I read an interesting article on The Atlantic the other day, probably read it in the past as it was an OpEd written in 2013, but is still as important as ever. The article’s premise is that there are no Economic Laws.
This of course is obvious, as in hard science we never refer to anything as “Laws” any more, other than antiquated theories that represent paradigmal thinking from great minds of the past. For example, the Law of Gravity has been significantly modified with the Theory of Relativity. Sure, the underlying math of the “Law” works for the most part, but breaks down under certain conditions. Meaning that it’s not actually an unbreakable law.
Even in Mathematics there are no true laws, there are theorems that are true, however not all those theorems can be proven to be true, according to Godel’s Incompleteness Theorem.
If we are unwilling to say that there are no laws in Mathematics and Physics, how can we so willingly say there are laws in Economics? This is foolish as it pushes us to think that the Economics is unchangeable and thus works consistently across all conditions and times. Recently the IMF released a report essentially arguing that the trickle down effect doesn’t work as it truly doesn’t “raise all boats”.
We must instead look at Economics as a tool, one that is imperfect and should not be used to moralize. However, it can be used in policy as long as we are willing to abandon the tool once we see that it does not work. Furthermore, tools that worked once don’t always work in every situation. There are tools that are more flexible and likely to work than others, similarly to specific frameworks. This is true in Process Improvement as it is in Development and Economics.
We need to seriously look at our policy tools and think about abandoning some of our economic frameworks as they are hurting the economy.