Trump Impeached for Interfering with A System of "Woke, Self-Serving, Lying and Looting"

mattstoller.substack |  If the goal of economics were to ascertain truthful views about the world, if economics were as its proponents offer, a ‘science,’ then one would remark on the lack of self-policing within the profession. Of course, given that there is limited self-policing at best and the top practitioners in the field are routinely wrong about fundamental questions, we can conclude that uncovering truth may be an incidental outcome of the practice of economics, but it is certainly not the goal of the discipline.

Methodological Biases in Economics

There are three main problems with economics as a ‘science’ that can guide public policy choices. The first is that it is a post-mortem discipline. Economists often assert we need data before drawing conclusions. Economist Thomas Phillipon noted this in his book on the institutional basis of markets that an economist was like that of Sherlock Holmes, asserting ‘data data data, I cannot make bricks without clay.” And yet, there was no data in 2000 when the U.S. changes its policies vis-a-vis China, because the consequences were in the future. There’s nothing wrong with being a study of the past that has a specific quantitative framework, as long as there is a genuine acknowledgment that there’s no science here and projections have no scientific validity whatsoever. 

The second is that using economics to make judgments about the world can be extraordinarily costly and exclusionary. This may or may not be a big deal when considering macro-economic forecasting, but when economics becomes a key part of institutional legal arguments it shades who can use the law to protect their rights. For example, showing that someone robbed me by breaking into my house requires evidence and common sense. But bringing an antitrust lawsuit showing someone robbed me by excluding me from a market often requires millions in economics consulting services. If you don’t have that money, the law becomes meaningless.

The third is that an obsession with quantifying leads to political control by those who have access to data. A well-known example is famous economist Alan Krueger, who was paid by Uber and then wrote widely circulated scholarship based on internal Uber data about the corporation’s wage setting terms. But it’s broader than just one company, most of the big tech platforms work with economists, giving these powerful corporate entities a measure of political control over lines of research. Beyond tech, it’s actually quite hard to get information on a whole host of practices in the economy. For example, the Trump administration had to battle hospitals just to get them to disclose their official price list for different procedures (which isn’t even real considering the extent of secret discounts and rebates throughout the industry).