Evidence-based economics is greatly lacking

[dArKeR]

There is a movement in medicine to require that applications for licenses to sell a new drug be "evidence-based." By contrast, trained economists view their discipline as having already achieved this scientific standard. After all, they express their ideas with mathematics and arrive at quantitative estimates of implied relationships from empirical data.

But economics is not evidence-based in selecting its theoretical paradigms. Economic policy initiatives are often taken without all the empirical pre-testing that could have been done.

A notorious example is postwar macroeconomic policymaking under the radical Keynesians. The radicals relied on John Maynard Keynes's untested theory that unemployment depended on "effective demand" in relation to the "money wage," but their policy ignored the part about wages and sought to stabilize demand at a high enough level to ensure "full" employment.

http://www.taipeitimes.com/News/edit/archives/2005/02/25/2003224522

[bemildred]

1. There is too much money involved to allow objectivity.

:hi:

[applegrove]

2. I have heard it is like flying on autopilot. You just hope for a soft

landing but do not know until you get there that you are there.

[oecher3]

3. whaa ?

In different ways, Milton Friedman and I objected, arguing that such a policy would require an ever-rising inflation rate. Money wages will lag behind demand, I argued, only as long as the representative firm is deterred from raising wages by the misperception that wages at other firms are already lower than its own -- a disequilibrium that cannot last.

Alright, there is always a lag between wages and inflation, since inflation is not something you can look up every morning like the weather forecast. Even publized CPI are not current but retrospective. The information of what the real wages should be for a worker is indeterminable and lags behind reality. Also, people just don't a chance of get raises each day/ week/ month. often only once a year. So therefore money wages will again be slow to adjust to shocks. Or as my Econ Professer in his lecture would ask, what would happen if he would walk into the Dean's office asking for a immediate raise because the coffeeshop downstairs raised the price of his daily cup of coffee. This particular disequilibrium might not last, but it will always be off, once it adjusted it is already in disequilibrium.
Just think of workers that saw year after year a 5% inflation rate, what kind of raise will they ask for next year? If there is a recession that has not been identified next year, remember economists take time to find out we had a recession.
I don't agree with supply-side economics either, just think of a rope, demand will pull the rope into a position, people will buy more if they feel the urge to do so. But quite contrary, you can't push a rope, people can't be forced to buy more, you can dangle a carrot in front of consumers nose, but if they don't crave it, you can supply as much as you want.

edited to include the passege I quoted and didn't include

[Robert Oak]

4. ya all read the article

it's saying that Bush's tax cuts only give money to the already wealthy
and don't do jack shit to increase employment and wages for the middle class.

Which is true.

And the article is also right, yet "wrong" on empircal evidence.

There seemingly is a religious cult in the middle of economics who chant the same economic mantra
with no empirical evidence...while the economists who do
dig deep and show that the prevailing religion is wrong..
get ignored by their colleagues, the press and any prize panels and publishers.

For example, free trade. Ralph Gomory has a great book that shows
absolutely free trade is not a "win-win" and only when the Godfather
of economics, Paul Samuelson, said outsourcing is "not good for America"
did any ears pick up at all...

now here is an example of tons of empirical evidence that is ignored...

Another example is productivity. You see economics professors
attempting to squeeze in low ball outsourcing estimates to prove
that outsourcing has little effect on productivity...yet 1 economist
in Britian showed is sure as shit does have a major effect on soaring productivity...the guy is ignored.

[slothrop]

5. debunking economics

Economics is a frame, get outside that frame. Take a look at the Post Autistic Economics Movement (PAECON) you can find it here http://www.debunking-economics.com/