neoclassical econ developed in reaction to this but moreso rising militancy and organization of the later 19th c. working class on one hand and capital’s need to deny its own basis in labor on the other — it developed as and generally remains an ideology.

behavioral, and post-keyensian, economics are, in my opinion, legitimate attempts to reform a failed neoclassic orthodoxy.

The problem with any social science is that unlike physical sciences, we are dealing with forward looking, adaptive entities. The physical world is mostly stationary. That makes it a hell of a lot easier to study. And addressing this problem is not as simple as saying we need more “art” or we need more “math” or we need more “stats” or whatever (though I do agree that more girls in the professional would be an upgrade ). A perfect example of a forward looking, adaptive non-stationary environment is the stock market. But as far as I know, those who rely on “art” cannot predict stock price movement any better than those who use quantitative models. You have to be a superstar and a real artistic genius to consistently do well as a stock picker. And the economy is about 1000 times more complex than the stock market.

Social sciences (and I mean ALL social sciences not just economics) are really in their infant stages. That is why the methods seem so crude and the predictive ability leave a lot to be desired. But they are progressing and the types of debates that occur here also occur among academic economists. You just don’t happen to hear much about it because these debates tend to take place at academic conferences and in journals rather than in public forums.

He is the only candidate that has. I find it remarkable that thoughtful people can say something like this at this point. It must be the triumphant of propaganda and willing suspension of reason over the facts.

A marriage of the “insights” of psychology to the “rigor” of economics….Damn, this seems like a bad idea.

These insights in psychology just remind me of technological innovation and the “human condition”. A lot of promises, a lot of complexity…and, yes, many specific advances. Somehow, though, there seems to be some mysterious anti-synergy force at play, because the whole often is less the sum of the parts. Only Shakespeare could capture the Tragedy of These Commons.

Perhaps if we apply the intellectual rigor of the economist, we might find our way out of this existential plastic bag…that’ll be with us for the next 10,000 years.

But listening to the economist is like a trip back to the Middle Ages. I know I’m going to come across like a real moron to the economists out there, but please don’t take it personal—I’m just ignorant of your complex models. I’m like Phil Hartman as the Caveman Lawyer. “I’m just a Caveman.” That stated, I just can’t help but to feel the rigor of the economist has an astrological feel to it. Complex models derived from some other complex model…that yield a recurring decimal result that always manages a refrain of “years late and billions of dollars short” with the lyrical variety of Paris Hilton covering Britany Spears.

I love the Freakanomic types who apply economics to everything. How about applying some of that rigor back on your profession? When was the last time an economist applied rigor to the accuracy of economic forecasting? Now that would make for scintillating reading!

Continuing the loop-back, economists could then go behavioral, and instead of behavioral finance, it could apply complex models and limited sample sizes to behavioral economists.

What might a behavioral economist model predict? A massive inferiority complex…as economics professors try desperately hard to be a part of a “hard” science?

There’s a certain irony in an intellectual discipline informing the world about cognitive dissonance, while being so suffused with it.

Maybe economics should cede some of the science and replace it with a lot more of the art. Then, it wouldn’t take itself so seriously. At the same time, we could actually appreciate the talents of a mercurial Kurt Cobainesque economist who regales us with economic riffs that we all know are so wrong, yet, “oh so right.” There’d be a refreshing invigoration of “theory turn-over” as the economic fashions quickly go “out of style”…plus the Curt Cobain type of economist is much more apt to burn out…as opposed to the interminable fade away of the tenured academic.

Finally, and most importantly…for the guys, anyways….there’d be A LOT more chicks.

High-Income Tax Deductions Rose in 2006

http://online.wsj.com/article/SB121158392075618797.html?mod=googlenews_wsj

High income tax deductions rose in 2006 meaning high earners got an actual tax cut on returns filed in 2007. However, since then, the economy has faltered. So tax cuts for the “most productive” in this case, didn’t result in improvements in the economy.

On to the second point, lower top marginal rates have still left massive amounts of capital offshore, leaving the “cut down on tax cheating” claim without support:

The New Global Hunt for Tax Cheats

http://www.businessweek.com/globalbiz/content/may2008/gb20080523_754004.htm?chan=top+news_top+news+index_news+%2B+analysis

“…the IRS reckons $295 billion of potential tax revenue goes uncollected—much of it because of underreported income. With governmental budgets strained everywhere, leaders are eager to mop up those missing payments…”

In summary, two data points that directly countermand GOP tax cut orthodoxy.

1. Incentives matter.
2. Unchecked regulation can lead to many unintended consequences that are as bad as unchecked capitalism.

I am particularly concerned with (2) because the people who want regulation are so knee jerk in their proposals and so quick to throw out the baby with the bathwater, that we may revert to the other pole.

What seems to be missing from the debate are more reasoned, balance discussions that seek out the strong elements of both neoclassical and behavioral economics to try to produce a new theory that improves on both. Instead, these debates typically become polarized where if you are on one side of the argument, you want to completely dismiss the other side.

Creating a economic system to produce the highest social good is not a trivial matter and is not as simple as saying “neoclassical economics is a fantasy” or “we need more regulation.” This is far more complex than raising kids and anyone who has tried to raise a child struggles with the tension between too much interference (regulation) and letting them figure it out (neoclassical). A sensible parenting method requires wisdom and not just dogmatic adherence to one philosophy or the other.

I think $3 trillion of presumed wealth is meant.

I couldn’t agree more. So why haven’t there been efforts to create anti-trust laws for aggregators of capital (debt or equity), based upon some large moving-target type metric. (E.g. aggregating capital in excess of 1%, 1/10TH% OR 1/1000TH% of US gross GDP either by individual companies or among various companies acting in a coordinated fashion, would subject those individuals or groups to significant financial penalties, or worse) that’s deemed to be an appropriate threshold for this purpose. It seems that large pools of capital can wreak havoc and cause distortions, especially in small individual markets, and probably contributed greatly to some of the asset bubbles experienced in recent years. An understanding behavioral economics is important for setting economic and regulatory policies but I also think there’s a need for a leader who understands the importance for setting limits on the size and scale of capital from the supply side perspective. Wouldn’t this also give emerging economies a chance for their own internal capital markets to develop before being squashed buy an alien 800 pound gorilla?