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On November 26 2016 03:16 LegalLord wrote:Show nested quote +On November 26 2016 03:08 ChristianS wrote:On November 26 2016 02:07 CosmicSpiral wrote:On November 26 2016 01:21 ChristianS wrote:
To prove free trade isn't actually good, you'll have to contend with such rock-solid theories as Comparative Advantage or the Law of Demand. If those are proven to be not truth, but mere professional bias, I'll eat my hat. You are tackling two different ideas here and they don't necessarily line up with each other. - Proving free trade isn't good has little to do with disproving economic theories. To prove free trade is good, you have to prove that it corresponds to and satisfies the heterogeneous value systems of human beings.
- Obviously, certain economic theories can describe behaviors within the market; by virtue of their level of abstraction, they are useful insofar as the economist can sensibly discern whether they're applicable (no one takes ceretis paribus seriously when applying the law of demand to real circumstances). Furthermore as LegalLord pointed out, a theory's power to describe phenomena is not equivalent to its ability to predict it. How economists predict the future of markets depends on what information they deem relevant, and there are many ways to skew their judgment on that front.
It's a bit ironic that you cite the Law of Demand as a rock-solid theory that can be proven to be true. The Law of Demand assumes the relevant economic agents are homo economicus, which you also disparaged as a fringe idea. It assumes a far more simplistic and functional notion of value than say, Baudrillard's object system. It seems i spoke imprecisely, so a couple clarifications are in order. When i said "trade is good" as a simplistic distillation of the economics on the issue, I meant good in the sense that economists usually talk about it, a sort of utilitarian perspective. That is to say, there are winners and losers from free trade, but the winners gain more than the losers lose, so more value is produced overall. In theory, rather than implementing a protectionist scheme you could just redistribute the winners' gains to the losers and everybody would be better off (although in practice redistribution schemes don't usually work out). The other clarification is that homo economicus is not a fringe idea in economics. It's a pretty central assumption, in the same way that volumeless particles with perfectly elastic collisions is central to the ideal gas law. The assumption is false, but its conclusions are still approximately correct, and you can then go back and talk about where your false assumption caused problems. In the case of the Law of Demand, the conclusion still seems pretty universal. Even though people don't really act like rational self-interested agents, thst approximation still seems to predict how their purchasing behavior varies with price quite well. You went wrong when you tried to draw an equivalency between a theory in chemistry and a theory in economics. One of those sciences is far more precise than the other. And chemistry doesn't do anywhere near as many of those bizarre "curve fit the theory to the data and assume it works" approaches. They modify their theories and confirm it through experiments that allow them to test the validity of their theoretical approach.
I'm certainly not going to argue with the idea that my discipline is more rigorous than economics. But for present purposes that doesn't matter so much. Economics doesn't always do a great job of supporting their ideas with experimental evidence, but the law of demand, for instance, is pretty well-supported. The only instance I've heard of in which a good doesn't exhibit normal price-demand behavior is rice in China. When the price of rice goes up, people buy more rice. That's because people have a limited amount of money to spend on food, and if they can they'd like to buy more luxurious foods, but if they don't have enough money they have to buy the cheapest option (rice). When the price of rice goes up, they have less disposable income, which means they have to buy less of the luxury options and more of what is still the cheapest option, even if it's more expensive now.
So the law of demand has a few weird exceptions, but nothing that would apply here. Comparative advantage means that goods will be more expensive if we force them to be produced domestically. Law of demand means that domestic demand will be reduced because of the price increase. That's a clear recipe for economic downturn. Biases of economics aside, that's all well-supported by both theory and evidence.
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Sanya12364 Posts
In the case of free trade, there is a quantifiable difference in the number of beneficiaries and the total economic output. This part of the free trade economic theory is difficult to refute. Simply more people are uplifted by free trade than by the lake of free trade.
However, that alone cannot be political justification for policy. Politics is subject to challenges to sovereignty first and foremost. In the case of democracies, there are questions of legitimacy, where the government is at least supposed to act in the general welfare as the people perceive it.
Once there the specifics of winners and losers in any economic arrangement are in play and the theory of holistic gain are not. Government policies play in this political economy.
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Academic free trade theory also assumes that you can allocate your resources to the most efficient application. This is clearly not the case in practice, and there are costs involved in changing the allocation of capitol as well.
In ideal conditions, you will still account for these things, but there is still potential disaster if you just throw a free trade policy in, and resources actually get misallocated as a response to policy.
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United Kingdom13775 Posts
On November 26 2016 03:46 ChristianS wrote:Show nested quote +On November 26 2016 03:16 LegalLord wrote:On November 26 2016 03:08 ChristianS wrote:On November 26 2016 02:07 CosmicSpiral wrote:On November 26 2016 01:21 ChristianS wrote:
To prove free trade isn't actually good, you'll have to contend with such rock-solid theories as Comparative Advantage or the Law of Demand. If those are proven to be not truth, but mere professional bias, I'll eat my hat. You are tackling two different ideas here and they don't necessarily line up with each other. - Proving free trade isn't good has little to do with disproving economic theories. To prove free trade is good, you have to prove that it corresponds to and satisfies the heterogeneous value systems of human beings.
- Obviously, certain economic theories can describe behaviors within the market; by virtue of their level of abstraction, they are useful insofar as the economist can sensibly discern whether they're applicable (no one takes ceretis paribus seriously when applying the law of demand to real circumstances). Furthermore as LegalLord pointed out, a theory's power to describe phenomena is not equivalent to its ability to predict it. How economists predict the future of markets depends on what information they deem relevant, and there are many ways to skew their judgment on that front.
It's a bit ironic that you cite the Law of Demand as a rock-solid theory that can be proven to be true. The Law of Demand assumes the relevant economic agents are homo economicus, which you also disparaged as a fringe idea. It assumes a far more simplistic and functional notion of value than say, Baudrillard's object system. It seems i spoke imprecisely, so a couple clarifications are in order. When i said "trade is good" as a simplistic distillation of the economics on the issue, I meant good in the sense that economists usually talk about it, a sort of utilitarian perspective. That is to say, there are winners and losers from free trade, but the winners gain more than the losers lose, so more value is produced overall. In theory, rather than implementing a protectionist scheme you could just redistribute the winners' gains to the losers and everybody would be better off (although in practice redistribution schemes don't usually work out). The other clarification is that homo economicus is not a fringe idea in economics. It's a pretty central assumption, in the same way that volumeless particles with perfectly elastic collisions is central to the ideal gas law. The assumption is false, but its conclusions are still approximately correct, and you can then go back and talk about where your false assumption caused problems. In the case of the Law of Demand, the conclusion still seems pretty universal. Even though people don't really act like rational self-interested agents, thst approximation still seems to predict how their purchasing behavior varies with price quite well. You went wrong when you tried to draw an equivalency between a theory in chemistry and a theory in economics. One of those sciences is far more precise than the other. And chemistry doesn't do anywhere near as many of those bizarre "curve fit the theory to the data and assume it works" approaches. They modify their theories and confirm it through experiments that allow them to test the validity of their theoretical approach. I'm certainly not going to argue with the idea that my discipline is more rigorous than economics. But for present purposes that doesn't matter so much. Economics doesn't always do a great job of supporting their ideas with experimental evidence, but the law of demand, for instance, is pretty well-supported. The only instance I've heard of in which a good doesn't exhibit normal price-demand behavior is rice in China. When the price of rice goes up, people buy more rice. That's because people have a limited amount of money to spend on food, and if they can they'd like to buy more luxurious foods, but if they don't have enough money they have to buy the cheapest option (rice). When the price of rice goes up, they have less disposable income, which means they have to buy less of the luxury options and more of what is still the cheapest option, even if it's more expensive now. So the law of demand has a few weird exceptions, but nothing that would apply here. Comparative advantage means that goods will be more expensive if we force them to be produced domestically. Law of demand means that domestic demand will be reduced because of the price increase. That's a clear recipe for economic downturn. Biases of economics aside, that's all well-supported by both theory and evidence.
Law of demand does mostly hold, yes. There is the class of Giffen goods that violate that law (Chinese rice sounds like a good example of that) but it is a mostly valid theory, yes. Problem is that there is far, far more than that to trade, and trying to say "it's just law of demand, of course it's better" misses the entire class of larger scale issues that necessarily accompany a more global economy.
For my previous example on the last page, your advocacy of trade based on the law of demand would be similar to me saying "we should lower minimum wage because the theory says we'd get more hours out of poor people that way." Even if you didn't know enough economics to tell me why that position is wrong I'm sure you would at least have a vague feeling that something doesn't add up. And they are both equally and instantly obvious to be flawed, even if I could spend days spinning a web of BS to justify an obviously wrong position that people who would be inclined to support my position would defend. Often the same people who support trade, in fact - moneyed interests that want cheaper labor and the smokescreen of appearing economically well-thought-out to hide behind.
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I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work. Of course that's another area where economic theory can be flawed. I believe in pre-industrialized times that relationship did actually exist – there are quotes from old industrialists about how they can't raise wages because if they do, they can't find any workers. Apparently a lot of people exhibited the opposite behavior, and tended to just work as much as they needed to to get by, and then spend the rest of their time on leisure. If you paid them more, they'd just work fewer hours for the same amount of money, and then they'd enjoy having more free time. Apparently the sort of law of supply behavior we'd expect, where if work was more lucrative workers would be more willing to supply it, is culturally engrained in industrial societies, not some innate human behavior.
But I'd like to push back against characterizations of my position as "it's just law of demand, of course it's better." Someone might think that protectionism will cause an economic downturn, and that is unfortunate, but it's important for various reasons to transition to domestic production. It's not impossible that the working class would be better off, even if everyone else would be worse off. And even if everyone including the working class was worse off in terms of standards of living, maybe someone might think domestic production is better for more intangible reasons, like that working for a living is good for a person's character, or we'd be less beholden to foreign powers, or any number of other justifications. I'm not necessarily arguing against any of that.
But if someone wants to argue that protectionism won't raise prices, they're just wrong. And if they don't think that higher prices will reduce demand, they're probably wrong there too. And by definition, that means people are going to have less stuff, and they're going to pay more for what they do have. That's a lower standard of living. If someone considers domestic production important for other reasons, those might be acceptable costs – but they are costs.
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If I were in Congress, and on some topic I felt the soundest vote was No, for reasons that I had clearly explained, but the popular opinion is yes by a notable margin (say 65-35, no comment on how well thought out that opinion is); and you were my constitutent, what would you want me to do?
Use my best judgment or reflect the sizeable popular preference?
and how would that vary based on how strongly I felt about the No vote being correct and how strong the popular preference is?
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United Kingdom13775 Posts
On November 26 2016 04:51 ChristianS wrote:
I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work. Of course that's another area where economic theory can be flawed. I believe in pre-industrialized times that relationship did actually exist – there are quotes from old industrialists about how they can't raise wages because if they do, they can't find any workers. Apparently a lot of people exhibited the opposite behavior, and tended to just work as much as they needed to to get by, and then spend the rest of their time on leisure. If you paid them more, they'd just work fewer hours for the same amount of money, and then they'd enjoy having more free time. Apparently the sort of law of supply behavior we'd expect, where if work was more lucrative workers would be more willing to supply it, is culturally engrained in industrial societies, not some innate human behavior.
But I'd like to push back against characterizations of my position as "it's just law of demand, of course it's better." Someone might think that protectionism will cause an economic downturn, and that is unfortunate, but it's important for various reasons to transition to domestic production. It's not impossible that the working class would be better off, even if everyone else would be worse off. And even if everyone including the working class was worse off in terms of standards of living, maybe someone might think domestic production is better for more intangible reasons, like that working for a living is good for a person's character, or we'd be less beholden to foreign powers, or any number of other justifications. I'm not necessarily arguing against any of that.
But if someone wants to argue that protectionism won't raise prices, they're just wrong. And if they don't think that higher prices will reduce demand, they're probably wrong there too. And by definition, that means people are going to have less stuff, and they're going to pay more for what they do have. That's a lower standard of living. If someone considers domestic production important for other reasons, those might be acceptable costs – but they are costs.
There is an income effect and a substitution effect. The economics of the issue predicts two opposing effects of unclear magnitude. The data shows that at the subsistence end, less money = more hours. Therefore we should lower the minimum wage. Clearly.
The "law of demand" argument here is similarly flawed. There is an argument for trade but it involves a wide range and wide depth of issues that simply don't fall into the scope of what you seem to think it is. It's an economic, political, military, foreign policy, and so on, issue, that simply can't be simplified to any simplistic appraisal of "trade good, trade always good" because that is just wrong and short-sighted. Throw in the tendency towards disinformation among those who advocate regarding the issue (if you look long enough you'll even find it in here) and you will find that it's just not a very fun game to play. Ultimately people vote based on their own appraisal of how it will benefit and hurt them and they are less wrong than people who say they're "just stupid" for voting that way would have you believe.
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On November 26 2016 05:21 LegalLord wrote:Show nested quote +On November 26 2016 04:51 ChristianS wrote:
I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work. Of course that's another area where economic theory can be flawed. I believe in pre-industrialized times that relationship did actually exist – there are quotes from old industrialists about how they can't raise wages because if they do, they can't find any workers. Apparently a lot of people exhibited the opposite behavior, and tended to just work as much as they needed to to get by, and then spend the rest of their time on leisure. If you paid them more, they'd just work fewer hours for the same amount of money, and then they'd enjoy having more free time. Apparently the sort of law of supply behavior we'd expect, where if work was more lucrative workers would be more willing to supply it, is culturally engrained in industrial societies, not some innate human behavior.
But I'd like to push back against characterizations of my position as "it's just law of demand, of course it's better." Someone might think that protectionism will cause an economic downturn, and that is unfortunate, but it's important for various reasons to transition to domestic production. It's not impossible that the working class would be better off, even if everyone else would be worse off. And even if everyone including the working class was worse off in terms of standards of living, maybe someone might think domestic production is better for more intangible reasons, like that working for a living is good for a person's character, or we'd be less beholden to foreign powers, or any number of other justifications. I'm not necessarily arguing against any of that.
But if someone wants to argue that protectionism won't raise prices, they're just wrong. And if they don't think that higher prices will reduce demand, they're probably wrong there too. And by definition, that means people are going to have less stuff, and they're going to pay more for what they do have. That's a lower standard of living. If someone considers domestic production important for other reasons, those might be acceptable costs – but they are costs. There is an income effect and a substitution effect. The economics of the issue predicts two opposing effects of unclear magnitude. The data shows that at the subsistence end, less money = more hours. Therefore we should lower the minimum wage. Clearly. The "law of demand" argument here is similarly flawed. There is an argument for trade but it involves a wide range and wide depth of issues that simply don't fall into the scope of what you seem to think it is. It's an economic, political, military, foreign policy, and so on, issue, that simply can't be simplified to any simplistic appraisal of "trade good, trade always good" because that is just wrong and short-sighted. Throw in the tendency towards disinformation among those who advocate regarding the issue (if you look long enough you'll even find it in here) and you will find that it's just not a very fun game to play. Ultimately people vote based on their own appraisal of how it will benefit and hurt them and they are less wrong than people who say they're "just stupid" for voting that way would have you believe.
I mean, at that end of things, I think your example fails partly because I might not necessarily disagree with the predicted outcome of lowering minimum wage – just the desirability of that outcome. There's a pretty good chance that lower wages would make workers work longer hours, but that doesn't seem very desirable to me. This, then, goes in line with what I've been saying: I push back against the characterization that I think anyone who opposes free trade is stupid or something. But prices going up is just about as certain as any economic consequences can be. Basic economic theory, e.g. comparative advantage, supports the idea. Then you look at the real world and you see these goods being produced for very low cost abroad, and the fact that American companies can't compete with their prices, and it should be obvious as the nose on your face that if foreign competition were removed, prices of those goods would rise. If there are political, military, foreign policy, etc. reasons to eliminate foreign competition then you can weigh those reasons against the economic costs to prices going up. But don't deny that they will go up, or say economists are biased when they say prices will go up. Both the theory and the evidence strongly support that prediction.
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On November 26 2016 04:51 ChristianS wrote:
I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work.
Is that really what the theory says? A change to the wage by itself isn't going to allow you to predict how many hours people will work, because there is an income effect and a substitution effect that push one's preference to work in opposite directions. Furthermore, more people will be employed to work, which should result in a net positive. Pure academic theory suggests that unless the minimum wage was already at the equilibrium wage, lowering the minimum wage will necessarily result in more money being spent employing workers. This isn't an argument that you can just wave away saying that it doesn't work that way.
Edit: it's a pretty safe prediction to say that prices will rise. What's not safe to predict is that it will have large effects on the economy that leave us in a much worse position after implementing a protectionist economy, and it's certainly not safe to say that higher GDP necessarily means that things are better.
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On November 26 2016 05:31 chocorush wrote:Show nested quote +On November 26 2016 04:51 ChristianS wrote:
I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work. Is that really what the theory says? A change to the wage by itself isn't going to allow you to predict how many hours people will work, because there is an income effect and a substitution effect that push one's preference to work in opposite directions. Furthermore, more people will be employed to work, which should result in a net positive. Pure academic theory suggests that unless the minimum wage was already at the equilibrium wage, lowering the minimum wage will necessarily result in more money being spent employing workers. This isn't an argument that you can just wave away saying that it doesn't work that way.
Again i suppose i have been imprecise. Law of Supply would predict that workers would work more if they were paid better. But as I noted there are other effects that might predict otherwise in certain conditions. I think the most likely interpretation would be that if there's a shortage of laborers higher wages will help, but we tend to have the opposite dilemma - unemployment is the big thing we're trying to keep down. In that context lower minimum wages would probably help (but again, that outcome might or might not be desirable).
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You are assuming that the price of labor is at the equilibrium wage. If you lower the wage beyond this, then less labor would be supplied at that wage, but the demand for labor would naturally push it up back to the equilibrium wage. Changing the minimum wage at equilibrium does nothing, because nothing forces firms to pay less per worker if it actually results in lower profits.
However, when your minimum wage is higher than the equilibrium, there is necessarily more demand for labor than what the current wage will result in based off of how much firms will produce at that wage.
Edit: This is considering aggregate demand and supply, and is separate from the choice of that an individual makes when his wages are lowered.
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Canada11279 Posts
Is rice in China such an exception though? If you look at rice in isolation, perhaps. But when the price of rice goes up, is it also the case that food costs as a whole are going up? So the demand for food remains the same because people need to eat, but the higher cost food is priced out of the market, and people dump the more expensive food and replace it with comparatively less expensive food, which in China is rice.
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United Kingdom13775 Posts
On November 26 2016 06:05 Falling wrote:
Is rice in China such an exception though? If you look at rice in isolation, perhaps. But when the price of rice goes up, is it also the case that food costs as a whole are going up? So the demand for food remains the same because people need to eat, but the higher cost food is priced out of the market, and people dump the more expensive food and replace it with comparatively less expensive food, which in China is rice.
I don't know if it is, but I will take an opportunity to explain the "Giffen goods" scenario.
Say rice costs $1 per unit, and meat costs $4 per unit. A standard worker earns $10 a week. They need to eat one unit a day to subsist, but more is better. They also prefer meat to rice but they can't afford to eat meat every single day. So they eat meat every Sunday but rice every other day.
Suddenly the price of rice increases to $1.25 a unit. They can't afford the meat anymore and now they have to buy more rice. Instead of 6 rice 1 meat, they buy 8 rice. Price goes up, they buy more.
That's how it could happen. Whether or not it does is a tricky question to answer but it has been done in "clinical experiments" with cigarettes with results that kind of confirm the idea in principle.
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On November 26 2016 04:51 ChristianS wrote:
I mena they're not "equally flawed" in that the theory predicts the opposite, actually – that as compensation gets worse people will be less willing to work. Of course that's another area where economic theory can be flawed. I believe in pre-industrialized times that relationship did actually exist – there are quotes from old industrialists about how they can't raise wages because if they do, they can't find any workers. Apparently a lot of people exhibited the opposite behavior, and tended to just work as much as they needed to to get by, and then spend the rest of their time on leisure. If you paid them more, they'd just work fewer hours for the same amount of money, and then they'd enjoy having more free time. Apparently the sort of law of supply behavior we'd expect, where if work was more lucrative workers would be more willing to supply it, is culturally engrained in industrial societies, not some innate human behavior.
But I'd like to push back against characterizations of my position as "it's just law of demand, of course it's better." Someone might think that protectionism will cause an economic downturn, and that is unfortunate, but it's important for various reasons to transition to domestic production. It's not impossible that the working class would be better off, even if everyone else would be worse off. And even if everyone including the working class was worse off in terms of standards of living, maybe someone might think domestic production is better for more intangible reasons, like that working for a living is good for a person's character, or we'd be less beholden to foreign powers, or any number of other justifications. I'm not necessarily arguing against any of that.
But if someone wants to argue that protectionism won't raise prices, they're just wrong. And if they don't think that higher prices will reduce demand, they're probably wrong there too. And by definition, that means people are going to have less stuff, and they're going to pay more for what they do have. That's a lower standard of living. If someone considers domestic production important for other reasons, those might be acceptable costs – but they are costs.
Interestingly enough, some societies (like the native Indians of South America. I don't know enough about the First Nations to speak of North America too), still work like that. They are seen as being lazy. Not because they're actually lazy, but because they won't work more than they need to to pay for the stuff they need. And if that happens to be 3 days of work per week, there's a good chance they just won't show up on the other 2. A friend from Manaus explained it quite well. He said that if the Indian needs food, he walks to the river and fishes. If you ask him why he doesn't fish a bit more, he looks puzzled and asks why he would fish a second fish if he's only going to eat one.
So yeah, materialistic is definitely an acquired culture, and not innately human.
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On November 26 2016 06:05 Falling wrote:
Is rice in China such an exception though? If you look at rice in isolation, perhaps. But when the price of rice goes up, is it also the case that food costs as a whole are going up? So the demand for food remains the same because people need to eat, but the higher cost food is priced out of the market, and people dump the more expensive food and replace it with comparatively less expensive food, which in China is rice.
You're kind of touching on the reasoning behind this already. Rice in some ways is a substitute for other foods, and one might consume more of it if the alternatives become more expensive. What made this example special was that controlling for other prices, quantities of rice consumed increased when the price of rice increased. This would make rice an inferior good, and the effect of the price change affected real wealth so much that the actual demand curve of rice changed.
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Canada11279 Posts
On November 26 2016 02:55 zlefin wrote:Show nested quote +On November 26 2016 02:00 LegalLord wrote:On November 26 2016 01:59 Orome wrote:
There's definitely reason to not blindly trust a consensus of experts when the experts in question are economists. There are also arguments to be made in favour of protectionism. That still doesn't make Trump's proposed economic policies look good however. Absolutely. There's no argument about that here, yet. The hope, though, is that someone in his administration can distill his intentions into policies that are more reasonable. And that's something that can perhaps be hoped for. And his presidency is almost certainly the end of the TPP and TTIP for the time being. That's definitely a good thing. We'll see what comes of NAFTA - perhaps that does need some renegotiating for the benefit of all the countries involved. I disagree on the end of TPP and TTIP being a definitely good thing. I believe they were beneficial, albeit only very slightly. I have no comment on other issues raised in the post or post chain.
Actually to my mind, the one really good thing to come out of Trump's presidency is the death of TPP. I tried voting for the party that was firmly against it in Canada and failed, but I think of the all of Trump's vague promises, I am most confident on this. And if US goes, Canada goes too. I'm sure the free trade portion of it was fine, but my biggest issue was in the intellectual properties section. TPP might have actually been alright for the US in the IP section because you guys have a pretty big advantage in IP, so locking people out and camping on IP is more important for profits. But for countries trying to innovate and break into industries, eroding the public domain and patent expiration is really, really bad. Yes, Hillary came out against it, in about the same way Trudeau did, but for all the dice rolling with Trump, I think ending TPP was a dice roll with Hillary and a sure thing with Trump.
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United Kingdom13775 Posts
Hillary didn't really come out against it. She paid lip service to the idea that she wasn't happy with the TPP deal while giving every indication that she planned on signing it into law. Her VP made the same instantaneous and not believable flip-flop. It was pretty clear she intended to pass the TPP when it would be possible.
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On November 26 2016 06:17 Falling wrote:Show nested quote +On November 26 2016 02:55 zlefin wrote:On November 26 2016 02:00 LegalLord wrote:On November 26 2016 01:59 Orome wrote:
There's definitely reason to not blindly trust a consensus of experts when the experts in question are economists. There are also arguments to be made in favour of protectionism. That still doesn't make Trump's proposed economic policies look good however. Absolutely. There's no argument about that here, yet. The hope, though, is that someone in his administration can distill his intentions into policies that are more reasonable. And that's something that can perhaps be hoped for. And his presidency is almost certainly the end of the TPP and TTIP for the time being. That's definitely a good thing. We'll see what comes of NAFTA - perhaps that does need some renegotiating for the benefit of all the countries involved. I disagree on the end of TPP and TTIP being a definitely good thing. I believe they were beneficial, albeit only very slightly. I have no comment on other issues raised in the post or post chain. Actually to my mind, the one really good thing to come out of Trump's presidency is the death of TPP. I tried voting for the party that was firmly against it in Canada and failed, but I think of the all of Trump's vague promises, I am most confident on this. And if US goes, Canada goes too. I'm sure the free trade portion of it was fine, but my biggest issue was in the intellectual properties section. TPP might have actually been alright for the US in the IP section because you guys have a pretty big advantage in IP, so locking people out and camping on IP is more important for profits. But for countries trying to innovate and break into industries, eroding the public domain and patent expiration is really, really bad. Yes, Hillary came out against it, in about the same way Trudeau did, but for all the dice rolling with Trump, I think ending TPP was a dice roll with Hillary and a sure thing with Trump.
well, as this is the US politics thread and I'm in US, I'm focused on whether it's good from a US perspective. (and a little bit from a world perspective)
I can't account for the perspective of each other signatory and what they gain as I have not studied them. but I'd imagine most of them have considerable gains from it, some it's more of a wash.
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Canada11279 Posts
On November 26 2016 06:26 LegalLord wrote:
Hillary didn't really come out against it. She paid lip service to the idea that she wasn't happy with the TPP deal while giving every indication that she planned on signing it into law. Her VP made the same instantaneous and not believable flip-flop. It was pretty clear she intended to pass the TPP when it would be possible.
Which to my mind is pretty similar to how 'against' the TPP Trudeau was. Noncommittal enough that you could probably you could back out, but you are probably going forward with it.
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On November 26 2016 06:04 chocorush wrote:
You are assuming that the price of labor is at the equilibrium wage. If you lower the wage beyond this, then less labor would be supplied at that wage, but the demand for labor would naturally push it up back to the equilibrium wage. Changing the minimum wage at equilibrium does nothing, because nothing forces firms to pay less per worker if it actually results in lower profits.
However, when your minimum wage is higher than the equilibrium, there is necessarily more demand for labor than what the current wage will result in based off of how much firms will produce at that wage.
Edit: This is considering aggregate demand and supply, and is separate from the choice of that an individual makes when his wages are lowered.
I think you have it a little mixed up, if I'm understanding you correctly. If the minimum wage is above the equilibrium wage, there's a shortage of jobs, not a shortage of laborers. So in that state employers can easily find workers, it just might not be worth it at that price.
If I understood LL correctly, his hypothetical claim was that based on economic theory, we should lower wages so workers will be willing to work more hours. This is presumably a hypothetical in which employers can't find enough workers at the current wage. In this scenario I'd say the economic theory probably predicts that workers will be even less willing to provide labor based on the Law of Supply, but there's some reason to think this might be an exception because at subsistence level people might exhibit anti-law of supply behavior because they need to meet the bare minimum to survive. In the US that might be questionable though; even the poor here aren't always at "subsistence level," they often have stuff like TVs and cell phones that they might rather give up than work 90+ hour weeks.
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EPT
