EPTI suggest dumbing it down for everybody's sake.
The Goddamn Economy: A Civilized Version - Page 37
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HeadBangaa
United States6512 Posts
I suggest dumbing it down for everybody's sake. | ||
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Savio
United States1850 Posts
On March 04 2009 07:34 Jibba wrote: Uh... the Ricardo model is seen as nothing but a theory in the development community, since it's usually not applicable in real economics. Capital liquidity is extremely high and from a rational choice perspective, it simply doesn't play out that they will or can develop a comparative advantage. When it is developed, it is only temporary and is often not sustained long enough to stimulate full industrial growth. Again, I beg of you, stop looking at it in terms of economics theory (which as Moltke pointed out is not as much of a hard science as it would like to believe) but in terms of public policy from the US and other countries involved. Theoretically, if every country engages in free trade it should be beneficial for all, but the first country that puts a protectionist policy in place is immediately going to become richer than its counterparts. Thus we have a giant fucking game theory model in which free trade cannot exist, and every single country uses modified levels of "strategic trade policy" to outdo eachother. Sorry, I am trying to catch up in this thread. I disagree with the first part of your statement here. I don't think you quite grasp the idea of what a comparative advantage is. But as for free trade and the game theory model, that has some real truth to it. However some argue that in many cases, countries like the US are best off without trade restrictions even though other countries have put on restrictions. In other words, our best response to their protectionism is still free trade. It may be because we import so much more than we export and that protectionist policies hurt consumers (higher prices) but help domestic producers. However, I think that would be extremely hard to prove but that is the idea. If we chose to help a relatively small number of domestic producers by raising tariffs, we end up hurting a much larger number of domestic consumers who now have to buy more expensive goods and less variety. | ||
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Savio
United States1850 Posts
On March 04 2009 08:00 Jibba wrote: I just don't see why we're having an economics discussion instead of a policy discussion. Its because Econ >>> Public Policy | ||
Jibba
United States22883 Posts
Macro is garbage. Even if it were reliable (which it's not), it has little relevance on what's actually going to happen. Here's one for ya. The F22 raptor costs 350 million dollars per plane, and Obama wants to remove it from the budget, but Congress is not going to let it happen. Now, you can talk about government spending, intervention, driving the economy, etc. but the only thing that's important is that manufacturing has been set up through over 1,000 companies in 40 states to ensure that interest group pressure keeps it in production. Why do you think something as stupid as the Buy American clause got introduced in the first place? It's public policy that you need to examine. EDIT: And I understand the comparative advantage well enough. The problem is that it becomes a comparative disadvantage unless a country can use it to expand growth in other sectors. There's a limited time to get this done, and it's easy for investors to move money from country to country. Ricardo built the model on the belief that infrastructure was difficult to build and replace, and that the continents were separated by oceans. The continents are separated by fiber optic cables. | ||
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fight_or_flight
United States3988 Posts
On March 06 2009 17:48 Jibba wrote: Macro is garbage. Even if it were reliable (which it's not), it has little relevance on what's actually going to happen. Here's one for ya. The F22 raptor costs 350 million dollars per plane, and Obama wants to remove it from the budget, but Congress is not going to let it happen. Now, you can talk about government spending, intervention, driving the economy, etc. but the only thing that's important is that manufacturing has been set up through over 1,000 companies in 40 states to ensure that interest group pressure keeps it in production. Here is another reason why macro economics is garbage. Most macro economists just assume constant growth (exponential growth), an assumption which is guaranteed to be wrong at some point or another. Their theories may work beautifully when things are growing constantly, but they fail to realize this is not a quiescent state. This video made a lot of good points which I can't refute. It is about exponential growth and it's dramatic consequences (its some physics guy giving a lecture). He seems to focus on population growth, but I think the real application we need to look at here is economic growth (which may or may not involve population growth). Population growth is limited by economic growth, and economic growth is currently assumed to be constant by our banking system. When viewed in the context of economics, this video seems to explain our current economic troubles and why they may be fundamental as opposed to some simple policy decision. http://www.teamliquid.net/blogs/viewblog.php?topic_id=80710¤tpage=4#65 | ||
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nataziel
Australia1455 Posts
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NovaTheFeared
United States7232 Posts
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warding
Portugal2396 Posts
On March 06 2009 18:05 fight_or_flight wrote: Here is another reason why macro economics is garbage. Most macro economists just assume constant growth (exponential growth), an assumption which is guaranteed to be wrong at some point or another. Their theories may work beautifully when things are growing constantly, but they fail to realize this is not a quiescent state. This video made a lot of good points which I can't refute. It is about exponential growth and it's dramatic consequences (its some physics guy giving a lecture). He seems to focus on population growth, but I think the real application we need to look at here is economic growth (which may or may not involve population growth). Population growth is limited by economic growth, and economic growth is currently assumed to be constant by our banking system. When viewed in the context of economics, this video seems to explain our current economic troubles and why they may be fundamental as opposed to some simple policy decision. http://www.teamliquid.net/blogs/viewblog.php?topic_id=80710¤tpage=4#65 Who, or which models make this assumption, why is it wrong, and why do they fail to realize it's wrong? On March 06 2009 13:47 fight_or_flight wrote: How many of them predicted this in 2006? Why should you believe they are they right now when they were wrong then? In fact, the people predicting another great depression in 2006 were more accurate than those economists. I don't know. I don't believe they are absolutely right, only that I place more confidence in their forecasts relative to random-TLers' forecasts. I could generalize like you and say that people who in 2006 predicted a depression for 2008 were the same people who in 2004 predicted a depression for 2006. Also, Peter Schiff fanboyism is ridiculous. He's an economist making wild forecasts left and right, he's bound to be wrong on most of them. He probably has been before. Worst even, he's a stock broker. It's great if his popularity leads people to learn more about economics and Austrian economics, it's silly if people start taking his word for granted and disregard all mainstream economists to follow the word of the 'prophet'. | ||
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oneofthem
Cayman Islands24199 Posts
this is a mistaken view. macro theory is still built on a lot of rational choice theory, which starts with axiomatized individual behaviors and builds up to a model of mass behavior. this methodology, or approach to understanding the situation, is more focused on internal consistency, how well models work given assumptions, and not on explaining actions by real people under contingencies. to do the latter would require a more careful study of how people actually behave, and when we are relying on this information to act, we have to treat the peculiarities of a situation seriously, not merely applying a clean model of rational economic actors. to put it another way, econ has an interest in keeping things simple in order to say something about economic behavior, but that something is going to be limited in relevance to real situations, requiring heavy qualifying. thus when you read an economist's prediction, the conclusion is just as important as the reasoning and assumptions. as history has shown, the model of the rational economic actor is becoming more complex as people work these complexities into the dominant math model. we have strategic interaction etc for example. even economists recognize that the world is more complex than the model. of course, a discipline like econ as it is currently doing business will have an easier time with micro situations, in which disparate situations could be more easily theorized, than macro situations. it's like building a house of legos. the bigger and more elaborate house will have more points of failure. | ||
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shmay
United States1091 Posts
On March 06 2009 23:53 warding wrote: Also, Peter Schiff fanboyism is ridiculous. He's an economist making wild forecasts left and right, he's bound to be wrong on most of them. He probably has been before. Worst even, he's a stock broker. It's great if his popularity leads people to learn more about economics and Austrian economics, it's silly if people start taking his word for granted and disregard all mainstream economists to follow the word of the 'prophet'. Granted, but the reason why I lend more credence to Schiff than other Economists is Economics itself. He has a large stake in the game. He's literally betting on Economic macro trends -- he faces huge incentives to know it intimately. While the academics like the guys at GMU, while I love them, don't face these in their ivory towers, and none of them saw this crash coming, while Schiff was screaming about it. | ||
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Choros
Australia530 Posts
Plenty of economists saw this crisis coming. I would say most decent ones did (there are many economists who believe without question in a dramatically oversimplified and ultimately fictional model of the economy but most people cannot tell the difference between them and the good economists ). There were economists in the early 90's who pointed out the simple fact that private sector debt levels just kept on rising while wages were stagnant overall and falling in many cases. It was clear that if this was to continue for too long then crisis was inevitable, naturally their calls fell upon deaf ears. The argument is that these people have been saying there will be a crisis every year for 20 years so they were bound to be right about it one day but no, this is the crisis they saw coming more than a decade ago the only thing you could not predict is exactly when. | ||
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warding
Portugal2396 Posts
On March 08 2009 19:08 shmay wrote: Granted, but the reason why I lend more credence to Schiff than other Economists is Economics itself. He has a large stake in the game. He's literally betting on Economic macro trends -- he faces huge incentives to know it intimately. While the academics like the guys at GMU, while I love them, don't face these in their ivory towers, and none of them saw this crash coming, while Schiff was screaming about it. Isn't all of wall street betting on economic macro trends too? I appreciate that he's putting his money where his mouth is (hopefully), but I don't think it makes him any more likely to be right. In fact, I remember reading that Schiff's portfolios have lost a lot of money. This post has some info on that: http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wrong.html On March 08 2009 20:55 Choros wrote: As a matter of fact theoretical economics predicts an end to economic growth. Politicians on the other hand do not. Really? Under which model? | ||
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Boblion
France8043 Posts
That's common sense ... And i don't even talk about pollution problems directed linked to "unmastered" growth or about the real "nature" of growth ( hi people greed ). | ||
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warding
Portugal2396 Posts
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Boblion
France8043 Posts
On March 09 2009 01:20 warding wrote: Human labour and physical resources may be finite, but what about technology affecting the productivity of the finite resources? Are advances in technology going to stagnate at one point? They definitly might. Or at least slow down. | ||
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ahrara_
Afghanistan1715 Posts
On March 09 2009 01:20 warding wrote: Human labour and physical resources may be finite, but what about technology affecting the productivity of the finite resources? Are advances in technology going to stagnate at one point? I think sustainable development is something we really have to consider (though I'm far from an environmentalist). Two problems with technology, and hopefully someone better informed on environmental econ can pick up on this: 1.) Technology does not always take into account environmental externalities. In fact, some technology actually facilitates faster exploitation. So you would be reducing your intake of petroleum while destroying another 100 sq km of rainforest, diminishing carbon reservoirs. 2.) Technology is not always exported to developing countries. The US could transition entirely to sustainable growth, but China can still be leaving a giant ecological footprint. | ||
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fight_or_flight
United States3988 Posts
On March 06 2009 23:53 warding wrote: Who, or which models make this assumption, why is it wrong, and why do they fail to realize it's wrong? Essentially the problem is more fundamental than even the explicit assumptions with macro economics. The problem is with the credit system itself which has been used for hundreds of years. Loans must be paid back with interest, and that usually means that the original investment is designed to grow. In fact, it is ingrained in our mindset that than an investment equals growth. I don't know which economic theories need this assumption to be valid or not. One would have to examine every single logical argument in that theory to determine if it did since this assumption is so fundamental that it is implicit. I don't know. I don't believe they are absolutely right, only that I place more confidence in their forecasts relative to random-TLers' forecasts. I could generalize like you and say that people who in 2006 predicted a depression for 2008 were the same people who in 2004 predicted a depression for 2006. Also, Peter Schiff fanboyism is ridiculous. He's an economist making wild forecasts left and right, he's bound to be wrong on most of them. He probably has been before. Worst even, he's a stock broker. It's great if his popularity leads people to learn more about economics and Austrian economics, it's silly if people start taking his word for granted and disregard all mainstream economists to follow the word of the 'prophet'. I'm not saying any particular viewpoint is correct. I'm simply saying that your viewpoint is incorrect. Panels of economists generally will say whatever is politically correct. They did not predict this crisis, and during the crisis they repeatedly said it would be over soon, and each trillion dollars into the banking system would return it to "health". Why start believing them now? | ||
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fight_or_flight
United States3988 Posts
On March 09 2009 03:15 ahrara_ wrote: I think sustainable development is something we really have to consider (though I'm far from an environmentalist). Two problems with technology, and hopefully someone better informed on environmental econ can pick up on this: 1.) Technology does not always take into account environmental externalities. In fact, some technology actually facilitates faster exploitation. So you would be reducing your intake of petroleum while destroying another 100 sq km of rainforest, diminishing carbon reservoirs. 2.) Technology is not always exported to developing countries. The US could transition entirely to sustainable growth, but China can still be leaving a giant ecological footprint. These are good points, but I think you guys are missing the bigger picture. If you watch the video (which i know is really long), he makes the point that in about 750 years, at the current population growth, there will be a human for every 1 square meter of land on the earth's surface. And in something like a few thousand years, the mass of humans will equal the mass of the earth.. I argued vigorously for technology as well. He didn't cover the exponential growth of technology, only the exponential growth in liabilities. Even if we could colonize both mars and the moon, the doubling time of our population is measured in decades, not millennia. So even if we had free energy technology, we would literally need to create matter and live in space to continue our growth. Even then, eventually the volume of space we would need would need to increase to a point where we would need to be moving away from each other at the speed of light to sustain constant growth. On the flip side however, I don't think population growth is such a big problem because as Japan, Russia, Europe, and (non-immigrants) of the US show, eventually populations decline. So we are really concerned with economic growth here in my mind. edit: I personally don't believe there is a limit to technology, and in fact I think technology can't be predicted. So even my comments above are probably not valid (what if there are infinite parallel universes, etc). My sole point is that we should probably not base public policy off of expected technological gains which are currently unknown. | ||
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CursOr
United States6335 Posts
is there any documation of a declining population that had a growing economy? i dont know any instances of it, but there might be. if that point comes in 5 years or 100 years, it eventually has to come. (russian population shrinkage) edit: + Show Spoiler + "Economically declining populations are thought to lead to deflation, which has a number of effects. However, Russia, whose economy has been rapidly growing (8.1% in 2007) even as its population is shrinking, currently has high inflation (12% as of late 2007)[9]" is 8% growth under 12% inflation really growth? or just borrowing? from: http://en.wikipedia.org/wiki/Population_decline | ||
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Shiftster
United States13 Posts
On March 09 2009 09:20 cUrsOr wrote: at some point the population growth has to stop, and will probably decline. ] Yeah, Japan and Western Europe are both getting shitkicked as the average fertility goes down. At the point where a small entrepreneurial class has to support masses of the retiring elderly, there are going to be serious economic consequences. But I digress. Let's talk about the Buy-American clause. The truth is, just like in 1929, when Hoover instantiated the Smoot-Hawley tariffs, this will bring eventual disaster to our economy. A trade war will begin, and our exports will suffer. Populism fails because it does not regard the long-term consequence. Obama is appeasing the blue-collared workers in the short term, but the future is at stake here. | ||
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