[xapata]

Correct. Many nonlinear systems cannot be modeled beyond describing their qualitative phenomena. The "butterfly effect" prevents precise estimations. You wouldn't expect the weatherman to tell you whether it'll rain this day next year.

[oli5679]

Ok, but there are other less ambitious questions you can answer within the paradigm of economics. What are the losses caused by the current system vs an alternative according to a specific welfare measure?

[xapata]

But we don't yet even have a good model of the dynamics of the current system, let alone any good predictions for specific welfare measures of alternate systems.

[oli5679]

Even if we don't understand higher order dynamics of the entire system, we have an approximately understanding of parts of the system and can use total intermediary fees as a welfare measure.

Imagine two worlds, one where American financial regulations remain unchanged, and one where financial advisers are not allowed to be paid a referral fee by asset managers they recommend to clients. What would you expect to happen to intermediary fees in this situation? Would you support the policy? Or are you totally agnostic because of 'Chaos Theory', 'Higher Order Effects' and 'Economics is a pseudoscience'.