This page deals with economics and business issues,concerning Latin America, and the global economy.-
Friday, August 07, 2015
Economics ,instability and uncertainty : Is it the weakest science of all?
Among different sciences, economics looks at first glance, like the one with more pending issues. Physics, and Mathematics are the sciences which allow us to be in the space, to go to the moon, and to get to Pluto and Mars. Chemistry and Biology are fitted to provide food, at a faster pace to an increasing global population .In all of these areas, there is few space for mistakes. So, these sciences, are precise enough in its foundations such that there is little doubt about the final outcome.-
Very much of that performance, is further improving with applied information technology and stronger capacity of new computers. Virtual reality increase the options, to reduce even further the error margin.-
What a difference economics science does, regarding its inability to control uncertainty and instability. The implication is that there is no way to guarantee the preciseness of the outcome. It follows that ,economics will always fluctuate between what it is expected and what it real . Thus , How come a society may become dependent upon economics , to solve key issues ?.The risk is very high that in such a case, it would be hard to avoid the wrong path for society as a whole .- .
Gary Becker made a huge contribution to the economics science, with its economics approach to human behavior. It stressed the rational nature of economics decisions made by humans, who keep in mind the benefits and the cost of its actions. Fertility, Marriage, Labor-leisure, rural-urban migration, crime were all subjects which could be explained by economics, so it defined policies to deal with them. So strong was the argument, that at macroeconomic level, it went that far as to suggest that economic policies , were not such a useful tool, for solving key unbalances between aggregate expenditure and incomes, unless nobody expected that policy intervention was necessary to coming in.
The whole issue of right or wrong, became somehow also solved by economics, depending upon the cost and benefits involved. Unfortunately for its expectations as a science, this approach turned out to be insufficient to guarantee an outcome all events proof. When it seemed economics reached its highest stage to be at a same level with other sciences, it failed with the control of uncertainty and instability. Just a few economists, predicted what the remaining ones the whole economic science and its followers ,could not foresee.-
The financial crisis of 2008, made a huge setback for the proposal of economics as the supreme master of all sciences. Economics alone is not enough to deal with uncertainty and instability. It needs complementary forces. Politics arise at the first place. Greek philosophers suggested, that politics instead economic should decide about the driven values and purposes of society, as long as values are permanent not transitory, and society become also more stable and peaceful. Let take an example, the meaning of freedom is based upon of its economics or politics implications?. It seems that politics has a wider response to justify freedom. Let check them out
a.- Freedom is a necessary condition for justice. Freedom is the way to justice, Without freedom there is no path to justice.
b.- Freedom allow citizen to become happier and richer, bot spiritually and economically so to speak.-
c.- Freedom allow society to increase wealth, and with it more people living better than otherwise .-
d.- Freedom allow a better allocation of resources to increase the welfare of society.-
One out of five reason to justify freedom, deal with economics, and keeping in mind that economics needs for such a purpose(d), an institutional framework.
So, Let politics to get through, and make it work with economics.