Recently, Tucker Carlson made the all-too-common mistake of suggesting that evolution by natural selection is an unproven idea, because evolution is just a “theory.” As he said on Joe Rogan’s podcast, “Darwin’s theory is completely unproven – which is why it’s still a theory, almost two hundred years later.” »
This is a basic misunderstanding of what “theory” means in a scientific sense. In the minds of those who make this mistake, theories are as yet unverified ideas that must be proven through the accumulation of facts and evidence. But that’s a mistake. Theories are explanatory frameworks that tell us what the facts mean. In other words, it is not the facts that prove or disprove theories. Theories explain facts and allow us to predict future facts and evidence that we should expect to observe in light of that theory. To say that evolution remains a theory after two hundred years is to say that evolution has remained an effective framework in its explanatory and predictive power regarding the facts and evidence discovered over the past two hundred years. This is not the devastating criticism that Carlson seems to think it is. It would be equally absurd to suggest that the germ theory of disease is an unproven idea, as it remains a “theory” despite having been proposed as far back as the 1500s.
Just as biological facts need a theory to be made intelligible, economic facts also need a theory. As with evolution, it is not uncommon to see commentators dismiss the importance of economic theory because it is simply theory – while they engage in a presumably more sophisticated practice of simply processing facts. Paul Krugman provided a wonderful explanation of how it goes wrong when discuss William Greider’s book One world, ready or not: the maniacal logic of global capitalism:
I think I know what Greider would say: even though I’m just talking about theory, his argument is based on evidence. The fact is, however, that the U.S. economy has created 45 million jobs over the past 25 years – far more jobs have been created in the service sector than have been lost in the manufacturing sector. Greider’s point, as I understand it, is that this is just a reprieve: any day now the whole economy will start to look like industry steel industry. But this is a purely theoretical prediction. And Greider’s theory is all the more speculative and simplistic because he is an accidental theorist, a theorist in spite of himself – because he and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are motivated by implicit assumptions that could not survive. daylight.
Needless to say, I have little hope that the general public, or even most intellectuals, will realize how completely stupid Greider’s book is.
Some of our statements are factually false, others are theoretically false. It may seem that the first error is the most serious, but the second is what really confuses our understanding. Indeed, I repeat, we need a theory to tell us what the facts mean. A mountain of correct facts interpreted by a bad theory will leave one deeply confused about how the world works.
For example, Congresswoman Alexandria Ocasio-Cortez once made the following comments about the low unemployment rate:
I think the numbers you just talked about are part of the problem, right? Because we look at these numbers and we say, “Oh, unemployment is low, everything is good, right?” Well, unemployment is low because everyone has two jobs.
Many people responded to this by pointing out that she was simply factually incorrect in her statement that “everyone has two jobs.” At the time she made this statement, the percentage of workers holding more than one job was at an all-time high. She claimed that unemployment figures had fallen because the number of people working multiple jobs was increasing – but this was factually incorrect, because the number of people working multiple jobs was not increasing as the unemployment rate fell.
But his statement being factually false was, in my opinion, less serious than the fact that his statement could not even have theoretically been correct. THE unemployment rate is not diminished by people holding multiple jobs. Rather, people holding multiple jobs would have the effect of keeping the unemployment rate higher than it would otherwise be, not lower. To see how, consider this very simplified example.
Imagine a town with ten working people. Being in the workforce means either having a job or not having a job but actively seeking one. Suppose eight out of ten people are employed and two people are unemployed and looking for work. In this case, the unemployment rate is 20%. Now suppose that a new job as a night watchman in a factory is created and two people apply for this job. One of the candidates is unemployed and the other is employed but looking to take a second job. If the job seeker gets a job, the unemployment rate would drop from 20% to 10%. But if the already employed candidate is hired and begins working a second job, the unemployment rate would remain at 20% instead of falling. (Also note that I chose my words carefully. It is not strictly true that having multiple jobs raised the unemployment rate – the rate here is unchanged at 20%. The idea is that having multiple jobs keeps the unemployment rate “higher than it would otherwise be,” and it certainly wouldn’t increase the rate. down.)
The big problem with the congresswoman’s assertion is not that she got the facts wrong. The big problem is that even if she was If she was right about the facts, she still wouldn’t have understood what those facts actually meant regarding the unemployment rate. This is why it is so important to have a good understanding of economic theory – because replacing incorrect facts with correct facts will do no good if one does not have a proper theoretical framework for understanding those facts.
For example, if I were asked to explain why I thought the economy was doing poorly despite low unemployment, here is an answer I could give that is at least theoretically correct:
Yes, the unemployment rate is low. But that’s only because many people have lost all hope of ever being able to find a job. As lawmakers continue to pass regulations that make it increasingly expensive to recruit employees, more and more of the least skilled and most vulnerable workers are being priced out of the labor market. Eventually, they give up on finding a job, and when they do, they are no longer part of the labor force and are no longer considered unemployed. So even though the unemployment rate is low, it’s not as good a sign as it might seem.
This explanation might be factually wrong: to solve this problem, we should look at labor force participation rate data to see if people have actually left the labor force. But this explanation is at least theoretically correct, meaning that discovering that the factual statement is false can actually lead to a better understanding of the situation.
