Thank you, someone who understands the circular flow of income. Tax isn't about there being more or less "money" or spending, its about placing some of the output of society under collective democratic control. Its about, you know, sharing some stuff a bit. That's alright, isn't it?
You can slice statistics a few different ways here though. Remember that the free trade models make two major predictions:
1. Total welfare is increased by free trade. This seems to be the case on average. Higher GDP, lower real prices for consumer goods as production moves to more efficient locations or process. This is unambiguously a good thing (as a first approximation).
2. There will be a redistribution of income between the factors of production leading to what is called factor price equalisation. This is much more complicated (and less supported by empirical evidence). Anyway, what this means is that labour say (one of the factors of production) should tend to have its income equalised over trading countries. Here is where your stagnant wages for the working class in the US over the last 40 years comes from.
Needless to say, lots of noise is made about 1 in favour of free trade, much less about 2.
Then there would be a Streisand Effect on the Streisand Effect.
Thank you for explaining the joke. Say, aren't you also the guy who explained "ya see, it's because the chicken was over there before, and it didn't want to be there, so it had to cross the road in order to be on the other side. Get it?"
Yeah, but that's not really explaining the joke though....
Go back a couple of hundred minutes and people believed everything was created by a big man in the sky!!
You're completely ignoring the degree of brainwashing and how many US citizens genuinely believe George Washington and Barrack Obama are the greatest leaders in the world.
There's a problem with this macho "zero-tolerance" concept also. No situation is ever 100% black and white clear. Zero-tolerance plays into the fantasy that things are just that, so we'll enforce the rules like God... yeah it is a bit all twisted and biblical.
>>>why people were looking to take out mortgages and other types of household credit in the first place.
Because the government-owned schools taught us to buy-buy-buy even if we had to go deep into debt to get our shiny-new toys (yes that includes shiny-new houses). The solution is for schools to teach people to say no, and save money first, and then pay cash.
>>>A bit of spend on some reasonable social housing
Sorry but I'm not working my ass off to buy somebody else a house. That's a violation of my rights and theft of labor. Let those persons save their own money to buy a small $40,000 starter home. Or rent, like I did when I first started.
No, instead you're working your ass off to pay for the collapse of the financial system. Personally I'd rather chip in a bit to make sure everyone in my neighborhood has decent accomodation.
As for the theft of labour argument, hahaha, what are you? A Marxist? Cause that's exactly what Marx says your boss is doing. The big wake up call from the current crisis is that you're going to be taxed regardless. So, you can vote for your taxes to pay for bombs and bailouts, or houses and hospitals....
The wider question is why people were looking to take out mortgages and other types of household credit in the first place. A bit of spend on some reasonable social housing so those that couldn't really afford it didn't need to turn to the credit system for a decent place to live would have been much cheaper than the bailout.
There were some other structural issues. The so called "death" of monetarism people called because the money supply was rapidly growing and inflation was staying low may have been premature. The money (credit) had to go somewhere, and it went into assets. A speculative boom being the result.
Just a few thoughts...
specifically, Information Technology Law and IP Law.
Yeah, but are you on THEIR side, or OUR side..?
Hi again, been busy and away sorry. I wanted to post a reply sooner... Anyway,
I definitely agree with your first observation, but do you really consider it to be a controversial statement in 2009? We have an entire field of Behavioral Economics that attempts to explain the observed market inefficiencies, and irrational actions by market participants.
We do have Behavioral Economics, and its very interesting. Sadly, much of what they have to say is boxed off into a little side field. It doesn't make much impact on mainstream academic economists and as for undergraduate teaching.... Micro every year, Behavioral and other hetrodox micro focused topics a third year elective, if lucky.
Still even if things are being cleaned up slowly, the idea of a self equilibrating, stable, free market is still a corner stone of our policy making apparatus, even if not made explicit. This is what I'm getting at when I talk about sacrilege. I made a simplification here, true, but there is a sense in much of economics that gov interference is the "least bad option" and that if we just had the guts to stick it out, Pareto efficient market allocations would result.
I think this is what you were longing for in your original post when you said:
"What is desperately needed in economics is a more reality based outlook that attempts to truly deal with the social and economic problems of wider society, rather than a bunch autistic, antisocial, arrogant geeks who don't even realise they're only allowed to keep doing what they're doing because it serves the interests of the powerful"
Your ranting about the powerful, I didn't get until I pasted your quote into my browser, and the spell checker choked on the word "realise". I think that the general political bias between the US and the UK is fundamentally different, and I once heard it described as follows: In the UK, you look at a rich man and say, "I want to get that guy," whereas in the US, we look at him and say, "I want to be that guy."
Haha, yeah we do tend to have a different outlook on that. What bothers me slightly about what you have written, is the faintly mocking tone "ranting about the powerful". Do you really think this isn't an issue? Economics over its history has a tendency to espouse ideas that legitimise (there's another one for the spell checker) the current distribution of income and wealth in society. In this, it acts in the interests of the powerful. Don't think I'm someone who wants to "tear it all down", but unless we are honest about the nature of the distribution of power, and its corresponding capacity to shape debate, we will be unable to level a rounded critique. Part of the baggage of classical and neoclassical economics is an attempt to put this kind of critique off the table. It places much of the economic fabric of society outside human agency, leaving you in a position akin to criticising gravity for someone falling off their roof.
When we move outside the west to the situation facing developing countries, this power aware discourse becomes even more important.
Do you really think any credible economist would argue that all government interference in the economy is a sacrilege? Business executives, maybe. But economists?
I mean, even the monetarist Milton Friedman wasn't against all government interference in the economy (he was, of course, against most interference). And as an aside, he also argued the ridiculousness of the "Economic Man", a walking, talking utility maximization problem, and that was in the 70s.
Your criticism, as it applies to Wall St. executives, I think is valid. But can you name any serious economist who claims that the government shouldn't be allowed to interfere in the workings of the market?
No, I can't name a serious economist making an impact today, but I'm not really writing about economists, my points were more an attack on the wider understanding of economics in society. So, yeah, I concede that point. Your point about Friedman, sadly homoeconomus made a return post Friedman. Lucas, Sargent, Prescot all working in 70, 80s made big use of the rational expectations hypothesis and Walrasian general equilibrium. An even more extreme position that that taken by the monetarists. The New Keynesians, Mankiw, Romer, have taken on much of that thinking.
So, overall, much of what you say is reasonable, but don't be fooled, much of the classical concept of utility maximising, rational actors working with equilibrating, optimising markets is still out there and going strong.
Nice thread, thanks for taking the time for a chat.
Not talking about the finance modelers, I'm talking about classical economics and its offshoots. Particularly new classical economics. Building your models (here I mean any mathematical treatment, not just computational models) based around things like utility maximisation and rational choice theory are fine to help you map out the theoretical territory. They are woefully inadequate for explaining any observed market behaviour.
The problem arose when this kind of economics led to policy making that sought to adjust the real world to fit these models. For instance, unions are inherently bad because they cause the market to deviate from perfect competition. Or, developing countries should focus on agriculture because that exploits their comparative advantage. In a banal sense statements like this are true, but only at the level of a very crude first approximation. There is no accounting for the social and historical specificities of the situation. When the mathematical treatment rules, the social side of the problem is abstracted away.
The economic ideas that become accepted "truth" in any period are those which serve to validate the position of the powerful. In prerevolutionary France, the physiocrats stressed the primacy of agriculture, these days we stress the natural, impartial action of the market, interference in its workings a sacrilege. Well that is until the wealthy are looking at losing serious money, then all the state interference necessary to mitigate this is suddenly allowed. I'm not saying that saving the banks isn't the right thing to do right now, we haven't really got a choice, and that is another big issue, but its interesting to see how quickly the economic rhetoric can shift when its the rich that start to hurt.
Yeah, its a big step in the right direction.
Oooh, yeah, thanks, I am interested in that. Its on my "todo" list to get more acquainted with some more innovative modeling techniques. Its pretty clear we need to model differently, more feedback being the first thing that springs to my mind. There is way too much tuning of the assumptions to get the results desired in economics at present.
Its interesting you should say that. The split in political economy when the practitioners in the field got high on maths basically created sociology. I think that idea comes from JK Galbraith.
The way I think about it, is that we're trying to take a scientific mindset and methodology into sociology. An attempt to uncover some of the relationships that drive our social and economic behaviour. I don't subscribe to the "its all crap" mantra (obv) but I do feel that the very maths heavy, rational agent optimisation way of doing things is a bit of a misstep. It should really be a minor subfield of maths that deals with rational decision making. A bit like game theory. Helpful in mapping out the theoretical territory, but of limited application to the analysis of real issues in society.
There is some light in the tunnel however. As more and more of wider society see that the neoclassical emperor has no clothes, the stranglehold of that school on economic thought loosens. The financial crisis is going to help this, people have already stopped looking at you funny when you talk about wealth redistribution. What's next? Will we be able to talk about class antagonism?
Ooops, went too far...
Part of the problem is that "the geeks" got hold of economics and constructed their big, deterministic, agent based models. Models can be illuminating true, but in the case of economics, when reality and models parted company, the economists bemoaned the inability of the real world to match theory.
What is desperately needed in economics is a more reality based outlook that attempts to truly deal with the social and economic problems of wider society, rather than a bunch autistic, antisocial, arrogant geeks who don't even realise they're only allowed to keep doing what they're doing because it serves the interests of the powerful (and they're not getting in the way too much).
IAAE
Old programmers never die, they just hit account block limit.
