Economic laws - anyone know any?
It was argued recently in this community that the further one leaned twards the left, Politically, the less one understood the ' realities' of economics.
I have to say that, as a left of centre sorta guy, I can only think of one Economic Law that will hold good with being compared to other branches of Science like Physics and Chemistry. And that is the Law of Supply and Demand.
Let us suppose I find a ten ton seam of coal near the surface on my land. I have a supply. Now, as long as there is big demand,I can sell my coal at a high price - however, if more people find coal on their land and enter the market as suppliers, the price will drop. OTOH, if only a few suppliers are trying to satisfy an ever increasing demand from a bigger market, the price of coal will rise.
Also, we must not forget the law of diminishing returns. Say I want to run a mile in world record time. So, I get into training for a whole month. Hey, from being a totally unfit slob, if I keep at it, I am gonna go on to be reasonably fit. i will drop a quite a few pounds and shave a fair bit off my time. but, as I get closer to my ideal weight and optimum fitness level, I cannot expect to keep on making progress at the same rate- otherwise, i am going to end up running the mile and arriving before I set off. Instead, I will find that it will be relatively easy to shave off the first minute, and progressively harder to improve.
And so it is with improving or increasing economic performance.
I think that this is just about all we can say with certainty about economics. Because , unlike Physics and Chemistry, economics is concerned with living people who have free will.Just because something is logical, sensible or desireable, people are not compelled to do it. If people can behave in stupid and self defeating ways, they usually will. Hence, economics cannot be an exact science.
Sure, there are economic theories - but these are not hard and fast, well established paradgms like the theory of Gravity or the theory of Evolution is. When a scientist says ' I have a theory' , it means s/he has developed a testable hypothesis, something one can check by peer review. When an economist says the same - well, s/he just has a hunch.
Economic forecasting is basically the same as betting on racehorses. you may be good at it, but you need an awful lot of luck or an extreme degree of caution to stay in front, winnings wise.
But this is merely my own opinion, as a lay person who has read the news and watched the world for more decades than some internet users have been alive. maybe someone out there is an economic genius who knows a lot more economic laws than this, and can give us a rundown on what we can expect to happen in the next few months/ years/ decades, going on these 'economic laws' that are so widely touted.
Even better, maybe that can explain why we need a stock market. I mean , why not do what the Japanese do - ask workers to invest in the company they work for? It would ensure that the firm has a source of capital, and that the workers have an incentive to see that the company succeeds. Or would it?
I have to say that, as a left of centre sorta guy, I can only think of one Economic Law that will hold good with being compared to other branches of Science like Physics and Chemistry. And that is the Law of Supply and Demand.
Let us suppose I find a ten ton seam of coal near the surface on my land. I have a supply. Now, as long as there is big demand,I can sell my coal at a high price - however, if more people find coal on their land and enter the market as suppliers, the price will drop. OTOH, if only a few suppliers are trying to satisfy an ever increasing demand from a bigger market, the price of coal will rise.
Also, we must not forget the law of diminishing returns. Say I want to run a mile in world record time. So, I get into training for a whole month. Hey, from being a totally unfit slob, if I keep at it, I am gonna go on to be reasonably fit. i will drop a quite a few pounds and shave a fair bit off my time. but, as I get closer to my ideal weight and optimum fitness level, I cannot expect to keep on making progress at the same rate- otherwise, i am going to end up running the mile and arriving before I set off. Instead, I will find that it will be relatively easy to shave off the first minute, and progressively harder to improve.
And so it is with improving or increasing economic performance.
I think that this is just about all we can say with certainty about economics. Because , unlike Physics and Chemistry, economics is concerned with living people who have free will.Just because something is logical, sensible or desireable, people are not compelled to do it. If people can behave in stupid and self defeating ways, they usually will. Hence, economics cannot be an exact science.
Sure, there are economic theories - but these are not hard and fast, well established paradgms like the theory of Gravity or the theory of Evolution is. When a scientist says ' I have a theory' , it means s/he has developed a testable hypothesis, something one can check by peer review. When an economist says the same - well, s/he just has a hunch.
Economic forecasting is basically the same as betting on racehorses. you may be good at it, but you need an awful lot of luck or an extreme degree of caution to stay in front, winnings wise.
But this is merely my own opinion, as a lay person who has read the news and watched the world for more decades than some internet users have been alive. maybe someone out there is an economic genius who knows a lot more economic laws than this, and can give us a rundown on what we can expect to happen in the next few months/ years/ decades, going on these 'economic laws' that are so widely touted.
Even better, maybe that can explain why we need a stock market. I mean , why not do what the Japanese do - ask workers to invest in the company they work for? It would ensure that the firm has a source of capital, and that the workers have an incentive to see that the company succeeds. Or would it?