One of the best articles online on why the so-called economic science is just a pile of esoteric junk (and people still swallow it with religious fervor).
Read the full article at Naked Capitalism.Once upon a time, about a hundred years ago, economics was different from how it is today. Many famous people had thought about economics, including Adam Smith, Ricardo, Marx, and others. Economics was not a perfect science, and lots of people who thought about economics disagreed. But in the last century, economists started to agree about two things: economics should become as mathematical as it possibly could, and politicians should listen to economists.(...)Someone named Lorie Tarshis went to Keynes’ classes, took notes, and made a book out of it. The name of the book was “Elements of Economics.” It was published in 1947. Back then, there were people who thought that communist spies were everywhere. Some of these people, including William F. Buckley, decided that Tarshis’ book was also part of a communist plot, and started saying so very loudly to as many people as they could find. Many colleges became afraid to use “Elements of Economics” as a textbook.(...)Meanwhile, Paul Samuelson was writing his dissertation, and he saw how angry the people had gotten with Tarshis. He decided to make it so his dissertation could not be attacked in the same way. So he did three things, writing very “carefully and lawyer like.” First, he changed Keynes’ ideas a little bit so that in Samuelson’s version of them, they said that corporations in the capitalist system would always give everybody a job as long as the government and labor unions didn’t bother the corporations. That made corporations happy with him, so that they didn’t think people should call him a communist. Second, he called his ideas “neoclassical synthesis Keynesianism.” That made other economists think that he wasn’t changing their ideas very much, so they were more happy to support him. Third, he wrote all of his arguments up in mathematical form. Now why would he want to write up his ideas as mathematical arguments? Well, for one thing, a lot of people don’t understand complicated math, so he could automatically win arguments with someone who didn’t understand math. Even the people who went around calling people communists couldn’t call him a communist if they didn’t understand the math he was doing.(...)Isn’t the point of mathematics that in math, things are either right or wrong?Actually, the way that things work in math is that first, you make ASSUMPTIONS, and then you figure out from the assumptions whether things are right or wrong. So the way that you use a mathematical argument to say things that people will like is that you change the assumptions until they make it so the answers are answers that people like.(...)Some people who don’t think like economists have made fun of economists for making unrealistic assumptions like these. Those people seem to think that if economics is based on assumptions like these, that maybe aren’t true, then economics must not be a useful science. But these people don’t know that in 1953, Milton Friedman destroyed all of their arguments with a magical “get-out-of-reality-free card.” When you play this card, it makes it so you’re not allowed to make fun of economists for basing their theories on assumptions that aren’t true.(...)But even though the card might not really work, mostly people don’t argue with economists and so they still use their theories and “think like economists.” “Thinking like economists” is kind of like looking at the world with 3-D glasses. When you’re watching a 3-D movie, it makes it so that you see really neat things. When you’re not watching a 3-D movie, then everything looks red and blue and kind of weird. But economists still like wearing their 3-D glasses.(...)Some economists have tried to use a lot less theories and mostly just figure out what is actually going on in the world. This kind of economics is called “empirical research.”(...)Even though it’s a good idea to do cross-validation, a lot of economists don’t do it.(...)Economics seems to be in a lot of trouble right now. The old economics has problems, and the new kinds of economics have problems too. Some economists have even given up studying the economy and now study things like speed-dating and violence in movies.