Thursday, September 26, 2013
Macroeconomics is not a science. If you want to compare it to science, it is similar to medicine. The purpose is to solve practical problems: when someone is sick, doctors try to prescribe medicine for patient's better recovery. But diagnosis can be difficult and depends mostly on experience. You see symptoms: high fever, body ache, but there are so many possible reasons that you don't know for sure what is the cause. If you are a doctor, you need a lot of science training. With those training you guess it from your understanding of science. You try to find more evidence supporting your guess of a certain disease, and if you found evidence, and your guess is close enough, you prescribe something that worked in the past. Sometimes your prescription worked but for the wrong reason: antibiotics can kill many different types of bacteria. But your diagnosis of an infection is still in the right direction. Sometimes your diagnosis is correct, but the patient simply do not respond to the medicine you prescribed, due to other reason. Some medicine is effective in the past but can kill certain patients. There is a need to weigh risk and benefit.