The two questions sound extremely abrasive and condescending, but they are honestly true. It's hard to tell (As shown by the word debate in the title, and not the word conclusion), if economies fail because people suck, or because governments suck. Informally, this is the main point of the article by Robert J. Shiller. There is a lot that is expanded on in the debate itself between three different social scientists who represent a set of common opinions, including Shiller, and the other two Nobel economists, Eugene F. Fama, and Lars Peter Hansen; Those opinions dealt with three different approaches to economies: Mathematically, (You know, numbers and statistics, things that aren't people) Historically, and Socially.
Fama had a speech on his opinion of economics, which Shiller wrote in his article as being based around Mathematics; The strict relationship between stock prices and graphs and the well being of the economy. In Shiller's words, Fama explained "that interest rates 'contain rational forecasts of inflation'."
Hansen had a lecture on the subject as well, as I have already mentioned as being described Historically based. This is not entirely true, in fact, I'm not sure how to categorize it and I'm sure Shiller feels the same way. It's described that Hansen talked about "distorted beliefs," (I'm assuming he means from the common citizen) of the financial market and how it operates. Essentially, that is the statement that implies that people simply are not observant enough by nature to let economies work their magic. The "People might just suck and that's the way it is" statement I summarized earlier. Shiller also mentioned that Hansen talked about animal spirituality and overconfidence, which I won't go into detail about because it sounds more of a personal problem than an economic one.
Shiller quite simply remained neutral, and trusted the free market's system of allowing people to make the correct decisions unanimously. (Not much to elaborate on there.)
A nice point in this article (Suprised I didn't say Shiller's article, aren't you?) is that the problem becomes more difficult than just economics, because people have to then argue about the meaning of the word "rational" itself before they can argue economic issues. So there is a complicated amount of involvement in personal issues in religion, and politics. Which we should know is not new to society, or more specifically these days, America.
There is an important and completely valid point in using interest rates and stock markets to determine the rise and falls of economies. But that's just it, a definition that we have an issue. And that eureka moment is what spawned this discussion at square one. "Do not pass Go! Do not collect $200!"
This is an issue with all arguments most of the time, "Are we really arguing to find an answer, or is this just verbal glove slapping?"
Really, we should just define priorities amongst our current knowledge, because three Nobel prize winning economists are three Nobel prize winning economists for a damn good reason.
- Fama made an excellent point, that by using the stock market, we can have a "doppler radar" for the economy. Essentially a tool for understanding if the economy is working or not, but definitely not a solution.
- Hansel talked about the lack of understanding amongst citizens about the economy, which is true. Have you seen that video on Jimmy Kimmel where they made up a new bill for the constitution, and people pretended to understand as if it was a real thing? People don't pay any attention to the government! (Except when it's on the news) But at that point, that becomes an education issue. Our education system is not working, and I strongly agree that it's having an influence on the economy.
- Shiller is correct that it's important to have social freedom in economies, because people are social and economies are social. You can't put mathematic boundaries on personal beliefs or opinions. As I mentioned in the point above however about education, democracy only works when people a.) care. and, b.) attempt to understand and fix issues in an active manner. We may need to shift our goals however, because people generally define success as wealth. Supply and demand may be causing some business aficionados to bask in their own economic debauchery, which in the whole of the economy, is unhealthy and damaging for the less money oriented individuals.
To sum up, my point is that we have many great understandings already that can lead to a solution.
But the Powerpuff Girls up here need to combine their Nobel prize winning minds into saving the world from disastrous economies, instead of arguing about who got a bigger slice of cake.
Article:
Author:
Robert J. Shiller
Date:
January 18th, 2014
