They do not mill about in parks and try to sell you their books. They have never staked out airports to try to give you flowers. They do not offer to read your aura or save you from the disembodied spirits of ancient aliens. Instead, they congregate in universities, preying upon our young. They appear on your TV and in your newspapers. They are trying to bend your mind to their way of thinking and co-opt you into their world view.
They are … the economists.
Economics is supposed to be the dismal science; an exercise combining mathematics and sociology to describe and predict how we go about the production and consumption of goods, the allocation of capital and resources, and government policies towards business. Instead, sometimes it seems more as though economists wish to retreat into cults and go to war with each other for airtime and adherents.
Let us examine, then, some of the ways in which economics and economists can deviate from the scientific roots of the discipline.
Simplistic Answers for Complex Problems
Cults offer you the "liberating" trade-off of surrendering your decision-making and simply accepting whatever the leader says. Economists boil down the intricacies and complexities of economics and human interaction into simplistic models and pithy political directives. Whether it is "inflation is always and everywhere a monetary phenomenon" or "capital is dead labor", economists love to offer easily-digestible one-size-fits-all sound bites.
By design, these models have built-in limitations. Scientists and academics understand that models have to be simplified versions of reality - if they were not simplified, it would be impossible to analyze and understand the underlying mechanisms. Unfortunately, while these models often work well in the controlled environment of theory, they sometimes appear to break down when exposed to real life and all of its glorious eccentricities and complications.
To read the full column, please go to:
http://financialedge.investopedia.com/financial-edge/0810/Economic-Cults---Dont-Drink-The-Kool-Aid.aspx
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