The piece states:
Yet obviously something is deeply wrong with economics. While economists using textbook macro models got things mostly and impressively right, many famous economists refused to use those models, in fact, they made it clear in discussion that they didn’t understand points that had been worked out generations ago. Moreover, it’s hard to find any economists who changed their minds when their predictions, say of sharply higher inflation, turned out wrong.
Nor is this a new thing. My take on the history of macro is that the notion of equilibrium business cycles had, by the standards of any normal science, definitively failed by any normal scientific standard by 1990 at the latest. The original idea that money had real effects because people were surprised by monetary shocks fell apart in the face of evidence of business cycle persistence; the real business cycle view that nominal shocks didn’t actually matter after all was refuted by decisive evidence that, in fact, it did.
Notwithstanding the cri de couer above, the fundamentals still remain. The models are speculations, they are gross assumptions of individual behavior and are based not upon fundamental physical facts but oftentimes based upon what the author believes are, or worse, should be facts. Those parts of economics which are accounting tautologies generally yield reliable results, as well they should by definition. Those parts which get involved into human interaction, demand curves and the like, often are the source of our troubles. Individuals really exist, not just crowds, or groups, and as a result oftentimes things just get in another direction.
One need look no farther that the above statement. One the one hand the gnome states that the truth is in the books but on the other hand the purveyors of the trade refuse to apply the very truths they espouse. In Medicine that would be per se malpractice and they would get sued. For an economist it is their opinion and non-actionable. Engineers get sued if the bridge collapses, Architects if the building does not function properly, and even lawyers themselves can get in trouble. For all there are professional ethical standards. Again I ask, what economist has ever been sued? Never will it happen, it is NOT a science.
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