Don't cling to a mistake just because you have spent a lot of time making it

"The chances of the government admitting that austerity has been a failure are precisely zero. That would mean telling voters that all the sacrifices since 2010 had been in vain." (Larry Elliott)

"Don't cling to a mistake just because you have spent a lot of time making it." (Banksy)

There's a school of thought that says ideas are like Soufflés - if you don't give them just the right care when you're baking them, letting the scaffold form as it should, they collapse in a gooey mess. I used to bake a lot of this kind of thing. I didn't get better, I just stopped trying - too ashamed of all the sad little sticky puddings. But I figure I'm a bit older and, if not wiser, more cautious now. Just throw some stuff out there, poke things a bit and see what happens. Do the thing and all that. Nothing may come of any of it, but then nothing will come of nothing if nothing's all that's done. Profound. So that said...

I've got this notion that it should be possible to show how the economy works in a way that's both robust and accessible. I don't mean accessible just from a three minute glance, infographics-style. But it should be possible - for example - to drag otherwise murky arguments about austerity out into the light where you can test views based on what's actually known, obvious, possible. You'd aim for reducing the range of ambiguity to something much less overwhelming. Expanding the little pool of clarity into something much more vivid.

The reason this draws me in is pretty simple: the 'sacrifices' Larry Elliott talks about - they're almost impossible to grasp. The things that have happened, are happening right now, to people, institutions, all apparently to right a listing economy - there seems to be a very strong case this was all totally unnecessary, literally counter-productive and utterly wrong-headed. And the arguments aren't all that abstruse - it shouldn't be that hard to mark out their boundaries. (Hah - note that for later.)

I'm not naïvely imagining there's some process of alchemy that can transform how the austerity debate is seen (or macro more generally). There's a whole bunch of people that are obviously inaccessible to what I'm talking about, not least those ideologically opposed to the idea of any state action who've seen the crisis as an opportunity. They'll continue to push whatever sophistry furthers that aim, of course. There are also people on both sides who Just Know and nothing could possibly convince them otherwise. (I like to pretend I'm not one of those, though don't we all?) Others won't have anything to do with quant of any kind, especially economics-plus-quant: for them, it's an elite-wielded tool propping up power. That's one to come back to - I have some sympathy for this but it's confusing the tool and the user.

That leaves a whole swathe of people who can meet and converse, given the right space and tools. Have no truck with the convenient lie about post-truth. The global response to Trump pulling out of the Paris Accord shows it's the idea of post-truth that's the danger - something well understood by regimes like Russia. (Paul Mason nails this brilliantly in his stage take on 'why it's kicking off everywhere'.)

I'm not saying there are always right or wrong economic answers, but you should be able to set out what the spread of rightywrongyness looks like. And if I'm talking about a tool, this would mean transparency in how it's built too. Code would need to be accessible, assumptions up-front, well commented and explained. The way models are perceived (even by many modellers) leaves a lot to be desired - I'd see this kind of open process as a chance to talk about that as well. It couldn't be something you went away for years to build - the building process itself would need to be a conversation. It couldn't be - initially at least - some single overarching model (h/t Jon Minton).

But that conversation would need a starting point, which brings me back to the beginning of this post. There's an argument that I should wait until I've got a little working example - I know what the first simple dynamic is I want to look at - but I'm bored of waiting for that. I just want to put something out there to taunt me with past versions of myself who'd annoy friends by trying to drag them into grand visions that I had absolutely no way of ever accomplishing. I think I might have learned how to start small and let things change as they hit reality. We'll see I guess. Hmm, just realised the Banksy quote I meant for austerity applies to me too.

Whoops, economics

Just caught myself off-guard and spewed on economic modelling at P3. Accidental blog entry!
"Does the absence of a workable model refute a hypothesis?" As usual, Krugman's my favourite on this. Particularly from section 'the evolution of ignorance' where he compares theory-making to early map-making. Early maps were more report-based but, as they slowly became filled in, that heuristic knowledge was lost.

"There was an extended period in which improved technique actually led to some loss in knowledge. Between the 1940s and the 1970s something similar happened to economics. A rise in the standards of rigor and logic led to a much improved level of understanding of some things, but also led for a time to an unwillingness to confront those areas the new technical rigor could not yet reach. Areas of inquiry that had been filled in, however imperfectly, became blanks. Only gradually, over an extended period, did these dark regions get re-explored."

Krugman got his Nobel prize for his work on geographical economics (the 'new economic geography'). Here he is (pdf) reflecting on that. His express purpose in creating his 'simple' core-periphery model was to show economists that geography mattered (as well as that you didn't need comparative advantage to make it work, so some places could become the core through endogenous forces alone). But the bait he used to lure neoclassical economists out of their dimensionless 'wonderland' was a model able to preserve general equilibrium.

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