teageegeepea comments on Awful Austrians - Less Wrong

34 Post author: Swimmy 12 April 2009 06:06AM

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Comment author: Shane 14 April 2009 01:27:27AM 0 points [-]

Austrians believe that modeling for purposes of prediction is fruitless. Modeling for the purpose of control is unethical and oppressive because property rights are violated.

Other economists believe they can successfully model and manage an economy. They deal in numbers without taking into consideration human action at a level that has explanatory power. Monetarists, Keynesians, etc. ignore human action and generally treat the notion as unimportant. Austrians claim human action cannot be modeled, but knowledge of human action is required in order to model.

Austrians, for example, are able to model the effects of unrealistically cheap money, which is the source of malinvestment which leads to a boom bust cycle. We are experiencing the bust now.

With Austrians, things that can be modeled are modeled. Things that cannot be modeled or achieved are accepted, rather than, like the Keynesians, arrogantly claiming knowledge which is proven wrong time and time again.

Every time we have a bust, we are first told it should never have happened because after the last bust the bankers were given the tools necessary to prevent the bust. Then we are told that they just need a few more tools in their bag in order to fix the problem and ensure it never happens again. Then it happens again, each time bringing us nearer to the hyperinflation of 1920s Germany or today's Zimbabwe.

The economists which claim to be able to manage our economy for our good are either liars or incompetents or both. And we are supposed to accept their critique of the Austrian baseline?

Claiming the presuppositions are wrong is fine, if one can show that these need not be presuppositions because they can indeed be measured and worked into a predictive model... This proof I have not observed in a research model, let alone in the applied science, which we live with daily.

Comment author: teageegeepea 14 April 2009 02:26:07AM 1 point [-]

Models are used for prediction in all sorts of domains. Each of us has a mental model (or "theory of mind") of how others behave to a significant degree of accuracy. Economics often covers situations well outside the range of the evolutionary adaptive era for which our intuitive mental models don't work as well. If modeling were truly useless, it wouldn't matter if it was used "for the purpose of control" because it wouldn't get you anywhere.

I wish Matthew Mueller's Post-Austrian Economics blog was still up, because he made a good point about the unfortunate entanglement of austrian economics with political libertarianism since Rothbard. This results in some of its adherents viewing people who think their method is flawed as political enemies. For the record, I still read sites like mises.org & Lew Rockwell (though to a lesser extent recently due to all the competing distractions on the internet and my banning from the comments section of the former) and appreciate the work they do in bringing economics to a wider audience even if they can exhibit the flaws they point out in Rand's circle.

Comment author: Shane 14 April 2009 02:00:28PM 0 points [-]

Thanks for your remarks teageegeepea.

There is a difference between modeling and manipulating.

To model, is to create a framework that describes something.

To manipulate is to choose one or more elements among the known attributes of the model which can be controlled and then use that to coercively accomplish goals; then set the model up to "show good things are happening" based on the all wise management of the modeled system by the managers.

You note "a significant degree of accuracy". The point is that the degree of accuracy that can be attained is insufficient for the purpose.