12.23.08Ecognorance
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” – Murray Rothbard
There is no question Rothbard was addressing the vast majority of humanity when he wrote the above quotation. After all, it is true: nearly everyone is completely ignorant of economic reasoning, and yet nearly everyone holds very strong opinions on economic subjects. Just think about the many, many basic economic fallacies that are accepted as common knowledge:
- minimum wage
- rent control
- price controls
- price gouging
- drug prohibition
- gun control
- protectionism
- bailouts
- Keynesianism
- stable price level
- government can create jobs
- anti-trust regulations
- etc. ad nauseum
People just do not understand the basics of supply and demand or the price system, or the incentive structure of a tax-funded monopoly. For example, the average person is ignorant of the fact that a minimum wage will unemploy marginal workers, or that there are systematic reasons why there are long lines at the post office and not at the supermarket.
Clearly, those of us who do understand economic reasoning will have to address this widespread ignorance. But instead of having to use the unwieldy phrase “economic ignorance” over and over, I have coined the term ecognorance (e-COG-nor-ance) to designate the ignorance of economics so prevalent today. Thus, “ecognorance” as a noun means the condition of economic ignorance, while the adjective “ecognorant” designates being unaware of economic knowledge. For example, we would say that statists are ecognorant, or that they live in a state of ecognorance.
I foresee that this new term will save a lot of economists’ time in pointing out how ecognorant people are. (See? Before I would have used the clunky, longer phrase “economically ignorant”. Linguistic efficiency!)
I think one of the reasons why people have such strong opinions about economics, even though they really know nothing about economics, i.e. are ecognorances, is that they think economics is just like politics, i.e. there is nothing really scientific about it. You hear people all the time say “I’m not an economist, but…” You NEVER hear anybody say “I’m not a astrophysicist, but..” or “I’m not a computer engineer, but…”
I definitely agree with you regarding economics being viewed as unscientific. I like to use the example of how absurd it would be for me to hold very strong opinions on microbiology, when I know very little on the subject.
Another reason is that people experience economic activity all the time, e.g. buying and selling, working, etc., so they feel they can speak authoritatively about economics. Yes, this is true, but they are still clueless with regards to economic reasoning.
Regarding the term “ecognorances” (noun) to designate a person who is ecognorant, I think “ecognoramus” is better.
“i.e. are ecognorances”
Excuse me, but surely you meant to say “ecognoramuses”?
I will give you a new word: Eco-arrogance.
Eco-arrogance is when you think that “gun control” is an economic phenomenon.
Eco-arrogance is when the economy fails, and its called a failure in some systems, and in ours its called “creative destruction”.
Eco-arrogance is accepting a system that claims that is the most efficient and the best, but yet has mountains of poor, starving and alienated people in it.
Eco-arrogance is thinking that all entities are profit seeking.
Eco-arrogance is based on the gold standard.
OK, I take it you are ecognorant.
First, gun control is a form of limited prohibition, and hence is an economic subject. Second, our present economy is state-corporatism; I don’t care for it. Third, again, we live under state corporatism; in a true, freed market, poverty would be virtually eliminated. Fourth, I agree that thinking all action is profit-seeking is a bogus neoclassical assumption. Fifth, I don’t support the gold standard; I support free market money.
Ah, I didn’t see your reply before I posted mine.
On the third point – I think we’d agree in sentiment at least. Even in the current incarnation of ’state-corporatism’, there’s a very clear correlation between the level of economic freedom in a state and its poverty level (though there are some notes to this). On the fourth point – again, I think most people fail to recognize what is implied by ‘profit’ which is really a failure by economists. Finally, free market money is of course what is meant when most of us praise the gold standard – but I’m sure you recognize this.
Oh boy, let’s address some of these.
“Eco-arrogance is when you think that “gun control” is an economic phenomenon.”
There’s a certain sense in which ‘gun control’ is an economic phenomenon – in that insofar as economic activity can be understood in a framework of praxeology.
“Eco-arrogance is when the economy fails, and its called a failure in some systems, and in ours its called “creative destruction”.”
Well, two things might be said. First, the theoretical response which is that subjective valuations such as ‘failure’ cannot be applied to the objective status (or ‘health’) of an economy, for no such objectivity exists. Valuation cannot be properly (or in any sense) understood in this way. Then there’s the practical response, which is that the failures we are now seeing are the result of market corrections that are now necessary because of meddling by the state.
“Eco-arrogance is accepting a system that claims that is the most efficient and the best, but yet has mountains of poor, starving and alienated people in it.”
No single other system has ever generated so much wealth, so quickly, for so many people in the history of any civilization ever.
“Eco-arrogance is thinking that all entities are profit seeking.”
They are. This is an evolutionary principle. The point where statists get tripped up is on the nature of profit. Profitability can be understood in senses beyond the monetary.
“Eco-arrogance is based on the gold standard.”
And thank God for that.
““Eco-arrogance is accepting a system that claims that is the most efficient and the best, but yet has mountains of poor, starving and alienated people in it.”
No single other system has ever generated so much wealth, so quickly, for so many people in the history of any civilization ever. ”
You did not actually address the issue. Yes, the free market produces more wealth than any other system.
The free market ALSO produces the greatest income inequality, and produces poor and alienated people.
Case in point: the deregulation seen in this country over the past few decades has contributed to a massive increase in GDP.
Over the past 20-30 years, although GDP has grown, real median income (adjusted for inflation) has decreased.
How is this possible?
All of the economic increase has gone to an increasingly small group of people.
It is not merely a question of does it work. Why is it a goal to maximize economic growth, if the vast majority of people do not get to share in its benefits?
“This is an evolutionary principle.” Altruism (self-sacrifice for the sake of another) can be found through out nature. Besides for which, human beings have the capacity to overrule genetic imperatives.
Hey gents,
Economics ISN’T a science. Isn’t that what Hayek was after when he railed against “scientism” amongst economists?
Keynesians and Monetarists are the “economic scientists” who spout derived calculus equations and claim the equations represent a realistic equilibrium model of the economy, from which they draw inferences that they can manipulate the variables with scientific precision to get the economy to do what they want.
Let’s not make their mistake! Economics is a study of subjectivism!
Economics, understood more basely as the study of action, is a science in the Aristotelean sense. It’s the study of action in its rawest form – hence praxeology (a logos of praxis). This is what Mises outlines atleast, and I’m inclined to agree.
But enough philosophy for now – your point stands in either case, in that the study of economics does not provide a basis for scientific interventionism in markets.
“For example, the average person is ignorant of the fact that a minimum wage will unemploy marginal workers” – that’s simply not true, in general, and asserting it is itself an example of that very sort of economic ignorance. In fact, it depends on just how the minimum wage is implemented. Simply imposing it by fiat will do that in most modern situations, yes, but not in certain economic climates (say, Australia in the ’50s and early ’60s) and even today it wouldn’t do that if other methods were used. That assertion is true of a common case but still a special case.
Likewise there are methods and/or situations under which any of that list can work (apart from “ad nauseum“, which is bad Latin) – yes, even Keynesianism in very special cases. It’s just that as far as I know few of those exceptions apply here and now (or even in the USA now), and the few that do need special approaches that aren’t on politicians’ agendas. Nevertheless, that list is not a list of fallacies – not in general. It’s just a list of things that don’t work here and now, at any rate if tried simplistically.
I think we might divide ‘economic ignorance’ into two groups:
1. Ecognorance of laymen, non-economists
2. Bad understanding of professional and mainstream economists
But I’d have some problems labeling the second category as economic ignorance too, and prefer to say ‘bad understanding’ or ‘bad economics’.
What do you think?
Good insight. On the one hand, we have basic ecognorance, and on the other hand, we have bad economics. So, the average person is ecognorant, while someone like Krugman is just a bad economist.
I wouldn’t call the second category ecognorance though, since they aren’t really ignorant, they’re just doing it wrong.
And what may be worse: if laymen people try to learn economics from these bad economists (e.g. Krugman), a dangerous kinda mixture arises -> ecognorance+odd and wrong economic ideas. I think this is the case of many people who try to get close to the economics discipline, following the wrong economists.
This is worse because these people think they know some economics and feel free to speak about it.
I’ve frequently used the phrase tvconomist to describe the talking heads that try to tell us Fannie is a great investment and deflation is the ultimate evil.
This thread is out of control.
Initially, I won’t defend much of anything Krugman has ever written in the NYT, I’ll disagree with him on almost everything regarding economics. This does not earn Krugman the title of a “bad economist”. A bad economist is someone who misapplies methodologies, who backs claims with bad/incomplete/misleading data et cetera.
I’ll second the comment above, many of the things on the list are not economic ‘fallacies’ in fact, that’s a misapplicaiton of the word fallacy (making you ignorant of logic, and if you’d like to invent a term for that, go ahead). You may disagree with protectionists, keyensians, et cetera, but that doesnt make people who agree with these pespectives ignorant. There’s a long list of important contemporary economists (whose combined credentials dwarf the author of this blog, who, from what i can find is a ‘freelance writer’ somewhere in canada?) who would classify themselves as neo-keyensians.
Look, as an economist I often shudder when I listen to uninformed pontification about economics, but we are not alone. Ill-informed people hold opinions on a wide variety of subjects, religion, ethics, sociology (esp. culture, race and gender studies), the natural sciences, history, et cetera. Don’t be so arrogant as to assert that people who don’t know anything about economics (much less, anarcho-capitalist economics, a relatively understudied branch of the discipline) deserve a special pejorative.
There’s a long list of important contemporary economists (whose combined credentials dwarf the author of this blog, who, from what i can find is a ‘freelance writer’ somewhere in canada?) who would classify themselves as neo-keyensians.
But credentials have no bearing on the actual arguments, which is what we are concerned with. If someone with the credentials of Paul Krugman makes a bad argument, it’s still a bad argument.
You may disagree with protectionists, keyensians, et cetera, but that doesnt make people who agree with these pespectives ignorant.
In a comment above I distinguished between ecognoramuses and bad economists. I would say that someone who believes the minimum wage helps the poor, while never considering its effects on supply and demand, is ecognorant. On the other hand, there are economists like Card and Krueger, who do understand supply and demand, and believe the MW helps the poor. But they fail to understand that the MW theory is counterfactual: a MW will cause more unemployment than otherwise. Hence, any data will illustrate this theory. Their use of empirical analysis is just bad economics.
People who don’t know economic reasoning and support the MW are ecognorant. People who misunderstand economic reasoning and support the MW are bad economists.
“Look, as an economist I often shudder when I listen to uninformed pontification about economics, but we are not alone. Ill-informed people hold opinions on a wide variety of subjects, religion, ethics, sociology (esp. culture, race and gender studies), the natural sciences, history, et cetera. Don’t be so arrogant as to assert that people who don’t know anything about economics (much less, anarcho-capitalist economics, a relatively understudied branch of the discipline) deserve a special pejorative.”
They do. Look: I have specialized knowledge that brings me insight to some of the idiotic things that people say about matters of which they are manifestly ignorant. Many people do. What’s important about economics is that someone who runs their yap about, say, aviation can do so pretty innocently, without putting their hand to a general disaster. Almost everybody speaking popularly about economics is an epistemic arsonist, now, in the middle of a conflagration.
That does deserve special condemnation.
The word “ignomic” is a much prettier word. The conjugations are nice too: ignomically, ignomicy, ignomist, etc.