In response to: http://lesswrong.com/lw/ar/awful_austrians/

When someone wants to demonize someone or some group, a common tactic is to immediately start out with insults and opinions.  This is a tactic known as “poisoning the well”.  Intellectually honest people present data and counter arguments, then let the reader decide based upon the points provided.

Opening:

Why is theism such an ever-present example of irrationality in this community? I think ciphergoth overstates the case. Even theism is not completely immune to evidence, as the acceptance of, say, evolution by so many denominations over time will testify. Theism is a useful whipping boy because it needs no introduction.

To start off with, the writer assumes that the reader is in agreement with him or her.  Such statements might be okay in a conversation where the people know each other, but in public, it is considered presumptuous.  How does anyone actually know that there is in fact, a great deal of theism in the aforementioned community?  For all the reader knows, it may very well be that the reader is less rational than those he is talking about when the writer does not provide examples or evidence.  A reader might conclude that the writer has an axe to grind, attempting to demonize a group even before debunking the common arguments clearly used by that group.

 

But I think the case is overstated for another reason. There are terrible epistemologies out there that are just as bad as theism’s. Allow me to tell you a tale, of how I gave up my religion and my association with a school of economics at the same time.

Another example of providing the conclusion prior to showing evidence to support said conclusion.  The evidence provided is what makes arguments valid, not opinions spat out by some random stranger that almost no one has any background information on.  This section here is clearly trying to further poison the well.

 

For the next few paragraphs, the writer goes on about his own negative experiences with Christianity.  As a formerly religious person myself, I do sympathize.  However, I see no mention of anything related to Austrian economics, save for implied parallels, so I will skip over these paragraphs.  I will say that the downsides of irrationality are mentioned, which I do agree with.  But it seems clear that the writer is trying to set up the reader to lump Austrian economics in with this religious type thinking he presented.

 

I will continue with the next point I consider worth addressing:

– I admire Hayek for his work on knowledge and institutions, and Mises for the economic calculation argument.

– But the first section on epistemology in Mises’ magnum opus, Human Action, is probably the best example of Dark Side Epistemology I have yet seen outside of religious apologetics or standard woo-woo. 

These 2 sentences when placed together are fairly contradictory if one understands the explanations that Mises used to explain the economic calculation argument:
http://en.wikipedia.org/wiki/Economic_calculation_problem

In my amateur phrasing, it boils down to firstly, that personal desires and willingness to spend money are arbitrary and subjective.  It is therefore impossible for a central planning authority to possibly keep up with the subjective desires of millions or billions of people.  I agree that this makes sense.

The writer’s second sentence on the other hand insults his methodology without even any sort of explanation provided yet.  If I found disagreement with any sort of methodology, I would try to present it as humbly as possible.  I might have said something like “But I feel like his section on epistemology is less well argued for reasons 1, 2, x, 8, 199, etc.”  No such humility is present here.

Since this is not really my specialty I will try to let you be the judge from the horse’s mouth:
http://mises.org/epofe.asp

However, I will say that my current best understanding of the epistomology of Mises relies more on theory rather than emperical fact recording.  I consider this valid, because this is a common approach in the physical sciences.  For example, when there attempts at weather predictions, as with so many other things, the future is hard to accurately predict. But knowledge of past events, data recordings, computer calculations plus various theories are what are used to predict future weather.  Even with the many millions of dollars of equipment used by the National weather service and the Weather Channel, they still do come up with occasional miscalculations.  For example, the weather channel might say that some day in a particular town may have a high of 40 degrees fahrenheit when in fact it only reached an actual high of 35 degrees.  This is with the best available data analysis and recording equipment available.

I think it makes sense that humans are infinitely more complex than clouds of water vapor, fairly consistent solar radiation, water currents, volcanic events, migrations, etc. , even if you were to put all those things together.

 

(Quoting from Mises)No laboratory experiments can be performed with regard to human action. We are never in a position to observe the change in one element only, all other conditions of the event remaining unchanged. . . The information conveyed by historical experience cannot be used as building material for the construction of theories and the prediction of future events. . . Neither experimental verification nor experimental falsification of a general proposition is possible in its field. (p. 31)

 

(The article writer) Well, ok. So how does economics tell us anything at all? 

 

Clearly, the implication here is that because some economists (especially austrians) do not always hyper analyze statistical economic data like the economists of the federal reserve and prefer to rely more on theory that they should therefore be dismissed.  But statisticians also sometimes work more with theory than gathered empirical data, yet they are hired by various organizations in both the public sector and private sector to help predict things like the probability of a rocket launch failure.

I think that hyper analyzing of data of things like purchases of music or clothing is only so useful when theory is not in use.  There are so many historical events and fashion trends that have no relevant precedent.  The weather, or systematic rocket builds, by contrast are extremely predictable and are often repeatable.  Human trends are not, especially not without general over arching theories explaining that preferences are random and fickle.

 

(Quoting from Mises) “Praxeology is a theoretical and systematic, not a historical, science. . . It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts. (p. 31)”

 

(The article writer) In other words, the assumptions built into economics (which is a subset of praxeology)–people have preferences, are selfish (in the tautological sense–even altruist acts are self-serving to Mises), and they take rational action to satisfy those preferences–are unquestionable, ultimate givens.  No evidence could ever confirm or disconfirm the predictions of economics, because it is an a priori science, just like math or logic. It is deductive–it starts from some assumptions, and its case rests on those assumptions alone, not on any evidence. 

 

If one thinks about it, at any given time, a person is doing what they prefer to do over the alternatives and with the given limitations of physical reality.  If you eat chocolate ice cream, you are preferring to eat that over some other nearby and relatively convenient to get desserts.  The person here also prefers to eat that chocolate ice cream over the alternatives of having no dessert, or doing something like do work, play a game, watch tv, get into facebook debates, go to the bathroom, etc.

I don’t think anyone would debate that this person would be fulfilling their own self interests here.

Where it gets a bit more tricky is when someone does something for someone else.  Let us say you want to buy something for a friend or relative.  Let us also assume that you care about this friend or relative.  The action of doing something for this person can be argued to be a form of self gratification, especially if there will be reciprocity soon after.  Everyone knows why lots of guys are willing to spend money on a date for a girl on a date, for example (non relative, both over age of puberty and the guy is either dating her or single and looking).  An example like this is a clear example of benefiting someone else for reciprocal reasons.

Where it is even more tricky is when someone helps someone else when there are no clear reciprocal benefits in the near future.  Suppose, for example, your car breaks down and someone gives you a ride to either your house or where there is a tow truck, then drives off right after dropping you off.  Or when someone hands you a quarter when you have not quite enough money to buy something, setting you at the right amount.

Everyone would agree that there are no immediate self serving benefits there.  But, I think it could be argued that the person providing the free ride to the stranded person values people in general to some degree.  They do not like to see others suffer.  Or they just want to make the world as good of a place as possible.  I would argue that in this sense, they are fulfilling their own desires as well as those whom they are helping.

 

On page 103, he claims out that any sign of preference reversals can never be considered irrationality, because preferences cannot be considered stable, even across spans of a few seconds. If your by-the-second preference changing leads you to be pumped for money, so be it. You’re still by assumption a rational actor, satisfying his desires.

 

People often arbitrarily make quick changes for preferences in real life.  Suppose someone chooses chocolate, but then remembered that they chose that yesterday, and do not want to be stuck with doing the same thing over and over again.  Is that irrational?  Irrationality means going directly against rationality, in regards to objective, as opposed to subjective issues.   Yes, there are times where there is an overlap, but I have yet to be convinced.  The example the writer provides here: http://lesswrong.com/lw/my/the_allais_paradox/ also only seems to demonstrate that there are implied choices that were presented in that link that the author would prefer, the alternatives being irrational.  Some people value safe bets over big payoffs.  Others are just the opposite.  The examples presented are a series of preferences, more complex versions of chocolate vs. vanilla flavoring.

 

Now he begins to go into guilt by association territory by attempting to compare his writings to the bible.

To really solidify the feeling that Mises’ predictions about economics are comparable to the Bible’s predictions about how the world works, consider the following. As I mentioned, Mises defines self-interest tautologically:

 

(Quoting from Mises) “Praxeology is indifferent to the ultimate goals of action. Its findings are valid for all kinds of action irrespective of the ends aimed at. It is a science of means, not of ends. It applies the term happiness in a purely formal sense. In the praxeological terminology the proposition: man’s unique aim is to attain happiness, is tautological. It does not imply any statement about the state of affairs from which man expects happiness. (p. 15)”

 

However, Mises specifically predicts economic outcomes based on self-interest as, well, actual self-interest. For instance, on page 763, he proclaims that price controls will lead to rationing by non-price means. But this is only true if the provider of the good in question is attempting to maximize profit; if the producer is willing to take a hit in the wallet out of the goodness of his heart for his customers’ well-being, as Mises’ tautological definition of self-interest allows, a small price ceiling could conceivably have no effect.

First, to claim a theory or writing that you disagree with to be as shallow and weak in intellectual quality as a 2000 year old book is rude, insulting and unprofessional.  Just imagine if scientists had treated each other in this hostile, aggressive manner.  Theories and ideas are correct or incorrect.  There was not even any sort of reasoning provided in this article as to WHY and in what manner the writings of Mises are like those of the 2000 year old goat herders.

Second, this critique of Mises regarding price controls is false, because price controls have indeed lead to shortages in places where there was either no stated desire of profit or profit was slandered entirely.  Real world examples include the British NHS system, where people are commonly on waiting lists for things Americans take for granted, Venezuela under Hugo Chavez, long lines for basic goods in the Soviet Union, etc. etc.  Heck, even in the USA, price controls for gasoline during the 1970s had people waiting in lines in their cars just to buy gas.  So I am not sure what the writer is talking about.  Perhaps he should follow his own advice and look at more empirical data and trends of what has happened.

 

So when are we to believe Mises? When he says economics is a deductive logic that can never be tested in the real world, or when he makes predictions that can be tested in the real world?

I believe what Mises actually did say is that no laboratory could be set up, not that outcomes could never be tested.  For example, one could never stick enough humans in some giant over-sized controlled environment lab to be used a basis for predicting things like economic recessions and depressions involving millions of people.  He then therefore claimed that theory had to be relied upon more.   As I said before, the weather, while already hard to predict, at least is relatively consistent over the course of decades and event centuries.  Humans are far, far less so.  For example, I do not see anyone riding around on horseback in knights armor these days.

I fail to see why these conclusions are religious.

 

The insistence on placing assumptions further and further away from our real ultimate givens, our real recursions, our real mystical priors, is a dark side epistemology. If we can devise a test for one of our assumptions, by golly, as rationalists we’re called to test it. If that assumption fails, we have to perform a proper Bayesian update. We have to use all of our evidence available to us.

 

What the writer does not seem to mention is that Mises predicted the great depression for what it was much better than other economists of that day:
http://online.wsj.com/news/articles/SB10001424052748704471504574443600711779692

So the writer can play his games and pretend that Mises is a religious crackpot comparable to Fred Phelps, even in spite of being recognized by many around the world, even non austrians as one of the greatest, if not the greatest economist of the 20th century.  I think when someone makes better predictions than his rivals, I will assume that his or her information and theories is also better than his or her rivals.

The rest of the article is just more slander making sketchy connections to religion.  At least it is not as bad as his bigoted facebook post, where he said: “Doesn’t it bother you how many people at the LvMI are fucking Christian?

As if that was actually relevant.  Did this writer bother to compare the percentage of christians who claim to be austrian versus those of rival schools such as Chicago school, Neoclassical school, keynsian, marxist, etc. ?   The writer also managed to conveniently not mention that Mises was a non-religious man, as well as a number of his biggest profile students, like Murray N. Rothbard.

I don’t see why this would be relevant.  For example, if I needed surgery, the first thing I will look at is the experience of the surgeon, not whether he is Christian, Jew, Muslim, Hindu, Atheist, etc.  I would greatly prefer that a Chrstian surgeon would perform on me assuming that he or she is better than the alternatives.

Finally, what is the superior alternative that should take the place of the Austrian School of economics?  None is offered.  All schools of thought, after all, are human institutions.  Everyone is subject to mistakes.  But the question is which body of work is the most consistent with actual reality.  Is it the Chicago school?  Is it Keynsian economics?  Neoclassical?  If one is going to damn a whole school of thought,  I think it makes sense to then provide an alternative which does an overall better job.  For example, in the sphere of religion, when young earth creationism was declared to be largely wrong, it happened only after the scientific findings of Darwin regarding evolution.

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