"Krugman is completely wrong" Peter Schiff.

Nah, that’s just history. Most definitely not scientific…

It can be, you just need to be really careful.

Some machine learning models are trained on one half of the available data, and evaluated against the other half for example.

Yes, that comes close. While historical description does no more than make a catalogue of facts, an economic theory in essence provides a better summary of these facts. In the same way as we have an immense amount of facts about the physical world, and a theory like Newton’s or Einstein’s gives a brief representation of these facts to acheive as simply and completely as possible, what we call understanding.

Going back to economics, let’s take Keynes theory as an example (let’s not get into how it is right or wrong). And let’s take it as originally formulated by Keynes, as this is much simpler. No doubt since Keynes, his hypothesis has been evaluated and improved in the “laboratory”. But that has made it much more difficult to understand.

But let’s take it at its historical basics, which essentially predicts three functional relations (liquidity preference, level of consumption, level of investment) from level of savings and interest rates.

Why can not economists observe reality, present and past, and observe and test how that hypothesis holds up? If they sit long enough, or cast their view long enough, they will usually find a situation where one or other variable is at one level or in a certain relationship to another, in continual dynamicism, and interacting with one another. Indeed, they may observe other variables that have not been accounted for, and need to be encompassed in the hypothesis. Or perhaps they will deduce that the hypothesis is a poor one on account of them.

No doubt, there will come a day when the current economic hypotheses are superceeded with ones that represent the facts of the economic sphere more simply and completely. But no doubt as will come a day for relativity, too.

I don’t deny that we have progressed much further in spheres like physics than in economics. I also ackonowledge that in social sciences like economics, there is as yet much metatheory (philosophy of science, history and sociology of science) that proceeds in parallel with the main economic science, as it goes.

This effort is exceedingly scientific. I think there are some mistaken ideas about what constitutes science in vogue, that stem from the ‘technician’ view of the world. Let it be said, a technician is not a true scientist.

Science is nothing but instructed common sense. Whether she uses her own eyes, an electron microscope, a telescope, her own nervous system, or a study of history, at the end of the day, she makes careful observations (including measurements) through these apparatus. He or she embodies a passionate preoccupation to understand and articulate truths of the sphere of life she is interested in, and bring these insights into the world. She adopts a set of accepted scientific techniques and practices in her quest. Economics is no different. At the same time it is ridiculous to insist that they use the same set of tools as scientists engaged in exploring other spheres of life and the natural world.

And actually, this is the tendency that is most deplorable in economics today (and fields like climate science for that matter) - this effort to rely too heavily on the type of mathematical models that have yielded such certain and verifiable observations in spheres like physics. But clearly these tools are not as well suited to the sphere of economics. So what.

Look at Ireland. In ‘recovery’ a falling deficit, and a supposed commitment to eliminate the deficit in the next year or two.

Be interesting to see krugman explain this away without an acknowledgement of weakened purchasing power for the working population, especially in terms of accomodation costs.

Krugman’s thinking seems quite anchored to a large single currency economy like the US. He really struggles with the Eurozone, getting as far as declaring it a really bad idea then giving up.

In that case the original theory of evolution is not scientific. Evolution is the classic case of a theory where certain observables (“descent with modification”) can only be studied in retrospect.

Col. Max put his finger on the other part of the problem, I think:

That’s the nub of it. We know that systems affected by self-feedback can be inherently unpredictable. The weather is the classic exemplar. The oddest thing is that we expect the analysis of the economy to be tractable. There’s every reason to expect it will be like the weather – predictable in detail for a short time ahead, predictable in its longer term broad patterns and repeating cycles, but inherently unpredictable in long term detail. In fact, it’s worse than that, since the weather is at least based on well-understood physical principles whereas the economy is a cultural artefact so, unlike the weather, the rules can change.

Indeed, the rain doesn’t fall because it didn’t fall yesterday and there’s a sale on on umbrellas today.

Workers are capitalists, even the most die hard communists/socialists are capitalists.

Capitalists are those who derive income from capital.

Which surely includes everybody who holds interest-bearing or profit-sharing instruments. In developed economies, only a minority are not capitalists in at least a small way. Even a child with a savings account is a capitalist.

Schiff has been banging on about hyperinflation, the collapse of the dollar , a massive bull run in the price of gold, and an the collapse of the US economy since 2008 , none of which has materialised, granted he did predict the crisis of 2008 , but still , people in glass houses eh!!!

Gold went from circa 250$ to circa 1900$ in approximately 10 years, is that not a bull run?

Schiff will likely be v-wrong regarding hyperinflation, however, the dollar will very likely lose its reserve status in the next 10 years but the shift will be gradual. Schiff is probably right that the US is a nation in decline in all aspects of wealth. Like most economists however, generally speaking, he is full of shit. Krugman is no different, a lowly bigot who happens to be also full of shit.