In regards to prediction: I just heard (starts at 9:20) some claims that no method of prediction for the economy is doing better than extremely crude models. Unfortunately, I haven’t been able to find a cite for the “two young economists” who did the research.
However, I’m not sure that prediction is a matter of wisdom—I think of wisdom as very general principles, and prediction seems to require highly specific knowledge.
It was obvious that real estate prices couldn’t go up forever, especially as more and more people were speculating in real estate, but as far as I can tell, it was not at all obvious that such a large amount of the economy was entangled in real estate speculation that a real estate bust would have such large side effects.
Solutions to difficult technical problems became much more feasible after science was around for a while. I’m not dead certain we even have the beginnings for understanding complex social systems.
Part of the difficulty of prediction is that it’s dependent on both science and tech which hasn’t yet been discovered (our current world is shaped by computation having become easy while battery tech is still fairly recalcitrant) and on what people are doing—and people are making guesses about what to do in a highly chaotic situation.
Taleb is interesting for working on how to live well when only modest amounts of prediction are feasible.
I suspect that predicting the economy with economics is like predicting a persons behaviour from studying their biology. My desire for wisdom is in the form of perspective, I want to know the rough landscape of the economy (like the internal workings of a body).
For example I have little grasp of the industries contributing most to GDP or the taxes within my (or any other) country. In terms of government spending this site provides a nice overview for the UK, but it is only the start. I would love to know the chain of businesses and systems that provide the products I use each day. In particular, I’m very interested in the potential for technologically supported self sufficiency as a means for providing a robust underpinning to society. To do this effectively its necesary to understand the systems that we depend upon.
While such understanding might not enable prediction, I think it does provide perspective on potential opportunities and threats (just as biology does). It also helps to focus on relative importance, similar to how concentrating on cash flow helps prioritise business decisions. E.g. the social equivalent of worrying about too much paper usage in office printers when there are entire business units that aren’t profitable. Or similarly, being blind to opportunities that could render many other problems irrelevant (such as easy self sufficiency reducing the necesity for potentially problematic government infrastructure).
In regards to prediction: I just heard (starts at 9:20) some claims that no method of prediction for the economy is doing better than extremely crude models. Unfortunately, I haven’t been able to find a cite for the “two young economists” who did the research.
However, I’m not sure that prediction is a matter of wisdom—I think of wisdom as very general principles, and prediction seems to require highly specific knowledge.
It was obvious that real estate prices couldn’t go up forever, especially as more and more people were speculating in real estate, but as far as I can tell, it was not at all obvious that such a large amount of the economy was entangled in real estate speculation that a real estate bust would have such large side effects.
Solutions to difficult technical problems became much more feasible after science was around for a while. I’m not dead certain we even have the beginnings for understanding complex social systems.
Part of the difficulty of prediction is that it’s dependent on both science and tech which hasn’t yet been discovered (our current world is shaped by computation having become easy while battery tech is still fairly recalcitrant) and on what people are doing—and people are making guesses about what to do in a highly chaotic situation.
Taleb is interesting for working on how to live well when only modest amounts of prediction are feasible.
Interesting points.
I suspect that predicting the economy with economics is like predicting a persons behaviour from studying their biology. My desire for wisdom is in the form of perspective, I want to know the rough landscape of the economy (like the internal workings of a body).
For example I have little grasp of the industries contributing most to GDP or the taxes within my (or any other) country. In terms of government spending this site provides a nice overview for the UK, but it is only the start. I would love to know the chain of businesses and systems that provide the products I use each day. In particular, I’m very interested in the potential for technologically supported self sufficiency as a means for providing a robust underpinning to society. To do this effectively its necesary to understand the systems that we depend upon.
While such understanding might not enable prediction, I think it does provide perspective on potential opportunities and threats (just as biology does). It also helps to focus on relative importance, similar to how concentrating on cash flow helps prioritise business decisions. E.g. the social equivalent of worrying about too much paper usage in office printers when there are entire business units that aren’t profitable. Or similarly, being blind to opportunities that could render many other problems irrelevant (such as easy self sufficiency reducing the necesity for potentially problematic government infrastructure).