Jason Smith — A Workers' History of the United States 1948-2020

After seven years of economic research and developing forecasting models that have outperformed the experts, author, blogger, and physicist Dr. Jason Smith offers his controversial insights about the major driving factors behind the economy derived from the data and it's not economics — it's social changes. These social changes are behind the questions of who gets to work, how those workers organize, and how workers identify politically — and it is through labor markets that these social changes manifest in economic effects. What would otherwise be a disjoint and nonsensical postwar economic history of the United States is made into a cohesive workers' history driven by women entering the workforce and the backlash to the Civil Rights movement — plainly: sexism and racism. This new understanding of historical economic data offers lessons for understanding the political economy of today and insights for policies that might actually work.…

Information Transfer Economics
A Workers' History of the United States 1948-2020
Jason Smith

Jason Smith — Macro criticism, but not that kind

With all the tired and plain wrong critiques of economics out there that are easily shot down by even the most critical student of economics, I thought I'd try my hand at writing at one that might pass muster. I did write a book, but it was more aimed at taking a new direction; this will be a more specific critique.

First, let me avoid the common mistake of using the word "economics" but then exclusively talking about macroeconomics: my critique is being leveled at macroeconomics (macro). This is not to say I don't also have criticisms of microeconomics or growth theory, but rather let me just focus on macro because that is what most people are interested in. I'm pretty sure the comeback "Auction theory is successful!" isn't really going to cut it with the Post Crash Economics Society or in general anyone who's life was turned upside-down by the Great Recession.

Second, let me avoid the common mistake of saying macroeconomists don't think about X. They do. There's a good chance they've thought about X much more than you have. Instead, let me focus on how macroeconomists think about thinking about X — the context, the spoken and unspoken narratives, the institutional knowledge.

And finally, let me avoid the common mistake of decrying the use of math in economics (this time in general). Mathematics is an extraordinarily useful tool. I know — I'm a physicist. I don't think economists have "physics envy", but the charge does carry a nugget of truth that I'll get to later....

Information Transfer Economics

Macro criticism, but not that kind
Jason Smith

Jason Smith — What to theorize when your theory's rejected

I was part of an epic Twitter thread yesterday, initially drawn in to a conversation about whether the word "mainstream" (vs "heterodox") was used in natural sciences (to which I said: not really, but the concept exists). There was one sub-thread that asked a question that is really more a history of science question (I am not a historian of science, so this is my own distillation of others' work as well a couple of my undergrad research papers).

Useful relative to philosophy of science and history of science, as well as foundations of economics. Philosophy of science makes use of the history of science.

It is also relevant to the orthodox and heterodox debate in economics.

Information Transfer Economics
What to theorize when your theory's rejected
Jason Smith

Jason Smith — Information transfer economics: year in review 2017

With 2017 coming to a close, I wanted to put together a list of highlights like I did last year. This year was the year of dynamic information equilibrium as well as presentations. It was also the year I took some bigger steps in bringing my criticisms of economics and alternative approaches to the mainstream, having an article at Evonomics and publishing a book....

Information Transfer Economics
Information transfer economics: year in review 2017
Jason Smith

Jason Smith — Lazy econ critique critiques

I agree that "unrealistic assumptions" has to be just about the laziest econ critique in existence. I wrote a post I was particularly proud of about how a lot of econ criticism is starting to look like vacuous art criticism.

Information Transfer Economics
Lazy econ critique critiques
Jason Smith

Cameron K. Murray — A random physicist takes on economics

Short appreciation of Jason Smith's A Random Physicist Takes on Economics. He likes it.

Jason Smith, a random physicist, has a new book out where he takes aim at some of the core foundations of microeconomics. I encourage every economist out there to open their mind, read it, and genuinely consider the implications of this new approach.

Go get it now. It only costs a few bucks.

Fresh Economic Thinking

A random physicist takes on economics
Cameron K. Murray

Jason Smith — A random physicist takes on economics: Out now!

My Kindle e-book is out now!

Here's the blurb:

A Random Physicist Takes on Economics is a novella-length critique of economic methodology from an outsider's perspective as well as a proposal for a new way of understanding supply and demand and rational agents as emergent concepts from the complex behavior of real people. After a brief biographical introduction on how he ended up doing economic research, author, blogger and physicist Jason Smith leverages "irrational" random agents and information theory to argue against the modern understanding of ubiquitous economic constructs such as so-called "rational" expectations, prediction markets, and utility maximizing agents using examples consisting of nothing more complicated than Dungeons and Dragons dice sets and pints of blueberries. Sometimes the unrealistic assumptions frequently made by economists about human rationality are found to be unnecessary to produce the same standard economic results. Sometimes "irrational" agents give insight as to why standard economic results fail. In the end, Dr. Smith calls for economists to present more uncertainty and plead greater ignorance when it comes to questions of politics and policy, and for everyone to move beyond zero-sum economic thinking and towards embracing the diversity and complexity of economic systems.

Information Transfer Economics
A random physicist takes on economics: Out now!
Jason Smith

Brian Romanchuk — Science And Economics

I had largely managed to avoid writing about the latest angst in the economics blogosphere regarding mathematics, science, and economics. I am not a fan of mainstream economics, but at the same time, I question some of the broad brush attacks on economics. The quest to pretend that economics can be a science like physics is doomed, and does not take into account the nature of what is being studied.

Bond Economics
Science And Economics
Brian Romanchuk

Andrew Lainton — Why an Economic Equilibrium is not Like a Physical Equilibrium

Conservative v. dissipative systems, and information transfer.

Decisions, Decisions, Decisions
Why an Economic Equilibrium is not Like a Physical Equilibrium
Andrew Lainton

Jason Smith — The reason for the proliferation of macro models?

The situation Noah [Smith] describes is just baffling to me. You supposedly had some data you were looking at that gave you the idea for the model, right? Or do people just posit "what-if" models in macroeconomics ... and then continue to consider them as .... um, plausible descriptions of how the world works ... um, without testing them???

Information Transfer Economics
The reason for the proliferation of macro models?
Jason Smith

Jason Smith — Economics to physics phrasebook

Fun.

Information Transfer Economics
Economics to physics phrasebook
Jason Smith

See also

Good ideas do not need lots of invalid arguments in order to gain public acceptance

Jason Smith — Classical Econophysics

That's the title of a book co-authored by Ian Wright (see here) that looks at "statistical equilibrium". Here's Ian….

Information Transfer Economics
Classical Econophysics
Jason Smith

Branko Milanovic — A short note on Skidelsky’s interpretation of Schumpeter

Why do we have this “problem” with Schumpeter? Because in his own work, Schumpeter shows a duality, or even a contradiction, between his often unquestionable endorsement of “economics as physics” in HEA where it is hailed as an unambiguous progress toward economics becoming an exact science, and scarce use of this approach in Schumpeter own work. His “Theory of Economic Development” is indeed in its structure very abstract and arid, somewhat similar to Ricardo’s “Principles” (of whose methodology, by the way, Schumpeter was very critical in HEA), but is not mathematical at all. His “Business Cycles” is heavily empirical but shown scant relationship to Walras and is generally anti-theoretical. (I have to confess that I tried three times to read his “Business Cycles” and that I always failed. It seems almost unbelievable that such a splendid writer and beautiful mind produced a work--which moreover he originally saw as a competitor to “The General Theory”—of, yes, such messiness and unreadability.)

Global Inequality
A short note on Skidelsky’s interpretation of Schumpeter
Branko Milanovic | Visiting Presidential Professor at City University of New York Graduate Center and senior scholar at the Luxembourg Income Study (LIS), and formerly lead economist in the World Bank's research department and senior associate at Carnegie Endowment for International Peace

Also

Liberation from the shackles of space

Full text of my New Republic interview

Jason Smith — A list of valid and not so valid complaints about economics

Useful summary of many points already made in previous posts. 

Information Transfer Economics

A list of valid and not so valid complaints about economics

Jason Smith

Jason Smith — Economics, physics, and data: a response to Blackford

This is a bit wonkish if you haven't been following this exchange, but it makes some good points relevant to philosophy of science and philosophy of economics. It is about Milton Friedman's famous article on "as if" methodology, that is, instrumentalism rather than realism relative to economics and physics. Blackford is a heterodox economist, and Jason Smith is a physicist.

Information Transfer Economics
Economics, physics, and data: a response to Blackford
Jason Smith

Noah Smith — Do economists have physics envy? (Part 2)

The making of another interesting argument that is interesting from my perspective as involving the philosophy of science.

One thing that seldom gets mentioned in this argument, outside of Post Keynesian circles, is Paul Samuelson's MIT approach to economics in which he realized that to write the kind of formal models that he wanted, he needed to assume ergodicity. Paul Davidson criticized this assumption.

Noahpinion
Do economists have physics envy? (Part 2)
Noah Smith | Bloomberg View columnist

Jason Smith — Of phlogiston and frameworks

…This could be summarized as simply saying there is no framework for macroeconomics. Frameworks, like string theory and quantum field theory, do two things: they tell you how to start looking at a problem, and they represent a shorthand for capturing the empirical successes of the field. My first criticism above says that string theory is a framework, so you can't make an analogy with macro which doesn't have a framework. My second criticism above says that until you have a working framework, you should be skeptical of any "natural experiments" because the interpretation of the natural experiments change with the framework.

In spite of this, for the most part I liked Romer's take on macroeconomics and I think he delivered some powerful arguments.…

Information Transfer Economics
Of phlogiston and frameworks
Jason Smith

David F. Ruccio — Phlogiston, the identification problem, and the state of macroeconomics

The problem is similar in macroeconomic models, and Romer finds that many mainstream economists rely on models that require and presume exogenous shocks—imaginary shocks, which “occur at just the right time and by just the right amount” (hence phlogiston)—to generate the desired results. Thus, in his view, “the real business cycle model explains recessions as exogenous decreases in phlogiston.”

The issue with phlogiston is that it can’t be directly measured. Nor, as it turns out, can many of the other effects invoked by mainstream economists. Here’s how Romer summarizes these imaginary effects/ A general type of phlogiston that increases the quantity of consumption goods produced by given inputs:

• An “investment-specific” type of phlogiston that increases the quantity of capital goods produced by given inputs
• A troll who makes random changes to the wages paid to all workers
• A gremlin who makes random changes to the price of output
• Aether, which increases the risk preference of investors
• Caloric, which makes people want less leisure

So, there you have it: in Romer’s view, contemporary mainstream economists rely on various types of phlogiston, a troll, a gremlin, aether, and caloric. That’s how they attempt to solve the identification problem in their models.…

Occasional Links & Commentary
Phlogiston, the identification problem, and the state of macroeconomics
David F. Ruccio | Professor of Economics, University of Notre Dame

Jason Smith — Macro is not like string theory, part III (Equations!)

I thought of another way to drive home the point that DSGE macro is not like string theory. It's essentially another way of representing the Venn diagram in that post, but this time in terms of equations. Basically, string theory is built up from a bunch of very successful pieces of physics in a natural way. A DSGE model is built of a bunch of pieces that haven't been empirically validated or worse appear to be wrong.…

Information Transfer Economics
Macro is not like string theory, part III (Equations!)
Jason Smith

Jason Smith — Macro is not like string theory, part II (my personal take)

Jason Smith follows up on string theory.

Information Transfer Economics
Macro is not like string theory, part II (my personal take)
Jason Smith