I was inspired by part of a Lew Rockwell speech that was posted at the Mises Institute website last week!
Today, I’m talking about the dangers of positivism in economics. Basically, in complex systems like the economy, you need a logical, causal framework to evaluate ideas. A purely positivist (i.e., each idea must be tested empirically) approach can be disastrous.
Why? Because empirical testing of uncontrolled systems can lead to counterintuitive and non-generalizable results!
The temptation to fiddle endlessly becomes a source of wealth for the fiddler and a source of poverty for everybody else.
Not only are there unlimited legions of bad ideas to “test,” there are an equally unlimited number of statistical tests to apply to the subsequent data, and a finite confidence interval means some of those statistical tests will give you false positives!
Anyway, check out the video up top, and the show notes here.