Thomas,
I have to quit. Life calls and I'll have to lurk for awhile. Just a few
comments on your last posting, and that's it.
>Again agreed but the difference seems to be that when their conclusions
>prove to be out of touch with reality, they tend to deny reality. How so,
>you might ask? The concept of the GDP has been validly questioned as
giving
>less than a true representation of the economic activities of a nation.
>First, it classifies all activities as positive, for instance the money
>spent recovering from a flood is considered growth in GDP while in
>essence/reality it is a return to a previous state. Second, it has nowhere
>to measure externalities, such as a mining site that pollutes the water
>causing fish to die which has the effect of reducing tourist traffic which
>has the effect of forcing some businesses into bankruptcy.
Let me assure you that economists are fully aware of this problem. A lot of
work has been done on the development of systems of national accounts which
integrate the environment, value unpaid work, and avoid the treatment of
negatives as positives. There are problems in integrating new approaches
into the existing system, however, particularly the problem of period to
period comparability. If you change this year's accounts to include new
variables, you should go back and include the same variables in the accounts
of former years. Otherwise you begin to compare apples and oranges over
time. It's not an easy problem to resolve for something as complex as a
system of national or even regional accounts. And if you change one system,
it makes it very difficult to provide comparisons with other systems.
There are also problems of valuation. How, for example, should unpaid work
or damage to the environment be valued? A few years ago, I did quite a lot
of work on the inclusion of the domestic production (hunting, gathering,
fishing, making things for themselves) of Aboriginal people in a system of
accounts. You can come up with valuation methods that you think are quite
brilliant, only to have someone come along and tear them apart. Before
that, I did some work on evaluating the environmental costs of agricultural
pesticides, of acid rain, and of oil and gas production in the Arctic.
Believe me, it aint easy and is awfully inconclusive!
>Data is converted into statistics or conclusions in a report. We rarely
get
>to question the questions that produced data which led to statistics. The
>same is true of a report, it is quoted ad nausem because it's conclusions
>tend to support a particular hypothesis. If other data contradict their
>data, they get into a war of who believes which data rather than
>investigating the collection of the data.
Believe me again Thomas, any economist worth his or her salt will always
question the data they have to work with. Many of the economists I've known
may have been naive, but very few were stupid. You may be confusing
economists with politicians or members of the advertising fraternity.
>Ronald Regan on the advise of small group of advisors brought forward the
>concept of supply side economics as a variance on conventional economic
>theory. This group was able to politically implement policies based on
this
>hypothesis. How many supply side economists are there now and yet from
1980
>to 1992, that was the dominant hypothesis on which economists based their
>decisions. Those were not "positive scientists", thse were zealots with a
>dream to impose on others.
I've tried very hard to mentally reconstruct what went on during the Reagan
era, but drew a blank. So I went back to what I consider one of the better
books that dealt with those times, "Greed it not Enough: Reagonomics", by
Robert Lekachman, an economist who was with the City University of New
York. Here is a quote from the very beginning of the book:
"Ronald Reagan must be the nicest president who ever destroyed a union,
tried to cut school lunch milk rations from six to four ounces, and
compelled families in need of public help to first dispose of household
goods in excess of $1,000.
This amiable gentleman's administration has been engaged in a massive
redistribution of wealth and power for which the closest precedent is
Franklin Roosevelt's New Deal, with the trifling difference that FDR sought
to alleviate poverty and Ronald Reagan enthusiastically enriches further the
already obscenely rich. Most of the benefits of i98I's tax legislation will
flow to large corporations and their afliuent stockholders, other prosperous
individuals, commodity traders, military contractors, and truly greedy
dabblers in oil, gas, and coal properties. Taxes on capital gains are
sharply reduced. To all intents and purposes, levies on corporate profits
are phasing themselves out. In future, estates passing to surviving spouses
will be exempt from inheritance tax."
Nuff said.
>It was with great surprise I heard that no economist predicted the Asian
>Flu. The single largest financial disaster of the 90's and not one learned
>scientist from that discipline could see the freight train coming down the
>tracks. Any good science has a measure of predicability in it. A physical
>scientist is relatively sure that water will boil at 210 degrees farheight,
>all other conditions being optimum. An economist is continually predicting
>based on their hypothesis and are continually proved wrong by reality.
This
>is not science, this is religion and the priests aren't too convincing
>anymore.
>>
Oh c'mon Thomas, I think you're reaching! Economics is not a science like
physics. It may not even be a science. A friend of mine - a very good
economist - used to maintain that economists were pretty close to witch
doctors. They devined entrails, that's about all they could do. But even
physicists have their problems. They may be able to tell you the
temperature at which water will boil, but try asking them when the next El
Nino is coming and what its impact on global climate will be, or when the
San Andreas Fault is next going to slip. As far as the Asian flu is
concerned, there were hints that it could happen, but you may be right in
saying that no one really put them together, and even if they did, no one
wanted to believe it.
Anyhow, these are my final words. Life calls. Signing off.
Ed Weick
