This author doesn't really explain how their proposed additions to the curriculum would have predicted the subprime mortgage crisis. If the author is going to criticize mainstream economics for being irrelevant, it seems reasonable that they show how using their methods, it could have been predicted.
Ok, if we demonstrate that the movement of the planets is not accurately predicted using a well loved system is it appropriate for us to be held to having to invent a new system before publishing?
It might be that there is another planet, or it might be that our understanding of the universe is incomplete. It seems to me that the information that there is something out there that isn't covered by our predictions is quite useful for directing science.
> Ok, if we demonstrate that the movement of the planets is not accurately predicted using a well loved system is it appropriate for us to be held to having to invent a new system before publishing?
Absolutely not! That would be irrelevant, out of scope, and completely unreasonable.
That said, if you're going to opine that you have a better model, you might be best advised to bring data that demonstrates it.
There are shades of grey here. In an absolute sense Newtonian mechanics worked until the systems of measurement got good enough to show that there were problems. Economics seems to be in quite a different situation - it's been shown not to work at all. Economists seem to have very little predictive capability, they predict poorly, measure things that matter little and deliver interventions that alter the wrong things. An alternative doesn't have a high bar to jump.
Well, at least comedians seemed to understand the crisis several months before Lehman crashed: "Subprime Banking Mess"
https://www.youtube.com/watch?v=mzJmTCYmo9g
"John Bird and John Fortune (the Long Johns) brilliantly, and accurately, describing the mindset of the investment banking community in this satirical interview."
If only there were a branch of economic thought which predicted regular, increasingly intense crises of capital, say, one which was articulated by a bearded 19th century German...
Carl Menger and Joseph Schumpeter! Two of them, and they didn’t utterly fuck up the foundations of their economic analysis by having a shitty labour theory of value.
I fail to see how Marxs LTV is shitty, infact I would say that long term predictions show approaches like Marxs' works a lot better than any praexological or more traditionally neo classical methods.
Steve Keen's Debunking Economics has a good section on the problems with Marx's labor theory of value. IIRC, Marx's original sketch included a good model of the effects of capital, but he later neglected that to focus on labor alone and later Marxists kept that tradition.
Trying to figure how why asking for evidence for something is considered worthy of a downvote by the people on this orange site. Is it because it was too 'to the point' and not verbose enough?
This is true. The author doesn't mention behavioural economics but I think that that is more the way forward. People are not the simple rational actors of conventional economic theory. They lie, speculate, panic and so on. Bitconnect is a one word disproof of rational agent theory.
I don't know about predicting the mortgage crisis but if you assume humans are human in all sorts of awful ways then you should stick to systems which are simple robust and hard to screw up and time tested rather then the opaque mystery content derivatives that fueled the mortgage bubble. This may have prevented it rather than predicted it.
The prediction thing is tricky as in the joke "The stock market has forecast nine of the last five recessions." There are always people predicting things will go wrong but how do you filter which to take notice of?
Segments of economics have problem deciding whether to be descriptive or prescriptive; a theorist will come up with a proof of what a rational actor would do in a given situation. When it's pointed out that no one does that, the theorist responds that he is uninterested in the economics of stupid people.
Check out Misbehaving by Richard Thaler for the entertaining details.
Synopsis: The notes below are our attempt to re-develop economic theory from scratch, namely starting with the axiom that individuals optimize what happens to them over time, not what happens to them on average in a collection of parallel worlds. The latter, surprisingly, is the starting point of the currently dominant form of economic theory.
Arguably you have to teach the highly abstracted and mathematical fundamentals of economics first, before you can go and dismantle them (or rather improve on them). Problem is that the latter part is frequently neglected.
