Friday, January 08, 2010

Economics and Deception

The closer you get to Economics the more you wonder why some people take it so seriously. They call it a `science` and yet, most of the mathematical modelling that goes into it is based on assumptions that are anything but solid.

Aruna Roy summed up this dilemma pretty well in one article -

There are two current myths that need serious examination. The first is that the economists have scientific answers and know best. The second is what the news and media now project—that people are largely mindless absorbers of glitter. Both these insult the intelligence of people.

Economics is not mathematics, it is more interpretative than absolute. Every economic argument has a counter argument. The power behind economic positions is determined by political ideology, the backing of power, money—sometimes ill-begotten—and a variety of motivations. The tragedy is that this group, which prides itself on its objectivity, has become the new God. Opinions are made by selective perception and, in their language, by data, sample size and schedules. The media helps reinforce the view that this is the whole truth.

Till two decades ago, it was accepted internationally that economic designs emanated from political priorities. But today we have conveniently elevated economics to a science, and we peddle it—consciously, hypocritically and ruthlessly for the well-being and reinforcement of a ruling elite, far more frightening than Big Brother ever was in Orwell’s 1984. We need to honestly question ourselves. As the Mahatma said, “There is enough for everyone’s need, not for everyone’s greed.”
Joan Robinson, a Cambridge don who was consulted by P.C. Mahalanobis while framing India's Second Five Year Plan, made another interesting point - "The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists."


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