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anon realizes we’ve been played
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this post was submitted on 20 May 2025
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A lot of macroeconomics in particular seems to follow aristotlian thinking, i.e. you can just logic your way from step to step. It is interesting in that pure mathematics does work this way in that you can start with a bunch of axioms/definitions and combine them and work with them until you reach a conclusion without any need for experimentation. For example, you don't need to measure a bunch of triangles to show that the Pythagorean theorem is true.
The way i was taught macroeconomics in school, it takes the mathematical approach of starting with a list of assumptions that seem to be true, and using mathematical logic to derive conclusions. The trouble is that: 1) many starting assumptions aren't as true as you'd think, and 2) many of the "logical" steps also aren't as logical as you'd think.
Supply and demand is an easy example. The classic idea is that as supply goes up, price goes down, and vice versa, while as price goes up, demand goes down. The existence of Veblen goods (i.e., things that people want because they are expensive) shows that the demand part isn't right.
None of this would be a problem if it was just an intellectual exercise to help develop hypotheses for use with more sound scientific methods, but it's used for policy directly.
Well tbf we cant make a replica of a national economy in lab and run experiments on it. We only have mathematical models
Yeah, that's true, but that's not the only way to run experiments. "Natural experiments" where experimental conditions happen naturally can be exploited for scientific aims.
I think it should be treated similar to the medical field. They human body is super complex, and there's competing mechanisms for all sorts of things. You could discover a mechanism by which a compound decreases blood pressure. There could be another mechanism by which the same compound increases blood pressure by a much larger amount. A lot of economists would just take that first mechanism as ground truth, and recommend giving the compound to a patient with high blood pressure.
I think in lieu of perfect information (which is always the case for economy and medicine), it's best to just go for whatever is the least abstract benefit. The way I was taught macroeconomics (as a teen, I definitely don't have a degree in it or anything), a minimum wage places an artificial limit on the total amount of labor that will be done, and therefore decreases GDP, and therefore everyone is worse off. That could be the case (I don't think it is), but it's very abstract, so it needs an overwhelming amount of evidence. Contrast that to the fact that a person cannot survive off of $2/hr, which is not an abstract conclusion, and you have good rationale for a minimum wage.