Thursday, June 10, 2010

Time that economists caught up with climate scientists.

A moan about the Dismal Science - Economics - and its practitioners.
Where are the computer programmes that will integrate all the known factors in the economy?

The economy is a system, like the atmosphere. Systems are composed of any number of interacting factors. Climate scientists work by putting all their data into a computer programme and running it. They would not dream of just writing books, papers, blogs and letters to each other. Sure, the climate "skepticks" complain about the computer programmes used, but that is because they want to stifle climate science because its findings clash with their free-market fundamentalist ideology.

To study a system, you need a good computer programme. Not a perfect programme, because perfect does not exist (except in the inner recesses of the mind of a fundamentalist), but one that approximates to what gives in the real world. They do not give absolute truth. GIGO is the overriding rule. Users of computer systems have to be aware of the Illusion of Infallibility. But it is undeniable that computers are a useful tool.

I want an economics programme. I blogged here about the National Debt, and here about the Budget deficit. But these are just snapshots of the system, drawing on bits of data here and there, as I find them. F'rinstance, I used the National Debt, but it makes a difference if the debt is owed in our currency or another currency. And the NatDebt varies with the Current Account Balance which together with the Capital Account Balance goes to make up the Balance of Payments. And I could not find the UK Capital Account Balance anywhere. I am sure it is in the Treasury website somewhere, but that site seems to me to be designed to foil nosey subjects who want to pry into the inner sanctum of Government monies.

There is far more to it than the simple but frightening (to the person in the street) sums trotted out by the Cameron. There is the matter of economic strength (i refuse to use the word growth), there is the tax revenue and how it is structured, there is the Rich Poor Gap, there is unemployment, there is social cohesion, there are natural resources, there a multitude of factors in the system.  We can only grasp what is happening if we have a computer programme to run. And we don't. There is a global climate programme that you can download from the internet. I want - no, I demand - an economics programme.

I'm hoping that someone will say - Look, you can download one here.


howard - ex n.s.g.p. member said...

"Where are the computer programmes that will integrate all the known factors in the economy?"
You'll have a long wait for these. Economic factors are far less amenable to quantification than those of the climate.

DocRichard said...

hi Howard
"Economic factors are far less amenable to quantification" is a discipline that is highly numerical. Stuffed with numbers and formulae. But you are right in that it is also shot through with value judgments and assumptions. To manage this, the numbers could be entered, and then the operational factors could be entered according to different assumptions. The results could then be related to the actual out-turn - so the programme would gradually become more aligned to reality - though it would never become a perfect match, because of "reflexivity" - economics being a human activity as well as a human study, so the perceived knowledge always affects activity and vice versa.

howard - ex n.s.g.p. member said...

Seems like you have an interesting and challenging project in outline. Does this mean we won't have a long wait for the 'economics programme'?

DocRichard said...

I think it most likely that there are programmes already out there. I know there are at least 2, I heard of them years ago. One analysed the impact of CI in the Netherlands, and the other was a general model of the UK economy. Clearly, they need more work, or we'd be hearing every day how wonderful they are.