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Chris
05-05-2012, 02:13 PM
This point was raised in another thread and bears repeating. It applies to economics, and economic policy, here but could be applied to any social science.

Aggregates and Averages, Individuality and Interventionists (http://www.americanthinker.com/2012/05/aggregates_and_averages_individuality_and_interven tionists.html)
A man blessed with exceptional instincts, Cowperthwaite determined that the best strategy to keep Hong Kong recovery's moving forward was to enervate the interventionists by disarming their most important weapon. When asked to name the one reform that swelled his pride most, Cowperthwaite replied, "I abolished the collection of statistics."

Cowperthwaite knew that statistics provided the raw input for interventionist mischief. He also knew that an organic, messy, free wealth-producing economy is too confounding and too replete with innumerable combinations of human action to be improved by mere mortals.

...Throw out a number purported to represent a population, and if that number points to unconscionable inequity or a trumped up free-market defect, the interventionist is already three-fourths on his way to guiding the economy toward his vision. The problem for the rest of us is that any number the interventionists conjure will pertain to no individual.

...The great macro-economists parse the one big aggregated end number and then decide what levers would best move that number up or down. When individuality is lost and capital is viewed as homogenous, any investment is as good as any other investment. Move the interest rate and money supply to make that number hit the macroeconomists' target. How it hits is inconsequential; hence, the continual parade of one asset bubble after another.

...Interventionist bureaucracy abhors individuality, because individuality prevents the bureaucrat from operating in a society of bewildering complexity....

Josef Stalin understood the power of aggregates and averages as well as John Cowperthwaite did. "One death is a tragedy; one million is a statistic," the communist tyrant accurately observed. Statistics reduce the population to pawns easily manipulated by the whims of the interventionist, who can pacify his conscience knowing that a statistic can never be a tragedy.

Peter1469
05-05-2012, 02:21 PM
Moreover economic formulas are based on static models as if human behavior does not change....