I knew I was going to like my Outer Banks vacation read, "Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics and Society," from the very first pages of Chapter One. Author Jim Manzi introduced the book’s main theme – “that real experiments were required for adjudicating among competing theories for the effects of business interventions” – by illustrating with strongly-opinionated macroeconomic analyses surrounding the stimulus program response to the 2008 economic crisis.
While “liberal” Nobel laureates argued that government spending should have been even higher than it ultimately was, conservative laureates countered that “it is a triumph of hope over experience to believe that more government spending will help the US today.” Worse than this 180 degree assessment difference by the best in economics, though, is that there was no way either side would be proven wrong even after the fact. The conservatives scoffed the stimulus didn’t accomplish what it purported; the liberals countered we’d have been in a full-scale depression without it – and what about the failure of Europe’s draconian conservative austerity policies anyway? “The key problem is that we have no reliable way to measure the counterfactual – that is, to know what would have happened had we not executed the policy – because so many other factors influence the outcome.” In short, there was no way to implement a controlled experiment to test the competing hypotheses. And without a smoking gun test, no way politically-charged economists will accept policy defeat.
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