Economics Makes Us Crazy

I have no misgivings about, nor apologies for, my near total ignorance of economics. I don’t know the special terms nor do I possess insight or erudition about its governing concepts and intellectual history. Sure, I’ve read a thing or two. But nothing technical. In the very little I have read, especially around election time, I get the impression that the application of econometrics to business and politics are, more often than not, inexact or flat out wrong.

Economics as we (don’t) know it, is kin to psychical research, the paranormal, and Dr. Phil in this regard; which, of course, only goes to show the following: what most of us take to be economics, is really just a shell of popular and over-politicized nonsense, built for public consumption and quick-fix consulting. Not the real thing, if there is one.

I know next to nothing about economics, but I do know a little bit about trying to make sense. Behaviorally speaking, making sense is really nothing more than building a reservoir of sensible intuitions about things and using it to measure other things. Sometimes, the intuitions get beat and the reservoir changes and adjusts. But the reservoir should win more often than not. Otherwise, a more serious reassessment is in order. A crisis in faith ensues.

One of the reasons I find positivistic social science research ridiculous or forgettable (or both) is because it often behaves like a bad gambler. It thinks it can beat the house with regularity, without cheating. Newton beat the house. Einstein, too. Can we name one, just one, statistics-strapped social scientist who has done anything like that? I didn’t think so.

Even worse, social scientists sometimes become so deluded as to think that the human reservoir of intuition needs its imprimatur to confirm it in the way that Newton’s laws clarified what is going when we play sports or go to the moon. Its own failure in producing these dubious aspirations, via findings that last more than a decade or two, ought to settle the matter until there is durable evidence that suggests otherwise.

Back to economics: in case you haven’t heard, national politics demands that we pretend to know something about “the economy.” Does anyone really know what this thing “the economy” is? There are many reasonable descriptions out there, but I am not in a position to entertain them here.

If “Rocha’s law of inputs and outputs” is as useful to understanding commerce as it to fixing a leaky tire or watering plants, then, it should be clear that the commercial state of the national economy is batshit crazy topsy turvy on both sides of the aisle.

Democrats and Republicans seem to be making the mistake of positivistic social science in thinking that the answer to the question is more reliably sought by betting against the house of common sense than by trying to use it.

On the left, we are to believe that more taxation and spending is a sound way to make things better. On the right-hand side, we are told the that reverse is true: less taxation and spending is the way to make the US function and prosper. The devil may be in the details, but the person taking crazy pills is not hard to find.

If the federal government is understood as a household, are we really to believe that more income plus added shopping and aggressive investing will team up to better provide for a family in poor health and chronic debt? The other side isn’t any better. Should we instead think that less income and shopping paired with timid investing will do any better? Are these the only options?

A great deal of ideological and philosophical assumptions have to be sorted out first, along with the devilish details. In the meantime, let me assure you that there is nothing wrong with saying “It seems that we might want to consider increasing our profits, decreasing our debts and liabilities, and being cautious but not stupid about investments, if we want to have a family that can provide for its children, be hospitable to its guests, keep its property in good repair, and so on.”

Both parties have packaged and sold an economic narrative that does not accurately represent reality and contradicts all common sense. There is no such thing as a truly free market nor is there a truly free lunch. The litany of contradictions on both sides are not evidence of hypocrisy so much as lunacy.

Sure, you can argue that you need to spend money to make money, but that truism only goes so far. Just ask a former small business owner, or become one yourself. And, yes, you can promote the idea that by empowering the rich the poor will prosper, but that also has its limits. Just ask your heart, if you have one.

In the end, selling an exception as the rule makes for nonsense, nuttery, and a crazy public that doesn’t have the slightest clue as to which side is up or down or what is going on and why it should care. If someone is going to make their point indirectly, then, they have the burden of justifying why the direct route proved insufficient in the first place.

The Catholic alternative is not to thrust these two downright crazy narratives about economics into Catholic Social Teaching. Don’t poison the well. We should do the exact reverse, obviously. We don’t need to translate Catholicism into US conservatism or progressivism, or whatever pet names you prefer. (And, no, we don’t have to become distributists either.)

This suffocating nonsense is opposed, in both directions, to the Catholic imagination. That so many Catholics in the US have spent so much of their time trying to force one square peg or the other, bespeaks a tremendous and off-putting lack of sense. It is insane. It makes us look crazy, sadly, because so many of us are crazy.

So stop acting crazy, just stop. As Catholics, we don’t need to agree about everything, but we should disagree with some dignity. Acting crazy doesn’t do that. At least in this case it doesn’t.

 

  • Petro

    It comes down to tribalism. We believe the narrative that our tribe happens to be pushing. Jesus tells us in today’s Gospel that we will be judged by how we treat the marginalized. No matter how we feel helping the marginalized is best done, arguing about it does nothing to help them in truth. I fear that most Catholics spend a lot more time arguing about how it should be done than actually helping. This should be a real concern for those hoping to be with the sheep and not with the goats.

  • Alan

    You might be better served by actually learning the subject matter rather than delighting in your ignorance of it – great for a populist politician, lousy for someone who actually wants useful answers.

    One root problem is that common sense is so rarely sensible when trying to get its arms around large, complex systems like a national economy. The federal government isn’t like a household (or a small business for that matter) and attempting to understand it that way will only lead you astray.

    • srocha

      The burden is on those of you who understand it to enlighten those of us who do not, and justify why common sense falls short and how. In the meantime, pretending and giving a pass to the whole thing on fiat seems like a far worse alternative, all things considered.

      • Alan

        There are any number of available introductory courses – online and live – that will do that for you. Since you open the post by asserting that you have no apologies for your near total ignorance of economics it is clear you aren’t actually interested in being enlightened – you prefer being in the dark so you can pretend that whatever you say has some meaning, you are the one looking for a pass as you make assertions while acknowledging ignorance of actual scholarship in the area.

        If you want some simple ways in which common sense falls short we can turn back to the silly analogy of the government as a household. Tax revenue isn’t analogous to family income at all – it isn’t obtain in exchange for goods or labor (on a free or controlled market), it can be raised at any level of national assets by force of law, it isn’t income really at all maybe closer to compare it to equity on a corporate balance sheet though that too is limited as an analogy. Government debt isn’t the same as household debt because only the government can produce, in unlimited quantity, the mechanism to payback its debt.

        Well, you should star to get the picture – the analogy breaks down much more than this. The point is, your ‘common sense’ doesn’t apply to a complex system with multiple feedback loops and unique conditions. Thinking it does is definitely the worst of all alternatives.

        • srocha

          This raises a perhaps more serious problem: if economics is outside the purview of “common sense,” then, what use is it to concern one’s self with it? I find this hard to believe. Surely there must be some basic, unifying principle that allows some accessible sense to be made of the matter. If not, then, the solution might create even worse problems: to simply allow the experts to decide and rule on the matter. But, in order to do that, the experts might do a better job of explaining on what grounds we ought to suspend common intuitions and ascent to their counter-intuitive alternatives. I will not undo my qualifiers, but I do not see a multiple feedback loop to be fundamentally distinct to A to B circuitry. External complexity does not undermine internal simplicity. But hey, at least I am not claiming to know anything! Imagine if I was! What a mess!

          • Alan

            Quantum physics is also outside the purview of common sense – its useful in so much as it informs our understanding of the world and the engineering of tools and mechanisms which manipulate the world.

            There are principles one can use to approach macroeconomics (though they of course come with their own assumptions as any model does and you need to be informed in the science to evaluate them for yourself). You are the one who is proud of not bothering to inform yourselves on what those are. Whether that means that we are only left relying on experts any more than we are when it comes to designing a nuclear bomb and it is somehow worse is a legitimate but very different discussion from throwing up your arms and using an analogy that is rooted in a composition fallacy as if that somehow helps rather than confuse the decisions even more.

          • srocha

            The difference, Alan, is that quantum physics has made that argument rather well. Economics, as far I can tell, has not. Perhaps I am overstating or you are are over interpreting my attitude towards my ignorance about economics — it is intended in part as being careful and also as, as arty notes, a passive agressive critique of social science in general.

            SR

  • Theodore Seeber

    The real problem with economics is that the models do not scale- at all. What works as a model for a household fails as a model for a Church, for a Government, or for a Business. It really is four almost totally different economic systems, joined together by one national currency imposed upon all by force of law.

    One of my major complaints as a distributist who understands currency, is that the US Consitution actually forbids subsidiarity and solidarity in the currency market (article I Sections 8 & 10, which basically gives the federal government a monolithic monopoly on currency). The only recourse for the people has been to directly disobey this and enter the sin of usury, either as borrower or lender, and all economic activity comes from that debt.

    Even taxes can be thought of as interest payments on your use of currency belonging to the Federal Government.

  • arty

    Reading the article and the comments, it looks to me as though the real question is: “Can there be such a thing as ‘social science’”? I’d count myself firmly in the “no” camp, and presumably Alan, in the comments, would count himself in the “yes” amp, at least as far as economics. I’d argue that there is no “science” when there is a human element in the objects of study, since people are, at core, pretty opaque, unpredictable, and are sometime rational, sometimes irrational, etc…. Human “science” since the enlightenment has failed to produce a single example of a scientific law, that has a track record of successful predictive power and where the conditions under which if would be seen to be false can be specified. Social scientists I know, therefore, generally fall into one of two camps: those who retain the rhetoric of science without the substance, and those who retain a commitment to the substance and have to argue, like Herbert Butterfield’s Whigs, that “now” is the pinnacle of human understanding of psychology, economics, sociology, etc….

    • srocha

      arty,

      You have pierced to the core of the article. Sadly it’s not very fair of me. I’m presently editing an article where I critique social science and I think it popped into this one here a bit more than I even realized until I saw your comment. In fact, my critique takes on Kuhn, arguing that science cannot be separated entirely from ordinary empirical observations, at a mental and sensory level. Good catch!

      SR

      • arty

        I’ve never known quite what to make of Kuhn’s argument in “Structure…”. I remember talking about him in graduate school, but he was always in that “often cited, never read” category, and I never had time to give him a thorough read, myself. My reaction at the time was, “ahh, a sneaky justification for radical post-structuralism!” At the time, there were three alternatives in graduate historiography class: 1. Traditional “objectivity”, 2. Radical postmodernism and poststructuralism, 3. A kind of mealy mouthed “well, we aren’t that (italics) certain but we’re still certain enough” middle ground.
        I remember at the time being certain that history wasn’t a science (and being deeply skeptical that there could be such a things as a “human science”), but also being pretty sure that the broadly postmodern approach to historical study was mostly a sophist justification for us to pursue whatever causes we deem worthy and label them with the stamp of “scholarship.”

        All this gets me around to saying that I’ve never quite known whether to consider Kuhn’s argument to be an ally, in that it rejects the Godlike status of “science,” or an adversary, in that (in history at least) if tends to provide fuel for the arguments of those who really just want to conclude “aha! I knew that nothing was really “true” after all.”

        Personally, I find Philip Rieff to be (have been, actually) the most penetrating “social scientist” around, and in fact I’ve got an article on him that should be coming out pretty soon. Where will you be publishing your article on Kuhn? I wouldn’t mind reading it-since I teach an undergraduate course in history and theory.

        • srocha

          I’d love to see your article, maybe it will tone down my recalcitrant feelings about social science. It’ll be out this Spring, I hope, at InterActions: UCLA Journal of Education and Information Studies. It is nice to be pressed to include more of my academic work here, I need to integrate more. So thanks!

          SR


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