college prof should know better, but it shows you the current sad state of academics.

 

[scriabinop23]

Quote from MKTrader:


That said, Austrians aren't necessarily great at timing--nor is any other econ school. But their use of deductive reasoning instead of fantasy math models seems to do a better job of explaining how the economic world works.

But that "deductive reasoning" you mention most often lacks rigour, and may be synonymized with "common sense." (of course where did common sense come from?) All to the point that austrian economics might as well be sociology and definitely pseudo science.

I find it is generally a thought process considered appealing to both political and academic rejects (aka libertarians who couldn't pass calculus).

Austrian economics is not economics - it is a social-political theory.

 

[Lethn]

The problem with Austrian economics is that it's not falsifiable and thus fails the criterion of being "scientific". It has the same problem as Freudian psychology - attractively intuitive, somewhat descriptive, not at all testable

I don't necessarily think that's true, Ron Paul often talks about Gold and Silver being used as a standard for currency. That in itself has been tested far more than fiat currency ever has, we used it for centuries as a way of defining wealth. Even before then people used things like sea shells etc. as a way of measuring wealth and Henry the 8th tried to counter the problem of banks constantly taking over countries with their currency by using measuring sticks as a form of wealth.

The problem with our current situation I think is not only that we haven't looked at history and learned from it properly but also that we've got utterly corrupt retards and cowards in charge of everything. As well as simply dishonest people. What is screwing us over right now isn't necessarily the type of system in my opinion but the fact that you've had these people outright scamming us for almost a century now.

 

[MKTrader]

Quote from scriabinop23:

But that "deductive reasoning" you mention most often lacks rigour, and may be synonymized with "common sense." (of course where did common sense come from?) All to the point that austrian economics might as well be sociology and definitely pseudo science.

I find it is generally a thought process considered appealing to both political and academic rejects (aka libertarians who couldn't pass calculus).

Austrian economics is not economics - it is a social-political theory.

Well, I passed all four semesters of Calculus with no problem and went considerably further in my math studies. I also looked at mainstream economic journals (including articles my profs wrote) and almost immediately saw the problems with applying such "rigour" to something more akin to an ecosystem than a car engine.

Ben Bernanke is an academic economist par excellence. Care to see a track record of the predictions from his mouth and high-falutin' models?

 

[ba1]

Ben's econometric model must have a GCM climate model on the backend.

 

[Specterx]

Quote from sjfan:

The problem with Austrian economics is that it's not falsifiable and thus fails the criterion of being "scientific". It has the same problem as Freudian psychology - attractively intuitive, somewhat descriptive, not at all testable

Not more so than any other "school" of economics - especially when it comes to implementing economic policy at the hard right edge. Policy of any sort really can't be evaluated in an objective manner, it all depends on what your values are and what you hope to achieve.

The Austrian school could be "falsified" if Austrian-style policies were implemented and it was observed (over the course of many years) that business cycles were just as severe as before, that economic growth and well-being didn't improve, etc. To my knowledge, no country has ever implemented such policies.

It's important to note that the old-style Gold Standard was not consistent with Austrian economics because banks could freely extend credit on reserves that didn't exist (fractional-reserve banking). Given this it's no surprise that the system eventually failed, since eventually somebody would demand more gold than your country had in its vaults.

 

[sjfan]

This isn't what I (or science) meant by "tested" (see http://en.wikipedia.org/wiki/Testability and http://en.wikipedia.org/wiki/Scientific_hypothesis)

What you are doing is essentially a perfect example of unscientific method of reasoning - you take a bunch of experiences and try to induce some rule from it. That's fine and all, but it isn't science.

For better or worse, mainstream economics is scientific in the sense that it attempts to build hypothesis that can be tested. Austrian cannot.

Quote from Lethn:

That in itself has been tested far more than fiat currency ever has, we used it for centuries as a way of defining wealth.