It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Saturday, May 24, 2008

Archer's fourth point

David Archer's response to Freeman Dyson in RealClimate is not to be missed. All of it is excellent. His fourth point describes the denialists better than I have seen it done, and I'd like to draw your attention to that.

The target audience of denialism is the lay audience, not scientists. It's made up to look like science, but it's PR.

Climate science is perfectly healthy; many points of view are represented on matters that are in doubt; rational revisiting of points generally treated with good humor. Communication aimed at political rather than scientific discourse are not necessary and hard to see as other than malicious.

Would most scientists agree with this assessment? Maybe not. Most scientists are only dimly aware of the denialists. This is because the denialists avoid actual scientific meetings for the most part, preferring to talk to the press. Some busy scientists don't feel a need to follow the press on their area of expertise, so they never really hear about all this supposed scientific controversy unless they find themselves entangled in it.

While it's progress that they are no longer getting equal time, how long will the press misrepresent the denialists as serious? There's a great deal of damage that needs to be reversed. It will be interesting to see the reactions to David's calling a thing by its right name.


Dano said...

The target audience of denialism is the lay audience, not scientists. It's made up to look like science, but it's PR.


This is why, in grumpier moments, I'm blatant to the FUD purveyors and small-minority ideology adherents that their FUD phrases and rhetoric doesn't have traction with decision-makers, because decision-makers don't read blog comments or many LTEs. Their staff does, but staff also reads Exec Summs of scientific reports, and staff reports to the decision-makers are going to say that the scientific community says that AGW is happening, etc.

bi -- IJI said...

"It will be interesting to see the reactions to David's calling a thing by its right name."

I can hear it now: David just hates rich people, he's an activist in sheep's clothing, he's just promoting alarmism to get more funding, blah blah blah...

"While it's progress that they are no longer getting equal time, how long will the press misrepresent the denialists as serious?"

I don't know, but perhaps we can try to speed up the process of inactivism's demise. I just came across a letter to the editor on a Canadian news source talking about the "Heartland 500" list (among other things). So that's an idea: write your editor today! :)

-- bi, International Journal of Inactivism

David Duff said...

So, is Dyson a scientist or is he a denialist? Similarly, what is Nordhaus?

Also, Michael, I thought it was you who was pleading for some stringent economic imput into the debate!

Michael Tobis said...

David, a fair point. Not everyone ranting against the science is part of the organized conspiracy. I doubt people like Dyson would be squawking quite so hard or given as much credence, though, had the organized conspiracy to look like science without actually doing any not existed.

As for economics, I think it would be a good idea, but only if it questions its assumptions pretty vigorously. The Stern-Lomborg axis doesn't seem fruitful at all, because they neglect many aspects of crucial interest.

See both my point and John Mashey's on the RC discussion.

Steven said...

"As for economics, I think it would be a good idea, but only if it questions its assumptions pretty vigorously."

Why? You don't.

You have claimed an interest in learning and understanding more about the economic aspects, but I haven't seen any reason to take your claim at face value.

I've definately gotten bored here. Any good point made against you or those who support you here gets one of two results: completely ignored, or completely off-topic, bizarre responses that make no sense whatsoever.

This really is just a pat-yourself-on-the-back club.

You asked before *IF* AGW is a sure thing, what would I recommend doing about. Force capture of the externalities. Sue those responsible under the largest class-action suit of all time.

At least then this would have a specific forum, with real evidence demanded and weighed. It's an imperfect system, but it beats the hell out of this constant bickering with both sides using exactly the same language against each other, with all the same accusations.

You (in the collective) consistently accuse others of being "Only in it for the gold", while you laugh at the same prospect for yourselves. Much like the current election, I can't wait for all this to be over. Within my lifetime hopefully we'll either have absolute clear evidence, and start doing whatever it takes- or it will have blown over like so many previous predictions of calamity.

Either way, I'm sure no one will ever admit being wrong.

As someone who is skeptical, but stuck around here specifically to expose myself to other arguments, I can say you've all lost me. The reeking arrogance around here is choking.

Michael Tobis said...

I do think that it is fair to compare the validity and utility of climatology and economics as fields.

Climatology understands regimes of applicability, and generally knows when it is making solid, probable or speculative statements.

The perception of arrogance comes in large measure from the unsupportability of some of the common denialist counterarguments. The PR engine likes to get us worked up so that is the function of the most obvious bullshit.

There is, on the other hand, no well funded PR engine attacking economic theory. It's simply being applied well outside the conditions for which it was developed.

The "completely off topic bizarre" responses to conventional economic argument start with the blazingly obvious fact that economics is coming up with wrong answers, answers that advise taking ludicrous risks with the biosphere in pursuit of the apparently higher goal of selling more plastic crap to each other.

Many of us respond by inquiring whether economics is really asking the right questions. You can't address the question of whether you have the right model within the terms of the model. This may seem bizarre or off topic to fields which insist on applying a single model to everything.

In physical sciences we have many cases where something is an extremely good approximation in some cases and quite uselss in others. Newton's laws, for instance.

Economic arrogance is assuming that the domain of applicability of their highly contingent theories and very short term observations are somehow permanent.

The refusal of most economists to put ranges of applicability on their models, indeed their attachment to essentially a single model for all time, is obviously naive. It is impossible to point that out within the context of that model.

Many people who criticize climatology on various grounds would be well advised to consider the extent to which comparable criticisms apply to economics.

David Duff said...

Michael, you write:

"Economic arrogance is assuming that the domain of applicability of their highly contingent theories and very short term observations are somehow permanent. The refusal of most economists to put ranges of applicability on their models, indeed their attachment to essentially a single model for all time, is obviously naive."

But Nordhaus, in his book reviewed by Dyson, provides the reader with a cost/benefit analysis over 100 and 200 years. According to Dyson, "The main conclusion of the Nordhaus analysis is that the ambitious proposals, "Stern" and "Gore," are disastrously expensive". Remember that Nordhaus, himself, makes no claims for or against the notion of AGW, he simply concentrates on analysing different proposals for dealing with it.

Writing of the attitude of the principle scientific association in the UK, Dyson writes this:

"This dogmatic tone is also adopted by the Royal Society, the British equivalent of the US National Academy of Sciences. The Royal Society recently published a pamphlet addressed to the general public with the title 'Climate Change Controversies: A Simple Guide.' The pamphlet says:

'This is not intended to provide exhaustive answers to every contentious argument that has been put forward by those who seek to distort and undermine the science of climate change and deny the seriousness of the potential consequences of global warming.'

In other words, if you disagree with the majority opinion about global warming, you are an enemy of science. The authors of the pamphlet appear to have forgotten the ancient motto of the Royal Society, Nullius in Verba, which means, 'Nobody's word is final.'"

That motto strikes me as being exceedingly wise. Perhaps you would like to adopt it on your own masthead here, Michael!

Michael Tobis said...

Another case of putting words in people's mouths. As far as I can see, the Royal Society is stating that 1) invalid arguments are being promulgated for reasons outside of science and 2) the current pamphlet does not attempt to address all of them. Both assertions are factual. It is bizarre to contend otherwise.

Presumably the pamphlet addressed some of the more common and more valid of the issues. I haven't seen it.

Like David Archer, I have no hesitation saying I'd be thrilled if somehow we were shown to have overestimated CO2 sensitivity by a factor of ten or more, enough to at least move the problem to the distant future. It's not like anybody serious wants these choices. It's perhaps wishful thinking to still be casting about for a factor of ten, though, but it isn't anti-scientific.

What is morally unconscionable is proposing, under cover of a pretense of scientific inquiry, that we ought to act as if the best evidence gave us that favorable factor of ten. If that is short of fraudulent, it isn't by much.

It may well turn out to be the worst lie in human history.

As for Nordhaus, he may well be right about Stern. I think both of them are asking the wrong question. That isn't a question about science, though, unless you grant that economics as applied to very long time scales is scientific.

Sed nullius in verba.

tidal said...

For what it is worth, "Nobody's word is final." is a rather dumbed-down translation of the Royal Society's motto and its intended meaning:
The Royal Society's motto 'Nullius in verba', roughly translated as 'Nothing in words', dates back to 1663, and is an expression of the determination of the Fellows to withstand the domination of authority... and to verify all statements by an appeal to facts determined by experiment. And, elsewhere: an expression of its enduring commitment to empirical evidence as the basis of knowledge about the natural world.

Specifically, they were seeking to distinguish their approach from other philosophies of the time that sought to establish "truth" based on deductive logic and appeals to ancient authorities. Hmmm, deductive logic and appeals to ancient authorities... reminds me of something that starts with the letter "e"...

tidal said...


Most of your contribution here w.r.t. economics has been to attempt to "educate" about a particular school that venerates the ability of free markets, "the invisible hand" and free trade to almost unerringly achieve Pareto-optimal allocations and maximize wealth.

Yet, the theory behind this paradigm strictly requires a large number of assumed conditions, including the "rationality condition", the "complete information condition", "no monopolistic pricing", and "complete markets condition", amongst others. These conditions are, in fact, so stringent collectively that no actual economy can satisfy them.

So, for example, when you said earlier: "Any alterations to the natural market, be it subsidies, taxes, whatever, can only push the marble UP HILL. In other words, any alteration to the free decisions people make when they decide they are better off by trading - makes them worse off. Put another way, you can only screw up free trade, you cannot help it.", you are describing an idealized notion that doesn't actually exist anywhere.

Most of the work in applied modern economics is in fact about effective responses when certain of the conditions are not met, and/or when dealing with demonstrated market failures.

One of the 'conditions' I mentioned above that is most pervasively NOT met is that of "complete markets". In order for the complete markets condition to be satisfied, it is necessary that ALL of the things that affect individual welfare and ALL of the things used as inputs to production are owned by individuals or firms. Clearly this is not the existing case with GHG emissions and carbon sinks and ecosystem services and on and on.

We seem to be approaching the joint issues of climate change and Peak Oil in apparent crisis mode. That suggests two of the greatest and widest-ranging cases of market failure ever seen.

To argue along the lines that "if only the market had been left to its own idealized natural functioning, these crises never would have happened!" is, I must say, naive or arrogant or both. (The argument, not you per se...). As Michael says "You can't address the question of whether you have the right model within the terms of the model."

By the way, some time ago I posed some "questions of neoclassical economics" that were posed by biophysical, ecological economists. You took a stab at answering them and I appreciated that. I must say, though, that I don't think it helped me embrace your larger message. For instance, the first question was "Do you believe that economic activities must satisfy mass balance?" Your answer was "Yes and no.", followed by a discussion of what you later describe as "extra-dimensional units of measure", such as utils, value, benefit, etc. That's all well and good, but NONE of that can ever change the fact that economic activities MUST satisfy mass balance. The answer is YES. That you waver on something as fundamental as that makes it very difficult to then get into larger discussions about how pure free-market economics deals with finite resources, ecosystem services, etc.

I am very conflicted about what business-as-usual economics is offering us in terms of dealing with various emerging resource and environmental challenges. On the one hand, its offering key insights on individual and market responses to particular incentives and policies, and designing tools for implementation such as cap&trade, ITQ's, pigouvian taxes, etc. All good stuff, and not the expertise of the physical sciences. On the other hand, there seems to be an over-arching paradigm that the world - insofar as it matters to humans - conforms to the "laws" of economics. The idea that "economics" might be subordinate to physical laws still seems to be largely alien to the discipline. That deeply concerns me.

Hank Roberts said...

Steven said...


In reference to your question.

Explain to me the difference in value of 400 pages of Shakespeare or Hawking vs. 400 pages of pulp romance novel, or even 400 pages of random text.

Same number of pages, same resources, same mass energy balance. Explain to me how that conveys any understanding of value.

You once again show me that you're not actually interested in learning about economics, as you say you are. The things you describe do not refer to the field of economics or the economic blogs, podcasts, professors, or authors I am constantly reading, listening to, or talking with.

Having listened to more hours of econ podcasts than I can recall, I can't think of any instances where economists refer to models in any of the ways you describe.

This is like discoverers telling stories of wild animals to gentle English upper-crust parties who are in no position to know any better. Yuor descriptions of how economists apply models, and well, essnetially any way you describe economics and economists would sound very alien to a lot of people who consider themselves followers or practitioners of economics.

Michael Tobis said...


What exactly do you think the word "model" means? Hint: I don't think it has anything to do with computers.

I believe the point of view you are espousing is a single model of human behavior, one which has limits. The limits, some of them at least, are acknowledged frankly in the derivation of the model but they are rarely re-examined.

Dano said...

Daly has a good paper (co-auth) that explains Tidal's point.

IOW: infinite substitution - nope.



Dano said...

More troubling still is the assumption free-market economics makes about nature: that we don't need it. Because everything is theoretically substitutable for everything else, when we run out of nature, we'll just substitute technology. That, says Farley, is a religious belief, not a scientific one... [emphasis added]

Speaking of the Daly paper, that italicized is from the first author.



David Duff said...

There is an even deeper philosophical problem, I suggest, in the fact that the future cannot be foretold. This, of course, leads to even greater problems particularly if legislators take action *now* against forecast problems in the future.

Steven is surely right to suggest, in effect (I do not wish to put words in his keyboard!), that we wait until the problems manifest themselves before taking action. Apocolyptic pronouncements to the effect that it might be too late can be safely ignored. That is *not* to suggest that there may not be catastrophes here or there, there always have been and always will be (see today, China, Burma, 'et al'), not least I suppose because the temperature of the globe was, is and always will be changing - thank God, because stasis really would be a disaster!

The important point is that any remedial actions will be tightly targeted on specific, tangible problems, not on the ifs, buts and maybes of our contemporary 'seers'.

No offence, gentlemen, but honestly, you really are not very convincing in your prognostications and your arguments.

tidal said...

David Duff

You realize, of course, that you are arguing that we collectively should ignore advice about exercise, diet, etc., and instead wait until you find out what ailment befalls us and then undertake remedial actions which will be tightly targeted on specific, tangible problems. Rather than taking broad preventative measures based on the if, buts and maybes of the health care profession. Wait til the problem manifests and all that.

Also, is it not simply amazing that anyone buys house insurance? Based on little more than vague speculations by actuaries?

No offence, but you really are not very convincing in your prognostications and your arguments.

Steven said...


The economics I am familiar with, I don't believe rely on a single model. Economics is not a one trick pony. There are several key economic concepts, and I believe they hold true in the vast majority of applications. Of course there can be outliers and rare cases.

This goes to the larger point of where the sciences are applicable, which brings me back to what the nature of economics really is.

Having said many times over that I am a very pro-science guy, I certainly think that the scientific method of Hypothesis, Experiment, Measure, Result, Conclusion is valid almost anywhere and time. There certainly have been many instances of mistakes in science at any of those stages (over history).

I believe most people make the mistake of believing Economics is about money. Essentially, when many people hear "Economics", they think "Finance".

Economics is about choices, and human behavior. Wherever people are the arbiters, economics has something to say. The "models", or basic theories of economics come from observation of human behavior, and they have held up remarkably well. That is not to say that the field is static.

Where planetary bodies impact each other in deep space, Economics has nothing to say- because there are no human arbiters involved.

My concern is this somewhat new phenom of scientists making policy recommendations way out on a limb past the H.E.M.R.C. process. This would be akin to Economists saying astronomers are wrong about gravitational attraction and dark matter.

David Duff:
I think you are OK in your interpretation of what I said. I have my speticism of various elements along the AGW chain. I'm open to the possibility that the earth 100 years from now will be somewhat warmer. I'm not positively convinced that this is the case. Nor am I convinced that a disaster is imminent.

As I've said many times, my first law of Economics is "All human beings inherently seek to better themselves". With more people on the planet by the minute, and with the increases in technology, science, and understanding- we are increasingly more likely, and more able to deal with any type of problem, and more motivated to do so.

Michael Tobis said...

This claim that "economics is about decisions" is a root cause of modern difficulties. Economists, particularly those holding a certain smug worldview that you share, have made vast claims about the applicability of their theories, to the point where they think anyone else offering any advice is operating outside their expertise.

Such a huge claim needs more than self-referential defense. Is there any?

You offer a simple model of how science operates. It's not the worst summary I've seen. Do economists do anything of the sort? Please elaborate on how economic hypotheses are tested empirically.

You'll need a very string case before I agree that all decision making should be subsumed under economics.

In fact, the whole thing looks like fuzzy thinking. Step 1) we claim to be building an objective science of decisions 2) we observe that money is measurable and that many decisions involve money 3) we claim that all other decisions not involving money are irrational and nevertheless statistically unbiased, so they can be ignored in the aggregate 4) we make implicit assumptions about relevant factors which decouple externalities and resources and which emphasize equilibrium without even developing methods for identifying out-of-equilibrium states 5) we ignore any constraints imposed by other sciences 6) on the basis of a mere two centuries we build much of our edifice on a presumption of unconstrained, permanent, exponential growth despite the fact that there are no examples of anything of the sort in nature, and so on.

It's a wonder any of this is good for any purposes at all, but I will concede that I think it is. When, however, you go beyond that to the point where you assert that all decisions of any sort have to pass through what you are calling economics (which is clearly just a particularly self-righteous branch of a fractious discipline anyway) you are making a claim that requires awfully vigorous evidence.

Many climatologists are claiming that economic calculations of the impact of human activities seem to be systematically undervaluing the risk of damage to the world as we know it. Such a claim doesn't seem intrinsically outside our expertise.

Economists meanwhile take the defense that economics subsumes all decisions, that this is a decision, and that therefore the value of a stable atmosphere is theirs to decide.

Right. OK, Have any evidence to back that up?

Steven said...

Aren't you the one who was just accusing someone of putting words in others mouth?

You just made a big straw man statement yourself, purporting to represent economics, and it's all completely alien to me.

If that's what you think of economics, I would have to agree with all your conclusions if I were in your head.

You really need to either learn something about it, or just quit including it as part of your focus.

You go off the reservation at step 2). I certainly don't think everything is about money, and many economists would say the same. Certainly many human transactions include money, and economics does address that- but so what?

I can see you bucking at the restraint you feel economics hems you into. I can see it in what you write, and it's clear that you are writing about your outside perception, not about economics at all.

I think this is the fourth time I have recommended Don boudreaux's "Globalization". It's by no means all inclusive, but it is an excellent start. And it has lots to satisfy your desire for empirical evidence (which I applaud BTW).

I can't even say we're having opposing arguments, because I won't attack the physical sciences in the same way. I think I have a pretty good grasp- and I grant that the phys, sciences certainly are based on empirical evidence. [I think if you do actually start learning anything about economics, you'll find plenty of answers to your questions- there is a broad and deep foundation of evidence upon which theories are based.]

What I do find interesting though about empirical evidence and science- yours would seem to be the field that measures the least, and is not based on empirical evidence. You chaffe at the restrictions you fear from economic models, yet your whole science is based on models. You program models. I see a lot of psychological projection here.

Specifically refering to climate modeling on computer- I would go so far as to say that economics is head and shoulders above in terms of real observation, measurement, experimentation, and empirical evidence.

If there are specific economic theories that you think are wrong, why don't you name them. For instance, you could say that people do not respond to incentives, or the theory of comparative advantage is wrong in some way. Nail something down that you disagree with.

Michael Tobis said...

Steven, see this posting. I've never heard an actual Ph.D. meteorologist, oceanographer or glaciologist say anything of the sort regarding their field. Yes, I have spent many hours of my life in their company.

You have acknowledged that you are a student, that you aren't a practitioner of either field. I therefore wonder what your basis for the comparison might be.

Regarding your suggestion that I pick at some aspect of the theory, that isn't the only way to falsify a theory. A theory contains three parts 1) an assertion that certain principles are relevant 2) an assertion that no other principles are relevant to a comparable extent and 3) a statement of the circumstances under which the model would fail to apply.

For instance, Ray Pierrehumbert is trying to understand how the world escaped from the snowball state 600 million years ago. He postulates very high CO2 concentrations. He cannot study this phenomenon with an off-the-shelf climate model because its radiative transfer calculations are based on atmospheres with CO2 partial pressures of a few mbar. He has had to import a more general (and more expnsive) radiative transfer calculation from planetary scientists. He knows that the approximations in conventional GCMs are out of range for the purposes at hand.

Among the many intellectual tools economists lose by being detached from the physical sciences is this matter of regimes. Economists don't seem to accept that a multiplicity of comparably valid but different models may be required to address all problems of interest.

By treating the very viability of the planet as something measurable in dollars the Lonbrgists make a particularly extreme example of this sort of error.

The inability to even grasp the question is disturbing. Let me repeat. I am not saying any component of some particular economic model is invalid. I am saying that most economists ignore components that are important especially on large time scales.

To be fair, I think there is a distinction commonly made between macro and micro economics. Is it possible that there is a third set of abstractions suitable for a global commons that on long time scales is itself coupled to the economic system?

Dano said...

I received my B Sc degree, then stayed on a few quarters did extra coursework that included Ag Econ and Macro. I did additional coursework for my Master's that included Micro and Urb Econ.

My UrbEcon prof was one of the biggest names in the field, and is very open and accessible. He spent a lot of time explaining to me why the r^2s are so low in Econ, as opposed to the sciences.

Econ only explains a little bit of human behavior.

In my view, economists looking to justify their choices impute far, far more worth to these small r^2 than can be found in the actual predictive value in their findings.

IOW: when looking at econ conclusions, I say in my mind "this works sometimes" and if the r^2s somehow are above, say, .33, than I say to myself "this works occasionally".

Never do I say "this explains most of the variance" because econ r^2s rarely approach .66. If they do, I immediately think something must be wrong with the paper and look for further corroboration.

That's the reality on the ground, economists.

Sorry to break it to you so bluntly.


And mt is correct about scale.

Scale is all-important in natural systems. EnvEcon and EcolEcon tries to bridge that gap. Macro? Not even close.



David Duff said...

I am pleased that my rough and ready summary of your views was not too far off the mark, I had no wish to embarrass you. I am a regular visitor to Boudreaux's excellent blog 'Cafe Hayek'. Very sound man!

You are absolutely right in supposing that I ignore all advice on so-called 'healthy living'. When I first moved here and met my new doctor for the first time he began by giving me the standard medico's lecture and I was forced to interrupt and tell him that I have always made it my practice to ignore anything that doctors told me to do - unless I was ill! At that point, I would (without too much faith in the outcome) do exactly as I was told.

You need to have lived as long as me to realise the fashionable twaddle that the 'Quacks' trot out. I remember a huge advertising campaign in the '70s over here in the UK, backed by the entire medical profession, whose slogan was "Go To Work On an Egg!" Later, the 'Quacks' told us all that if salmonella in eggs didn't finish us off, then egg-induced cholesterol would.

From this piece of, er, empirical evidence you will understand my scepticism concerning so-called global climate experts!

Dano said...

I know I said something about Econ a couple of comments above, but fuhgeddaboutdit.

Rob Dietz said it waaay better than I did. Read his take instead.



Steven said...


Are you actually expecting me to think economics falls abpart because one practitioner in the field said something like that? If you held that same standard for climatology...

To further expand my profile- since you've singled me out (For others, because you know this, but didn't include it). I *am* a student. But I am not an 18 year old, with no experience. I am in my 30's, having served in the military, in the computer industry, and as a marketing director (3rd in line from the top) of a national scale company. I would consider myself well read in science and economics, owning dozens of books in both subjects (And widely read in general). I am returning to school to change careers. I've been awarded International level academic and service awards, and I've been involved in Habitat for Humanity, as well as two trips to New Orleans to build Katrina damaged homes. My specific economic research interests are in personality and economic/political biases, and emerging world economic growth. Here's why this is relevant- I wouldn't say I'm a scientist, or a climate expert. I would say I'm a young adult who is intelligent and has an interest in the intersection of these two disciplines. If you just write me off as unreachable- you should reconsider what you think your chances are of communicating to the public. I'm not just your target, I'm a wider mark, and closer to your gun. If you can't hit me, you've got bigger problems. I'm about as close to an open minded and friendly, but skeptical, audience as you are likely to find.

I'm neither going to swoon at your brilliance, nor let you get away with BS. You've got plenty of people here who regularly pat you on the back. I think you have some good information and intentions, I think you also regularly violate your own principles. I do hold you to a standard- at least as long as I'm going to be around. Lately I've been drowning in arrogance, and starved for information.

You are still avoiding specific examples of principles you think are wrong- at any scale. If you wish, you can use this as a jumping off point. I will list some of the basic principles, and you can post this list anew with your refutation-- scratch that. Let's just start with you putting an X or something by the ones you disagree with.

1. All human beings inherently seek to better themselves.
2. People respond to incentives and sanctions.
3. The cost of something is what you give up in order to get it.
4. Markets, with multiple sellers and multiple buyers, auctioning with even imperfect information will find a market clearing price that approaches an equilibrium that is good for both parties.
5. Trade, by definition, makes both parties involved better off.
6. Price is an emergent phenom, as a result of (4) above.
7. Theory of comparitive advantage. (This is not easily summarized)
8. Division of labor; specialization improves efficiency, allowing trade and comparitive advantage to make two parties better off- with less labor.
9. Cooperation emerges in large free markets without central authority.
10. Externalities; some elements may not be accounted for, therefore the closed system does not fully capture all costs.
11. Time preference. All other things being equal, people prefer a good now to a good later.
12. People are risk averse. Risk aversion can be overcome, by degrees, at a price.
13. Political actors have different motivations and incentives that market actors.
14. The supply curve slopes upward. At high prices, more people will be interested in offering a good. At lower profit, fewer people are willing to offer a good.
15. The demand curve slopes downward. At high prices, fewer people want to buy. At lower prices, more people want to buy.
16. The production possibilities curve. With a given amount of resources 100 pizzas can be made, or 100 robots. But 100 of both cannot be made. Inefficiency can plot a point anywhere inside the curve, and full efficiency can plot a point anywhere on the surface of the curve. No production numbers can occur that plot a point outside the curve.

Michael Tobis said...


Steven, I do hope you read the referenced article and respond to it. It's not "one person's opinion", it's a well-argued complaint that seems to represent the experiences of anyone trying to bring empirical evidence to economics.

As for your sixteen points, you should start your own blog and defend them. I don't see why I owe you a lengthy discussion of any of them. I am more interested in the limits to economic theory than in its core, because that is really the issue. Under what circumstances does this model have predictive power, and how much?

Regarding your 16 points, I'd say most of them are mostly true most of the time. Again, its the exceptions that are of interest.

I don't know what point 7 means.

Point 16 is a trivial 2-variable example of the sort of linear programming that economists do when they finally get quantitative. I consider it so abstracted from reality as to be of extremely limited utility.

Overall, I don't think the 16 points constitute a coherent position, so I don't know why you want me to discuss them in any detail.

Point 16 interests me though. So you have this conventional guns and butter graph. So what? Why should I care? DO you really believe this little construction can be scaled up to the whole economy of the world?

For one example, why should we consider the economy near-equilibrium at all? If it's because the math is too hard otherwise that just supports the idea that this is an empty intellectual exercise which we shouldn't pay much attention to.

Scientists assume equilibrium all the time, but they don't consider the problem done when they have the equilibrium. (The ocean carbon cycle has so many time constants that the head spins. It will take millenia to equilibrate with the current input, during which time the ocean will be very acidic. Eventually it will return to near-neutral. The transition isn't negligible for the thousands of years of fish and coral that live through it!)

The fact that you culminate with this rather bizarre corner of mathematics (constrained linear optimization) seems perfectly in line with what I have seen of academic economics. Linear programming (based on an assumption of equilibrium) is the one true hammer that they try to apply everywhere. Amazing but true.

It strikes me as almost totally devoid of any real world use; markets are dynamic, prices never equilibrate, and resources value changes in response to cultural and economic shifts. The idea that this sort of thing could scale up to the whole system would only occur to people who hadn't looked at a lot of kinds of system.

Then these people are sometimes the same ones who turn around and complain about our cloud parameterizations. That takes some nerve, I'll acknowledge. Then they claim that all decisions should pass through them, since they are the experts. Finally they haven't the least compunction about calling us arrogant at the same time.

I think the point of view Steven espouses is well described in "The Hidden Order: The Economics of Everyday Life" by David Friedman. The smug simplicity is not hard to see through if you have a critical eye, and it's a pretty good read. It's also helpful to understand the situations where the model does apply.

Just keep your eye out for the rug and the broom, and watch for things getting swept under. It's pretty revealing.

(PS - I'm at home convalescing from a minor surgery. Don't expect me to be this verbose all the time.)

Steven said...


There's too much there for me to respond point by point.

What is becoming increasingly obvious to me is that you'll done nil in terms of researching economics.

Your assertions are laughable to anyone who has read even one or two basic to moderate leval books on any economic topic. I'm on the third of a 3 book buying spree- all of which have ample examples of evidence, complexity theory, and applications of various scope and scale.

To put it shortly, you don't know a damn thing about economics except that you don't like it based on your own ignorance of the subject. This definately is fruitless.

tidal said...

Hi again Steven,

Interesting to hear your background. Still curious, did you actually study the equivalent of an Econ 101 course, and Intro to Micro and Macro?

Your list of points is rather interesting. For the most part it looks like something that is very classical - Smith, Ricardo, John Stuart Mill - etc. Generally, I would say that most of the points are truisms as opposed to principles. There is some generic truth to most of the points, but many of them are subject to a variety of assumptions and caveats. You state them all rather axiomatically, yet most modern maintream neoclassical economists recognize that they are at best approximations of real-life functioning...

Some specific comments:

Point 10, externalities: means that points 3-5 and 7 all are subject to heavy qualifications w.r.t. their ability to accommodate for same.

Further, on externalities: You do not propose any mechanism for internalizing said externality costs, but there are certain classes of public goods for which there does not appear to be a purely free-market mechanisms to address the externalities. E.g. "Privatizing the atmospheric commons is functionally impossible as far as I can tell." (That's Jerry Taylor from Cato speaking by the way, from a dialogue we had @ desmogblog...). Therefore, Point 9 is ill-framed and open to debate.

Intergenerational "time preference" is an ethical issue. The assumption of subsitutability of human-made capital for (depleting) natural capital goods and services is controversial. Point 11 is subject to a number of assumptions and caveats.

Point 12, risk aversion. If a person is risk-averse, they discount uncertain benefits and augment uncertain costs by a risk premium. The risk premium varies with the degree of risk aversion and the magnitude of the uncertainty. But Weitzmann (2007) shows that the combination of risk aversion regarding future consumption and a "fat-tail" for the potential reduction in future consumption due to adverse climate change impacts can generate a very large risk premium - possibly infinite in some cases. The upshot of this is that "At least potentially, the influence on cost-benefit analysis of fat-tailed structural uncertainty about climate change, coupled with great unsureness about high-temperature damages, can outweigh the influence of discounting or anything else….. (3) all of this translates into placing severe limitations on the reliability of policy advice coming from standard cost-benefit analysis (CBA) of climate change; (4) the conventional economic advice of spending modestly on abatement now but gradually ramping up expenditures over time is an extreme lower bound on what is reasonable rather than a best estimate of what is reasonable; (5) removing the artificial limitations on conventional CBAs that comes from excluding very-high-impact disasters is capable of shifting a more inclusive economic-welfare analysis strongly away from the gradualism of a climate-change policy ramp." (This is Martin Weitzman we're talking about here... hardly "leftie" or "greenie". His paper can be fully generalized to other issues with fat-tail risk profiles, but he suggests that climate change has many of these troublesome characteristics). Again - point 12, requires many subjective assumptions and caveats... may be a gross over-simplification to the specific issues of climate change, for one.

I think Dano posted a summary chapter from Daly and Farley earlier that discusses a more general critique w.r.t. market failures... Doesn't organize point by point as per your list, but does a more complete job than I can here.

Anyhow, if I were to summarize one thing about your list: axiomatic. Everything is largely stated as self-evident. That's not even something that modern economics generally does, because of real-world complications. That's partly my reason for asking if you have studied the discipline formally. Hope there is something of interest to you, regards, t.

Michael Tobis said...

To be specific, my understanding of economics is based on 1) an undergrad Econ 101 class, "keynesian" in approach, a long time ago 2) David Friedman's book 3) more or less regular reading of the financial pages with emphasis on technology, communication and resource sectors 4) more or less regular reading of Krugman's column in the Times 5) some attention to Lomborg and Stern 6) occasional readings of technical papers which touch on environmental issues 7) occasional interactions with professional economists at high end computing meetings and 8) recent readings of non-mainstream economists recommended by readers here, notably John Mashey and Paul Baer. If my understanding of the materials doesn't match yours it is not due to lack of interest or knowledge.

I am not an expert but I know more about the subject than most other people I know. I am not sufficiently impressed with what I have seen to believe that such expertise is especially meaningful in addressing the problems that interest me.

You are free to try to convince me that I have missed something important, or to wander away. So far you have done neither. I don't see how your exasperation adds value to the conversation.

I don't even know what it is you think I am missing. If you would like to suggest something, please do so. Just huffing about what I don't know is silly. I make no claim to omniscience.

Steven said...

Tidal, I don't disagree with most of your points. (And yes, I've gone through Micro and Macro. I'm an econ geek. My MP3 player mainly is used to listen to econ, and it's about all I read anymore. The econ professor at school is hounding me to get a PhD and teach econ).

What I've been trying to do is begin from the beginning, and find where MT finds fault in econ. That list is by no means the end-all of econ. They are *basic* principles, and you are correct in that some of them interact and have influence on each other. What surprised me that most about MT's reply was the ones he criticised are the ones I thought would be his favorites- being akin to scientific conservation of matter/energy.

Based on the bias of the couse he lists, and the other econ influences, I am not at all surprised.

MT: You are right. I think I'm getting less out of this, and I've got other projects to work on. As of Tuesday, I've got a lot more new stuff on my plate.

On the one hand, I'd like to stick around, because both sides bail enough as it is. But I don't think we're going to get anywhere. I've seen very little "take away" here. Mostly preaching to the choir, back-patting, and "How great I art".

MT: I highly recommend understanding the Ricardian concept of comparative advantage. There are plenty of other econ books that I would actually expect you to find very interesting, considering the work you do. James Surowiecki's "The Wisomd of Crowds" being one. I've hammered Don Boudreaux's "Globalization" here already.

You're non-plussed with Lomborg, and I'm increasingly beginning to see that it actually has nothing to do with his book or premise.

What I wondered about last night was if you think anthropology, sociology, psychology, finance, (possibly philosophy) are sciences. There are few test tubes involved. But there is still plenty of observation, experimentation, measurement, statistical analysis and empirical data. Econ touches on all these fields.

If you want to know that econ is experimental, and relies on evidence, that is abundantly out there to be discovered. I don't think you genuinely want to know that.

I think you feel threatened, and frankly I think there is an enourmous amount of projection about your own tea leaf reading, and the criticisms that could be leveled your way. If you want to complain about econ, I think you need to do a little more to find out what you're actually complaining about.

You don't have to, but why keep bringing it up if you're really not interested in it?