The Problem With Econometrics

Following up my last post I thought I’d expand on my problem with econometrics. Essentially the core problem with econometrics is that it is heavily dependent on its assumptions and can be easily twisted to say whatever its designer wants it to. Continue reading “The Problem With Econometrics”

The Emperor’s New Econometric Model

Once upon a time some men decided to play a con trick on the Emperor. So they told the emperor that in exchange for only a mildly exorbitant fee they would produce the greatest econometric model in the world (after all you can’t spell econometric without con or tric). The Emperor agreed but instead of creating an econometric model, the consters merely covered pages and pages with random letters and obscure symbols. Eventually the conmen decided to present their model to one of the Emperor’s advisors. They told him that it was an econometric model of such complexity that only the wise could understand it, to the uneducated it looked like random symbols. The advisor who knew little economics, pretended to read it before agreeing with the conmen about its sophistication. Continue reading “The Emperor’s New Econometric Model”

Austerity Isn’t Working

(This is the original draft of an article I wrote for the University Observer. A counter argument was also written.)

Whenever someone tells you there is no other option, don’t believe them. There are always other options and when people pretend otherwise its usually because they want to shut the debate down. So when Michael Noonan grimly announces that we have no choice but to implement austerity, we shouldn’t blindly accept this. There is always an alternative. Continue reading “Austerity Isn’t Working”

Esperanto: A Language For Everyone

(This article was originally published in the University Observer. Rather than simply reprint it, I thought I’d publish my original draft before it was edited.)

The world is divided into thousands of different languages separated from each other, each with its own culture and nationality. Everyone who has been on holiday has felt that awkward moment when you try (and usually fail) to breach the language barrier with a local. We have probably all thought how much easier life would be if there was one language that we all could all speak together. But national pride gets in the way, the English won’t learn French and the French won’t learn English, and neither will learn German. What we need is a neutral language, one that doesn’t have a past of colonialism and oppression of native languages. There is a language and it’s called Esperanto. Continue reading “Esperanto: A Language For Everyone”

Say It Isn’t So

Few economists openly admit to believing in Say’s Law anymore. It is generally considered a relic of the past, a once dominant theory that had faded away. Although it was prominent in the 19th century, it was swept away in the Keynesian revolution like so much of Classical economics. However, economic theories never die. Say’s Law lives on in conservatives think tanks like the Heritage Foundation and when Marco Rubio (who many favour as the next Republican candidate for President) rose to reply to Obama’s State of the Union address, it was Say’s Law he invoked. Even in the world of economics, some economists unconsciously channel the spirit of Say when they preach about the worries of crowding out and through Walras’ Law which is just a weak version of Say’s. This year’s joint winner of the (pretend) Nobel Prize in Economics Eugene Fama constructed an argument against government stimulus (unconsciously) based more or less on Say’s Law. Continue reading “Say It Isn’t So”

Guide To The Economic Schools Of Thought

Economics is not a homogenous or unified subject, rather there are a series of competing ideas over the key areas. These ideas can be roughly divided into several schools of thought and I’ll give a guide to them here. It is the great myth that economists pretend to be non-partisan when in reality we all have our own biases and opinions. It is impossible to study a topic without forming an opinion of it and economists are no exception. So by understanding the different schools of thought you can not only understand why economists give different and contradicting policy advice but also how they see through different lenses. Continue reading “Guide To The Economic Schools Of Thought”

Debunking The Broken Window Fallacy

One day a boy was playing football when he accidently broke a window. Rather than get mad, the people shrugged their shoulders and said breaking windows is good for the economy. After all, if no windows were broken, then all the glaziers would be out of a job. By breaking the window, the boy ensured money would be spent on repairs, thereby ensuring someone kept their job and giving the window making business a boost. However, at this point Bastist in his seminal essay “That Which Is Seen And That Which Is Not Seen” jumps in to point out why this is a fallacy. While we see the money spent on repairing the window, we don’t see what would have happened had the window not been broken. Instead of repairing the window, the money could have been spent on a new pair of shoes. So while the glazier is better off, we don’t see the people who are worse off as a result. Continue reading “Debunking The Broken Window Fallacy”