Ron Paul vs. Paul Krugman

[cbeast]

Austrian economics is based primarily on deductive reasoning and logic. That puts it into the same category as mathematics. Similarly as mathematics, it is based on axioms. Strictly speaking, it's not science, but a tool that can be used in science.

Can you provide an example of a specifically Austrian Economic axiom and how it can be used in science?

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[cunicula]

Maybe the video will help explain?

http://www.ted.com/talks/esther_duflo_social_experiments_to_fight_poverty.html

[molecular]

So when did Keynes or Krugman use the scientific method and isolated a human society in a laboratory in order to produce predictable and repeatable results ? 

+1

As I've said on a number of times on this forums, the one thing that makes
a discipline scientific is its actual power to predict the future, and *not* the
fact that it somehow "explains" things.

Physics is a science: given enough data about powder chemistry, wind, angle,
projectile mass and shape, gravity and distance, you can accurately predict
where a shell will land once fired. A very useful tool to have.

Real science can land robots on Mars. Try and ask any economist to pull off
something like that.

Economics, whichever cult you happen to be follow (Keynes, Austrian), is *not*
a science: its predictive power is essentially non-existent.

On the other hand, economics, however has borrowed all the lesser attributes of
a real scientific discipline, in particular the complex jargon: economists have long
realized that there was much money to be made fooling regular people into believing
they have a clue about anything.

In fact, you can pretty much draw a one to one parallel between economics and
astrology: they use the same technique (fooling the gullible), serve the same purpose
(ensuring the practitioner makes a living), and have similar predictive power (none).

great post, especially the last paragraph. thanks, will use

[molecular]

Maybe the video will help explain?

http://www.ted.com/talks/esther_duflo_social_experiments_to_fight_poverty.html

please explain.

[finkleshnorts]

Maybe keynesianism is pseudoscience too.

We don't need science, we need sound money and free markets.

In my view, economics cannot be science anyway, unless you completely understand how humans work. You'd have to start there.

Regarding Keynes vs. Hayes or whatever: fuck that debate. Keynes may be right, I don't know, but his strategies are not implementable because they require responsibly acting leaders/central banks/policymakers, which we do not have at our disposal currently.

Humans fail consistently at regulating even very simple systems, such as a thermostat-controlled freezer. How can you expect a group of humans to succeed at regulating something as complex as the world economy?

You cannot, this is the mistake we made. We thought we could have our economies regulated.

I think we're better off concentrating our efforts on deregulation and coming up with good monies (let the free market use whatever it wishes to use), than arguing about right or wrong of some theories about the behaviour of apes. I'm pretty relaxed about these two things, because they will solve themselves in the end anyway. Solutions will just emerge, the question is how bad we want it to get before we let them.

I do think FunnyFoo is right about the problems bitcoin has (slow transactions, cumbersome to use, scalability issues), he's wrong however in saying that it's easy to come up with a better solution. I point to history (litecoin) to show that.

Thank you for this well though-out post.

+1

[cunicula]

Maybe the video will help explain?

http://www.ted.com/talks/esther_duflo_social_experiments_to_fight_poverty.html

please explain.

The video describes the use of experiments in development economics. These are analogous to randomized trials in medicine.  They both aim to establish an empirical basis for solving problems, based on reproducible, randomized trials. Evidence-based approaches to economics are explicitly rejected by the Austrian school. Would you trust a doctor who rejected evidence-based medicine? If not, then why would you trust an Austrian economist?

[lonelyminer (Peter Šurda)]

Austrian economics explicitly rejects the scientific method. It relies on deductive reasoning, but explicitly rejects mathematical deductive reasoning. If you want to call that science.... fine. You can have your faith-based anti-math whatyamacallit, and I'll take the scientific method.

Austrian economics rejects the notion that empirical data can confirm or refute economic theory, because economics is based on human action. Just like like empirical data cannot confirm or refute math. By the way I participated in math competitions back in high school and if I recall correctly twice I ranked 4th in the country.

PS Go back to your compound, you home-schooled, gun-wielding, bible-reading piece of shit.

I live in an apartment, attended public schools, don't have a gun and am an atheist.

Furthermore, thank you for providing evidence for my claim that you don't actually have an argument.

[lonelyminer (Peter Šurda)]

Can you provide an example of a specifically Austrian Economic axiom and how it can be used in science?

The main one is the axiom of human action, in that humans use means to achieve ends. As an example of use, it can be explain why barter occurs: if person A possesses a good X, person B possesses a good Y, A values the possession of Y more than X, and B values the possession of X more then Y, they perform an exchange (I'm ignoring transaction costs and the existence of other people and goods for simplicity).

[lonelyminer (Peter Šurda)]

The video describes the use of experiments in development economics. These are analogous to randomized trials in medicine.  They both aim to establish an empirical basis for solving problems, based on reproducible, randomized trials. Evidence-based approaches to economics are explicitly rejected by the Austrian school.

If you insist on empirical approach and how economists should be making testable predictions, why did Austrians then predict the housing bubble, while Keynesians didn't? Doesn't that disprove Keynesianism?

Hint: it doesn't, it just shows how you contradict yourself.

Would you trust a doctor who rejected evidence-based medicine? If not, then why would you trust an Austrian economist?

To phrase it like this is to misunderstand Austrian economics. Would you trust a mathematician that rejects empirical approach, or one who claims that measurement can prove or disprove mathematic theories?

[cbeast]

Can you provide an example of a specifically Austrian Economic axiom and how it can be used in science?

The main one is the axiom of human action, in that humans use means to achieve ends. As an example of use, it can be explain why barter occurs: if person A possesses a good X, person B possesses a good Y, A values the possession of Y more than X, and B values the possession of X more then Y, they perform an exchange (I'm ignoring transaction costs and the existence of other people and goods for simplicity).

OK, I'm with you so far. Your example has formed an hypothesis from your axiom. Science makes use of these tools by making predictions. Now we need to make a prediction based on this hypothesis that "humans use means to achieve ends." If we go with your example:
"if person A possesses a good X, person B possesses a good Y, A values the possession of Y more than X, and B values the possession of X more then Y, they perform an exchange (I'm ignoring transaction costs and the existence of other people and goods for simplicity)."
Now design an experiment that can test this hypothesis. And you'll need to test its falsifiability.

[lonelyminer (Peter Šurda)]

Now design an experiment that can test this hypothesis. And you'll need to test its falsifiability.

I think I didn't explain myself well. The example I used is still an economic theory. It cannot be tested empirically. It is impossible to think of a situation which would either confirm or refute it, since we cannot measure how people value. The maximum we can do is that when we observe barter, we can say that it is consistent with the theory presented above. Which does not really mean much.

The theory explains that barter is the consequence of the fact that more than one person exists, more than one good exists, and people having opposing valuations (double coincidence of wants). However, even if we didn't observe any barter anywhere ever, it still would not refute the theory, as it could simply mean that one of the conditions (e.g. double coincidence of wants) isn't fulfilled.

Austrian economics attempts to explain human behaviour on the most abstract level possible. While this means that its empirical use is extremely limited compared to other approaches, it's not necessarily a disadvantage. As Nassim Taleb (not Austrian, but a fan) eloquently put it, it is better to be approximately correct than exactly wrong.

[cbeast]

A theory requires empirical testing, otherwise it is a hypothesis. An axiom is a generally accepted definition, but in this case I and many others do not accept it. Therefore you are making logical fallacies starting with begging the question. You cannot call this science until it is testable and verifiable. It is pseudoscience until then.

[lonelyminer (Peter Šurda)]

A theory requires empirical testing, otherwise it is a hypothesis. An axiom is a generally accepted definition, but in this case I and many others do not accept it.

A correctly formulated axiom, in my opinion, cannot be refuted or confirmed. In isolation. However, it can happen that someone claims multiple contradictory axioms valid simultaneously. In this case, this contradiction can be exposed and therefore that particular combination of axioms rejected as erroneous.

It is illogical to object to a single axiom in isolation. If anything, it exposes biases of the protester.

Therefore you are making logical fallacies starting with begging the question. You cannot call this science until it is testable and verifiable. It is pseudoscience until then.

Kindly note that I did not call it science. Therefore, no fallacy.

Edit: in retrospect, perhaps I should have used the term "theorem" rather than "theory". That would be a more accurate terminology.

[caveden]

A theory requires empirical testing, otherwise it is a hypothesis.

You're basically calling mathematics entirely a "hypothesis". That's nonsense. Logical deduction on top of axioms can produce valid scientific theories, and in some situations this method is much more reliable than trying to conduct repeatable experiments with all the variables properly isolated (the "empirical" way). Social sciences are an example: experiments can't be repeated at will, and it's impossible to even distinguish all variables, let aside isolate them.

[cbeast]

A theory requires empirical testing, otherwise it is a hypothesis.

You're basically calling mathematics entirely a "hypothesis". That's nonsense. Logical deduction on top of axioms can produce valid scientific theories, and in some situations this method is much more reliable than trying to conduct repeatable experiments with all the variables properly isolated (the "empirical" way). Social sciences are an example: experiments can't be repeated at will, and it's impossible to even distinguish all variables, let aside isolate them.

Math is not science. Math is a descriptive language just like this language. There are no more perfectly straight lines real world than there are invisible pink unicorns. They only exist in the language of our imaginations. This is about philosophy. You can learn more about it by searching the term epistemology.

[caveden]

Math is not science. Math is a descriptive language just like this language. There are no more perfectly straight lines real world than there are invisible pink unicorns. They only exist in the language of our imaginations. This is about philosophy. You can learn more about it by searching the term epistemology.

Mathematics is a science. It's not (only) a descriptive language. Math allows us to obtain true knowledge, not only talk about it. Ex: If two items of the same nature are put together with another two items of the same nature, you'll have four items of that nature (2+2=4). That's not a product of "imaginations", it's a true fact.

[cbeast]

Math is not science. Math is a descriptive language just like this language. There are no more perfectly straight lines real world than there are invisible pink unicorns. They only exist in the language of our imaginations. This is about philosophy. You can learn more about it by searching the term epistemology.

Mathematics is a science. It's not (only) a descriptive language. Math allows us to obtain true knowledge, not only talk about it. Ex: If two items of the same nature are put together with another two items of the same nature, you'll have four items of that nature (2+2=4). That's not a product of "imaginations", it's a true fact.

I threw you a bone. OK, so you claim math is a science. Fine. a^2 + b^2 = c^2 is a math theorem that is mathematically accurate to absolute precision. Now show me a perfect triangle anywhere in nature that can be measured and independently tested and verified to have perfectly straight lines and can be accurately measured at anytime to be be consistent of the theorem that a^2 + b^2 = c^2 exactly.

[Red Emerald]

Math is not science. Math is a descriptive language just like this language. There are no more perfectly straight lines real world than there are invisible pink unicorns. They only exist in the language of our imaginations. This is about philosophy. You can learn more about it by searching the term epistemology.

Mathematics is a science. It's not (only) a descriptive language. Math allows us to obtain true knowledge, not only talk about it. Ex: If two items of the same nature are put together with another two items of the same nature, you'll have four items of that nature (2+2=4). That's not a product of "imaginations", it's a true fact.

I threw you a bone. OK, so you claim math is a science. Fine. a^2 + b^2 = c^2 is a math theorem that is mathematically accurate to absolute precision. Now show me a perfect triangle anywhere in nature that can be measured and independently tested and verified to have perfectly straight lines and can be accurately measured at anytime to be be consistent of the theorem that a^2 + b^2 = c^2 exactly.

lol wtf. "Math is not science."  This is not the direction I thought that this debate would go... And I don't understand how it makes either side's point.

[caveden]

OK, so you claim math is a science. Fine. a^2 + b^2 = c^2 is a math theorem that is mathematically accurate to absolute precision. Now show me a perfect triangle anywhere in nature that can be measured and independently tested and verified to have perfectly straight lines and can be accurately measured at anytime to be be consistent of the theorem that a^2 + b^2 = c^2 exactly.

But I don't have to show you anything in nature for it to be true.... A triangle has such properties a priori. That's exactly why you should not always use empiricism as a way to acquire knowledge. "Measuring and testing independently at anytime" is the empiricist way of acquiring knowledge, which doesn't fit neither to Math, nor to any social science.

The Pythagoras equation holds true for any triangle, even if you're not capable of finding an object with triangular form in nature.

Are you trying to argue that the equation is not true because you've never seen a natural object of triangular shape?

[caveden]

lol wtf. "Math is not science."  This is not the direction I thought that this debate would go... And I don't understand how it makes either side's point.

It is related. Keynesians practice economic wrongly. They try to use the empirical method, which doesn't work for social sciences as you simply cannot repeat experiments at will, much less isolate all the variables.
The empirical method is the one used in Physics, Chemistry etc.
The aprioristic method is the one used in Economics, Mathematics...