Why you should do an econ PHd. (just a suggestion)

Economics now is like medicine in the 1800's. we didn't know what dna was, we didn't have mri's, most patients died from surgery and even childbirth could kill. we didn't care much about cancer because malaria and TB got to everyone first, and even influenza.

claim 1: economics is hardly a science because they disagree so much about fundamental things in the economy (such as expectations)

i remember jeff sachs said once in his book about ending poverty that good economists should be like doctors.

econometrics are like diagnostics tests. they use an mri, we us m0 to see what is happening to the money supply (strangely enough, nobody bothers anymore, because we disagree whether to use m0, m1 or m2). we take all sorts of statistics, (cpi or rpi) for inflation, national income statistics to watch the deficit.

the problem with the limited economics i have learnt so far is not that people disagree. it's because you treat macroeconomics as one whole big body of people who seem to behave the same way (because the mathematics is too complicated if we try to individualize them).

maybe we envied the wrong science. if we break down macroeconomics into pathways and relationships between the various organs, (bond market and money market), housing, central bank etc etc, we'd be able to arrive at the differential diagnosis. now we only know that gdp is going down, (oh no, myocardiac infarction), so we take out defibrillators, nitroglycerine, morphine, etc. and pump pump pump. we don't know what causes the underlying, so it could keep coming back.

we need to know the biochemical pathways of economics. that way we will eventually have slaves of statisticians injecting colourless dye into money or doing whatever it takes to find out where money flows, why it flows and how we can make it flow faster or slower.

economics has its successes, and like good medicine, it needs crises and anomalies to learn. unfortunately, more people die everyday than economies go into collapse. economists shouldn't be responsible for gdp growth, that's the workforce. it's supposed to be responsible for recommending the right incentives and institutions. and i think we learn from our past cases, we do have central banks regulating money supply, we know how to react better when a stock market crashes, but we still can't get it 100% right everytime because we don't know the pathways. pathways will teach you motives.

it's the japans and bolivias of this world that make it interesting.

and we haven't even talked about microeconomics yet!

"get me a wald test on whether B is 1"

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