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Date: | Wed, 18 May 2011 12:18:26 -0700 |
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The more I read Dave's explanations of his claims about doing the
science of economics as apart from the art of economics, the more
displeased I get. Haven't we learned since John Stuart Mill's essay on
method and countless restatements in textbooks that confronting
hypotheses with facts (data) to evaluate evaluate or select between them
is the appropriate scientific method? How is it that Dave can still
declare that economic science cannot tell how to control inflation? He
writes:
> But say that government is specific about its inflation goal--to achieve a certain level of inflation as defined by some measure, can we then provide a scientific answer. I believe not. You might do it by the way Abba Lerner and I suggested--creating property rights in prices, and establishing a market in changes in prices, thereby eliminating inflation. You might do it by price control; you might do it by limiting aggregate demand, or a variety of other ways. Each has advantages and disadvantages that go far beyond economic issues or economic theory, which is what I meant by the issues being vague. In my view, economic science cannot answer what method we should use to control inflation.
What is the meaning of "creating property rights in prices"? When and
where have price controls curbed inflation? What is the source of
"aggregate demand" so that controlling it, independently of a central
bank's money creation would curb inflation? Haven't we learned anything
since David Hume's Essay on Money that increases in the quantity of
money (the modern equivalence of a central bank's currency) in excess of
its demand only raises the price level ultimately, and from which we get
inflation? Dave's definition of science as the statement of how things
work should lead to his evaluating his alternative theories of inflation
by empirical evidence. Indeed, careful deductive reasoning affirms the
quantity theory of money as the reliable principle from which to account
for inflation. I think historians of economics invite their being
ignored as practitioners of economic science by their refusal to
recognize that.
James Ahiakpor
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