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Eureka: Why economic theory is so divisive
by Jay Gutman
2017-09-28 09:52:32
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Math is about the almost sacred properties among numbers that humans have little or no control over. Physics is about the properties of the universe surrounding us that we have little control over. Medicine is about saving patients whose diseases we have little control over.

finance1_400When it comes to sociology or economics, I've tried to chip my two cents in as frequently as possible hoping that my vested interests wouldn't interfere with the assumptions I have about economics. A Korean economics professor might say that hard work and dilligence is what lifts a country out of poverty and that corruption and nepotism are part of the game (paraphrasing the great Kim Hak Joon). A Jewish sociologist might say that Ashkenazi Jews have higher IQ standard derivations than the rest of the world thus overall have a larger pool of smarter people (paraphrasing Stephen Pinker). A Jamaican-born Canadian might say that the environment you grew up in influences your intellect more than your genes would (paraphrasing the great Malcolm Gladwell). Another Jamaican-born intellectual will say that the older the median age of an ethnic group, the better off they are intellectually because older people have read more books and  tend to make more money and that by the way African-Americans from the Caribbean were often colloquially called the “Black Jews” (paraphrasing the great Thomas Sowell).

The thing about economics and sociology is that we all have our biases and vested interests. A financially struggling economist might say that subsidized-housing is a good thing, while a wealthy economist might argue that taxes are a terrible thing. So the idea for any economist would be to try to figure out what's good for all people. Not just your own people, not just yourself, but for the general population.

It's impossible to give a general overview of what economic or social theory would be. How do you factor in Jehova's witnesses in the economy, a society where most members don't work and that lives largely of donations and inheritances. Or societies where having as many children as possible is encouraged, and where temples or churches provide food and shelter to help families that can have as many as 17 or 18 children. Or societies that complain about low birthrates but then almost encourage organizations to fire pregnant women, allegedly (and partly correctly) because such women often get pregnant when assigned complicated projects.

How do you factor in the idea that the lifespan of leaders is becoming increasinly longer (and that many leaders of companies are diapered and in wheelchairs) when the average lifespan of an entry-level worker at such companies is something like 10 months or 11 months. Does this 1% thing even exist? If so, how would free college tuition and higher minimum wages even shake the 1% a tiny bit? By the way among what some like to call the “1%” they have an expression called to “blow up” where millionaires lose every penny they have in a relatively short span.

What do recessions even mean? Do they mean that most companies failed to break even in the economy? Or is it just that some sectors of the economy (IT and telecommunications for example) have a large number of companies that collapsed, while other sectors are relatively unharmed.

What do unemployment and underemployment mean? Is a fresh college graduate who works at a café considered unemployed? What about a former IT executive making six or seven figures who lost everything and has to work as a school teacher to survive. Would that be underemployment?

Finally, there are entire sections of the world where the only viable employment options are basically sports, entertainment, drug dealing or prostitution. I swear I'm not making this up. How can such districts be dealt with?

Now back to the original discussion. Unlike physics where man has little control over the laws governing the universe it surrounds, economic policy can actually influence the surroundings in several ways. Plus in economics, unlike in physics, laws don't always follow the reality on the ground. How can that be fixed? I don't know, or as many Middle Eastern cab drivers will tell me, heaven knows.

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Emanuel Paparella2017-09-28 10:45:46
The illusion is that physics and math are objective laws unto themselves while the humanities and liberal arts are subjective because they have to do with Man as such. The fact is that mathematics and physics too as an academic science is an invention of the human mind. May it is not easy and positivistic or reductionistic as objective/subjective... Or, as any cab driver anywhere may be able to tell us: go figure.

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