How long have you been writing?
I began writing for national publications about 20 years ago. Barron’s Financial Weekly (the Dow Jones publication) had a column they called “Other Voices” that was part of the editorial pages, and I wrote a number of pieces for them. A few of them are re-published in “Fiscal Follies.” It was a perfect outlet for me to work on my writing, and to really focus on a particular audience. The editorial page editor at the time, a really excellent economics writer named Tom Donlan, would work with me on sharpening them up, and his edits gave me a front-row seat to how to write like a pro. I was still working for a big company at the time doing very technical work, so these articles were a way to really learn how to write concisely and effectively.
What would you say is your most interesting writing quirk?
The writing I like to do is meticulously factual, but I also use classical allusions and humor. I try to let the facts make my points, I like using quotes and I detest generalizations. Many non-fiction writers are trying to make some general point and end up lecturing their readership rather than entertaining and engaging them.
How do you do research for your books?
When I find an interesting non-fiction subject I study the references/footnotes and read the source material. I often request 100-year-old books from library storage that haven’t been checked out in decades. My experience with Barron’s taught me how much more readable and fun non-fiction writing is if you use quotations. The perfect quote that illustrates a historical point can often be found in old references. I am a “numbers guy,” and this shows up in a couple of ways. My writing is often chronological and geographical. I use dates and places to get the history to flow more naturally. (The financial history in “Fiscal Follies” illustrates this.) I also use specific quantities in my writing, and certain themes in the book are developed using simple arithmetical arguments.
Tell us about your first published book? What was the journey like?
I came upon a compelling history story a dozen years ago. It was regional history, not technical or financial history, but the story was so beautiful. I remember telling myself as I started writing that “You really don’t have time for this.” I asked myself in response “Do you want to be a writer, or not?” I knew exactly how I wanted to tell the story and I had all these great records I thought were worth publishing, and I finally just buried myself in the project on weekends and got it done. When the book came out, I had this wonderful experience that writers don’t often have. There are hundreds of descendants of the family portrayed, and they really enjoyed the book. I’ve met over one hundred of them, and I’ve given talks about the book all over the state and descendants often attend. It was a very rewarding experience. (How I came upon the history is re-told in “Fiscal Follies.”)
What is the key theme and/or message in the book?
The theme is simply that economics is not science in the same sense that physics and chemistry are. A simple idea, perhaps obvious, but the implications are profound. Many people don’t know just how precise physics and chemistry are, and how imprecise and error-prone the social sciences are. This differences are worth embellishing, and I use examples that are–I hope–fun and interesting stories in themselves.
What is the significance of the title?
I take some good-natured jabs at the economists and financial “big wigs” who dominate our public policy discussions and show the reader just how such people have blundered in the past. Some of the chapters draw inspiration from entertainments (movies, plays, even operettas) and describe how such works of fiction illuminate facts of human nature that influence our economic world. The book has the feel of a series of shows, like vaudeville.
Tell us about the process for coming up with the cover.
I felt the book needed artwork to help with the rapid changes in subject matter, but I am not artistic. I was discussing the problem with my wife and she mentioned that one of our nephews was working with AI images. He told me that you can just type in a text string and see what the software comes up with. I had him try a few text strings. They worked perfectly, and I used some of the images for the book. The cover—“court jester on a unicycle juggling dollar bills”–was one of them.
Was the writing process different and what challenges did you face writing xxx genre? (when writing in a new genre)
A book like “Fiscal Follies” is not a popular genre, and it is difficult to quickly communicate the idea of the book. “Fun with economics and finance? That’s not possible,” is the typical response. There have been very few books written in this genre, and the reason I thought it was worth trying is that the articles re-published in “Fiscal Follies” were well received and I knew I could write more in that vein and expand the general themes. The difficulty is that unless people (including book editors) are willing to give the manuscript a chance by reading it, they will simply assume that you can’t do it well enough. In a way, I understand them. Humor writing is difficult. (A great Groucho Marx quote: “Drama is one thing, but comedy is really serious.”)
Who is your favorite author and why?
I enjoy historians like David McCullough and Paul Johnson and enjoy the great fiction writers like Thomas Mann and Jane Austen. My favorite author, however, is P.G. Wodehouse, the great 20th century humorist who wrote the Jeeves and Bertie Wooster stories. I enjoy Wodehouse because he was such a superb prose stylist. Some of his paragraphs and his similes are brilliant writing, even though they’re often just silly. He is one of those writers who teach you, through his examples, just how many ways there are to structure a description and tell a story.
Who is the author you most admire in your genre?
The author (and the book) that inspired me to try this genre was a guy named Fred Schwed, who wrote a quite popular book back in 1940 called Where are the Customers’ Yachts? (I quote from the book in “Fiscal Follies.”) It is a book that is known to very many people who read and write financial history but is otherwise little known. The first sentence of the book is worth quoting:
“’Wall Street,’ reads the sinister old gag, ‘is a street with a river at one end and a graveyard at the other.’
“This is striking, but incomplete. It omits the kindergarten in the middle, and that’s what this book is about.”
Read Chapter 1 of Fiscal Follies
Chapter 1 INTRODUCTION: IS IT SCIENCE?
A few years ago, at a big, national meeting of professional economists, one of the economists in attendance is said to have created a period of uncomfortable silence when he asked the assembled throng to name an economic problem that the profession had actually solved.
It is a bit of a trick question, of course. Basic economics is really concerned less with solving problems than it is with structuring the discussion around questions a society and its citizens must constantly ask itself: What to produce? How to produce it? With what resources? How to distribute the produce? Et cetera.
The story, while perhaps apocryphal or exaggerated, is nevertheless interesting in that it exposes an uncomfortable truth. There are precious few widely accepted solutions to society’s many economic problems. This lack of clear answers to straightforward economic problems has been a source of frustration for many decision-makers, up to and including officials at the highest levels of government. U.S. President Harry S. Truman, when asked what he could really use in his administration, famously said in exasperation, “Give me a one-handed economist! All my economists say ‘On the one hand, on the other hand.’”
How could this be? How could a profession that sends at least one of its members to Scandinavia every year to receive a prize for achievement in the field of “Economic Science” grow silent when asked this question? After all, the Nobel laureates in other sciences such as physics and chemistry had specific achievements to tout, work that answered questions and was built on by others to produce real, tangible advancements and new products and technologies. How can a scientific field be bereft of tangible, permanent advancement?
One way to understand this uncomfortable silence is to look at the details behind the work done by some of those Nobel laureates. The Nobel Prize for Physics in 2017, for instance, went to a team of researchers who used extremely small distortions in space-time detected at the Interferometer Gravitational-Wave Observatory to observe—for the first time—the universe’s gravitational waves, waves that in the particular case studied were generated over a billion years ago when two black holes collided. The detection method, the precision of the measurements, the underlying phenomena responsible are all a little abstruse, but the conclusions reached were clear, unambiguous, and repeatable.
In contrast, the Nobel Prize in Economics for 2002 went to an Israeli psychologist for work that showed how human behavior—economic and otherwise—was often irrational and driven by bias. His research methods involved not precise measurements but the use of surveys (!) that put subjects in situations designed to pinpoint this bias and irrationality.
Here was work that, unlike that of the physicists, was easy to understand. Irrationality in decision-making—who does not encounter this almost daily? The irony of giving the prize to a psychologist, not an economist, whose findings tended to undermine the certainty and repeatability of all the other work done in the field of economic science, was one that caused remarkably little comment.
Most of us don’t understand the work done by these prize-winning physicists: It concerns solutions to problems whose relevance to our daily lives seems very small. We aren’t particularly interested in the details either because they are both complicated and somewhat boring—a repulsive combination.
Conversely, a field of study interested in the many ways in which humans may behave in an irrational manner is a field of study that is accessible to all of us. Even when economists resort to using higher math, they deal with subject matter that is easy to grasp: markets, prices, supply and demand. We are familiar with these subjects because we confront them every day. They are also subjects concerning which members of the public can, and often do, have differing opinions and value judgments.
How might this familiarity and these different opinions be a barrier to the development of the “economic sciences”? Perhaps for the simple reason that if humans are behind the behavior that results in the observations made by economists, precision and reproducibility of results will become a problem, because when faced with the same or similar sets of circumstances, humans will not necessarily think or behave in the same, or in any consistently predictable way.
This lack of precision and reproducibility is an open, acknowledged issue in the “soft” sciences like biology and medicine. A recent survey of some 1,600 of these researchers indicated that 70 percent of them had failed in attempting to reproduce the work of others, and a whopping 50 percent of them had failed in reproducing their own work! (Physicists and chemists were more confident regarding the papers published in their field.) Concern is utterly understandable in drug testing and in medicine and psychology testing, where humans are often the subjects of the experiment and where there are real human costs incurred when errors are made. Some 52 percent of these researchers considered this lack of reproducibility a “significant crisis.” Social scientists are somewhat concerned, with one journal acknowledging the problem and explaining that such social science studies are “difficult” to reproduce due to “culture” (because people are different) and “time period” (because people change).
An example might illustrate what is a simple point. Metallurgists know that certain gold alloys are more flexible and more lustrous than pure, 24 karat gold. A gold alloy that is both strong and beautiful is a version of 14-karat gold obtained by blending gold, copper, and silver at a specific set of weight ratios—58.5/29/12.5. The results of heating and blending these elements in these precise ratios are utterly predictable: the luster, the density, the electrical conductivity, etc. Imagine taking a similar blend of humans—perhaps Chinese women, Scandinavian men, Sumatran men—and subjecting them to a test: a particular game of chance, a particular tax system, perhaps stranding them all on a desert island and observing how they organize themselves, etc. Would the results ever be as utterly predictable for the humans assembled in these ratios as would the metallurgical process? To ask the question is to answer it.
The hard sciences like physics and chemistry are simply different from these other fields of study. Lumping them together as different forms of science is to fail to make an extremely important distinction.
These differences can also be seen by reviewing a little scientific history, specifically the human behavior surrounding what may be the two greatest advancements ever made in physical science.
When Isaac Newton formulated his laws of motion and of gravity—oddly enough, by looking to the heavens and attempting to explain the mathematics of lunar and planetary motion—he did not run out and shout “Eureka!” In fact, he did not bother to publish the details at all. It was the seventeenth century; he had a secure job as a professor of mathematics at Cambridge University in England; and there was nobody looking at the problem in the purely mathematical way he was, and no professional need to “publish or perish.” It was only years later, when rivals claimed to have reached some of the same conclusions, that Newton bothered to show the depth of his understanding by devoting two years to fully developing his views in Latin—the lingua franca of international scholarship at the time—in a compendious text he entitled the Principia Mathematica. The book appeared in 1687, some twenty years after he had arrived at some of its central insights. His work set out both the laws of physical motion and of gravity and of the mathematical tools he had developed to explain it all, something we know today as calculus.
When Albert Einstein offered a slight modification to Newton’s work a little over 200 years later, he knew that what he was advancing was counter-intuitive and not as readily demonstrable as Newton’s laws of motion. He described his theory in a paper, but his development of the ideas and conclusions had been purely theoretical and mathematical rather than empirical or observational. In deference to the durability of Newton’s work, and because of the abstruse nature of his own theory, Einstein set out three observable tests that would either confirm or refute his theory, what is now called the “General Theory of Relativity.” If Einstein was correct, the results of the tests he proposed would be slightly different from those predicted by Newton’s time-tested theories. If his new theory could not more accurately predict the results of these three tests, Einstein suggested Newton’s work should stand unmodified. These tests later confirmed his theory, of course. Perhaps the most famous of these three tests will be discussed later in this book.
Let us consider these two advances, but not so much the science as the behavior of the scientists involved. Newton decided not to bother to publish his findings in the 1670s. Why? History has branded Mr. Newton a solitary and secretive sort, but this hardly puts him far from the temperamental mainstream of the scientific community. More important than his natural disposition, there was no professional or financial reason to do so. Perhaps most important of all, Newton knew he was right. There was simply no doubt in his mind that his equations worked. His math illustrating how a gravitational force proportional to the product of the masses involved and varying inversely with the square of distance from the sun explained the motion of the planets set down by Johannes Kepler earlier in the century—the elliptical orbits, the variations in planetary rotational speed—worked perfectly to explain Kepler’s observations and equations. We know of once when he started to commit his thoughts to paper, but he never quite finished. There was no driving need to do so. Was he interested in the approbation or “constructive criticism” of his fellow scientists? Please! Further, what was the point of belaboring something that was so clear, so complete, especially because it would have entailed the tedious task of explaining the mathematical method he used, a method that was his own quirky creation?
Newton’s intellectual and mathematical brilliance is worth a paragraph. Keeping in mind the rudimentary seventeenth century scientific knowledge that Newton had at his disposal, consider the following intellectual feat: Theorizing that the moon’s circular orbit about the earth was a system that was similar to the elliptical orbiting of the planets about the sun, Newton used his mathematical ideas about the mechanics of circular motion and a gravitational force as well as the diameter of the earth and the moon’s approximate distance from earth and combined it with the lunar cycle to define the moon’s rotational speed. He then used this lunar speed and the moon’s distance from the center of the earth to compute the acceleration of free-falling bodies at the surface of the earth, a value that Newton and a few of his contemporaries knew well: 32 feet per second per second. Sure enough, the motion of the moon and its distance from earth predicted with reasonable accuracy the acceleration of free-falling objects at the surface of the earth, proving to Newton that his theory and his math were correct and that the principle of gravity that he had invented and defined mathematically was universal and explained motion at the surface of the earth as well as the heavens. This leap of intellectual and mathematical wizardry, done using only these few skeletal facts, may simply have no peer.
Albert Einstein knew that Isaac Newton’s math clearly worked to explain most of the physical world. A few specific tests could confirm Einstein’s theory and permit him to modify Newton’s work, tests that others were free to perform. The behavior of Newton and Einstein occurs every day at a far less interesting level in research laboratories throughout the world. Researchers and scientists work to solve technical problems, and the solutions are used to produce commercial products and potentially make money. Such advances are sometimes patented, but very often they go unpublished. The common law surrounding “trade secrets” has developed to protect property rights in such unpublished advances.
The idea of a social scientist, an economist perhaps, concluding something and keeping it to himself or herself is almost unthinkable, for any number of reasons. The whole point of the social sciences is to publish, ostensibly so that others can benefit from the conclusions. There are also extremely compelling monetary reasons for doing so, of course. Often the research is funded to generate and publish results. The social scientist could of course arrange a series of tests to confirm or refute the original finding, but this would often be prohibitively expensive and potentially wasteful in that the social scientist might have to concede that the original result was not reproducible and was, in fact, largely a matter of coincidence. It simply doesn’t happen much.
Most social scientists approach any fact pattern with a theory that they use to view the facts. Their theory, furthermore, is not really a scientific theory. It is not a testable hypothesis. Social scientists deal not in testable, “falsifiable” hypotheses but in “world views,” prisms through which facts are diffracted and filtered to generate a monochromatic light that illuminates the world in the tinted way in which the social scientist wishes to see it. To observe this, the social scientist discoursing upon their theory of “colonialism,” or “imperialism,” or “the flat tax” should be asked a simple Einsteinian question: What fact or fact pattern (past, present, or future) would cause them to reject their own theory? You and they will then discover that no such fact exists. If confronted by a fact that seems to contradict the theory, the good social scientist has a ready-made reason why it must be “filtered-out” or ignored due to some sort of bias or mistake they will insist was involved in its collection.
The intellectual legacy of the most influential social thinker of the last 200 years—for good or ill —makes this point. Karl Marx’s social and economic theories yielded both a general “class-based” view of the world as well as an unambiguous economic prediction. Marx believed that these classes were intractably at odds with one another, and he, therefore, made a concrete prediction: Workers’ wages would spiral ever downward as workers increased productivity, which he theorized would add to the supply of labor. “If one man does the work of 1-1/2 or 2 men, the supply of labor increases” is what he wrote—and additional supply of labor would, in turn, allow the capitalists to force down wage rates. This prediction was a critical part of his worldview: Workers’ wage declines would create desperate conditions that would lead to a revolution.
The ensuing decades, alas, would reveal Marx’s prediction to be completely wrong. Wages in England, where Marx lived, increased in purchasing power by almost 60 percent over the last 30 years of his life—literally, before his very eyes. No matter. Marx persisted in predicting his inevitable revolution even in the face of these realities, and his influence persists in the intellectual world because his nebulous, malleable theory about the class struggle–initially between the proletariat and the bourgeoisie, later the oppressed and the patriarchy–could be used to filter the light any way the viewer desired. The malleable “class theory” led Marx to make erroneous predictions, but if one ignored the errors and hoped others forgot them as well, the theory itself could continue to be useful, because his “class theory” wasn’t a testable hypothesis in the scientific sense, and it remains vibrant among social scientists, if perhaps not most economists, to this day. More will be said of Mr. Marx later.
Some influential social scientists used to understand this. Prominent economist and social critic John Kenneth Galbraith made this lack of a corrective force in the social sciences a critical part of his wildly popular 1950s book, The Affluent Society. In discussing how conventional thinking develops and hinders the specific sort of Progress that Galbraith advocated, he posited that, “Because economic and social phenomena are so forbidding…and because they yield few hard tests of what exists and what does not, they afford to the individual a luxury not given to physical phenomena. Within a considerable range, he is permitted to believe what he pleases. He may hold whatever view of this world he finds most agreeable or otherwise to his taste.”
The more modern view taken by many contemporary social scientists is that objectivity and balance are morally suspect, and in explaining themselves, they illustrate their disdain for (or ignorance of) scientific reasoning. Howard Zinn, the popular writer of polemical histories, insisted in his most popular book that his slanted approach to history writing is justified, even required. “The historian’s distortion… is ideological”10 Zinn tells us, going on to illustrate that the “intent” of various historical figures leads him to abandon balance. In discussing the behavior of people like Christopher Columbus and other Europeans in conquering the New World, he asks rhetorically, “Was all this bloodshed a necessity for the human race to progress from savagery to civilization? …Perhaps a persuasive argument can be made—as it was made by Stalin when he killed peasants for industrial progress in the Soviet Union as it was made by Churchill explaining the bombings of Dresden and Hamburg, and Truman explaining Hiroshima.”
Zinn’s logic, which is legalistic rather than scientific, is that if what Europeans intended in carving up the New World into private property as progress toward “civilization,” that same intent to advance progress could be used to justify acts like mass bombings and Stalin’s starving the Russian and Ukrainian peasantry.
Leaving aside the faulty parallelism involved in invoking the bombings of Dresden and Hamburg and Hiroshima, which were motivated not by a desire for progress but by a drive to end a terrible war as quickly as possible, Zinn claims the historian cannot distinguish between what colonizers intended when driving native peoples off land to divide it into private property and what Stalin intended when dispossessing, starving, and killing millions of peasants. Unable to distinguish between these intentions on moral grounds, Zinn argues that none of them can be justified.
The application of scientific reasoning, which focuses almost exclusively on probabilities and detailed results and not intentions, cuts through Mr. Zinn’s difficulty. Stalin’s treatment of the Russian and Ukrainian peasantry was based on a new and novel theory—to wit, the entirely speculative notion that collective farming would increase farm output over land kept in private hands—that had never been tried on such a scale and that quickly proved a complete failure. The details of this failure will be discussed later. The Europeans who settled the Americas, on the other hand, in defining and placing in private hands land that had been used as hunting grounds, were applying methods that had proven successful in Europe for hundreds of years and that quickly met with success in America as well. By focusing on intentions—one speculative, the other time-tested—the social scientist is unable to distinguish them and falls back on tendentious criticism. Equipped with the ability to differentiate between speculation and likelihood, the physical scientist easily gets past such simplistic equivalencies.
A related difference between the hard sciences and the others, one that hinges on this difference in testable hypotheses, lies in the ease with which errors are exposed.
The “cold fusion” case from the late 1980s can serve as an example of the ease and speed with which errors in the hard sciences are laid bare. Early in 1989, two respected chemists reported that they had detected odd levels of heat energy in a calorimeter containing “heavy water” (i.e., D2O) and a palladium cathode that were merely kept at room temperature and pressure. The chemists hypothesized that the deuterium nuclei in the heavy water were somehow interacting with the palladium catalyst and fusing with other deuterium nuclei nearby, and the “fusion” of these nuclei that results in the creation of a helium atom was producing the heat energy they were detecting with their calorimeter. If true, the energy produced in this way would be nothing short of a miracle in that it would be cheap and clean and plentiful because the energy released per fusion reaction is enormous. The results were widely reported, and the chemists behind the work were whisked off to testify before a Congressional committee. Alas, their results could not be replicated by others, and errors in their experimental methods and observations were quickly identified. Within a year, the excitement concerning the possibility of such a “cold fusion” reaction proceeding in this manner had completely dissipated.
If a physical scientist were to offer an alternative theory regarding the dependence of the gravitational force constant on distance and mass, perhaps through some correction of Isaac Newton’s work, the theory could be tested in a matter of minutes. When a social scientist posits a new method of societal organization that will improve the lot of the average citizen, however, there is no way to test the theory short of imposing it on the public using the coercive power of government. As an example, when social scientists offer, as they often do, a new series of marginal income tax rates or tax tables that they claim will result in what they consider to be more equitable outcomes or greater economic growth, they start from a world view and simply imagine what will happen. The “data” used to buttress their theories are, by the standards of the physical sciences, imprecise and inadequate. They have little scientific evidence to back up their claims–often because such evidence is difficult and/or expensive to generate—and they have no scientific evidence that isn’t confounded by dozens of facts.
Another difference between the hard sciences and everything else is more subtle and has to do with a principle called “the law of large numbers,” a law that underpins the insurance trade as well as the precision of much of the hard sciences. This law can be summarized as “even the extremely improbable becomes predictable with enough data.” An example: It was discovered in the 1940s that the half-life of an odd and radioactive isotope of carbon containing eight neutrons—carbon-14— was much longer than expected at about 5700 years. Following this, physicists gave birth to the idea of “carbon-dating.” They proposed measuring the radioactivity of the skeletal remains of plant or animal life to determine how long ago the plant or animal died.
Carbon-14 is extremely rare. Only one in a trillion carbon atoms cycling through the atmosphere and through living plants and animals is a carbon-14 atom. Such carbon-14 atoms are created when cosmic rays hit the earth’s atmosphere and convert a nitrogen atom into a carbon-14 atom. These exceedingly rare carbon-14 atoms react almost instantly with nearby oxygen molecules to become CO2, diffuse down to earth and are there “fixed” (via photosynthesis) into living plants and then animals.13 These one-in-a-trillion carbon-14 atoms are plenty, however, for the simple reason that every 12 grams of carbon atoms contains roughly a trillion-trillion atoms, meaning that those 12 grams of carbon atoms in a living plant or animal contain about a trillion carbon-14 atoms. This, in turn, means the age of the remains of a “once living” plant or animal can often be assessed with real accuracy even if the specimen contains only a few grams or even milligrams of carbon atoms because even if only one carbon atom in a trillion was a carbon-14 atom when the plant or animal died, there were still billions or even trillions of them in the specimen when it died, and their slow but predictable decay (back to a non-radioactive nitrogen atom) will allow the age of the specimen to be quantified because every 5730 years since the subject died, the number of such carbon-14 atoms declines by precisely 50 percent. Due to this rate of decay, the technique works best when the specimen died between 500 and 50,000 years ago.
This same law endows the hard sciences with incredible specificity. For example, the atomic weights of the lighter chemical elements listed in the Periodic Table of the Elements—those with atomic number less than 20 or so—are nearly always an integer multiple of the weight of a proton or neutron (which weigh approximately the same amount) because there are few isotopes and—like carbon-14—they’re rare. An exception is chlorine, which displays an average weight of about 35.45 times the weight of a proton or neutron because about 3/4 of all chlorine atoms in nature are chlorine-35, and 1/4 chlorine-37. The odds of sampling even a microscopic sample of chlorine atoms—perhaps a trillion of them—and arriving at any average significantly different than 35.45 is basically zero. Why? The Law of Large Numbers, that’s why. It may be possible to test a dozen chlorine atoms and get an average weight of 35, or 37, or any number in between other than that “true” average. A trillion chlorine atoms? Not a chance.
Do social scientists study trillions of subjects that behave in such a predictable manner to permit them to make such precise conclusions? Of course not.
Those social scientists with experience regarding the precision and reproducibility of the hard sciences would know that the conclusions they reach in their social studies should be properly modest regarding the reach and the finality of their conclusions. Such “hands-on” experience in the physical sciences is quite different, however, from simply passing a couple of science courses, and because of this, there are precious few such social scientists. Nearly all social scientists, therefore, do not realize that they are working in an ersatz scientific field, a hollow imitation of the real thing going on in the world’s real laboratories.
Social scientists who work with economic data may appear—both to the public as well as to themselves—to be scientific and “data driven” because the economic scorecards they toil over do seem very objective and precise. The financial figures generated by governments and corporations run to billions, even trillions, and the figures balance to the penny. Ledgers record tediously precise transactions; balance sheets show the equity account precisely equal to the difference between assets and liabilities. Income statements are often misleading and later need adjustment, but the precision of the arithmetic leading to the income figure is unassailable. All of this lends a patina of precision that can mislead the observer because even with all this exactitude, the doors of the fiscal world cannot be opened tomorrow without considerable uncertainty as to what the new day will bring.
The social sciences are simply not science in the same sense as the physical sciences. The studies they undertake in attempting to understand the past to better predict the future might be said to be “arithmetically systematic,” but that does not necessarily make them science. The conclusions they draw are often made using data and “correlation coefficients” that would make physical scientists giggle.
Social scientists and medical/biological scientists are often heard discoursing on a “model” they use to analyze a situation, and their work is often the subject of press releases that involve “associations” — e.g., greater use of laxatives was recently “associated” with dementia. The hard sciences do not use such terms—they use “equations.”
By starting from the presumption that the social sciences are a science in the same sense as the hard sciences, the intellectual world makes a dreadful mistake. This book is a compilation of some of these mistakes, chosen not merely to criticize but also to get us to laugh a little at the folly that is human endeavor. “Error,” as the old saw goes, “is what comes of getting out of bed in the morning.”
If the social science of economics is not science in the same sense that the hard sciences are, what is it? If the higher math that developed around the physical sciences should not be applied to economic and social problems, at least not with the hope of the same precision and certainty, what sort of imaginative constructions should be used to inform such disciplines?
This book argues that this social world can be better understood through the facts of economic history as well as works of fiction—plays, movies, opera lyrics—with all the fun that such understanding might allow. Articles developing these ideas and presented here appeared in national magazines and journals and websites devoted to economic and financial issues, and the comments generated suggested that readers found them interesting and fun.
This approach will no doubt impress some among the stern, hardboiled, non-fiction element of the reading public as silly and nonserious. In defense of this approach, I can only say that—unlike the economic theorists whose work I discuss—I am not trying to solve an economic problem with finality. If one’s thesis is that the study of the economic world is not a scientific process leading to the development of precise economic solutions, it would be sillier still to begin announcing such solutions. The writing here is not entirely devoid of the scientific method, however. The work of social thinkers is reviewed not by looking just at their ideas and intentions but by looking at their results, contrasting those results with the theories and predictions they used to justify the policies that produced those results. Economists have devoted precious little time to this approach, although they seem to have the time to study just about everything else. Errors made by economists and their cousins in the business world in approaching the general economic problem of scarcity have been huge and sometimes so disastrous that the reader might take this approach seriously. Mistakes can be funny, but perhaps not as they are being made. Mark Twain famously told us that, “Humor is tragedy, plus time.” The social sciences produced bouts of almost unimaginable tragedy in the last few hundred years, but with the advantage of hindsight, we can look back and analyze some of the mistakes and have a chuckle or two, something that would have been much more difficult when those tragedies were occurring. Similar mistakes are with us today if we are willing to look. That is what I’ve tried to do in this book.
