Monday, December 03, 2007

x365: 52 of 365: economists

When I was young (let's say 0-25 years, although some would say I'm still spinning out my youth into the finest and thinnest of strands) I was both naive and overly taken by my own convictions. I took a lot of notions at face value and behaved as if these facile ideas needed defending. It was my key to popularity and winning the ladies.

Most of these ideas didn't vanish in an instant; they just weathered and slowly lost their edges. But I still remember the day, sometime in the early 1980s, when a stray phrase on the news popped a major bubble. Two CBC news anchors were reflecting on the recession of 1981 and wondering aloud about the chances of another recession coming along in the future to make everything miserable for everyone. One of the anchors explained it thusly: "Some economists think that X caused the recession, other economists think that it was Y. So we need to look out for X in the future, or Y".

Even to my puberty-addled brain, it was clear that factors X and Y were extremely different measures. It was like watching a debate the increased incidence of puppies in a household, with one person citing the Phenomenon of Dog Pregnancy and the other relying on the Principle of Dog Adoption.

— Dad, I said, how is it that economists disagree on this?

— Well, different economists have different ideas.

— You mean they don't just know?

I know, the mind boggles. How, I thought, could an economist not just know how an economy worked? It was all about money, right? Money comes in easy-to-measure units, you buy and you sell with it, and that's all there is to it, yes? I had no clue about things like the gold standard, debt vs. deficit, inflation, growth and recession - but I knew that something was weird if different experts could examine a past event, come to radically different conclusions and then use those conclusions to predict the future.

I didn't have the vocabulary for it at the time, but what I realized is that economics is as much about the behaviour of people as it is about money and its backup band of players and instruments. And if it's really about people and the billions of choices they make, then economists must start with an idea about how people make those choices. It struck me that evening, while the anchors pointed at charts and interviewed people with poofy hair (this was the early '80s, remember) that these predictions were prescriptive; they had less to do with how people behaved than with notions of right behaviour for people. It was sanctified guesswork with institutionalized prejudice.*

I was outraged, until my parents upped my allowance.

*Being wiser and older now, I recognize that this view is as facile as supply-side economics. Almost.


john said...

There is a reason Economics is call the "dismal science."

palinode said...

'Dismal science' was another bit of vocabulary I didn't possess at the time. But I would have liked it.

Ozma said...

I first encountered economics in a biography of Catherine the Great that explained the onset of inflation during one period as a loss of faith.

So I was sure economics was all about psychology.

But I thought you were talking about the moment you found out that no one knows shit about nothing (or nothing about shit). That should be a liberating moment but I'm still trying to forget it ever happened.

palinode said...

Ozma - That's exactly what I was talking about, in a roundabout way: the realization that expert opinions are for shit, and that no one truly knows anything. The thing is, I didn't realize that I was realizing that. I had stumbled on a room in a huge warehouse of ignorance, but I was too ignorant at the time to figure it out.

I like your comments.

lotus07 said...

Aren't the epiphany's of youth precious?

palinode said...

lotus07 - That they are. I grew up on James Joyce and believed that I needed a supply of epiphanies if my life were to have any worth. Every time a new idea struck me, I would think 'An epiphany! I hadda epiphany! I am a geen-yoos!' Now I'm grateful if I remember to have lunch.