Friday, 17 July 2009

Economists fail at Physics 101

The Economist magazine has a rather mediocre article entitled What went wrong with Economics? which unsurprisingly does not answer its own question. However there are some very good comments posted by readers of the piece. I particularly like this one:

The problem I discovered in my introductory economics class can be summed up with this fictious analogy from physics:

"Let us assume that there is no friction, that there is complete combustion of all gases, and that there is excellent alignment of the guidance system..."

In short, economists make assumptions that DO NOT WORK IN THE REAL WORLD and then expect the world to conform to their postulates. Economists (as has been alluded to by other comments) do not know the working definitions of much of the jargon they employ, and do not realize which of the various processes they are ignoring are nontrivial.

Modern Economics is trying to be the equal of modern physics without having gone through the equivalent intellectual phase of thermodynamics or quantum mechanics.

Economists are often overcompensated pretentious bores who could not get more than a $10/hr job in the real world, if they had to get by on any talent beyond the art of memorization.

The fact that many economists have been able to earn substantially more than $10/hr, run and advise governments and central banks, run and ruin commercial banks etc. could well turn out, in the history books of the future, to be considered as perverse as the credibility given to medieval doctors who advised bloodletting as a panacea for most ailments.

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