This article is based on a set of false assumptions, and is obviously written by someone ignorant of the history of economics.
>"Economic theory, like the physics on which it is based, is in essence an extended exercise in perturbation theory. Solvable and simplified frictionless markets are populated by rational agents which are then all subjected to perturbations in an effort to recover economic realism. Thus while it is false that economists believe idealized models to be exactly accurate as outsiders contend, it is fair to say that they implicitly assume deviations from the ideal are manageably small."
When Smith wrote "The Wealth of Nations", he had no such theory of frictionless markets populated by rational actors."The Wealth of Nations" was written based on what Smith observed in the world around him, not some thought experiment, and most of the examples in the book were based on real markets and policies, such as the corn laws. Smith had in fact written another book which made it clear that he believed humans were complex moral and emotional beings.
Throughout the history of economics, many (if not most) of the notable contributions were made by people addressing the situations they found themselves in, such as Bastiat responding to protectionism he saw in the French national assembly.
>"Even die-hard proponents of market capitalism will cede that this public sector represents “market failure” where price and value become disconnected. Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others? Thus in a traditional market economy, payment must be secured by threat of force in the form of compulsory taxes."
This is another example of the author's complete misapprehension of economics. I have never heard any economist argue that all externalities should be compensated or penalized, because everything has externalities. Many have come to different conclusions based on the abundance of externalities; there are Marxists who believe the government must control everything to properly allocate resources, and there are anarcho-capitalists who believe that externalities should either be paid for voluntarily (perhaps after social pressures) or not at all.
I could go on to list many of the rest of the egregious errors in this post, but wouldn't want to further tax your patience.
It's an informative example of social signalling masquerading as analysis. There's a TED-ish evangelical enthusiasm for drawing analogies between ideas that aren't really analogous, an appeal to authority (science[tm]), some drastic oversimplifications of complex ideas, and a zinger at the end.
But unless you believe that technology is an evolving lifeform that has its own parasitic political agenda - always possible, but hard to support without evidence - the problems of capitalism and technology are about opportunity distribution, not about whether software runs in a loop.
There's no invisible silicon hand at work. It's still all about some people making decisions, and about other people who are excluded from that process.
I agree it definitely has that quality. However the analysis also 'feels' right to me, the proposed model fits elegantly. My money is on him being correct in many ways.
It's worth noting that most schools of economics are heavily indebted to physics. This came from a desire to increase economics' perceived rigor, and led to the (mis)appropriation of some core concepts[1].
Yes, many economists aspired to make their studies more similar to physics in the early 20th century, to the point that there were interesting devices such as hydraulic computers made to model macroeconomics. Later in the 20th century, economists became more interested in statistics, and the majority of academic economists appear to remain most interested in using advanced statistics to model and predict behaviour. There are other economists who have based their study on basic assumptions and reasoning.
> This article is based on a set of false assumptions, and is obviously written by someone ignorant of the history of economics.
And your rebuttal by someone who should check their ego and judgement of people with nothing to go on.
>ERIC R. WEINSTEIN is a managing director of Thiel Capital in San Francisco. He is also a research fellow at the Mathematical Institute of Oxford University. Weinstein speaks and publishes on a variety of topics including, gauge theory, immigration, the market for elite labor, management of financial risk and the incentivizing of risk taking in science.
As far as I can see this man is infinitely more qualified than you in economics, that is until you provide credentials.
And by all that I do not mean I agree entirely with Weinstein, just that your reply is so typical of internet discourse.
>I could go on to list many of the rest of the egregious errors in this post, but wouldn't want to further tax your patience.
Please do, this is Hacker News not Reddit or Facebook. Expend and source.
He's not saying all externalities should be compensated. He is explaining public goods. You are familiar with the practice of paying for an army with taxes, right?
Then by analogy, he's saying that more and more things are moving into some weird place where they're more like public goods than what they replaced used to be. I don't see a call for treating them as public good in the article, though.
>"Economic theory, like the physics on which it is based, is in essence an extended exercise in perturbation theory. Solvable and simplified frictionless markets are populated by rational agents which are then all subjected to perturbations in an effort to recover economic realism. Thus while it is false that economists believe idealized models to be exactly accurate as outsiders contend, it is fair to say that they implicitly assume deviations from the ideal are manageably small."
When Smith wrote "The Wealth of Nations", he had no such theory of frictionless markets populated by rational actors."The Wealth of Nations" was written based on what Smith observed in the world around him, not some thought experiment, and most of the examples in the book were based on real markets and policies, such as the corn laws. Smith had in fact written another book which made it clear that he believed humans were complex moral and emotional beings.
Throughout the history of economics, many (if not most) of the notable contributions were made by people addressing the situations they found themselves in, such as Bastiat responding to protectionism he saw in the French national assembly.
>"Even die-hard proponents of market capitalism will cede that this public sector represents “market failure” where price and value become disconnected. Why should one elect to pay for an army when he will equally benefit from free riding on the payments of others? Thus in a traditional market economy, payment must be secured by threat of force in the form of compulsory taxes."
This is another example of the author's complete misapprehension of economics. I have never heard any economist argue that all externalities should be compensated or penalized, because everything has externalities. Many have come to different conclusions based on the abundance of externalities; there are Marxists who believe the government must control everything to properly allocate resources, and there are anarcho-capitalists who believe that externalities should either be paid for voluntarily (perhaps after social pressures) or not at all.
I could go on to list many of the rest of the egregious errors in this post, but wouldn't want to further tax your patience.