{"id":14996,"date":"2013-10-28T14:38:53","date_gmt":"2013-10-28T18:38:53","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=14996"},"modified":"2013-10-28T14:46:46","modified_gmt":"2013-10-28T18:46:46","slug":"economics-could-be-a-science-if-more-economists-were-scientists","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2013\/10\/28\/economics-could-be-a-science-if-more-economists-were-scientists\/","title":{"rendered":"Economics could be a Science if More Economists were Scientists"},"content":{"rendered":"

New Economic Perspectives<\/em> has the brilliant William Black article Economics could be a Science if More Economists were Scientists<\/strong><\/a>.<\/p>\n

But here is the real takeaway about economists and their pretensions to be scientists.\u00a0 The Fed employs hundreds of economists who are supposed to study important economic developments.\u00a0 There were no more important micro-foundational developments than the three mortgage fraud epidemics and the hyper-inflated bubble that they produced.\u00a0 The Fed\u2019s economists, according to the authors of the study I have been discussing, failed to study the four developments that were about to cause a catastrophe.\u00a0 To make it worse, only the Fed had the authority under the Home Ownership and Equity Protection Act of 1994 (HOEPA) to ban all liar\u2019s loans and the Fed held a series of hearings mandated by Congress at which there was extensive testimony about liar\u2019s loans.\u00a0 The Fed\u2019s economists, therefore, should have made studying the three mortgage fraud epidemics and the resultant bubble their highest research priority.\u00a0 That\u2019s what scientists would have done.<\/p>\n

But those studies would have produced results that would have devastated the dogmas that rule the Fed\u2019s economists.\u00a0 The effectiveness of those ideological blinders in preventing serious research on the frauds by the Fed\u2019s economists continues to this day.\u00a0 This is a very old story.\u00a0 Michael Jensen, when he was the managing editor of the Journal of Financial Economics, discovered that no proposed article could get through peer review if it challenged the efficient market hypothesis.\u00a0 Jensen was a strong supporter of EMH, but he was appalled by this triumph of dogma over science.\u00a0\u00a0 He published an \u201canomalies\u201d volume, though as he noted in the first volume each of the contributors professed belief in EMH.<\/p>\n

The strength of Jensen\u2019s endorsement for EMH, even when he discovered that his colleagues were ruled by their dogmas should be a cautionary tale with regard to Chetty\u2019s claim that this time it\u2019s different, this time economists will behave like scientists.\u00a0 Jensen stated:\u00a0 \u201cI believe there is no other proposition in economics which has more solid empirical evidence supporting it than the Efficient Market Hypothesis.\u201d\u00a0 If he is correct, then the costly collapse of EMH suggests that all other economic propositions rest on even shakier foundations built on friable dogma rather than bedrock facts.<\/p><\/blockquote>\n

The irony of this article is that on this very web site, New Economic Perspectives, there is a contingent that adamantly refuses to understand the content of this article.<\/p>\n

Look at the discussion of the article Why Understanding Fiat Currency Matters For Scientists: We Are Being Pitted Against Public Health<\/strong><\/a>.<\/p>\n

I repeatedly refer to the writings of William Black to urge caution in the proposals put forth by the New Currency Theory proponents.\u00a0 The person most often responding to my comments refuses to recognize the relevance of the possibility of fraud in talking about the theory.<\/p>\n

I discussed this “conversation” in my previous post MMT, NCT, or Reality?<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

New Economic Perspectives has the brilliant William Black article Economics could be a Science if More Economists were Scientists. But here is the real takeaway about economists and their pretensions to be scientists.\u00a0 The Fed employs hundreds of economists who are supposed to study important economic developments.\u00a0 There were no more important micro-foundational developments than […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-14996","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=14996"}],"version-history":[{"count":3,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14996\/revisions"}],"predecessor-version":[{"id":14999,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/14996\/revisions\/14999"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=14996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=14996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=14996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}