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Kasz216 on 08 April 2014
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Mr Khan said:
sc94597 said:
Mr Khan said:
 

that's because Microeconomic models only ever function under ideal macro conditions. You can't talk about a supply-demand gap when the supply-demand gap in employment is huge for much larger reasons than minimum wage.

This is why they should teach Macro first. Teaching micro first makes people think that micro models are how the economy "should" work.

Unfortunately macro-economics is too far behind to do that. It is arguable whether or not micro economics is scientific, and the amount of conflicting hypotheses and data found in macro is so much greater, at least micro-economics has a deductive basis to make up for the insuffiecient inductive basis, macro seems more like a bunch of competing philosophies: neo-keynesian, new-keynesian, (blanket label) keynesian, neo-classical, monetarism, austrian, etc, etc. There was a time when keynesians encompassed all of macro-economic thought as being correct for instrumental reasons, it worked (at least seemingly), but then it started to not work during the many crises of the 70's and ever since.  Ultimately, it seems better to just use deductive logic until something empirical can be resolved (if it can be resolved, maybe the austrians are right with the economic calculation problem.) 

Heh, austrian school is just the manifestation of the cancer of post-positivism in the body of economics (just as the post-positivist cancer struck in most other social sciences at the end of the 20th century).

Macro works because it deals in pure aggregates, whereas individuals are by no means bound to follow the dictates of microeconomics as some seem to believe. Aggregates do work through the noise and arrive at the mean actions of a population.

(edit: not trying to make it sound like i'm disparaging all other economic schools of thought, which i might disagree with but at least Chicago School and Monetarist branches have something to bring to the table. I have a very dim view of Austrian in particular and feel its very presence distracts from serious discourse in the field)


Eh, while a lot of people would question the specific Austrian bent....

the fact that Macro works on pure aggregates is the exact problem with Macro.


People forget this because there are so many numbers in economics... but economics is a social science.

 

The Austrian way of analysis is actually the best as far as social sciences goes.  The only issue is that so few Austrian's seem to bother to do research.  Instead just sticking to past truisms.  When the real truth is....

 

All economic theories are more or less bullshit because people change.


To look at the buying patterns and decision making patterns of people from the USA, Russia and China and assume everyone will  act the same is asnine.

So is expecting the "Greatest" Generation" "Generation X" and Millenials and assume they're going to be the same is crazy.

 

Studies on economics should be like studies in Psychology or sociology.  Made as narrow as possible for the best accuracy.