In Economics Do We Know What We're Doing? Nobel Prize winner grows disenchanted

Interpretations of Deaton’s Reassessment

• Thread parses his remark about the Great Migration and immigration:
  • Consensus: he is not endorsing racist hiring; he’s noting that tighter European immigration likely forced northern factories to hire Black workers, indirectly enabling the Great Migration.
  • Used as an example of how immigration can have distributional downsides for specific domestic groups, which he previously underweighted.

Keynesian vs Austrian Economics

• Debate over whether “Keynesian knob‑twiddling” (monetary/fiscal management) is humane stabilization or just postpones a larger crisis.
• Disagreement on whether any society has truly implemented Austrian ideas (no central bank, minimal regulation).
• Critics liken “true Austrianism has never been tried” to defenses of communism; defenders say virtually all history shows heavy state intervention.
• Some argue pre‑Keynesian recessions were more frequent and brutal; others say downturns are needed to purge bad investments, but acknowledge workers bear most of the pain.

Economics, Power, and Political Use

• Strong theme: economics is heavily used as ideological cover by media, politicians, and think tanks, often to justify pre‑chosen policies (tax cuts, deregulation, austerity).
• Economists are compared to court priests who legitimize power; incentives and funding (e.g., from wealthy donors) bias which economists are elevated.
• Calls that economists should foreground ethics, power, and inequality rather than treating “efficiency” as the main objective.

Limits of Models, Data, and Predictability

• Many comments stress that macro models rest on unrealistic equilibrium and rationality assumptions; general‑equilibrium math is fragile, with conditions rarely met.
• Econometrics without explicit interventions is criticized (Milton Friedman’s “thermostat” example; Lucas critique); instrumental variables and policy experiments are seen as partial fixes.
• Disputes over whether GDP, inflation, and even supply/demand curves are meaningfully measurable; some see them as rough but useful, others as so malleable they’re “nonsense.”
• Energy, long lags, and complex human behavior are cited as underrepresented or hard to model.

Supply, Demand, Crises, and Price Controls

• Basic supply–demand curves are defended as a valuable conceptual tool, especially to argue against price caps that create shortages.
• Others counter with cases where rationing and controls are necessary (war, pandemics, critical goods), and argue that real‑world outcomes often diverge from textbook predictions.

Globalization, Inequality, and Justice

• Several quotes from the article are highlighted: economists’ neglect of power, equity, and slow‑acting mechanisms; over‑optimism about technology and globalization.
• One side now doubts that harming certain workers for global poverty reduction was justified; another argues competition from a rebuilt world economy was inevitable and globalization made most people richer, with protectionism seen as worse long‑run.

Status of Economics and Its Prizes

• Recurring skepticism that economics is a “science” in the same sense as physics or engineering; replication and forecasting failures are noted.
• The economics “Nobel” is repeatedly called out as a bank‑created prize, framed as a PR coup for finance rather than a true Nobel.