A friend recently posted an article on Facebook located at https://aeon.co/essays/how-economists-rode-maths-to-become-our-era-s-astrologers called How economists rode maths to become our era’s astrologers. Here is my comment to his article share.

This is my comment to the article. There are a few things we might consider. One is to push the boundaries of economics towards a more mathematical and quantifiable discipline but presented in such a way that the common person can understand. Nate Silver from fivethirtyeight.com quantified election predictions based on different weighs on the results of public opinion polls when in the past, news commentators just guessed who might win an election with nothing to back it up other than a gut feeling. Another is to expand the disciplines required to be studied by new economists to fields including statistics, and politics because with government monetary intervention, every major economic policy or event has a political component. The introduction of negative interest rates, the creation of a credit market many times the value of an economy, and the advancement in automation of technology has skewed the effectiveness of an economic theory to explain the current phenomenon. For example, the automation of manufacturing technology means that less physical labor is required in the face of increasing demand for the manufactured product. Since there is less demand for physical labor, according to the laws of supply and demand, employers will pay less for their current labor. Technology efficiency also means that less raw materials are required because there is less waste in manufacturing which leads to decreases in commodity prices as less raw materials are needed to produce the same goods. The lower commodity prices further increases cost savings. The cost savings of their produced product is passed onto consumers in the form of lower prices which shows up in the form of lower inflation. The economic theory becomes less effective in using inflation rate as an indicator of economic growth. Another way of saying this is that we are currently testing the limits of these economic theories. Whether current economic theory holds, theorists have to add another factor to the economic theory mathematically to account for these new phenomenon (e.g. in Chemistry, the Van Der Waals equation explains the behavior of gasses in ideal conditions. To account for real gas behavior, a factor is added to the equation to explain the deviation from the ideal gas law), or we have to create a new set of equations remains to be seen.

What we cannot do, however, is to make the mistake of trying to use the economic phenomenon to explain the economic theory instead of asking whether the economic model is still viable in explaining the current economic landscape.