From: jfh@beach.cis.ufl.edu (James F. Hranicky)
Newsgroups: talk.politics.theory,alt.politics.libertarian
Subject: Re: Economics and the Dart Board
Date: 17 Dec 92 03:54:41 GMT
Followup-To: talk.politics.theory
Organization: Univ. of Florida CIS Dept.

In article <1992Dec12.141832.21403@panix.com> gcf@panix.com (Gordon Fitch) writes:
>jwales@silver.ucs.indiana.edu (jimmy donal wales) writes:
>| ... Gordon also took the position that prediction in economics is
>| not really possible because we don't understand psychological factors
>| very well at all.  What does such a position do to his other stated
>| position/theory about the 'information revolution' and 'exchange value'
>| and etc. etc.?
>
>I cleverly thought of this objection while I was writing
>the article and took care to note two exceptions to the
>unpredictability of economics: one at the very local level,
>where a quiet environment might lead to fairly predictable
>areas of signal; and very large-scale changes or events,
>where we would be dealing more with culture and technology
>than mood.  Even so, I don't claim the latter are highly
>predictable as occurring at a given moment, just that they
>seem "inevitable" over a period of time.  Had I been
>hanging around in the Fourteenth Century I could not have
>looked at my watch and said "Uh-oh, capitalism is due to
>appear in four hours, 37 minutes and counting...."  yet
>given the state of culture and technology of the times
>its appearance was almost certain around that time.
>-- 
>
> )*(    Gordon Fitch    )*(    gcf@panix.com    )*(
>( 1238 Blg. Grn. Sta.,  NY NY 10274 * 718.273.5556 )


However, back then there was certainly no such thing as a concept of 
economics. The Austrian School of economics approaches predictability
with care. The school states that pinpointing specific times for events
and even some events themselves may not be possible, but there are general
trends that can be predicted, such as:

1) An increase in the quantity of money will generate a boom, followed by a 
   bust, and the contractions severity will depend on how much money was
   added and the duration of the increase.

	a) Von Mises predicted that the inflationary policies of the 
	   Federal Reserve in the 20's would lead to an eventual 
	   depression, although he knew that the time and severity
	   were unpredictable.

	b) Friederich von Hayek predicted the stagflation of the 70's some
 	   thirty years before it actually happened.

2) Interventionism lead to Socialism.

	Just look at the state of Health Care now. Before Medicare and
	Medicaid there was no health care crisis. Hoiwever, these 
 	programs have caused the cost of health care to skyrocket, and
	now people are calling for socialized medicine. There is a 
	parallel to college costs also. This will can happen in any
	area of the economy. The costs rise due to inflation (a result
	of government intervention) or to subidies, and people cry out
	for the benevolent all-knowing government to spare them from
	the "evil greedy capitalists."

These are just a couple of examples. There is some amount of predictability
to the economy, but only in very general trends. This, by the way, is 
why Socialism must fail, because a bunch of government bureaucrats can
never amass the amount of knowlege needed to imitate the price system
of Capitalism.
 
Jim Hranicky (jfh@reef.cis.ufl.edu)
Newsgroups: talk.politics.theory