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Ed Miliband

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I think the bigger problem is that politicians and political activists latch onto economic theories that seem to validate their political ideology without really understanding the theories or the debate surrounding them. Hence we have the re-interpretation of the great liberal capitalist Keynes as the guru of socialist state driven economics which is an aberration in itself before contemplating the changes in the world economy since the 1930s.

 

You are right, but my views are coloured by my experience of the Social Science, which included Economics) students at uni. Their apparent lack of rigour (ie. ability to prove their theories rather than just present them as if they were fact) caused me to despise the use of "Science" in this context. I still don't think Economics has a basis in provable theories.

 

I should say that I found Economics students personable and friendly (one such is the only friend from any faculty I have stayed in touch with after 40 years). It is the subject I have little time for.

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You are right, but my views are coloured by my experience of the Social Science, which included Economics) students at uni. Their apparent lack of rigour (ie. ability to prove their theories rather than just present them as if they were fact) caused me to despise the use of "Science" in this context. I still don't think Economics has a basis in provable theories.

 

I should say that I found Economics students personable and friendly (one such is the only friend from any faculty I have stayed in touch with after 40 years). It is the subject I have little time for.

It's a general problem in economics that those who sign up for economics degrees aren't necessarily very good at maths. We should treat the subject a bit more like engineering in my view. Those who stay on in the profession are another matter.

 

Economics does have a basis in provable theories, it's just that the subject as taught in the UK, doesn't emphasize the need to recite proofs. In my experience, proofs could even be glossed over or ignored.

 

It's a science like psychology is a science but not a science like physics or chemistry.

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I'm getting married to my partner of 15 years, am I doing it for a better image?

 

Anything's worth a try.

 

;):D

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It's a general problem in economics that those who sign up for economics degrees aren't necessarily very good at maths. We should treat the subject a bit more like engineering in my view. Those who stay on in the profession are another matter.

 

Economics does have a basis in provable theories, it's just that the subject as taught in the UK, doesn't emphasize the need to recite proofs. In my experience, proofs could even be glossed over or ignored.

 

It's a science like psychology is a science but not a science like physics or chemistry.

Genuine question then: if one wanted to get a grounding in the provable basis of economics what should one read?

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Genuine question then: if one wanted to get a grounding in the provable basis of economics what should one read?

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Oh yeah because there only are about four economic papers written so each one is of enormous importance.....

 

That's a very skewed summary based no doubt on reading a very sloppy piece of journalism and no understanding of the underlying concepts.

 

The truth of the matter is that debts have to be paid back at some point - unless you want to go bust. This is as basic as saying that the world isn't flat.

 

Debts spiral because you have to pay interest on them and that interest rate is almost always higher than inflation. Nothing earth shattering there.

 

Therefore what you don't pay today, will be paid tomorrow with interest.

 

You don't need to study economics to see the logic of trying to stop debts escalating. This was the understanding that most people had before anyone invented Excel.

 

The only embarrassing detail is that the fear of future debt repayments doesn't cause GDP to shrink nearly as much as previously thought. It still does shrink though.

I'm no economist (I am hot at Excel for a start, which overqualifies me) but it does seem that there are lots of economists (proper ones, with Nobel Prizes and "A Dummy's Guide to Excel 2003" on their bookshelves) that would disagree with much of what you've put there.

Maybe you're right and they're all wrong. I don't know. But I find economics fascinating. It seems much more of a black art than a science to me.

One thing I do know is that debts don't have to be paid back. I once heard that the UK government still pays out on bonds sold to fund the Napoleonic Wars. No idea if that is actually true.

"You don't need to study economics to see the logic of trying to stop debts escalating. This was the understanding that most people had before anyone invented Excel."

That line of reasoning worries me BTW. There are lots of things that "logic" tells you should be true, but aren't. Science was invented precisely because this line of reasoning was so poor at actually working out how the world really does work. One would hope that, with the remarkable increase in computing power and data storage, economics could move towards a more empirical evidence base and away from old fashioned common sense dressed up as "logic"

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Economics does have a basis in provable theories, it's just that the subject as taught in the UK, doesn't emphasize the need to recite proofs. In my experience, proofs could even be glossed over or ignored.

 

It's a science like psychology is a science but not a science like physics or chemistry.

Are these mathematically provable or empirically provable? The history of science is littered with beautiful and mathematically perfect theories that unfortunately happened to be not true.

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Genuine question then: if one wanted to get a grounding in the provable basis of economics what should one read?

 

Most textbooks are produced for the undergraduate market and thus cover what the student needs to know which is usually the theory itself. You can deduce the basic mathematics behind the model if you have a decent i.e. good A-level knowledge of Maths and have studied philosophy but those elements are not usually explicitly laid out.

 

Economics papers (with the odd exception) are far more rigorous but aren't really "basic". Sadly most economics graduates skip the proofs and read the intro and the conclusions. 

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I'm no economist (I am ###### hot at Excel for a start, which overqualifies me) but it does seem that there are lots of economists (proper ones, with Nobel Prizes and "A Dummy's Guide to Excel 2003" on their bookshelves) that would disagree with much of what you've put there.

Maybe you're right and they're all wrong. I don't know. But I find economics fascinating. It seems much more of a black art than a science to me.

One thing I do know is that debts don't have to be paid back. I once heard that the UK government still pays out on bonds sold to fund the Napoleonic Wars. No idea if that is actually true.

"You don't need to study economics to see the logic of trying to stop debts escalating. This was the understanding that most people had before anyone invented Excel."

That line of reasoning worries me BTW. There are lots of things that "logic" tells you should be true, but aren't. Science was invented precisely because this line of reasoning was so poor at actually working out how the world really does work. One would hope that, with the remarkable increase in computing power and data storage, economics could move towards a more empirical evidence base and away from old fashioned common sense dressed up as "logic"

I'd like to know which ones would disagree.

 

The model I put forward is simple because it is a tl;dr version of economics. Reality is even more brutal as debt level rises so does the interest rate and debt spirals  faster than I suggested it would.

 

We may not need to make the final payment on Napoleanic debt but as you say, we are still paying it.

 

Economics is actually not common sense meets logic. Much of what economics says contradicts what "most people think". It is based on rigorous mathematical models but you don't need to understand these models in order to get a Bachelor's degree.

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Economics is actually not common sense meets logic. Much of what economics says contradicts what "most people think". It is based on rigorous mathematical models but you don't need to understand these models in order to get a Bachelor's degree.

It's the rigorous mathematical models which worry me. There's a really rather beautiful and rigorous piece of maths that sites behind JJ Thompson's "Plum Pudding" model of the atom. Sadly, it's not actually how atoms work.

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We may not need to make the final payment on Napoleanic debt but as you say, we are still paying it.

And we don't necessarily have to do that.

Looking into this further (bored at work) and I find that the various nations lent each other large sums to pay for the First World War and payments were suspended in 1934 and never started again. Apparently it is no longer possible to work out who owes what to how and so the debt is "suspended" but hasn't been written off. No payments are even made to cover the interest, and haven't been for close on 80 years.

So it turns out that you may not have to pay off debts after all.

I am fairly convinced at the moment that the debt argument is a political one and has limited, if any, basis in economics.

But hey, what do I know?

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I noticed that on Peinar politics a couple of weeks ago the whole program was about how low the Labour lead is

At the moment I reckon Labour are getting a pretty raw deal from the media. Especially the BBC.  Anyone who heard Martha Kearney's interview with the three party leaders must surely come to the same conclusion.  Last Monday Milliband, announced as the "Leader of the Labour Party" - not "The Leader of the Opposition" was given a really hard time by Kearney, with interuptions, not allowing him to finish sentences and talking over him.  Cameron (The Prime Minister) was allowed to smoothly put his points, avoid awkward questions and attack Labour.  I didn't hear the interview with Clegg but did hear him described as "Deputy Prime Minister" 

Overall there seems to be a general attempt to belittle Milliband - similar to the tactics used upon Kinnock.  I also heard a Today interview with Harriet Harman and the hectoring interupting was similar to that used on Milliband.

I've also noticed on the World at One on the occasional Wednesday when Cameron deigns to answer questions that if he has a success over Milliband Kearney is quick to point this out - however if the boot is on  the other foot Milliband's victory is ignored.  The Beeb these days appears to have a definite pro Tory tone. But then it's run by an ex Tory minister so what can you expect?

Edited by fieldofclothofgold

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It's the rigorous mathematical models which worry me. There's a really rather beautiful and rigorous piece of maths that sites behind JJ Thompson's "Plum Pudding" model of the atom. Sadly, it's not actually how atoms work.

It doesn't need to be "how atoms work". It needs to be an accurate approximation of how atoms work.

 

Newton's laws of motions might not have been entirely accurate but they served a purpose.

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And we don't necessarily have to do that.

Looking into this further (bored at work) and I find that the various nations lent each other large sums to pay for the First World War and payments were suspended in 1934 and never started again. Apparently it is no longer possible to work out who owes what to how and so the debt is "suspended" but hasn't been written off. No payments are even made to cover the interest, and haven't been for close on 80 years.

So it turns out that you may not have to pay off debts after all.

I am fairly convinced at the moment that the debt argument is a political one and has limited, if any, basis in economics.

But hey, what do I know?

No, you do need to pay off debts unless your creditors agree to a suspension or a cancellation of the debt. No chance of that these days.

 

The alternative is to declare bankruptcy but then you need to balance the books anyway since nobody will lend you any cash immediately after you refuse to honour your existing debts. This means you can only spend what you earn; the "alternative solution" to austerity involves creating a balanced budget - the irony.

 

What governments have tended to do is print lots of money since the debts are in their sovereign currency which they can print at very little cost. This has meant inflation that reduces the value of every pound by a fraction. This is a "stealth tax" equivalent to putting up taxes and reducing wages / benefits. Again the alternative to austerity is austerity under a different name.

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It doesn't need to be "how atoms work". It needs to be an accurate approximation of how atoms work.

 

Newton's laws of motions might not have been entirely accurate but they served a purpose.

But the point is that it wasn't a particularly close approximation of how atoms work, although the maths was very nice and very rigorous. You appear to be saying that economics is full of rigorous maths, but that's useless if it doesn't stack up against reality.

Newton's laws are elegant but the real point is that they work very, very well indeed against reality in almost every practical situation. You drive your car according to Newtonian laws of motion - except for your SatNav, which has corrections for Relativity. What matters is that it works, nothing else.

So where is the evidence base for the claims of economists? When I hear an economist tell me that high national debt reduces growth permanently, where is the evidence for that? Is it really true, or is it just a prediction that should be true according to the currently fashionable theory.

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No, you do need to pay off debts unless your creditors agree to a suspension or a cancellation of the debt. No chance of that these days.

So, except for the debt that is hundreds or years old and we have never paid back, and the debt that we simply stopped paying back and noone really minded, we have to pay it all back?

Who are Britain's creditors? Who are we paying this money back to?

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But the point is that it wasn't a particularly close approximation of how atoms work, although the maths was very nice and very rigorous. You appear to be saying that economics is full of rigorous maths, but that's useless if it doesn't stack up against reality.

Newton's laws are elegant but the real point is that they work very, very well indeed against reality in almost every practical situation. You drive your car according to Newtonian laws of motion - except for your SatNav, which has corrections for Relativity. What matters is that it works, nothing else.

So where is the evidence base for the claims of economists? When I hear an economist tell me that high national debt reduces growth permanently, where is the evidence for that? Is it really true, or is it just a prediction that should be true according to the currently fashionable theory.

The essential difference between economics and physics is that both describe reality but that humans are odd creatures. Reality can change in economics but not in physics.

 

Economic models predict what is likely to happen based on what we know of humans. It's not exact but it's as good as we can achieve. However, there is the distinct possibility that at some point our models may need to change just as they have done in the past.

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So, except for the debt that is hundreds or years old and we have never paid back, and the debt that we simply stopped paying back and noone really minded, we have to pay it all back?

Who are Britain's creditors? Who are we paying this money back to?

A mixture of private individuals, funds such as pension providers, banks, other governments. The largest group will be Britons.

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But the point is that it wasn't a particularly close approximation of how atoms work, although the maths was very nice and very rigorous. You appear to be saying that economics is full of rigorous maths, but that's useless if it doesn't stack up against reality.

Newton's laws are elegant but the real point is that they work very, very well indeed against reality in almost every practical situation. You drive your car according to Newtonian laws of motion - except for your SatNav, which has corrections for Relativity. What matters is that it works, nothing else.

So where is the evidence base for the claims of economists? When I hear an economist tell me that high national debt reduces growth permanently, where is the evidence for that? Is it really true, or is it just a prediction that should be true according to the currently fashionable theory.

 

Unless I've misread recent posts, both you and NS are basically saying the same thing. We should be very careful when taking an economist's word for something. They sound convincing, but there is no real empirical evidence that what they are saying is true. Indeed, it would be impossible to gather such evidence. What would you use as an experimental test bed, there is no such thing as a "laboratory economy", only the real world. If you get your "experiment" wrong in the real world, people lose jobs and homes and countries like Iceland, Spain, Greece and Cyprus end up in a real mess. In the end, though, it is the politicians who should exercise caution when dealing with economics and not, as you say, just follow the currently fashionable theory.

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Unless I've misread recent posts, both you and NS are basically saying the same thing. We should be very careful when taking an economist's word for something. They sound convincing, but there is no real empirical evidence that what they are saying is true. Indeed, it would be impossible to gather such evidence. What would you use as an experimental test bed, there is no such thing as a "laboratory economy", only the real world. If you get your "experiment" wrong in the real world, people lose jobs and homes and countries like Iceland, Spain, Greece and Cyprus end up in a real mess. In the end, though, it is the politicians who should exercise caution when dealing with economics and not, as you say, just follow the currently fashionable theory.

There is no empirical evidence based on controlled experiments but we do have data collected from the real world. It is better to make decisions with imperfect models and imperfect data than to throw it all away and hope that we make good decisions with no data and no models.

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There is no empirical evidence based on controlled experiments but we do have data collected from the real world. It is better to make decisions with imperfect models and imperfect data than to throw it all away and hope that we make good decisions with no data and no models.

 

Go on, I'll accept that, but those imperfect models and data really need to be checked (peer reviewed?) very carefully when all our futures depend on the decisions.

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Go on, I'll accept that, but those imperfect models and data really need to be checked (peer reviewed?) very carefully when all our futures depend on the decisions.

They generally are. I daresay that some major historian or other has cocked up his methodology on some study or other and been found out later. I doubt anyone said that the whole academic subject of history was a bit suspect.

 

The other thing being that there have been no dramatic reversals of policy since this revelation. As ever the media have over-hyped the significance of this particular study. If the entire intellectual justification for austerity really rested on this one study, you'd have thought that the error would have been picked up before now.

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