Super, thanks for the comment 🙂 . I’ll write another post at some point soon 😉

http://econospeak.blogspot.com/2008/08/exclusion-of-labor-cont.html

All economists believe there will be some sort of substitution yes – once oil runs out we can’t keep using it 🙂

However, some economists believe that any alternative to oil will be very expensive, and so economic growth will suffer sharply, while other economists believe technology will completely save the day – ultimately these differences are based on the individuals value judgments.

Economics, in of itself, is a way of framing issues – the way people use the tools of economics to analyse these issues is their own problem 😛

I read a discussion on the limits to growth between Professor Julian Simon and (maybe) Herman Daly (Roger Kerr also quotes Julian Simon). Oil becomes scarce, the price goes up alternatives are found (and it is a relatively smooth process). I gained the impression (wrongly it seems) that all economists believe in (eg) the infinite substitutability of resources .

“I have doubts about the limits to growth and the lack of ability of economic models to factor in the not so material aspects of life”

Economists have admitted the limiting factors to growth since the profession started – economics is the study of choice given scarcity after all 😉

Furthermore, economics creates a framework to analyse issues – it does not place specific value on issues. In the case of job satisfaction, and the pain of losing a job, economists recognise that there are issues here – however, it is the policy makers that have to place a subjective value on these things, economists merely present them with a framework where they can do this.

The thing to remember is that there is a distinction between the descriptive (positive) and subjective (normative) elements of policy. Economic model are meant to provide a descriptive starting point, but you can’t get any policy out of them without making subjective value judgments.

The investment banker you mentioned isn’t the economics profession, it is one person. He has different subjective values than you – and that is fine. However, none of this provide a critique to the economic model – which is what I’m defending in the post. An economic model tells us that if X occurs we can expect Y – it does not tell us the value or cost associated with Y.

Actually, I should have a post out at 1pm that briefly talks about this stuff – working off the premise that philosophers are best placed to make subjective judgments. I would enjoy your comments there as well 🙂

I’m not qualified to criticize economists other than I have doubts about the limits to growth and the lack of ability of economic models to factor in the not so material aspects of life (as taught in evolutionary psychology).

Interesting. I’m getting sick of this criticism, so I better discuss it.

I grew up in a household where, for a while, the only income earner was on the sickness benefit – as one parent was ill and the other had to stay back to look after him. Of course the government cut that for about a year as well – so we were extremely poor.

Then when I went to university I had to work at the Warehouse in order to pay my bills – as it is pretty much impossible to move down to Wellington and live without taking out the full student loan and working a good number of hours. My hours were incredibly variable – not what I would want, but I don’t see why the firm should have been acting as a welfare agent. As a result, if I had to work an 80 hour week to build up a little savings a week before exams I’d do it. Furthermore, as I was on a casual contract I could be sacked at any point.

None of these experiences changed my view that economics is a good way of describing how the economy works (a view I’ve held since I’ve been about 14, and I learn’t about economics being the study of choices) – they change the value judgments I make, and they change the weight I put on different outcomes, but they don’t imply that the fundamental description economics provides is wrong.

For some reason, a number of the most left wing people commenting here, along with some policy makers, have decided that the economic model is “wrong” because they don’t like the conclusions some economists come up with. However, this thinking is wrong headed. Ultimately, the economic model can explain anything – it is the subjective value judgments you place in it (such as – how much bargaining power does the benefit give the poor?) that is the issue that is up for debate.

It is fine if you criticise the subjective assumption I have made, but if people want to say I am wrong because I assume people make choices based on a set of values/preferences (which is fundamentally what the economic model is) then I want them to show me an alternative way of thinking of how social situations work.

“Bad laws are written, bad rules of society are created, basically bad decisions are made when people’s judgment is impaired”

Completely agree Kimble. Ultimately, I find it annoying that people just make arguments based on their opinions, and act like they are as good as (if not better) than arguments based on logic and actual evidence (not just a paper that they found on google that backed up their prior position 😛 )

This idea of hardship giving insight is bullshit.

“You dont know anything about car safety until you have lost a child in a car crash.”

or,

“You dont really know about workers unless you have been one yourself and been laid off.”

Now I am willing to admit that different life experiences can help people view things in a different way, and that could lead to a greater understanding. But over ruling that possibility is the probability that it just clouds peoples judgment.

Bad laws are written, bad rules of society are created, basically bad decisions are made when people’s judgment is impaired. But the above is an argument I see everywhere, especially from politicians who rely on emotive arguments to win power (see the Greens for a perfect example).