Carving this off into an economics-only thread.
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Originally Posted by sebastian_dangerfield
There is no "how the economy works."
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No, there actually is. It's super complicated and hard to predict, but there is an empirical reality. You said that economists drive behavior in a way that's self-fulfilling. I won't say that never happens, but that is a lousy theory of how the economy works. If you were right, the Republican tax bill would have spurred a fantastic new era of growth and innovation.
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But economists' and their adherence to tired theories do impact investment and business decisions which drive the economy.
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I don't really think there's much of that.
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I know tons of old fart investors who lost tons of money making silly investments on the predicate that interest rates would go sky high after their artificial depression was eased. That didn't happen. But if you followed a lot of conservative economists, and even many liberal ones, that was a reasonable prediction.
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I believe you. But (a) there was a counterparty on each of those trades, and more to the point, (b) this undermines what you were just arguing -- your old fart investors believed the economists, but those beliefs did not drive the economy.
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Picking Laffer would undercut my point because he's too laughably in the can for corporate benefactors. So was Friedman. Even Goolsbee, however, will hew to neoliberal doctrine if pressed.
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To sum up, then: You see conservative economists who are in the can for corporate benefactors, and lefty economists who believe in neoliberal doctrine.
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And every one of them will profess that the business cycle is a law like gravity. Why? Because if you massage data to fabricate these laws, you make it seem like risk can be managed, which businesses and investors seek to do.
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I don't know of a single economist who professes that the business cycle is a law like gravity, unless you just mean they think there are business cycles, just like there is gravity.
Risk can be managed to an extent. No one thinks it can be done away with.
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And that leads you to laws like, "The housing market does not go down."
Another neat one of the moment: "We'll never see anything like 2008 again."
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Not even sure who you're talking about at this point.
