29 November 2015

Motive and Incentive, part the first

One of the driving memes of these endeavors is that motive and incentive are at least as important as data to understanding an economy, both at the micro (especially) and the macro level. Comes an extensive piece which deals with such in the context of The Great Enabler, the Nobel Prize in Economics (which, actually, it isn't really). Economics isn't any more "scientific" than any of the other social sciences, and the last few decades of Right Wing ascendence makes such ever clearer. The quants sought, as the micro set have always done, to remove all value judgment from the field. Doing so is explicitly to support the power center of an economy: more wealth is always better, even when (or, because) such increase of wealth devolves to a 1% or .1% of the economy. Brown nosing and ass kissing by design.

A kindred heart:
A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.

Chemical reactions obey God's, or Mother Nature's, rules over which said chemicals have no control. Thus, the results are by definition not only optimal but also justified. Casting economics as objective analysis serves the purpose. Power centers very much appreciate such rhetoric.

Folks who can bend, break, or change the rules to their advantage will do so. The rest of the flora and fauna of the planet can't do that, modulo some tool making of other primates. But only humans have banks.
GDP, inflation and even growth figures are not objective temperature measurements of the economy, no matter how many economists, commentators and politicians like to pretend they are. Much of economics is politics disguised as technocracy -- acknowledging this might help open up the space for political debate and change that has been so lacking in the past seven years.

I had the displeasure to be a grad student at the University of Massachusetts in the early 70s when the quant types took over the asylum, led by one Vernon L. Smith, Darwinist to the core. After all, the field was originally named Political Economics, and it certainly takes great pains to support its political patrons, often disguising its motives and incentives behind the abstruse. The irony, of course, is that Smith's Nobel was shared with Daniel Kahneman (mentioned in the Guardian piece as a counter-weight to the quants; perhaps the author should have used the Wiki), a psychologist. One wonders whether Kahneman put Smith on the couch?

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