god & the market

[Michael Yates]

Today in my intro econ classes I talked about the scientific method as a
way to uncover the "truth" of our economic system.  Starting from initial
assumptions, we trace out the logic of these assumptions to yield
hypotheses or predictions.  Then, very important, we must put these
hypotheses to the test.  Of course I pointed out how difficult this whole
process is, especially the problem of devising good tests.  But my main
point was that if you stopped after generating the predictions, you were
not acting scientifically but were in fact in the grip of an ideology.  I
used Card and Kreuger's studies of the effects of raising the minimum
wage to illustrate this.  Neoclassicals were aghast at their results, and
just could not believe them.  The Wall St. Journal editorialized against
them. Card and Kreuger even uncovered publication bias in neoclassical
journals, which were more likely to publish articles which upheld the
orthodox position that raising the minimum wage leads to employment loss
than those which did not.

After I finished I asked:  "What response should you make to me if I
state that the only reason poor women have more kids is to collect more
welfare money.  A young man responded when I called on him,  "yeah, I can
see that they would"!!!  The market place as a punisher of sins,
indeed!!  Statements without any attempt to test are the stock and trade
of all too many social scientists.

Michael Yates

Doug Henwood wrote:


> A friend sent me this exquisite comment by a grad student in finance:
>
> >The free market is the one place, besides the judgment seat of God,
> >where people are held to account for mistreating people.
>
> DOUG