Monday, March 4, 2013

The difference between economic theory and reality.

      Over mathification of economics comes with many problems that I illustrated in my previous post. Over mathification implies that the person doing the calculations is able to have perfect information or at the least enough information to make your calculations. Not to say the results of whatever calculations should be wrong or right but that you can't make every economic statement based on this idea and that the math isn't necessary for economic theory.
         On a similar tangent I believe that just because an economic theory seems fine on paper doesn't mean it extends to the real world. Walter Block talked about the world illustrating economic theory instead of proving it in his talk on Austrian Economics and Libertarianism. I find his complete and utter confidence in his theories slightly unsettling in light of the fact that they don't necessarily work all the time. This could be for a variety of reasons, many of which he isn't taking into account. It's this simple fact that he theories can be wrong seems to make for the fact that they don't take everything into account which is an impossible feat.
          This argument extends for my ideas n transitivity. I agree with Walter Block on the idea As of now though I make the point that in the flawed system that exists transitivity might have it's place. As of now the rich are more able to keep and make money than the poor. The rich are also resistant to fail as a group as seen in the housing crash in 2009. The rich maintained their money while the lower classes also lost. In this instance a “free market” isn't in action therefore I believe economic theory doesn't necessarily work properly. IN this case I see the possibility of transitivity working due to the fact that the world isn't a perfect economic model. What i'm essentially trying to say is that while the mathematics and theories of economics are noble pursuits you shouldn't completely rely on them for your opinion on everything. The world is a crazy place and it won't always follow the grand plan being enacted in your imagination.

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