Neato Missile wrote:BigBallinStalin wrote:(1) Learn about Public Choice.
This is interesting stuff, but I think that by now most of us are at least somewhat aware of the fact that the vast majority of politicians are in it to serve their own bottom line. The fact remains that the policies they enact while questing for the almighty dollar can have huge ramifications on us lowly plebes.
It's entirely possible that I foolishly missed the point you were trying to make here. Public choice theory seems to claim that citizens should stay ignorant of politics, so maybe you're suggesting that as Rational Actors we should just tank the thread?
What is Public Choice?Some public choice economists examine the extremely low chances of one sole vote in changing the outcome of an election in order to highlight the incentive faced by a voter. Since the chance is so little, it's rational that the average voter spends very little time in informing himself about the costs and benefits of voting for various politicians. Compare this to the incentive one faces when buying a car or a house. This is a positive economics; it
explains what is happening.
Based on the positive economics, some economists (and others) shift to normative economics/science (and away from Public Choice),
by concluding that voting is irrational, and people
shouldn't vote,
but that would be erroneous because the rationality of one's vote depends on other values, e.g. the satisfaction in participating in a vote or supporting one's party, the feeling/efficacy of "strength in numbers," etc. So, I wouldn't recommend ignorance or tanking the thread--from both economic perspectives (pos. and norm.).
Public Choice assumes that politicians (and bureaucrats) are as self-interested as all other individuals. In the late 1960s and 1970s, this school of economics took much criticism because many intellectuals assumed that politicians and bureaucrats were not self-interested (or were extremely altruistic and hardly selfish). Although it's obvious to us that politicians and bureaucrats are self-interested, it's an observation that we tend to forget. For example, whenever anyone supports a policy to be implemented by the government, they're assuming that the interests of the politicians and bureaucrats are aligned with the goals of that policy. In many cases, this assumption is discovered to be false, and the occurrence of unintended consequence can seem dumbfounding. (You'll see this assumption on TV, in speeches, and here on the fora).
In other words, even if you can codify a public policy, if the incentives of politicians and bureaucrats are not aligned with the policy, then they'll distort the policy, reject it, or implement it and (un)intentionally let it fail. The incentives faced by politicians and bureaucrats typically gear them toward not serving the interests of the public, but for the sake of brevity, I'll stop here. You can PM me if you like, or ask more questions here--whichever is more useful for you.
Neato Missile wrote:BigBallinStalin wrote:(2) Correction: The CBO is good enough for Congress, but it isn't good enough for assessing the effects of public policy over 330+ million people.
(3) Advice: take neoclassical economic predictions for an entire country or State with a grain of salt. The future is uncertain, and there are no constants in the social sciences/for human behavior; however, the methods of neoclassical economists neglect that, and then run into trouble when it's applied at the State/national level.
These are good points, but seem to exist solely to stymie discussion. If the future is so uncertain and the populace so large that economic predictions are doomed from the start, then what facts
can we look at when discussing these issues? You mention "neoclassical" economics twice: is there an alternative form of prediction that can produce more accurate results, which the government/media does not utilize for some reason?
For public policy, Austrian Economics is not formalized, so it isn't tractable, which is a big problem for AE.
Nevertheless, the methodology and assumptions of neoclassical economics (Keynesian plus added revisions and other schools) base their "validity" on strong correlations and aggregative analysis, which produces a tractable yet inaccurate view of the economy--depending on how much one scales up the subject matter (one firm v. national economy). This explains why the central planners (Federal Reserve) create so many unintended consequences which they can't correct or predict.
The problem is that regardless of the accuracy of AE, the recommendation of AE is in a nutshell "the government must stay out of the economy," which politicians and bureaucrats don't find impressive because they're interested in looking for a science which confirms their necessity.
The theories within microeconomics yield predictions, but with complex phenomena, basically these predictions only show tendencies because all relevant factors cannot be formalized. The neoclassicists gloss over this problem with their macroeconomics (and aggregative analysis) and then proceed with "predicting" the future--based on their economic models which don't sync with reality.
For smaller firms, neoclassical economics is useful for future planning. For a nation of 330+ million people and with political and bureaucratic incentives at play, it's usefulness is extremely limited, but this doesn't matter if no one really understands how this works (which describes nearly all voters). Competitive predictions based on profit and loss incentives yields a more accurate, or self-correcting, mechanism for parting some of the fog of the future, but with the government, their predictions are monopolized (Federal Reserve, CBO, etc.) and even alongside other analysis, which is funded by the government, then the future won't be nearly as clear as the market-based predictions.
That's why you'll get guys like Barney Frank saying that there is no housing crisis on the horizon (2005), or you'll get Bernanke (Federal Reserve) saying all sorts of things contrary to the opinions and analysis of people in the market (see: Crash Proof 2.0).
Neato Missile wrote:BigBallinStalin wrote:(4) Just remember that when you put economics (any kind) into the hands of the government, then those politicians and bureaucrats tend to have a strong incentive to confirm their own bias, as in manipulate it for their own goals--regardless of the extravagance of the assumptions used in the economic analysis. It's like having the cigarette industry pay for experiments on whether or not tobacco leads to cancer.
(5) More honest analysis? ... What exactly are you looking for?
Absolutely, data can and will be skewed the moment it gets into a politician's hands. This was what led me to the CBO report in the first place-- it seemed like the best way to avoid these biases. I've since learned that, particularly in the wake of Ryan's VP nod, some Republicans consider the CBO untrustworthy. "Honest" was a poor word choice, I was more interested in finding out if there's an analysis that is even more non-partisan than the CBO.
The futures market is somewhat useful.
The stock market, and market for bonds can be useful.
So, papers which talk about these might yield what you're looking for (WSJ, Bloomberg).
As far as grand public policy is concerned, it's largely a joke---as we've seen with Paul Ryan's budget and its huge assumptions, and the same goes for Obama and any president with their Plan for the Future that tend to be very limited on details or which make grandiose assumptions.
For non-partisan institutes and think tanks, here's a list of 98 of them:
http://www.theihs.org/koch-summer-fello ... ost-searchYou can find relevant criticism on public policy there, sort by category, etc.
http://mnfmi.org/category/climate-change/That one analyzes the effects of regulation regarding the environment.