What’s wrong with economics in a single sentence

I have been reading David Romer’s Advanced Macroeconomics for some work I am doing and came across this. He is trying to explain why a particular equation doesn’t seem to capture the actual reality of the world. So he writes:

“There are other possible interpretations: the education and skills of the labor force, the strength of property rights, the quality of infrastructure, cultural attitudes toward entrepreneurship and work, and so on.”

And having noted all this in passing, he goes on his way.

To which I have added after a post in the comments which read: “Romer is referring to technology in Solow’s exogenous growth model and he does not simply move on. In fact, Romer devotes chapters 3 and 4 to a discussion of the drivers of technological growth.”

And indeed he goes on with an assembly of other factors of which the ones in the list are largely the specific ones ignored, such as the importance of property rights, say, or cultural attitudes, and the role of and attitude towards entrepreneurship.

If you cannot quantify some cause, so far as economics today is concerned it may as well not exist.

Say lives

I don’t know about the rest of the economics world, but where else but here at the J.-B. Say Congress would one find this:

Entrepreneurship has become a specific field of research in Economics since the beginning of the 1980s. This period was characterised by two linked phenomena: (1) the end of economic growth (“The Glorious Thirty 1945-1975”) and (2) the failure of Keynesian policies. A new economic dynamics should be ensuing from a radical economic and political change. Thus, the challenge was to find a new economic dynamics based on a new institutional structure, aimed to promote free markets and private initiative.

This is from an editorial in the local research institute into industry and innovation newsletter, Innov.doc No. 54 dated Septembre 2014. The spirit of Jean-Baptise Say has not yet been extinguished, although it has been exiled to the far north west of France, as had Say himself.

More of why the US is heading to the ash heap

A philosophy for those who can’t make it in the world as it actually exists:

If the tech scene is really a meritocracy, why are so many of its key players, from Mark Zuckerberg to Steve Jobs, white men? If entrepreneurs are born, not made, why are there so many programs attempting to create entrepreneurs? If tech is truly game-changing, why are old-fashioned capitalism and the commodification of personal information never truly questioned? . . .

The undue emphasis placed on entrepreneurship, combined with a limited view of who “counts” as an entrepreneur, function to exclude entire categories of people from ascending to the upper echelon of the industry. And the ideal of authenticity privileges a particular type of self-presentation that encourages people to strategically apply business logics to the way they see themselves and others.

It is with their ignorance that the world we have built will be torn to pieces. Just go thou and achieve. Not so in America any more, at least not amongst some of those who would like to pull down merit as an actual criterion for success.

Digital elitism is optimistic, in that technology is positioned as a solution to an array of difficult problems. At the same time, it inculcates an air of superiority and a universality of experience that truly only applies to a very small number of the world’s most privileged individuals.

Digital elitism does not reconfigure power; it entrenches it. It provides justification for enormous gaps between rich and poor, for huge differences between average people and highly sought-after engineers. It idealizes a “better class of rich people” (as Kara Swisher put it) who evangelize philanthropy and social entrepreneurship — but it also promotes the idea that entrepreneurship is a catch-all solution, and that a startup culture is the best way to solve any problem.

But not everyone can work at a startup, and the business model of startups cannot be applied to all situations.

And if an entrepreneurial business model can’t be applied to all situations it therefore apparently shouldn’t be applied to any. The fantastic ignorance of how things work by people who can only tamper with mechanisms they have no clue about, as sensible as putting a screw driver into an electric socket, will only destroy, only destroy. Nihilists with a collective death wish.

[Came upon this website via a link that went through Instapundit]