All Categories

Syllabus

This seminar examines the development of practical knowledge intended to transform “existing conditions into preferred ones, ” as Simon (1996) put it.  Such knowledge is embodied in artifacts that do not exist in nature including physical objects, organizations, practices, and paradigms. Knowledge of what naturally happens or naturally is — of facts (such as of atomic structure), of physical laws (as of planetary motion), and of axiomatic theorems and models (e.g. in geometry or micro-economics) – lies outside our scope, except to the degree that we can harness such knowledge to develop and use artifacts.

By traditional intellectual standards, studying practical knowledge may seem undignified and uninspiring. The ancient Greeks venerated contemplation, music and the other arts, abstract truths, and mathematical reasoning. Merchants and craftsmen (including, presumably, builders of large hollow horses) occupied the bottom rung of Plato’s idealized society; their knowledge and toil was but a means towards the realization of the good life by a small enlightened class. Modern society has raised science into the pantheon of the wisdom we venerate. And, while engineers, physicians, lawyers, entrepreneurs, managers, and accountants can secure higher incomes, many continue to regard the development of that practical knowledge as subordinate – a mere application or translation of more profound scientific ideas. Similarly, although Western universities started by offering practical medical education, some in the upper reaches of the Academy now regard professional schools as verging on the teaching of trades that have no place in institutions of higher learning.

(more…)

Fair-lending laws turned consumers into anonymous credit scores—and a target for identity thieves.

In a longer working paper I further argue that reducing individuals to scores has also undergirded the vast growth of anonymous markets in securitized consumer and mortgage loans.

Photo: David Goldman/Associated Press

My working paper just posted on SSRN synthesizes ideas Ive been working on for my practical knowledge seminar, a case writing project on medical innovation and a forthcoming paper in the Journal of Applied Corporate Finance.

I argue that economics lacks an “engineering” counterpart to its “physics” side. That’s fine as long as you don’t rely just on the “science” of economics to make practical choices. But wouldn’t we be better off with an engineering side? (I grant social engineering is a scary phrase!)

Abstract:
Keynes thought it would be “splendid” if economists became more like dentists. They have instead become more like physical scientists who focus on propositions about invariant tendencies amenable to decisive verification. This predisposition, I argue, limits the utility of economics in evaluating concrete policy choices. I further suggest that emulating the more pluralistic and less decisive techniques used to develop and test new engineering and medical technologies would mitigate these limitations. Additionally, I offer an example of how a simulation model can help evaluate policies that affect the extension of credit.

My article, just accepted by Ekonomisk Debatt, will be published after translation by the Swedish Economics Association in May.

The argument is half-Hayekian in the sense it argues for an important role for the decentralized, private sector creation of the medium of exchange, which Hayek presumably would have approved of, but anchored in a government monopoly for creating base money that Hayek did not favor, but which dates back to antiquity.

Abstract:

The decentralized enterprise that sustains the dynamism of economies makes top-down monetary interventions, such as quantitative easing, that target aggregates such as overall inflation, futile. Moreover, economic stability and dynamism also require prudent, decentralized lending to decentralized borrowers. But, sustained monetary interventions aimed at aggregate inflation (or employment) targets induce imprudent credit extension, jeopardizing stability and dynamism.

 

https://ssrn.com/abstract=2924514

Amar Bhidé

Financial Times  August 16, 2016

Easy money is a dangerous cure for a debt hangover

Amar Bhidé and Anders Barsk

Quartz June 21, 2016

Brexiters are making a dangerous mistake in their argument for leaving the EU


From Quartz  January 7, 2015

When it comes to ISIL Europe is repeating the sins of its fathers

political posters