To understand how we got ourselves into our current economic mess, complicated explanations about derivatives, regulatory failure, and so on are beside the point. The best answer is both ancient and simple: hubris - in this case, that of modern mathematical economics, which claimed to have devised a set of scientific tools that could predict and manage human behavior.
PRINCETON – To understand how we got ourselves into our current economic mess, complicated explanations about derivatives, regulatory failure, and so on are beside the point. The best answer is both ancient and simple: hubris.
In modern mathematical economics, many people in the rich world decided that we had finally devised a set of scientific tools that could really predict human behavior. These tools were supposed to be as reliable as those used in engineering. Having ushered scientific socialism into its grave at the Cold War’s end, we quickly found ourselves embracing another Science of Man.
Our new beliefs did not stem from some new experiment or unexpected observation, the way a real scientific paradigm shift does. Economists do not typically conduct experiments with real money. When they do, as when the Nobel laureate Myron Scholes ran the hedge fund Long Term Capital Management (LTCM), the dangers often outweigh the benefits (a lesson we still don’t seem to have learned.) And, since almost every observation that economists make turns out in a way that wasn’t predicted, no unexpected observation could ever actually change an economic paradigm.
Until recently, there had been relatively little discussion of what the rapid growth of digital labor platforms meant for the nature of work and the employment relationship. But an important recent report provides answers to many questions – and raises several more that policymakers and regulators need to address.
highlights the risks to workers arising from the rapid growth of online labor marketplaces.
PRINCETON – To understand how we got ourselves into our current economic mess, complicated explanations about derivatives, regulatory failure, and so on are beside the point. The best answer is both ancient and simple: hubris.
In modern mathematical economics, many people in the rich world decided that we had finally devised a set of scientific tools that could really predict human behavior. These tools were supposed to be as reliable as those used in engineering. Having ushered scientific socialism into its grave at the Cold War’s end, we quickly found ourselves embracing another Science of Man.
Our new beliefs did not stem from some new experiment or unexpected observation, the way a real scientific paradigm shift does. Economists do not typically conduct experiments with real money. When they do, as when the Nobel laureate Myron Scholes ran the hedge fund Long Term Capital Management (LTCM), the dangers often outweigh the benefits (a lesson we still don’t seem to have learned.) And, since almost every observation that economists make turns out in a way that wasn’t predicted, no unexpected observation could ever actually change an economic paradigm.
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