Economics should be like rocket science
It's as simple as that
❦ Wen 丨 Gary Galleria
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Over the years, it has been common to hear people conclude that "it is not rocket science" in various tasks, which means that rocket science is the most difficult and tricky thing, and almost everything else seems much easier. In all my years as an economics professor, I have become increasingly dismissive of this statement.
The depths of economics
I think that economics may not need "rocket science" to deal with the problem of social coordination; but it is much more complex and difficult in many respects, especially in the case of controlling results, than "rocket science".
After all, we've successfully launched rockets into many of the spaces near our planet, confirming that we have enough capacity to solve as many related problems as possible. However, many economic policies remain notorious for their harms outweighing their benefits. As Peter Botke said at the beginning of an online article,
"The more one wants to control, the less likely such ideas are and the problems in their implementation to bring about any efficiency, let alone any certainty about it."
In a sense of importance, rocket science is simply the vector addition of correlation forces. The correlation that produces rocket thrust is governed by the laws of physics and obeys a stable relation that can be expressed mathematically. The problem is to accurately measure the information needed and control the relevant forces—that is, to design complex things to function as intended.
I'm definitely not disparaging rocket science or engineering. I have great respect for the achievements of the space industry. But what constitutes economic study is human beings and their interactions, which are not as "dealing" as the interactions of chemistry and physics, especially as Thomas Sawwell often said that there is no solution to the problem of scarcity, only trade-offs.
The problems of rocket science and engineering are all focused on achieving unanimously decided goals. This means that the resolution of differences of purpose is not a major limitation. However, the reason behind the economic interaction between people lies in the fact that we disagree with almost every target — in particular, what we want, how, when, where, for whom, let alone who we want to pay.
Economics, rather than achieving unanimously decided goals, focuses on resolving the trade-offs between conflicting desires among trillions of people, especially on the role of human rights in doing so. This is very different and much more complex than trying to work together to achieve a unanimously decided goal. Why is the idea that "since we can send people to the moon, we can solve some social problem" purely misleading? This is an important reason.
There are constants in physics
Rocket science and engineering have many problems involving the physical constants that determine these relationships, such as the law of universal gravitation, such as stable and reliably predictable equations. As computing power increases and technology advances, so does rocket engineers' ability to maneuver flight. However, since the object of economic research is human, there are no such reliable constants and reliable equations that can be used to accurately describe relations in human society.
For example, the law of demand states that people are willing to buy more at a lower price when other conditions are constant. But this law doesn't tell us how much more. And the demand will change with the other conditions that were supposed to remain unchanged. Moreover, fundamentally, there are "other conditions" in economic relations that are infinitely relevant, many of which were unknown or unmeasurable at the time. In contrast, the variables involved in rocket science are much simpler in terms of numbers.
There is another reason: unlike material molecules, people learn knowledge from experience, and over time, the correlation changes, but we don't know exactly how big or how fast this change is. Increasing computing power will not overcome these challenges. Even from the basic principles of economics, a person still cannot gain effective control over society.
The physics behind rocket science rules out the causal relationship of going back in time. The result cannot precede the cause. But this is often not the case in economic relations. Once people start predicting future events, the results begin to appear in advance, not just after the event (when, of course, the expected event does occur; unexpected deviations from expectations will also change expectations and change market relations).
For example, in 2017, stock prices rose before the corporate tax rate was actually reduced, and fell when the prospect of a trade war became more likely, while steel and aluminum prices changed in 2018 when tariffs were still a threat. It seems that causation is reversible through changing expectations, as if the outcome had occurred before the cause. In addition, we lack precise methods to measure many of these expectations (many of which do not exist explicitly) and their variations.
Variables in political economy
For physics, what happens in the reaction of matter doesn't depend on your cognition. The same is true of the application of physical laws, no matter what unrealistic expectations you have. But for public policy, policymakers and voters will change their decisions about what they will bring, even if these beliefs are wildly false (e.g., higher minimum wages will increase the incomes of all low-skilled workers, or artificially lower prices will increase the supply of a shortage of goods).
Moreover, what we want to make a reality will have an impact on what we convince ourselves to believe, which in turn affects the false statements that the seekers of political control think will "work" for us. Implications for the electoral prospects of affected political representatives, which are missing from the physico-chemical relationship, will also alter policy choices, often in a worse direction.
In physics, there is no need to worry about the rights of elements, the violation of rights, or the question of fairness, justice, or equality. Yet, as the Founders of the United States so radically demonstrated, rights are at the heart of social interaction and governance mechanisms, and violations of these rights justify revolutions. In the physical sciences, the goal of language is precision, while in the social sciences language (and even the resulting analysis) tends to be rather vague and inconsistent, such as the current versions of "social justice" and the traditional meaning of "justice" that do not coincide, making clear communication almost impossible in many cases, let alone clear analysis.
Jeff Jacoby, in a 2009 Article in the Boston Globe, shed light on some of these issues.
"Economics will never be rocket science or any other 'hard science,' it will never be. Human motivations, hobbies, relationships, and expectations (materials of economic life) cannot be perfectly modeled or reduced to immutable equations. Unlike tides, electromagnetic waves, or chlorophyll, people have free will. Men and women make choices for themselves, and no economist or political decision-maker can say for sure what those choices will be. ”
What is the conclusion of all this? Economics is not like the physical sciences. Reasoning and analogy based on the physical sciences are often misleading in economics and can be harmful to society, especially if they come from careerists who want others to be manipulated by themselves. That's why Hayek wrote,
"The peculiar task of economists is to show the world that they know very little about the mechanisms they think they can design."
In other words, economics as a science, both its principles and logic, tell us what the reasons are, even if we know enough to control rockets, not enough to control humans.
What is the reason for controlling human beings?