Link to Preface:

When I say that “Economics is dumb” I don’t mean that the field Economics is 100% bullshit or has nothing to offer humanity. Specifically, I mean that popular conceptions of Economic arguments are dumb – typically these are unfounded, exaggerated, or simply untrue. Many proponents also do not appreciate the limitations of economic theory, nor do they have any real knowledge of the empirical data behind their claims.

This series Is made with the aim to give others the knowledge to address the bad economic arguments we see here at DAR or reddit generally - particularly from the “neoliberal” and libertarian types. These posters often invoke economics to justify their ideological absurdities. However, usually these claims lack empirical evidence, are overly-simplistic, or have much less support from “experts” than their confidence would suggest. These types also pretend to hold impossibly materialistic world views that are too ridiculous to be taken seriously. For instance, no one goes through life as a totally atomized “individualist” that is completely disengaged from any friends or family, and never rewarded these people nepotistically or leveraged their connections at the expense of the “free market.” They cannot hold true to these ostensible values in their day-to-day lives or personal relationships. Since I have no collective name for the types of insufferable autists and globohomo pawns you come across on plebbit pushing their BS there and other places, I’m going to give them one: le-conomists. Not everyone who posts about economics on online forums is an overly-educated autistic retard, but hopefully you will in time come to understand who these people are and what kind of arguments they make. Or just browse r/Neoliberal for like, five minutes. While “Economics” can provide valuable insights and help guide policy, it can be very limited in practical application, and it is inadequate to justify the kinds of things these types propose. It is not a sufficient to be a cornerstone for any ideology. While the field may seem complex and impervious to outsiders, I would argue for most consequential themes, this is actually not true. Employing data and common sense beats long-winded and lofty theoretical debates on most topics that matter to the average person.

ECONOMICS IS NOT A SCIENCE

First, Economics is not a science, and most economists do not pretend that it is. In fact, economists are usually much more aware of the limitations of models/assumptions in the field than are the various pundits that claim to represent “consensus.” The idea that economics is a science however is very real (and false) belief held by many people. A fact best demonstrated by a thread brigaded a few months ago by r/ neoliberal and a user I encountered there Despite the inexact and pseudo-scientific (but actually) nature of Economics, there are some economists that use their positions of influence to be pseudo-celebrities to strive to be economic equivalent of Dr. Oz.

In reality, Economics is limited in its ability to both be a “social science” and an real science. Like a “social science,” it can provide valuable explanations for human behaviors and market outcomes – but sometimes sociologists produce ridiculous theories on humanity that shouldn’t be taken too seriously, or can be easily politicized. Econometrics give us a way to measure and quantify impacts on the economy kind of like a science does – but much more imperfectly. Also, just as science cannot prove that scientific progress is good for humanity, the same can be said about economic “progress.” Economists concerned with development or technological progress have no arguments against the anarcho-primitivist critiques of Kaczynski or the fact the measures on self-reported societal well-being have either declined or not increased as the technology and the economy have “progresse.”d Economists are not an authority for making moral assessments.

Within “Economics”, many commonly-cited platitudes and supposed consensuses are taken out of context or over-simplified by various pundits and sold as facts to the public. The way that misleading or outright false phrases like “immigration is good for the economy” have been propagated by different groups is exactly like how similar catch phrases have been coopted in areas like intelligence (“IQ doesn’t measure intelligence!”), or human biology and genetics (the most infamous being Richard Lewontin’s “within-than-between” fallacy on race). These and others are just examples of how the dominant culture will conveniently adopt and propagate any phrases that justify the status quo – whether such phrases are accurate, or not. Public misinformation on Economics this is not necessarily the fault of the majority of economists themselves - but rather a small group of politically-motivated media pundits, special interests, and other institutions of misinformation. Especially because “the economy” is often of primary concern, this phenomenon has greatly muddled politics and public discourse over the last 50 years. Since these unfounded platitudes are so engrained in the public consciousness, they are very dangerous and have already inflicted terrible damage on our societies. Here are just a few examples of these unfounded beliefs:

1. “There is a relationship between inflation and unemployment” (Phillips Curve) This relationship probably exists most of the time, but not reliably, and only in the short run. The Phillips curve is often taught to students in a way that suggests it is always an empirical fact and that it is a relationship that is exploitable by central banks. Over time, both of these have proven to be mostly false. There have been no less than seven Nobel (Memorial) Prizes awarded for various critiques of this curve over the years. In the 1970s the US experienced stagflation (high inflation and high unemployment) directly in contradiction with the theory. However, the Philips curve was used as if it were an exploitable instrument by Central Banks as late as the 1980s. A negative relationship can be observed from 2000-2015 but it is much weaker than people expect. Nowadays, Economists use heavily modified forms of this curve (if at all). In fact, there is a large number of skeptics who doubt an exploitable Philips Curve even exists (1) (2). Note also that Economics is a “Nobel Memorial Prize because it isn’t one of the original prizes awarded - and there is a significant amount of controversy as to whether there should be one at all.

2. “There is a tradeoff between unemployment and any minimum wage” – this is often argued by libertarians right-economic types, but the empirical evidence for this is actually very mixed and economists support for minimum wage varies a lot 1 2. Some of the relevant literature is best explained in detail by this comment I found in r/BadEconomics

3. The Laffer Curve – “increasing taxes decreases revenue.” This is sometimes referenced when (conservative) layman want to argue against higher tax rates. The Laffer curve does have a theoretical basis, but usually people think the mathematics are more robust or more relevant than they really are. Arthur Laffer literally just drew the curve on a napkin when he was trying to explain the concept to Dick Cheney and Donald Rumsfeld in 1974. When you consider the empirical data on the subject, it doesn’t lend that much support to proponents of lower taxes because the revenue maximizing rate is postulated to be around 70% (note: this is not about “tax cuts” and effects on economic growth, but the theory behind the Laffer curve and tax revenue-maximization, specifically). Most economists were also fairly critical of Laffer’s claims at the time

There is much more we could talk about each example, but these are some of the more innocuous myths that exist. One of the most dangerous and prescient today is “immigration is good for the economy” - and we will return this phrase repeatedly in this series. The general public holds many misconceptions about Economics and this naivety is often exploited by different groups who use these incorrect and misleading platitudes only to further their selfish political aims.

MANY ECONOMIC ASSUMPTIONS ARE DEEPLY FLAWED

Or, at the very least, have obvious limitations. Economists use models to represent human behavior. One common example is the idea of the rational agent –

a rational agent is an agent that has clear preferences, models uncertainty via expected values of variables or functions of variables, and always chooses to perform the action with the optimal expected outcome for itself from among all feasible actions.

Notice this does not describe you or any person you’ve ever known. This conceptual homo economius does not exist, and we can think of a few reasons that demonstrate why this is the case:

1. Most people are not very rational. They lack self-control, they do not think through their actions or even have a clear idea of what they want in the future – even if they had the perfect information to make the “right” decision

2. People do not actually behave as individual agents. They have in-group preferences for friends, family, and race/ethnicity - and they often exert such preferences at the expense of market efficiency (nepotism and corruption)

3. As long as there is any sharing or reallocation of resources between different humans or human populations, we could expect problems 1 and 2 will manifest to create significant market frictions – and none of these distortions will be “perfectly rational”

So it’s obvious that rational agents aren’t good analogs for actual humans and don’t really exist - but neither do other things like ”frictionless markets”, or even “free markets”. In no single real setting are any of these assumptions actually true Even in primitive societies, there are tribal and personal allegiances that impose frictions on markets. All economically advanced markets of today are some kind of mixed economy, with a mess of legal restrictions, diplomatic nuances, trade regulations, and are populated by humans who are not all +120 IQ autists, and have imperfect information.

If it you feel that I am exaggerating or that it seems dubious that an entire field would build its models and recommendations based off assumptions like these, consider this - a Nobel Prize was literally just awarded to a man who pointed out these assumptions were bad:

"Thaler was the 2017 recipient of the Nobel Memorial Prize in Economics for "incorporat[ing] psychologically realistic assumptions into analyses of economic decision-making. By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes."

Now, I’m being slightly disingenuous with this phrasing here: economists know people and firms don’t literally behave this way in actuality – but this assumption is critical for many of their models, and this is the crux of the issue. Economics relies on assumptions/ models that reduce the very complex to the overly-simplistic. While these can be used to generate insights and explanations for some scenarios and perhaps form the basis for theory, they can be seriously misapplied if taken too far or out of context – and many adherents to “Economics” do exactly this. There are a lot of these assumptions that I could critique – but in the interest of not writing a novel and driving a pointed discussion I will only cover the poignant ones.

ECONOMISTS ARE NOT GOOD PREDICTORS

Economists are not very good at predicting the future. Humans in general are not good predictors. This is especially true the farther you get into the future and for predicting major events. For instance, there were only a handful of economists that predicted the housing crisis of 2008, and (Ex-)central bankers/The Fed weren’t among them.. I would also argue that no single person precisely predicted the recession, because even among people who did predict one, all believed the dollar would fall when it actually strengthened (I am not 100% sure on this). In retrospect, this is a major event that should’ve been easily predicted by looking at the data – but almost no one did so. Most importantly, neither did any major central banks. The track record of many of these economically important institutions and officials is not so great given their high degree of entrusted responsibility.

Let’s examine the history of the Federal Reserve as an example. The Federal Reserve (“The Fed”) is the US central bank, an public institution responsible for conducting monetary policy. In its history, The Fed has not correctly predicted any economic downturn, and has in fact exacerbated things like the housing crisis, the 90s dotcom bubble, and even the Great Depression. In fact, the Fed’s poor historical track record is just common knowledge across many fields. Economists like to critique the monetary policy of The Fed in the 1930s - almost 90 years after the fact.. We might now be able to explain why The Fed went wrong in 1930s - but its not obvious that these lessons will be useful in the future. The realm of central banking and monetary policy has changed massively as the industry has evolved and become digitized. The conclusions we draw from the 1930s on monetary policy or markets might not be applicable in the modern economy at all (this is the crux of the Lucas Critique) In fact, maybe the real lesson to learn from all these failures is that The Fed and other central bankers don’t really know what they’re doing, and we shouldn’t expect them to ever prevent or fix economic problems at all The Fed can’t even reliably predict the state of the economy a mere quarter ahead of time, let alone major events in the short or long-term future. Arguments for/against central banks aside, the track record of these institutions given their level of responsibility is not very good. Note also that Economics doesn’t lend itself well to experimentation – every situation is unique across history and we can never “go back” to try something different to know how it would have turned out. The simple fact is that we can usually not be sure certain policies improved things or made them worse compared to just “doing nothing” – especially as we get further into the future.

Given the track record of economic models and theory there isn’t a good reason to have too much faith in the predictive power of this philosophy. Predicating your plans for the future on strictly economic progress and the advice of “experts” is dangerously naïve thing to do.

ECONOMICS IS STILL EVOLVING

Economics is a field that is still evolving and changing all the time. There is plenty of controversy on different subjects within it. As technology advances and the economy changes, theories are disproven, modified, or cast out in favor of others – or hybridized into new forms. Good examples of this are the decline of Keynesian economics following oil shock and stagflation in the 1970s and the call the development of “microfoundations” following the aforementioned Lucas Critique, or the rise and fall of the monetarists in the 1970s-1990s. Now since the 2008-09 crisis Keynesianism has now seen a “resurgence”. This tumult is non-trivial because these schools have very different opinions on the merits of certain fiscal and monetary policies (like “Quantitative Easing”) that have real effects on economy and society. You can read more about these schools/ideologies if you like, but it’s definitely not worth your time, barring a need to satisfy extreme autism. Even if we pretended there existed some mainstream paradigm of Economics where its experts were aligned on all theories and produced consistent policy recommendations (and you fully understood them), this doesn’t mean you should take it very seriously. Economists don’t have “the economy” completely figured out – and don’t pretend to have all other important aspects of human society figured out either. Most certainly don’t go around robotically parroting mantras like “immigration is good for the economy” ad nauseam – like their self-appointed leddit representatives seem to imply. Some prominent economic pundits will routinely criticize politicians or the general public for their ignorance of Economics - but when things inevitably “go wrong” within their own field of expertise, these same “experts” just take turns blaming each other and deflecting responsibility for these problems. Especially as technology accelerates and ill-advised immigration policies get worse, we will undoubtedly face new and greater problems – but we have no good reason to trust economists to predict them.

“OBJECTIVISM” IS ONLY AN IDEAL

As aforementioned, Economic models and interpretations of data are reductionist, and can cause theorists to arrive at dangerously simplistic policy recommendations. Worse however, is that neither of these are safe from the corruption of self-interest, or the influence of dominant, leftist, pseudo-religious beliefs (and anyone in this camp knows what these are). The reality is that Academia is extremely far-left, and economics is no exception, even if they aren’t as far-left as other disciplines. There is a penalty for challenging commonly-held beliefs or going against “consensus” - and like many academics, these people sometimes have personal and political agendas. For instance, economists basically pay no attention at all to the “race and IQ” issue, openly attack people who try and use this as an explanatory variable for economic outcomes. After learning about intelligence research and the implications IQ has for many life outcomes (esp. income), one can only assume that the majority of economists are cowards, narrow-minded conformists, or both.

On top of this, “Intellectuals” can be egotistical and get a sense of power and importance from being acknowledged as “experts.” But, their areas of knowledge are usually very narrow to their own concentrations. Sometimes, these people inappropriately prescribe their biased and uninformed ruminations as “solutions” to problems in society not because there is a ton of evidence for their conclusions, or because anyone asked – but because these prescriptions align to their own political views and give them a sense of personal importance.

It should be common knowledge that intellectuals can be dishonest or obfuscatory. Consider how the fraud Stephen Jay Gould wrote a whole book to slander a dead biologists, such as Samuel Morton, in the name of his egalitarian religion - or how Robert Putnam famously didn’t publish his findings on social trust for years while he tried to “develop proposals to compensate for the negative effects of diversity.” (and more on this later). As aforementioned, the field is also still evolving - its full of ideological swings and competing schools of thought. When you also consider also the overrepresentation of (((certain groups))), prescriptions for things like stateless “free markets” the, “dangers of nationalist protectionism” and the endorsements of “open-borders” immigration policies become painfully predictable. Academics are just people that can be ideological or self-interested, and it is important to remember this and be skeptical. For more on why you should be skeptical of “intellectuals” or “academics,” I also really recommend you watch these videos with Economist Thomas Sowell where they discuss his book “Intellectuals and Society” 12 where he cautions the general public against the advice of “experts” who’s main products are “ideas.” Academics can spend a whole career publishing papers, critiquing old theories, and creating new ones – while never once having any real-life experience in an actual firm or government agency.

FINAL POINTS / TL;DR

I feel the need to reiterate that this is not a critique of economists– just a brief overview of why you should be skeptical of this field and not to take the advice of “the experts” or other pundits that seriously. Economics can provide valuable explanations and solutions to real-world problems. The remainder of this series will be an introduction to relevant topics and a guide for dealing with the bad arguments we see from various posters on the internet. Understanding Economic basics is important for conducting policy and making related judgements - but theories have limitations. Other than providing a basic framework, Economic theory alone can provide very little in the way of practical advice – ignoring the real-world context of any society’s geopolitical climate in favor of some detached theories is a very foolish and naïve thing to do. If a person says that “Economics” forms the basis for their ideology - like it often does for many neolibs and lolberts - you should be highly skeptical of this person and any benefits their recommendations would allegedly bring. Economics has a reputation – even a “veneration” - in many circles it simply doesn’t deserve.

Since we are bound to jump around on lots of topics and things might get confusing, I want to lay out several axioms on Economics to guide your reading (other than those already enumerated for the “le-conomist”) and we will continuously validate these as we explore each topic

1) Economic models and theories are reductionist or over-simplistic and make assumptions that are obviously not true in the real-world (rational agents, “perfect” anything). The field also doesn’t pretend to have all the prescriptive solutions for humanity and society

2) Empirically, economists do not have a good track record at predicting economic things - especially the things that matter the most to society - like the distant future, or major events. It could be said that Economics lacks historicism

3) Academics are just people who have self-interests, make mistakes, and have other mortal limitations. Many prominent intellectuals/pundits also have personal and political agendas, and academia is verifiably far-left. You should always be wary of “the experts” – especially when they seem to broadly deny relationships as robust as race and IQ

4) Many commonly-espoused Economic mantras or alleged “consensuses” held in common belief lack important context or are simply untrue – and these are often used by different pundits to further their selfish political goals or to justify things that are obvious absurdities to almost everyone (like “open borders”)

If the prescriptions of libertarians or “neoliberals” feel viscerally wrong, it’s probably because they are. Any uneducated person can intuitively recognize that the idea of selling out you market, land, and nation to foreigners in order to acquire more goods and services more cheaply is “wrong,” and will result in permanent, disruptive, demographic changes to your country and community - and this leads us to our final axiom:

5) “Economics” is not a moral authority. These theories often don’t take into account even the most basic psychological needs of most people

It is only those who have been indoctrinated in an ideological school (like Economics) within a technologically advanced society that are able to sustain such detached beliefs on human nature. If it seems “wrong” that you should ignore your basic instincts to accept hordes of third worlders into your nations because someone tells you “immigration is good for the economy” that’s because it is – and we will establish why over the course of these posts.