I will read the Moldbug article, although I have to say I’m not optimistic, given my past experience with his writing. But I do want to disagree on this:
Inferring causality from a time-series of various economic variables is incoherent… Data about effects of economic policy tells us nothing if one has not already pre-supposed causal relationships between certain variables (ie, which variable is affecting which). If one had not done so, how does one know which variables to link with which other one?
I think you are either underestimating the tools at our disposal for causal discovery, or you have an evidential standard for causality that is way too high. Are you familiar with Judea Pearl’s work on inferring causation from probabilities? Check out this sweet post by Eliezer if you’re not.
ETA: I’m only a few paragraphs into the Moldbug piece and my hackles are already rising. He has already declared that a conscious being must be rational “by definition” and that other peoples’ desires are unknowable, also “by definition”. I don’t think either of these claims are true (assuming the words have their usual meanings), let alone true by definition. This doesn’t bode well, but I’ll keep reading.
Thanks. I have read that post by Eliezer before. The issue with monetary economics is the number of variables. Money is one half of every single transaction, in a sophisticated economy. A sound economist’s standards for evidence are not any higher than anyone else’s, or should not be. It is just that the array of variables is huge and gathering enough data for inferring causality, in the way the post shows, is a pipe dream. Solution: deduction from first principles.
Economists assume certain causal relationships and just screen off everything else. This is so wrong, it is tragic. And its results will be tragic too. The last 5 years were a warm-up act.
Re definitions, the meaning of rational there is that the person acts based on his internal map of the world (this is how Mises used the word way back when and it is part of parlance in Misesian economics). It does not mean what LW thinks it means.
Re unknowable desires, it is a way of saying that economically relevant desires are revealed by economic actions. Demand means being willing and able to pay.
I mean that in a monetary economy, one always buys goods and services with money. One side of the transaction is money, whatever it is. Sophisticated here means an economy that has progressed beyond barter and developed a medium of exchange and a store of value, ie, Money.
Important to note separately that multiple currencies are results of legal tender laws. In the absence of such interference, the market would choose one commodity as Money (refer the linked article) and it would not be paper with ink on it. Yes, what could happen is that the chosen commodity is then represented by pieces of paper, but they are simply a more convenient token for the commodity, which is kept in store. And there could be multiple different papers with different names, but they all refer to the stored commodity and are thus economically equivalent and with fixed ratios among them. This economically sound system used to exist—close enough—in the 19th century.
Even now, the various currencies are not different in any meaningful economic sense. Non-US countries use the USD as the reserve for their own currencies. Some also use the Euro, Yen etc. But analyze the Euro and one sees tender laws and gold standing behind it. What stands behind the USD? Laws and legitimacy of the govt enforcing those laws. There is gold, which would be called upon if peple reject the currency as it is. We need to separate the surface phenomena from the economic relationships underlying them.
I will read the Moldbug article, although I have to say I’m not optimistic, given my past experience with his writing. But I do want to disagree on this:
I think you are either underestimating the tools at our disposal for causal discovery, or you have an evidential standard for causality that is way too high. Are you familiar with Judea Pearl’s work on inferring causation from probabilities? Check out this sweet post by Eliezer if you’re not.
ETA: I’m only a few paragraphs into the Moldbug piece and my hackles are already rising. He has already declared that a conscious being must be rational “by definition” and that other peoples’ desires are unknowable, also “by definition”. I don’t think either of these claims are true (assuming the words have their usual meanings), let alone true by definition. This doesn’t bode well, but I’ll keep reading.
Thanks. I have read that post by Eliezer before. The issue with monetary economics is the number of variables. Money is one half of every single transaction, in a sophisticated economy. A sound economist’s standards for evidence are not any higher than anyone else’s, or should not be. It is just that the array of variables is huge and gathering enough data for inferring causality, in the way the post shows, is a pipe dream. Solution: deduction from first principles.
Economists assume certain causal relationships and just screen off everything else. This is so wrong, it is tragic. And its results will be tragic too. The last 5 years were a warm-up act.
Re definitions, the meaning of rational there is that the person acts based on his internal map of the world (this is how Mises used the word way back when and it is part of parlance in Misesian economics). It does not mean what LW thinks it means.
Re unknowable desires, it is a way of saying that economically relevant desires are revealed by economic actions. Demand means being willing and able to pay.
Semantic issue in both cases :)
Economies that have multiple currencies are unsophisticated...?
I mean that in a monetary economy, one always buys goods and services with money. One side of the transaction is money, whatever it is. Sophisticated here means an economy that has progressed beyond barter and developed a medium of exchange and a store of value, ie, Money.
Important to note separately that multiple currencies are results of legal tender laws. In the absence of such interference, the market would choose one commodity as Money (refer the linked article) and it would not be paper with ink on it. Yes, what could happen is that the chosen commodity is then represented by pieces of paper, but they are simply a more convenient token for the commodity, which is kept in store. And there could be multiple different papers with different names, but they all refer to the stored commodity and are thus economically equivalent and with fixed ratios among them. This economically sound system used to exist—close enough—in the 19th century.
Even now, the various currencies are not different in any meaningful economic sense. Non-US countries use the USD as the reserve for their own currencies. Some also use the Euro, Yen etc. But analyze the Euro and one sees tender laws and gold standing behind it. What stands behind the USD? Laws and legitimacy of the govt enforcing those laws. There is gold, which would be called upon if peple reject the currency as it is. We need to separate the surface phenomena from the economic relationships underlying them.