“Economics” is a science, a body of knowledge and inquiry. It is not a person or an organization and does not “stand” on anything.
Nobody who actually studies economics believes themselves some sort of oracle. What you read in newspaper columns is not “economics.”
So “Literature” is a science, then? How about “Art”? Both fit your definition with equal precision.
All three stand as much on opinion and consensus as on the facts “science” demands. Call it theory if you like, but I can’t think of another “science” where a vast number of divergent theories can all be held simultaneously, none provably more accurate than the others except in specific cases.
I concede that the accounting side of Economics are facts (for the most part). But the interpretation of those facts and, in simple terms the “modeling” done to make sense of them is no more science than evaluations of Shakespeare.
I’m not sure anyone’s said that, at least not beyond what rather esteemed economists have claimed for their own prognostications. I suppose we can laugh at the average Bachelor in Econ’s notions, but quite a few senior figures seem to think they have highly accurate forecasting down to, well, a science. (And at every turn some great majority of them are wrong.)
Really, your post is exactly like that of Libertarians who dismiss counter-arguments with “That’s not what defines Libertarianism” or “Real Libertarians don’t believe that.” Not to politicize the thread, but it gets difficult to tell religious indoctrination from quite a number of political - and other behavior-based - beliefs.
Economics is the intersection of accounting and behaviorism. It may stand on various science-based lily pads, but in the end it’s reasoned opinion, not science.
Consumers don’t drive the economy. Giving people more money doesn’t drive the economy. What drives the economy is production. People finding better ways to produce things that people want.
That is what economics is about. Money is not wealth, money is just a way to make transactions easier.
The study of those things is certainly a science, yes. Science is the search for objective truth about our universe.
Some kinds of science are rather harder than others. Finding truth is not necessarily easy.
I’m curious as to where mainstream economics has a great many divergent theories that are simultaneously held by people who are actual economists. Perhaps you could cite examples? I will grant the Austrian school can be a little weirdly dogmatic but it’s a bit on the margins.
And, after all, economics as a science is new. It would have been rather unfair in the nineteenth century to say physics was not a science because physicists disagreed on a lot of things and many leading physicists quite firmly believed things that were, in fact, completely wrong.
It is, however, REALLY easy to tell the difference between a scientist and a prophet.
I disagree. (NB: I don’t agree with your phrase ‘giving people money’.) I don’t know if you’ve ever been out of work. If you have been, did you maintain your previous level of spending? Most people I know (including myself) who have been out of work, reduced spending as much as they could. When the Bush Recession was in full swing and millions of people were not getting paychecks, did companies ramp up production to produce goods people weren’t buying? If giving money to corporations stimulates the economy, why weren’t millions of jobs and higher pay created with the trillions of dollars corporations were hiding offshore?
Companies do not hire people unless they need them. They don’t need them unless production and/or products expand. Production usually doesn’t increase unless there’s a demand for them, and demand usually doesn’t increase when people don’t have money.
In the 1950s, a nostalgic time for many conservatives, the ratio of CEO-to-worker pay was about 20-to-1. In 1980, it was 42:1. It was 200:1 in 2000, and today it’s around 450:1. Clearly a higher percentage of money made by a company goes to the ‘non-consumer’ (those at the top of they pyramid) than to the consumer class (the workers). And people complain pay has stagnated, and they can’t afford to buy consumer items, or they get deeper into debt. The way I see it is this: The executives or their predecessors started the company. They deserve credit for that, and for keeping it going. The workers produce the things that the company sells. It’s a partnership. When one partner increases his share by 1,000% he’s shooting himself in the foot.
How is “people finding better ways to produce things that people want” not just another way of saying consumers drive the economy? If people find a better way to produce things that people don’t want, then they fail economically. Both groups of people are developing better production. So why did one group of producers succeed and the other fail? Because one group was making products people wanted. And the people who want things are the consumers.
You can find numerous examples of producers succeeding by making quality goods that consumers want. And you can also find numerous examples of producers succeeding by making shoddy crap that consumers want. But how many examples are there of a producer succeeding when his product, regardless of its quality or cost, is unwanted by consumers?
Consumers drive the economy.
Sorry–but your logic is bad.
Physicists knew the facts, and planned for them.
Economists knew the facts, and refused to plan for them.
Every one of these disasters you list was carefully examined in advance by the PhD physicists. They carefully designed the Fukushima plant to withstand known parameters of earthquakes (but not a tsunami).The Hyatt hotel was carefully designed to support the known parameters of weight of crowds of people, etc. Mistakes were made, and they were fatal… but the mistakes were not intentional, and those who made the mistakes lost their licenses to practice engineering.
The economists in 2008 did exactly the opposite: they intentionally IGNORED the basic facts. And then they proudly denied that they made any mistakes, and still continue to practice their “profession”.They are no better than astrologers or Tarot card readers.
See post 22. Theoretically, the price on oil will rise due the raise in the minimum wage, but only proportional to the size of the US market compared to the global market (unless we assume that Europe and other countries will be raising their minimum wages at roughly the same rate as the US - which is probably a reasonable assumption, realistically) but certainly there will be a much longer lag to this effect than if we just look at the effects on American produced, American consumed products and services.
I’m not a professional economist, but I’m reasonably sure that most of them spend their day performing research or writing research papers. They don’t spend their days going through investment packages to determine whether the rating matches the quality of the contents.
It’s much more realistic to blame the crisis on financiers than economists.
In 2001 companies were producing lots and lots of stuff. When this production exceeded the ability to consume it, guess what happened.
You have to produce what people want and also what people can afford. Do you think that companies in 1929 forgot how to produce things that people wanted?
Yeah, Puddlegum has it backwards. it is the vast, competitive consumer market that drives modern economies and allowed us to plow the Soviets under when it came to technology. You don’t come up with modern computers in isolation, building scores of them for the government. It is because the market demands constant improvement and is willing to pay for it. The billions and trillions of research dollars employing millions of researchers that have produced pretty much every modern convenience and many military advances all came from consumers.
The Housing market exists because people need and buy houses. It doesn’t exist because someone is building them for the hell of it.
I don’t know which economists you follow, but my own mainstay publications saw the 2008 collapse coming in 2006-2007. People blew off this prediction as being too scary and remote to be true. Then it came true, and people accuse them of not being alarmist enough.
Whoever wins, I look forward in 2018 to seeing who credits POTUS with sound judgment, or at least makes a statement of support that is damned by faint praise.
OP’s question was So what does Economics 101 actually say?
Can you cite an actual Econ 101 course, or any professor or textbook with agrees with your peculiar view on minimum wage hikes?
Didn’t think so.
One thing to keep in mind is that the consumer market is more than just Joe Six-Pack buying a TV, some groceries and gew-gaws for the kids. It also includes a LOT of business-to-business transactions which (I think; IANA economist) tend to amplify the effects of the Joe Six-Pack consumers.
In other words, for every bottle of motor oil that Joe buys for his car, Shell had to buy a plastic bottle from someone, labels from someone, oil from someone, refinery equipment from someone, hard hats for the refinery workers, and so on. And each of the suppliers who provided those items to Shell has a similar cascade of items.
But in the end, it’s all geared toward retailing products and/or services to private citizens for the most part.
An analogy might be that hospitals employ a lot of people, buy a lot of stuff, and generally enrich economies. But what drives hospitals, or what is the one thing hospitals HAVE to have in order to run? Patients. In an economic sense, we have to have consumers willing to buy stuff, much the same as hospitals have to have patients providing a demand for treatment that they can satisfy.
Do you think that in 1929 people just stopped wanting stuff? Compare the economy of the US to the economy of Venezuela, is the US economy better because its citizen want more than Venezuelans? Did the Industrial Revolution happen because people suddenly wanted to buy more stuff?
People in all societies everywhere and at all times want stuff, it is just a matter of whether those wants can be supplied that makes a difference between rich and poor societies.
The Great Depression was caused by French gold hoarding because of WW1, the rise to power of the nazis in germany, and a severe monetary shock. None of these concepts are economics 101.
How are these two statements at odds with each other?
That cash doesn’t just sit there. The banks invest it so they can pay interest on the money they hold. The money is still in use. Just not at home.
The rise of the Nazis in 1933 caused the Great Depression, which began in 1929?
There was a drought, too, remember? Agricultural productivity fell catastrophically, even with full and diligent employment in the sector. Banks then foreclosed on farmers who couldn’t pay the interest on their loan. And then the bamk owned millions of acres of dust bowl, and failed themslves.
That was the depression, with the stock market crash only one of the contributors, which by itself could have been overcome.
Try Climatology 101.
No, people didn’t stop wanting stuff. But people stopped being consumers. And look at what happened when the economy lost consumers.
Argentina and Zimbabwe do not practice free market economics. They practice Marxism in Zimbabwe, and state socialism in Argentina. To state the obvious, that’s the exact opposite of free market economics. You are correct that the economies of both countries crashed and burned. That demonstrates what graduates of econ 101 know: free markets are great, while communism sucks.
As it happens, both countries have an excellent example of free market success right next door. Chile has by far the most free economy in South America. It’s also by far the wealthiest, healthiest, and happiest country in South America. The first world prosperity of Chile makes a stark contrast with the poverty and misery of Argentina.
Next door to Zimbabwe is Botswana, one of the few African countries that has stuck with democracy and capitalism since independence. Once again, Botswana is wealthy, healthy, and happy, in sharp contrast to horrors of life in communist Zimbabwe.
So there is plenty of empirical data contrasting free and unfree econonies. The free economies always do massively better. If these examples aren’t enough, try contrasting North and South Korea, East and West Germany, or China and Hong Kong. Everywhere you look, free markets do better. Of course, it makes sense that advocates of unfree markets would want us to believe that there’s no data on the question.