Economics today is a respected (for the most part) field of
work, which has its own Nobel prizes, professors and specialized departments in
every major university, learned journals and lengthy tomes in bookstores,
pundits on the television and web, and so on. And much of the area of economics
is sensible and necessary, and we have no better tool for analyzing and
predicting economic outcomes. But some, perhaps much of this is but a house of
cards and we’ll see the end of at least some of the discipline, soon. Or, at
very least, we will see swept away the false constructs of a self-infatuated
theoretical belief system, to be replaced only with analytics of the biggest of
“big data”.
There can be few more important challenges to the standing
of economics as a respected discipline than these, which I’ll touch on here:
- The increasing apparent weakness (some would say complete falsehood) of some of the founding precepts of economics
- The reactions of a core group of leading academics to the revelation that their analyses and theses were wrong, completely wrong, and based on inadequate data, incompletely analyzed.
- Nonsensical data being used – if only because there’s no substitute
- The increasing power of “big data” analytic tools - but I'll leave that for another time.
The title of this piece cites a saying ascribed to 1930s-era
German theoretical physicist Wolfgang Pauli, whom upon reviewing a naïve,
neophyte paper is said to have remarked: "Das ist nicht nur nicht
richtig, es ist nicht einmal falsch!": this is not only not right, it is not even wrong[1].
Meaning – there was nothing in the paper that could be considered to be
verifiable, and thus the paper was utterly useless – or that its ideas were
unconnected to any known reality. The saying seems particularly appropriate for
the current state of some of orthodox economics, Nobel prizes and
munificently-endowed university chairs notwithstanding.
