The Fake Economic Boom

[Broomstick]

Ha-ha-ha! All you people who mocked me for settling for less and not keeping up with the Jones - I WIN! Neener-neener!

You actually got mocked for that? I wouldn't expect people to actually say that to someone's face.

Oh, yeah - people are scum, ya know?

I have made unconventional choices. Some very conventional people assume that is from stupidity or foolishness. Quite the contrary. I do put thought into my choices, it's just that, looking at the same pile of stuff, I come to different conclusions than they do.

For example - I have been repeatedly told that, for the money I have spent on airplanes I could have had a house. Well, yes, in fact that IS true. However, I decided that learning to fly and having those experiences was more important to me than having a house - which many of these types find simply incomprehensible. But, hey, I don't have children (that drastically reduces my space requirements), I don't need to put anyone through college, and, with a disabled spouse, I would have to do nearly all the home maintenance myself which, despite not being a home owner, I am well aware can be a lot of work. Or an expense because you're paying someone else to fix/maintain things. The other thing is that, should I lose my job I can simply stop flying and that cost will disappear. If I had bought a house I would still have on-going mortgage payments, even when paid off there is taxes and maintenance... It's not a choice I'd recommend for everyone, but for me, under my circumstances, it was a good mix of pro/con and fit to my resources and needs.

A lot of it is deciding what your priorities really are. We'd like a mammoth flat-screen TV, exotic vacations, a new computer system, more living space, lot of things we don't have. The thing is, we simply don't have the resources to have everything we want. First we must get the things we need, THEN decide what we can afford on the want list, and stick to just that. Frequently, it's a matter of waiting 2-3 months to save money for something rather than buying it on credit. Now, some things it makes sense to take out a loan for - a car, for instance. Or a house. Something very durable that you will be able to keep after you finish paying the bill (also, both car and home loans are available at relatively low interest rates, particularly with a good credit rating.) Credit cards, in my book, are only for emergencies. For example - if you're traveling and need a hotel room unexpectedly. Then you pay that sucker off.

Oh - and the living space thing? We're getting it by getting rid of shit we don't need or want anymore. This week I filled up the dumpster outside with garbage, and then took 10 bags of stuff to Goodwill for donation so someone else could use them. Ironically, we used shredded credit card offers to pad the kitchen gear against breakage when we donated it.

I have an odd regret in that computers became commonplace only after I reached adulthood. There are books and books of my writing that would take up MUCH less space in e-storage, for example, but computers as we currently know them just didn't exist at the time I wrote this stuff down. I have several thousand books - it would have been nice to have a really decent e-book format instead of all the shelves. I have thousands of pictures from film - digital cameras just didn't exist at the time. I have vinyl records and cassette tapes from pre-CDs (and yes, I still listen to them). These things take up space, they weigh a lot... if only I had had them electronically, in long-lasting media. But that is not what is. At least my electronic piano takes up much less space than an acoustic.

[houser2112]

I have an odd regret in that computers became commonplace only after I reached adulthood. There are books and books of my writing that would take up MUCH less space in e-storage, for example, but computers as we currently know them just didn't exist at the time I wrote this stuff down. I have several thousand books - it would have been nice to have a really decent e-book format instead of all the shelves. I have thousands of pictures from film - digital cameras just didn't exist at the time. I have vinyl records and cassette tapes from pre-CDs (and yes, I still listen to them). These things take up space, they weigh a lot... if only I had had them electronically, in long-lasting media. But that is not what is. At least my electronic piano takes up much less space than an acoustic.

You could use a scanner to digitize the books and photos, could you not? Also, my parents are in the process of putting all of their old camcorder videos onto DVD through a video capture card; there's probably a similar piece of hardware for analog audio input. Of course, these things take time you may not have, but the options are out there.

[Darth Wong]

"Scanning books and photos" is easy to type, but very time-consuming to actually do.

[Fingolfin_Noldor]

The problem with economists, especially those in the West, is that they treat their philosophical presumptions and political preferences like they are proved by economics itself. But I find this leap in logic to be rarely substantiated. MoO keeps harping on "growth for everyone" - which is of course just bullshit: there's been plenty of growth for 30 years; but the working wage has yet to rise in real terms. So why would those in the lower quartiles of income give a shit about additional growth when it already has not been lifting their boat in 30 years?

I'm not entirely familiar with the way economists do things, but is there some form of scientific method or do they riddle it with more ideologies or handwaving?

[Darth Wong]

The problem with economists, especially those in the West, is that they treat their philosophical presumptions and political preferences like they are proved by economics itself. But I find this leap in logic to be rarely substantiated. MoO keeps harping on "growth for everyone" - which is of course just bullshit: there's been plenty of growth for 30 years; but the working wage has yet to rise in real terms. So why would those in the lower quartiles of income give a shit about additional growth when it already has not been lifting their boat in 30 years?

I'm not entirely familiar with the way economists do things, but is there some form of scientific method or do they riddle it with more ideologies or handwaving?

At best, economists work like this:

Step 1: Create a theory.
Step 2: Discuss the theory with other economists.
Step 3: Find historical examples to support that theory.
Step 4: Publish theory.

The really sad thing is that a lot of people honestly can't see what's wrong with this methodology. Some might even think it's pretty close to the scientific method (it isn't). And that's economics at its best. At its worst, it's more like this:

Step 1: Cite an existing theory.
Step 2: Dismiss objections by citing the theory again.
Step 3: If others continue to object, start name-dropping.

[Broomstick]

You could use a scanner to digitize the books and photos, could you not? Also, my parents are in the process of putting all of their old camcorder videos onto DVD through a video capture card; there's probably a similar piece of hardware for analog audio input. Of course, these things take time you may not have, but the options are out there.

Very time consuming. This a collection acquired over 30-40 years. Also, for older items that have deteriorated there is the matter of color-correcting photos, cleaning up audio recordings, and so forth. Optical scanners, even today, often have problems with handwriting although what I have that is typed (I still own a typewriter) would not be so difficult.

Right now I'm working on cleaning up and organizing the house. Once that's done, converting some of the collections to e-format becomes more reasonable.

And, oh yes - I'm still looking for work. And I need to talk to yet another health insurance agent because I am still working on that, despite my innate pessimism. For someone "unemployed, with nothing to do" I'm actually quite busy Then again, cooking largely from scratch to maximize the food dollars is also eating some of my time. But damn we're eating good!

[Guardsman Bass]

To be fair, most of them at least try to create theories that make specific, falsifiable predictions on some aspects of their theories (a good version of Krassner's Hegemonic Stability Theory comes to mind), and they mostly acknowledge that they'll never be anywhere near as predictive as the hard sciences due to about a trillion entangling factors.

[aerius]

The really sad thing is that a lot of people honestly can't see what's wrong with this methodology. Some might even think it's pretty close to the scientific method (it isn't). And that's economics at its best.

Yup, none of the mainstream economists test their theories to see if they actually work, and to see if the predictions (if any) actually match up with the results.

[TimothyC]

You could use a scanner to digitize the books and photos, could you not? Also, my parents are in the process of putting all of their old camcorder videos onto DVD through a video capture card; there's probably a similar piece of hardware for analog audio input. Of course, these things take time you may not have, but the options are out there.

As Mr Wong, and Broomstick have said it is very very, very time consuming. In fact I've only (personally) known two people who scanned any large amount of printed material. The first is Shep, and the second is my father who scanned in my grandmothers old genealogy book drafts. I don't know how long it takes Shep, but it took my dad over a year to get just one of the books done.

[Master of Ossus]

The really sad thing is that a lot of people honestly can't see what's wrong with this methodology. Some might even think it's pretty close to the scientific method (it isn't). And that's economics at its best.

Yup, none of the mainstream economists test their theories to see if they actually work, and to see if the predictions (if any) actually match up with the results.

Exactly! No economist ever creates a falsifiable theory and then measures it against all that data that they gather just to watch as it gathers dust.

[J]

Exactly! No economist ever creates a falsifiable theory and then measures it against all that data that they gather just to watch as it gathers dust.

Noted economist shows perfect record in predicting oil prices. Too bad it's 100% wrong, literally. Yergin and CERA may finally have a chance of being right if/when the entire world economy crashes into the worst depression in recorded history.

[Master of Ossus]

Census Bureau study from 1947 to 1997 which can be found here in pdf format

The specific data to which I am referring is Table C-17 "Median HOUSEHOLD Income by Race and Hispanic Origin of Householder 1967 to 1997" (emphasis mine). If you look the median income (inflation adjusted for 1997 dollars) has gone from 31,583 to 37,005 in the study period with the maximum in 1989 (37,415 adjusted)

This means despite a massive entry of minorities and women into the workforce as second earners there is about .5% average growth not even pointing to the fact that you can see multiple downtrends throughout the study period.

C-10 is "median family income," and it's gone from just over doubled over the period, and since 1970 has gone up by about 10%. I do see the multiple downtrends in the market, though, in terms of households. Actually, the most interesting thing about that is the racial breakdown, since hispanics seem to be doing worse while blacks are doing much better. Whites are fairly stable but slightly trending upward. I'll have to think about that. I think what we're seeing is the effects of decreasing household size, too, especially in the Hispanic community, but I'll have to puzzle over it some more since that does seem odd.

[Guardsman Bass]

Exactly! No economist ever creates a falsifiable theory and then measures it against all that data that they gather just to watch as it gathers dust.

Noted economist shows perfect record in predicting oil prices. Too bad it's 100% wrong, literally. Yergin and CERA may finally have a chance of being right if/when the entire world economy crashes into the worst depression in recorded history.

Could you actually call Yergin a real economist? He works as an analyst, but his background is in International Relations.

[Battlehymn Republic]

But aren't economic theories about as falsifiable as political science and International Relations theories?

[J]

Could you actually call Yergin a real economist? He works as an analyst, but his background is in International Relations.

I certainly wouldn't, unfortunately he's acknowledged as an "expert" in the field of oil economics.

Or you could go with the fact that since 2004 when they started the survey of oil futures prices wherein economists & analysts are asked where they think prices are headed the next week, the accuracy rate is something like 51% or 52%. Their record for last year as I recall was well under 50%. By looking at the supply situation, world events and so forth, my prediction accuracy for the same time period was over 90%, and that's how I tripled my initial investment in oil futures last year. The Peak Oil model works, the EIA, IEA, and CERA models do not.

[Master of Ossus]

But aren't economic theories about as falsifiable as political science and International Relations theories?

Depends on the theory, but in general they make very specific predictions about human behavior or markets or industries.

[Master of Ossus]

Could you actually call Yergin a real economist? He works as an analyst, but his background is in International Relations.

I certainly wouldn't, unfortunately he's acknowledged as an "expert" in the field of oil economics.

Or you could go with the fact that since 2004 when they started the survey of oil futures prices wherein economists & analysts are asked where they think prices are headed the next week, the accuracy rate is something like 51% or 52%. Their record for last year as I recall was well under 50%. By looking at the supply situation, world events and so forth, my prediction accuracy for the same time period was over 90%, and that's how I tripled my initial investment in oil futures last year. The Peak Oil model works, the EIA, IEA, and CERA models do not.

My fundamental problem with the peak oil theory is that there is NO rational explanation for it. At best it's an empirical observation, but even then it's one that makes virtually no sense since we are hardly out of the resources that it models that it models most closely (coal being the quintessential "perfect fit").

[Keevan_Colton]

Could you actually call Yergin a real economist? He works as an analyst, but his background is in International Relations.

I certainly wouldn't, unfortunately he's acknowledged as an "expert" in the field of oil economics.

Or you could go with the fact that since 2004 when they started the survey of oil futures prices wherein economists & analysts are asked where they think prices are headed the next week, the accuracy rate is something like 51% or 52%. Their record for last year as I recall was well under 50%. By looking at the supply situation, world events and so forth, my prediction accuracy for the same time period was over 90%, and that's how I tripled my initial investment in oil futures last year. The Peak Oil model works, the EIA, IEA, and CERA models do not.

My fundamental problem with the peak oil theory is that there is NO rational explanation for it. At best it's an empirical observation, but even then it's one that makes virtually no sense since we are hardly out of the resources that it models that it models most closely (coal being the quintessential "perfect fit").

We still use coal and there are still huge amounts of it out there...it's just we moved to oil because it was cheaper and more versatile, not because we ran out of coal...how the hell does coal model well to predict oil?

[Keevan_Colton]

Oh and empirical observation trumps theory every single time. Reality is the final arbiter after all.

[Illuminatus Primus]

At best, economists work like this:

Step 1: Create a theory.
Step 2: Discuss the theory with other economists.
Step 3: Find historical examples to support that theory.
Step 4: Publish theory.

The really sad thing is that a lot of people honestly can't see what's wrong with this methodology. Some might even think it's pretty close to the scientific method (it isn't).

I do not think that's entirely fair; maybe the big-names who offer sweeping social prescriptions for their theories, but most economists I had at university do something like:

Step 1: Create a theory. (e.g., Earned Income Tax Credit encourages labor more than traditional welfare)
Step 2: Define conditions. (labor statistics on traditional welfare, attempt to limit externalities)
Step 3: Examine labor statistics and other data to see the effect of the theory with respect to its scope. (how did working hours change amongst recipients of the Earned Income Tax Credit who formerly received just traditional welfare).
Step 4: Reject theory if it fails; retain if it conforms to evidence.

Unfortunately, real economics can only make very limited claims within a limited scope; and even after that, it suffers from "is this the right tool for the job" - problems. Economics doesn't command exactly how a society should be run; redistributive mechanisms do not need to be more emphasized in a society with an equitable distribution of wealth. A command economy is mandatory for a total war. Reregulation is necessary in a state where productivity has become a greater threat to the social welfare than wealth disparity. Stas is an economist too. There are a lot of kinds of economists, with different philosophical presumptions and political stances. Unfortunately, a lot of American economists think that the welfare of the poor does not matter, and they conflate this with the actual claims of economics itself. Unfortunately, whether or not society should have an equitable distribution of wealth in times of high growth is not a question of economics - its a question of political philosophy and social ethics. Economics is not normative, it is positive.

[Darth Wong]

But aren't economic theories about as falsifiable as political science and International Relations theories?

Depends on the theory, but in general they make very specific predictions about human behavior or markets or industries.

Could you give me an example of an observation that could be used to falsify supply-side theory? It's all well and good to say that economists use the scientific method ...

[Illuminatus Primus]

Exactly! No economist ever creates a falsifiable theory and then measures it against all that data that they gather just to watch as it gathers dust.

Noted economist shows perfect record in predicting oil prices. Too bad it's 100% wrong, literally. Yergin and CERA may finally have a chance of being right if/when the entire world economy crashes into the worst depression in recorded history.

Let's be fair: he's an industry PR shill; he has no economics credentials to speak of.

[Illuminatus Primus]

My fundamental problem with the peak oil theory is that there is NO rational explanation for it. At best it's an empirical observation, but even then it's one that makes virtually no sense since we are hardly out of the resources that it models that it models most closely (coal being the quintessential "perfect fit").

What are you talking about? Any physical resource which is intrinsically limited and for which growth generally always increases will eventually ought to approximate a Hubbert curve. I don't know any analysts who actually reject a peaking and "curve-decline" scenario, aside from total lunatics; I only know that there are optimistic peakers who suggest it will be in the 2050s or some such shit. What evidence is there for that? The simple fact of the matter is we're down to 35-40 years of consumption at current rates, and discovery has been geometrically declining since the 1960s. Please explain to me how this does not yield a depletion scenario and a shortfall between liquid fuel supply and demand in the foreseeable future.

[Broomstick]

My fundamental problem with the peak oil theory is that there is NO rational explanation for it. At best it's an empirical observation, but even then it's one that makes virtually no sense since we are hardly out of the resources that it models that it models most closely (coal being the quintessential "perfect fit").

Just because we can't make sense out of observed data does not mean that the forces behind the data make no sense. "Empirical observations" can easily trump theory - it is based on actual fact. Just because we don't understand the generating phenomena doesn't make that observation inferior. Theories must fit facts, not vice versa.

If the theory does not fit the facts then the theory must be discarded or amended.

[The Dark]

The problem with economists, especially those in the West, is that they treat their philosophical presumptions and political preferences like they are proved by economics itself. But I find this leap in logic to be rarely substantiated. MoO keeps harping on "growth for everyone" - which is of course just bullshit: there's been plenty of growth for 30 years; but the working wage has yet to rise in real terms. So why would those in the lower quartiles of income give a shit about additional growth when it already has not been lifting their boat in 30 years?

I'm not entirely familiar with the way economists do things, but is there some form of scientific method or do they riddle it with more ideologies or handwaving?

At best, economists work like this:

Step 1: Create a theory.
Step 2: Discuss the theory with other economists.
Step 3: Find historical examples to support that theory.
Step 4: Publish theory.

The really sad thing is that a lot of people honestly can't see what's wrong with this methodology. Some might even think it's pretty close to the scientific method (it isn't). And that's economics at its best. At its worst, it's more like this:

Step 1: Cite an existing theory.
Step 2: Dismiss objections by citing the theory again.
Step 3: If others continue to object, start name-dropping.

DW: Try examining Card and Krueger's Myth and Measurement. They wanted to test the theory that increasing the minimum wage increases unemployment. They went to regions where the states were changing the minimum wage (Pennsylvania and New Jersey for one, California and Oregon for the other), and used statistical data to measure the impact of increasing the minimum wage (and, in passing, found the theory to be incorrect). As of yet, there's not really a new theory to describe the observed behavior, but there is an understanding that the previous theory is outdated.

Some of economics is hard to test - one of our standing disclaimers was that macroeconomics is an equation with about 7 billion variables, one for each individual's decision. That's why I tend to prefer microeconomics or small-scale macro - it's easier to experiment and test variables to find empirical data.