I couldn’t agree more with these commenters at Brad DeLong’s place:
I’d say the point is not that economists have come up with a lot of false hypotheses. That’s normal and just the way hypotheses are. The point is that the status of those so-called hypotheses is not reduced by empirical evidence. As noted by Quiggin, one problem is that they aren’t hypotheses at all but rather statements so vague that they can’t be tested. The other problem is that many economists draw policy implications of statements so vague that they can’t be tested.
Of course, economics isn’t the only “science” that begins with the letter E that suffers from these problems. What’s worse about economics, though, is that they already have at least three alternative hypotheses that work much better on both logical and predictive bases than mainstream Samuelsonianism or Efficient Markets.
None of the mainstream economists saw the financial crisis of 2008 coming. None of them realize that we are in a giant economic contraction now, not an economic recovery. None of them are paying any attention to the commercial real estate debt crisis or understand how that is going to affect the economy. (Here’s a hint: it could be bigger than the total Finance and Household sectors debt-deflation of $1.1 trillion to date and has the potential to take down up to 40% of the banking system in the next three years.) And despite some public tearing of hair-shirts, as per the famous article in The Econonomist, no mainstream economists have shown any signs of abandoning their failed hypotheses, policies, statistics, or econometric models.