Now it's obvious that if I=1, then there are no imports or exports, and no immigration or emigration. The country has to develop all its own industries for everything it needs to survive. This case obviously maximizes the need for labour from the local population by definition.
Or later, you say:
You can have lower prices or lower unemployment, you choose.
I say that here's a corner with a banana shape, so the world is not like a cube.
You're not being consistent. When I make a claim, you say it cannot be true because economic modelling is impossible, and empirical observation is not scientifically valid. But then, you make your own claims, for instance about links between prices and unemployment!
You need to choose between the two options. You can either dismiss my claims on your grounds that economics is intrinsically impossible, and accept that your own claims are equally impossible to prove. Or you can accept that economics is possible, in which case you need to explain the models and assumptions of your unemployment/pricing link.
At present, you're trying to have it both ways. When I make a statement, you say it's impossible. When you make a statement, you believe your assumptions are unquestionable.
Now regarding my assumptions, you're forgetting that it is possible to make a fallacious argument towards a true conclusion. You can be as skeptical as you like about the assumptions that lead me to say "increasing trade will increase employment in the long run". However, the most that allows you to do is to express agnosticism about that conclusion. You cannot say that that conclusion is not true, however flawed you think my arguments are.
Finally, I should note that this issue has nothing to do with the abstruse debate between neoclassical economists and Keynsian economists. The whole point of Keynesianism is precisely that they believe that that they can reduce unemployment by introducing more money into the money supply, by government borrowing and spending in particular.
However, trade also increases extra money into the money supply: firstly as the exporting companies get foreign profit, secondly due to inward investment from overseas.
When you maintain that increasing trade reduces employment, you're rejecting not just eeeevil neoclassical economics, but nice Keynesian economics. And, I suspect, Marxian economics too. [ Parent ]
Now it's obvious that if I=1, then there are no imports or exports, and no immigration or emigration. The country has to develop all its own industries for everything it needs to survive. This case obviously maximizes the need for labour from the local population by definition. This statement depends on many assumptions about economics, such as that "needs" are a constant, that importing goods cannot create new "needs".
Correct me if I'm wrong, you're saying: here's a micro economic model argument (comparative advantage), it works in some cases (companies producing widgets etc). Therefore, it's conclusions are good as a general principle (free trade! globalization!). I'm saying: here's the same micro economic model argument (comparative advantage), it fails in some cases (impose a restriction which intentionally violates assumptions). Therefore its conclusins are bad as a general principle (trade barriers! antiglobalization!).
So far so good, but you seem to insist that your general principle has evidence (the "good" analysis of companies producing widgets) whereas my competing principle doesn't (the "bad" analysis where I merely replace assumptions). However, I can't accept that.
Surely, you agree that making a full scientific model of the world economy within which the general principles can be put head to head is beyond feasibility? (at least at this time if you're optimistic) I think that it is certainly preposterous to expect from such a model, were it to exist, analogous qualitative behaviour to the simple comparative advantage model, or any other simple model which aims to study particular behaviour.
If you fail to see that, I'm happy to give you two equations which differ by a simple term whose qualitative behaviour along solutions is radically different.
However, if you accept that, then why should a simpler model, however useful in some cases, constitute positive evidence for a more complex one?
You need to choose between the two options. You can either dismiss my claims on your grounds that economics is intrinsically impossible, and accept that your own claims are equally impossible to prove.
Now regarding my assumptions, you're forgetting that it is possible to make a fallacious argument towards a true conclusion. [...] However, the most that allows you to do is to express agnosticism about that conclusion.
When you maintain that increasing trade reduces employment, you're rejecting not just eeeevil neoclassical economics, but nice Keynesian economics. And, I suspect, Marxian economics too.
This is especially true when you attack my models for over-simplifying, when your own models are even more over-simplified.
For instance, your model depends on a zero-sum model of trade, which comparative advantage shows to be false. If one nation concentrates on coal-mining, and the other on steel; comparative advantage shows that the amount of coal and steel produced will be greater in the trade case than the no-trade case: wealth is increased. Your model is thus less realistic than mine, and I would argue too simplified to be realistic.
Another case is that you assume that employment can only come from the production of "needs" rather than needs and luxuries. The case of needs and luxuries together can provide more causes for employment than needs alone. That again makes your model too simplified to be realistic.
Yet another is that you seem to be using "needs" to mean "quantity demanded". A supply and demand curve means that if the price of goods falls due to trade, the quantity demanded will increase. This in turn gives more cause for employment. Thus, your example only works if the supply-demand curve is a straight line. Furthermore, in the trade case it is not necessary that all goods have a supply and demand curve for employment to rise, since it's possible to benefit from trade if any traded good has a supply and demand curve. Therefore, for your argument to work, all goods have to have a perfectly flat supply-and-demand straight line.
You can't then turn round and say that my models are flawed because my curves of some goods are unrealistically simple, when your example demands perfectly straight lines for everything.
A full, perfectly accurate model of the whole economy predicting every good is of course impossible. If I believed that, I would have to be a Marxist since that would mean central planning could be perfectly effective.
However, nor is it possible to create a full, perfectly accurate model of the physics of the universe. It is, however, possible to construct large-scale, largely accurate models of the universe. And to construct fairly accurate models of simpler systems: for instance the evolution of a star.
You're creating a double standard of science here: demanding a level of accuracy for economics that could not even be achieved in physics. To be consistent, you would also have to choose to disbelieve in physics as well as economics. You're basically trying to create a different standard to judge economics by, since you dislike the conclusions it comes to. --"Everything is vague to a degree you do not realize till you have tried to make it precise." -- Bertrand Russell[ Parent ]
You're creating a double standard of science here: demanding a level of accuracy for economics that could not even be achieved in physics.
A good way to understand many fields is as a collection of patches of theories with _specific_ requirements. You want micro economic models? Fine, but use them _specifically_. If you do, then my method of criticism is inapplicable.
To spell it out: if you state that your model needs X,Y,Z and you only make claims related to X,Y,Z, I have no leg to stand on. In that case, if I say but what about A,B,C it's irrelevant. That's where you want to be, because then you're justified (I don't think you've done that). If you don't spell out X,Y,Z or you say that X,Y,Z are merely special cases and the model is more general, then you're implicitly claiming the model works with unspecified assumptions. Those could be L,M,N, or they could be T,U,V, etc. If you're not specifying assumptions, or maybe it's unknown to everyone what they might be, then they could even be A,B,C. All I have to do is pick _any_ A,B,C I like and say your model fails with those. That's what I've done.
For instance, your model depends on a zero-sum model of trade, which comparative advantage shows to be false. [...] wealth is increased.
Yet another is that you seem to be using "needs" to mean "quantity demanded". A supply and demand curve means that if the price of goods falls due to trade, the quantity demanded will increase. This in turn gives more cause for employment.
Furthermore, in the trade case it is not necessary that all goods have a supply and demand curve for employment to rise, since it's possible to benefit from trade if any traded good has a supply and demand curve. Therefore, for your argument to work, all goods have to have a perfectly flat supply-and-demand straight line.
Or you could just say comparative advantage doesn't solve the employment maximization problem, but increases personal wealth. I'd agree with that, but if you argue that, my question is "why is personal wealth maximization desirable" ? But that's a philosophical question. -- $E(X_t|F_s) = X_s,\quad t > s$[ Parent ]
And that's where you're wrong. The material that astrophysics, the science, works with are snapshots of the (night) sky. You could define astrophysics as a descriptive theory of sky snapshots. Astrophysics the science includes all the experiments and predictions you can perform with an unlimited supply of sky snapshots.
Where I place physics higher than economics is in the routine use of repeatable controlled experiments on specific questions, but arguments from simulation or mere theory are just speculation in any field.
You've already rejected the "repeatable controlled experiments are the only foundations of science" argument. You're directly contradicting yourself by resurrecting it now.
Basically, when your ideology wants to accept a science, you accept observation as part of the scientific. When your ideology wants to reject a science, you reject observation as part of the scientific method.
However, ideology should follow science, not the other way around.
Now, regarding the issue that wealth creates employment: while that happens to be true, it's not actually the argument I was making.
Consider a supply and demand curve, say for transistor radios againg. When the price of radios falls, more will be demanded, and more will be sold. This means more people can be employed in total making and distributing these radios. That's one of the points that your model leaves out, and that makes in worthlessly unrealistic .
Now, since you brought it up, we could look at the issue of why wealth creates employment. When someone makes money, or saves money by buying cheaply, that money does not disappear. That person must either spend it or save it. When he spends it, he creates employment for the producer or provider of the good or service. When he saves it, the bank lends it out to someone. This can either be for further spending, or it can be investment in a new business.
If you're saying wealth creation does not create jobs, where do you think the money goes?[ Parent ]
And that's where you're wrong. The material that astrophysics, the science, works with are snapshots of the (night) sky. You could define astrophysics as a descriptive theory of sky snapshots. Astrophysics the science includes all the experiments and predictions you can perform with an unlimited supply of sky snapshots. Now you say: Where I place physics higher than economics is in the routine use of repeatable controlled experiments on specific questions, but arguments from simulation or mere theory are just speculation in any field.
Now you say:
If you're saying wealth creation does not create jobs, where do you think the money goes?
A supply and demand curve means that if the price of goods falls due to trade, the quantity demanded will increase. This in turn gives more cause for employment.
You're adding new assumptions ("more people can be employed")
Now, I say that astronomers observations of the universe are the equivalent of economic data. you're trying to claim that they're different because one is "historical" and the other "experimental". So no, I do not understand why you consider them to be different, nor why that difference makes one a science and one an art.
But where you really seem to be getting desperate is statements like this:
An extra haircut daily makes no difference to a hairdresser's employment status. Your customer isn't creating or destroying a job.
Finally, you say about where the money goes:
It might also end up tied in real estate, it might end up nowhere due to inflation
That's a reading comprehension failure on your part, not a new assumption on mine.
A set of historical data such as employment numbers or currency exchange rates has no control. You can't say, let's magnify the data beyond what we have, you can't say let's go and look at the previous data years before the earliest records, you can't say let's ungroup the data now into constituent time series for a specific subpopulation, etc.
Are you really saying you can't comprehend why increasing the number of haircuts that happen increases the number of hairdessing jobs? Is that really the basis for your argument against trade creating employment: that yes it increases the number of haircuts, but not hairdressing jobs? You're really descending into the absurd there.
So you're really talking about large increases so that you can neglect in theory the ability of a business to leverage its existing resources to meet demand. It's a nice simplification: if you equate an arbitrarily small change in demand with a continuous increase in employment, you can introduce differential equations to model equilibria.
Trouble is that for many things you might want to model, there are jumps. For example, if you think about computer science students entering the work force, this is correlated with the ends of academic years. So you get a time when there are many available candidates to fill the demands of employers, and then there's the rest of the year when the talent pool is basically unchanged until the academic year ends again. So your company is experiencing demand, and wants to employ more cs students, but it may well have to wait for the next available batch of graduates, or be prepared to spend more and poach from competitors.
This is the same category of error that you made earlier: you're confusing "some" with "all".
Now, again, you're denying any increase in wealth increases employment, which means you deny that any of the money saved goes to spending or investment. Instead you say it all becomes tied up in real estate or inflation.
Now what is inflation? It's the raising of prices. You're arguing that lowering of prices has no benefit because... it raises prices. That's not a "complex accounting problem", that's an absurdity.
I'm getting a strong impression that don't even have a minimal grasp on the basics of what you're trying to talk about.
Which leaves your other explanation: all the money becomes "tied in real estate". Now it's possible to buy real estate and not derive any benefit from it. You could choose not to rent it out, not to run a business for it, not to live in it and save rent (the rent saved going back into spending and investment again). That's a pretty stupid thing to do though. Yet you're now arguing that all the money saved from globalization goes into there. That's another absurdity.
That's right. And if you think about it, that's not what you mean either. What you mean to say is that increasing the number of haircuts requires more _activity_ from hairdressers, which expands until said hairdressers are unable to meet the extra demand, at which point if they can afford it and they can find someone or train someone and have the space etc, a new job will be created. So you're really talking about large increases so that you can neglect in theory the ability of a business to leverage its existing resources to meet demand. It's a nice simplification: if you equate an arbitrarily small change in demand with a continuous increase in employment, you can introduce differential equations to model equilibria. Trouble is that for many things you might want to model, there are jumps. For example, if you think about computer science students entering the work force, this is correlated with the ends of academic years. So you get a time when there are many available candidates to fill the demands of employers, and then there's the rest of the year when the talent pool is basically unchanged until the academic year ends again. So your company is experiencing demand, and wants to employ more cs students, but it may well have to wait for the next available batch of graduates, or be prepared to spend more and poach from competitors.
Again, your argument depends on all supply and demand curves, across the whole economy, being absolutely straight lines, with not one trade-friendly sector or industry where an increase in demand means an increase in supply.
That's yet another absurdity.
Three absurdities make a pretty weak argument.
Now, onto the science argument. You say:
I don't know how to put this any other way than I already have. Prediction and understanding requires controlled experiments. A physicist in a lab who does controlled experiments is doing science. Even an astronomer who can point a telescope anywhere he likes and can magnify pictures of the sky as much as he likes is controlling his experiments to some extent. A set of historical data such as employment numbers or currency exchange rates has no control. You can't say, let's magnify the data beyond what we have, you can't say let's go and look at the previous data years before the earliest records, you can't say let's ungroup the data now into constituent time series for a specific subpopulation, etc.
Furthermore, governments are constantly making economic decisions, based on economics. These consist of experiments: changing the economy according to theories.
An astronomer can look at different parts of the sky, but he cannot change it. Nor can he collect arbitrary data from new stars that appear, though an economist can get new data all the time.
An economist thus has far more control than an astronomer. And he can carry out controlled experiments to a greater degree than the astronomer.
So, by your own criteria, economics is a science, yet astrophysics is not. [ Parent ]
That's an exceedingly complicated question. It might also end up tied in real estate, it might end up nowhere due to inflation, etc. It all depends how you account for things.
You're making the same some-for-all error yet again. All I need to make the case for trade to create jobs is that the increase in the number of haircuts demanded leads to some level of increase in the number of hairdressing jobs.
in the number of hairdressing jobs. You're coming up with reasons why the increase might be a lesser increase than in an absolutely perfect market.
However, the argument you're trying to make, which no Neoclassical nor Keynesian nor Marxian economist would agree with, is that these little bits of friction somehow absolutely cancel out any increase in the number of hairdressers. Yet you can't explain why.
Now, onto the science argument. [...] This is the opposite of the case. Economic data is constantly being created and recorded. An economist can start a new study collecting any kind of new data he chooses to collect. An astronomer has no control over what the sky does.
Merely collecting data is not what a controlled experiment is. Economists start studies all the time, and they do so in highly uncontrolled conditions, while trusting that statistics and long term equilibria ("econometrics") will compensate for the underlying flaws. And lo and behold, they justify all this by making more assumptions on how people supposedly behave!
There's simply no comparison with hard science.
That's not necessary. All that's necessary is some of the wealth created goes to create jobs.
You haven't come up with any counterexamples to that at all! The best you can do is come up with an example of why the increase may be slightly slower than in an ideal case. Even so, jobs are still created by trade.
Similarly, you're trying to argue that created wealth somehow does not go to spending or investment. You haven't given any examples to that except inflation and property. The inflation example simply doesn't make any sense since we're talking wealth not simply money: more hair is being cut, more coal mined, more steel refined in the trade case to the no-trade case; so with no more money being printed it doesn't make sense that inflation would be increased. In that case we're talking deflation not inflation: same amount of money to buy more stuff means lower prices, not higher.
The only example that might make any sense at all is the idea that created wealth goes to unproductive property, that is not used for anything. But even that falls apart against the some/all issue. If any wealth goes elsewhere, then the central point is correct and increased wealth creates some jobs.
Your lone example is not a counter-example. If there is any mixture of where the wealth goes: even if 99.9% of wealth goes to buy unproductive property and 0.1% going to spending or investment, then some jobs are created. For your argument to work, exactly 100% needs to go there.
You need to show that absolutely no created wealth goes to spending or investment for your argument to work; and obviously enough, you can't.
Merely collecting data is not what a controlled experiment is. Economists start studies all the time, and they do so in highly uncontrolled conditions, while trusting that statistics and long term equilibria ("econometrics") will compensate for the underlying flaws. And lo and behold, they justify all this by making more assumptions on how people supposedly behave! ... I suspect that you don't understand what devising an experiment (step 1) and collecting data (step 2) means.
As far as I can see, you've pulled the notion of controlled experimental astrophysics straight out of your arse to try to justify your beliefs.[ Parent ]
