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By TheophileEscargot (Sun Feb 18, 2007 at 12:17:05 AM EST) Reading, Listening, Museums, Trolling (all tags)
Reading. Museums. Random thoughts on socialism and economics.


What I'm Reading
Finished Fiddlers and Whores: The Candid Memoirs of a Surgeon in Nelson's Fleet . A bit like a real life Dr Maturin: it's an extended letter written by a surgeon to his brother, about his adventures over six years in the navy. Has some fascinating stuff there: accounts of battles, a shipwreck, being taken prisoner; plus quite a lot about escapades ashore.

The problem is that his actual diaries were lost in the shipwreck, so this is all reconstruction after the fact, and frustratingly lacking in detail sometimes. Does mean it's pretty short though. Worth looking out for if you like Patrick O'Brian or are interested in the period.

Listening
Finished the Early Middle Ages course mentioned here. Not bad, but events towards the end are a lot less interesting than the beginning in the late Roman empire.

Just started another one: an anthropology introduction called Peoples and Cultures of the World by Edward Fischer. Only three lectures in, but not getting much out of it. Haven't learned much I didn't already know; and the way Fischer describes the subject makes anthropology seem more like stamp-collecting than science. He's very keen on saying that anthropologists must reason inductively, and draw theories from their research rather than research to find out if their theories are true. If you can't draw any systematic conclusions though, the whole thing seems a bit like a pointless collection of anecdotes.

What I'm Reading 2
Nearly halfway through Anansi Boys by Neil Gaiman. Reads much like some of the novels in Robert Rankin's interminable Brentford series. Also suffers from a blandly generic central character: yet another wimp trying to find his confidence.

Not actually that bad though, just a bit too cutesy and a bit too familiar.

Museums
Went to see the excellent Crossfire Christian Marclay exhibition at White Cube. Well, the comic extracts were pretty mediocre, but there's a great video installation: you stand in a room with four wall-sized screens while a gunfight montage scene plays out on each, with loud sound. Does very well at pointing out the conventions of it, by cutting them all together, like there's about ten seconds of the rolling-across-the-floor-shooting move, but from a dozen different movies. The whole thing also follows the traditional dramatic structure, too. At the start there's about a minute of cocking revolvers, snapping shotguns shut, sliding magazines into assault rifles, working the slides on semi-automatic pistols. Then it goes into dramatic looking-down-the-gun-barrel shots, then the actual fight starts, and after mass mayhem it peters out into the individual gunshot bits as the hero and villain of each movie duel it out.

Well worth seeing if you're in the area.

Random thoughts on socialism and economics
I was following this thread in Breaker's holiary.

There's an argument that I see on Metafilter a lot. It basically goes that the common assumptions made in simple economic models, such as perfect competition, job switching being easy, rational actors, are wrong. So far, so good. However, the arguer usually then goes on to imply that therefore traditional socialism and protectionism are right. I've can't really see that link.

They seem to talk disparagingly about "simple models". This seems to imply that they have their own, more complex models, which justify command economies, protectionism and so on. So, where are these complex models? Can someone link to them?

In some cases, they seem to imply that economies are somehow impossible to model at all. But if so, surely since they're making economic claims, there must be some kind of empirical evidence behind their claims instead. Examples could be systematic studies of a group of nations that have liberalized or restricted their trading policies. Are there such studies which suggest protectionism is a good thing?

Returning to theory, here are some of the "simple assumptions" mentioned in the thread as unrealistic, and what I think happens when you start factoring in the complexities.

  • People switching jobs from one industry to another easily
    Now that is definitely a serious issue. If an economy rapidly switches from isolation to trade, there can be serious dislocation in the short term.

    However, that does not change the long-term result of trade. It's an good argument for slowing down globalization. However it is not an argument for stopping globalization.

    Moreover, in the thread above, this appears to be being used as an argument to reverse globalization. The chief example given in that thread, the "muffin" example, urges an industrialized nation to isolate itself from trade in order to boost employment. In that case, to avoid the short-term pain, we should maintain free trade.

  • Prices being set through perfect competition
    Another good, realistic objection. In the real world competition is not perfect. But how does this affect the result?

    Take the example of the cost of shipping, something missing from a simple model. This means that the profits of a firm exporting over a long distance will be reduced over exporting locally.

    This is a reasonable argument. However, it does not imply that governments need to erect trade barriers to stop it happening: the reduced profits give the firm a disincentive already. Moreover it seems to be being used to argue that trade is actually harmful: but since companies don't want to trade at a loss, this is not the case.

  • Agents being rational
    This is definitely a strong topic of debate amongst economists. For example, it is argued with some evidence that people fail to take inflation into account in their financial decisions. People may also tend to save less for their retirement and spend more money in the short-term than is truly rational.

    As such, the latter is a valid argument for some forms of central control over the economy. It can be argued that the government needs to coerce people to save a certain amount for their retirement.

    However, it's not clear that this argument affects trade. It seems unlikely that consumers act differently-rational for imported goods than they do to domestically-produced goods.

    For this argument to be valid, you need to look the specific ways people act irrationally, and whether state controls are necessary to correct them.

    It seems more common though that the phrase "agents are not rational" is misunderstood to to mean a quasi-mystical statement than the human soul is beyond mere economic understanding. Stating that agents are not rational is not the same thing as stating that agents are not predictable.

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Funny old world | 23 comments (23 topical, 0 hidden)
You seem to have covered it pretty well by Scrymarch (4.00 / 3) #1 Sun Feb 18, 2007 at 03:53:03 AM EST
One other issue around prices that gets flagged a lot is whether the markets we actually have do or can correctly signal the cost of complicated externalities such as environmental losses and costs, or whether the reaction is too volatile and destroys wealth.

I think the assumption meme is probably the pop culture version of the Post Autistic Economics movement. They are a serious if trendy set of mostly young economists who emphasise the problems you mention above. They lean on the behavioural economics work you mention above pretty hard from my casual reading. I don't know that they have full blown alternative models to neoclassical economics though. Some of them might be threatening to be neo-keynsian.

Trade in goods seems more popular than other forms so far as I can tell. I seem to recall some pretty good empirical backing too.

I think there's been some studies suggesting unrestricted movement of capital can, even over time, be detrimental in economies with simple or flawed financial sectors, ie many developing economies. Anti IMF people are going to say "duh" to that. Even if that turns out to be the case ending FDI - ie turning away money - is hardly necessary, you would just need to add friction.

Unfortunately this whole debate is flavoured in the UK by Thatcher's policy of Fire them all: the Market will know its own.

The Political Science Department of the University of Woolloomooloo

The other issue in many of these arguments by cam (4.00 / 4) #2 Sun Feb 18, 2007 at 04:40:38 AM EST
from internet punditry and educated specialists is that things like economics, politics etc are treated as some kind of exclusive case that has a divine right to exist (the end of history argument).

I think they have to be treated as human technologies where trade offs are made - and, that if a better technology comes along, then it should be used.

cam
Freedom, liberty, equity and an Australian Republic

[ Parent ]
People switching jobs by ucblockhead (4.00 / 2) #3 Sun Feb 18, 2007 at 06:46:09 AM EST
Doesn't this effect both ends? If it's hard for an English worker to find a new job when it flees to China, isn't it equally hard for a Chinese peasant farmer to switch to that new job?

I've noticed this disconnect when people talk about how programming jobs fleeing to India...the same people who bemoan how hard it is for a programmer here to switch jobs act as if all 1.2 billion Indians can become programmers overnight.

In my mind, the best argument for globalization is that the bigger the economy, the less dependent it is on fuckups/shortages/disasters in one area. I think we've actually seen this over the last twenty years, with things like the Japanese deflationary period and the dot-com bust in the US being absorbed by other parts of the economy. What happens to consumer if there's a local drought and the price of wheat skyrockets?
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[ucblockhead is] useless and subhuman

is it? by martingale (2.00 / 0) #5 Mon Feb 19, 2007 at 02:56:20 AM EST
Doesn't this effect both ends? If it's hard for an English worker to find a new job when it flees to China, isn't it equally hard for a Chinese peasant farmer to switch to that new job?
The jobs that go to China tend to require lower skills. So your English worker (eg coal miner), after his job has gone to China, lives in an environment where the average jobs available require higher skills. The Chinese lives in an environment where the average job need lower skills than the average job in England. This is because China has the comparative advantage in lower skilled export industries.

The underlying assumption of the model is that comparative advantages are always followed, by definition. So the model says the English worker is finding just as easy to switch to another occupation as the Chinese peasant. The model doesn't know anything about skills.

So if you inject into the input side that gaining useful new skills may be unachievable for a fraction of the population (this goes against the model assumption), you find that the Chinese peasant is more likely to find a job.

In my mind, the best argument for globalization is that the bigger the economy, the less dependent it is on fuckups/shortages/disasters in one area [...] What happens to consumer if there's a local drought and the price of wheat skyrockets?
That's all very well, but what do you do when there are big wars which disrupt your suppliers, when there are cartels which refuse to sell you the products you've grown dependent upon (and have outsourced in a previous generation), etc? Oops, that's not accounted for in the free trade argument.

The problem with globalization is that there's no world government and world justice system and world police force. What makes free trade work well in a single country or in the first world is the stability, predictability and regulations agreed upon by cooperating governments. Without those governments, or if those governments have a different agenda, then free trade can make you worse off.

For example, think about the fact that China can easily produce the US military arsenal more cheaply. It truly makes sense from a cost perspective to outsource all the electronics and assembly of US weapons there or to India or Taiwan as applies. Imagine a world where all the tanks and airplanes are manufactured in a single region, and everyone buys them from there. It's ludicrous. Why? Because the assumption of free trade, that each country participating in it can reasonably _depend_ on goods being available equally regardless of whether they are produced locally or imported is not true for weapons technology, for instance.
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$E(X_t|F_s) = X_s,\quad t > s$

[ Parent ]
Issues with that by ucblockhead (2.00 / 0) #8 Mon Feb 19, 2007 at 06:05:48 AM EST
First, when jobs go over seas, what jobs remain? These days, it's service jobs, which very often aren't especially skilled. It takes no more training for a Westerner to be a Starbucks Barista than a Chinese peasant to be a textile factory worker. Probably less. Second, one of the biggest complaints about globalization is the "offshoring" of jobs requiring technical skill.

There actually are very few arms suppliers in the world. But yes...it is in a country's best interest not to outsource weapons production out to anywhere other than strong allies. But that's a very special case. In any case, globalization no more means that any particular thing is only made in one country than a free market means any particular thing is only made by one company. Disruptions in supply are only really an issue for resources that are found in certain places, like oil. For manufacturing, if supply were disrupted in one place, some other place would start manufacturing as the price would have gone up.
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[ucblockhead is] useless and subhuman

[ Parent ]
special cases and scope of the models by martingale (2.00 / 0) #10 Mon Feb 19, 2007 at 03:08:51 PM EST
First, when jobs go over seas, what jobs remain? These days, it's service jobs, which very often aren't especially skilled.
That's true, but isn't the kind of job the model is concerned with. The model is about export industries. The farmer has a greater choice of low skill export industries, whereas the Westerner isn't switching to another low skill export industry, but likely to enter the low skill service industry. Meanwhile the high skill export industry that the Western country specializes in according to the model isn't getting that worker.

Second, one of the biggest complaints about globalization is the "offshoring" of jobs requiring technical skill.
The model makes no particular allowance for technical skill. If the end product has lower unit price, that's what matters to the model.

There actually are very few arms suppliers in the world.
Yes, I realize that, I chose that example because it plainly induces power relationships between the suppliers and the dependant countries.

I don't believe it's such a special case really, as the scope of free trade arguments is global. Other problem areas at the global scale are things like water and gas supply, which also are too important to leave to free trade specialization.

In any case, globalization no more means that any particular thing is only made in one country than a free market means any particular thing is only made by one company.
The free trade argument being discussed in the previous thread is the comparative advantage argument, according to which open trade (ie without political interference) produces (eventually) specialization in areas where each country has a local advantage. That means that if your country needs food, water, energy, etc (ie exportable things) to function, everyone is better off if certain countries make the food, others make energy etc according to their local strengths.

Disruptions in supply are only really an issue for resources that are found in certain places, like oil.
It's also an issue when the local industry which used to produce the resource in earlier times no longer exists because it's cheaper to import. That's not to say the industry can't be recreated, but not easily in the short term, which is the time frame that matters in a disruption.
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$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
Um by ucblockhead (2.00 / 0) #11 Mon Feb 19, 2007 at 04:59:42 PM EST
hereas the Westerner isn't switching to another low skill export industry...
No...as I said...the Westerner is probably switching to a low skill service industry. Just look at the economies of the US and Western Europe...as the traditional low-skill manufacturing industries have gone offshore, the service sector has exploded.
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[ucblockhead is] useless and subhuman
[ Parent ]
yes I know by martingale (2.00 / 0) #12 Tue Feb 20, 2007 at 12:13:44 AM EST
That was partially the point in my original thread with R.Mutt, that this assumption of the model also fails.
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$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
*sigh* by martingale (2.00 / 0) #4 Mon Feb 19, 2007 at 02:14:38 AM EST
I thought we were done with that thread.
They seem to talk disparagingly about "simple models". This seems to imply that they have their own, more complex models, which justify command economies, protectionism and so on. So, where are these complex models? Can someone link to them?
What are you talking about? You're like the theist who wants atheists to show you an alternative god before he believes his own doesn't exist.

A model is an abstraction for a physical situation. There is no need for an alternative model to be able to say it's wrong or too simple. In fact, an alternative doesn't often help understand what's wrong with a particular model: it's better to review the assumptions made. The best way I know for doing that sort of thing is to plug in unorthodox inputs and see what outputs you get.

It's natural to feel defensive when your pet beliefs are criticised. I'm sure that actors on stage routinely think critics should shut the hell up and try to do some acting themselves. Invariably, that's missing the point.

In some cases, they seem to imply that economies are somehow impossible to model at all. But if so, surely since they're making economic claims, there must be some kind of empirical evidence behind their claims instead.
You mean like studies which measure certain economic observables and verify that they fall within the appropriately predicted range? What's an appropriate predicted range when you can't duplicate a historical time series? Economics is called a soft science for a reason. There's no lab at the macro economic scale where you can do controlled experiments, and even at the micro scale, where controlled experiments are much easier, there are more ethical issues than in physics.

Again, criticising the intrinsic shortcomings of a soft science is perfectly valid, there's no need to wait until a solid alternative exists.

* People switching jobs from one industry to another easily

However, that does not change the long-term result of trade. It's an good argument for slowing down globalization. However it is not an argument for stopping globalization.

Well it's true that if you wait until people retire before allowing their industry to disappear, you'll have less political opposition for your plans.

The other aspect you're glossing over is training the next generation for the modified industrial requirements. If those kids in school don't get training somewhere, they're no better than the existing people who you want to repurpose.

* Prices being set through perfect competition Another good, realistic objection. In the real world competition is not perfect. But how does this affect the result? Take the example of the cost of shipping, something missing from a simple model. This means that the profits of a firm exporting over a long distance will be reduced over exporting locally. This is a reasonable argument. However, it does not imply that governments need to erect trade barriers to stop it happening: the reduced profits give the firm a disincentive already. Moreover it seems to be being used to argue that trade is actually harmful: but since companies don't want to trade at a loss, this is not the case.
What a specious argument. Let's take an example and argue that the objection is bogus. Let me do the same:

Why would any company want to trade at a loss? It's called a loss leader. It's called growing the market. It also happens all the time when governments own a substantial interest in a company and have a political or strategic rationale for the behaviour, like building tanks or airplanes.

Oh, perhaps you were _really_ thinking of private companies which produce widgets that can be imported/exported? Assumption, assumption, assumption!

* Agents being rational

However, it's not clear that this argument affects trade. It seems unlikely that consumers act differently-rational for imported goods than they do to domestically-produced goods.

Well, let's look at some more unstated assumptions here: you're assuming that the domestic goods being discussed are substitutable for equivalent imported ones, and that consumers are making decisions in a vacuum. In reality, a popular current approach to fighting equivalent imported goods on a large scale is to mount a "made in $country" propaganda campaign. As I'm sure you'll agree, propaganda campaigns are expressly intended to override the individual decision making ability of the targeted population. Oops, suddenly the imported products are no longer completely substitutable.

But wait, I have no doubt you wish to respond that the propaganda campaign itself costs money which must be factored into the costs of domestic production. However, that's simply not the case when the propaganda is generated by political groups ("think of the children!", "save the dolphins!").

For this argument to be valid, you need to look the specific ways people act irrationally, and whether state controls are necessary to correct them.
Surely, you're not advocating state controls to "correct" the irrational beliefs of citizens or regulate free speech?

It seems more common though that the phrase "agents are not rational" is misunderstood to to mean a quasi-mystical statement than the human soul is beyond mere economic understanding.

Stating that agents are not rational is not the same thing as stating that agents are not predictable.

I'll leave the mystical mumbo jumbo to others, but I'll certainly say that aiming to usefully predict agents at the macro economic scale (ie in an uncontrolled environment) is much harder than you appear to think. Tell me, have you applied your prediction theories to the stock market yet?
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$E(X_t|F_s) = X_s,\quad t > s$
The thing is by R Mutt (1.00 / 1) #6 Mon Feb 19, 2007 at 03:39:26 AM EST
Throughout that thread you were making grandiose statements pronouncing which economic policies are best: namely protectionism over trade.

To do so, you should have either some theoretical or empirical backing for those statements.

Yet you refuse to accept either theoretical models, or empirical data.

Therefore, you have no basis for recommending protectionism.

It's interesting you should bring up religion, given that you're the one making statements based on faith without evidence.

Regarding experiment, it is perfectly possible to have science without experiment. Consider astrophysics for example: you cannot make practical experiments on a star, but you can observe stars and compare them against your models. Or evolutionary biology: one cannot force a species to evolve, but you can observe the fossil record, and even model the frequency of genes in a population.

Of course, their are some people who would question both of those sciences. Namely, those who have a religious faith that the universe must be only a few thousand years old, and therefore feel they must reject the sciences that disagree with their faith.

See the connection yet?

[ Parent ]
Let me clarify that a little by R Mutt (3.50 / 2) #7 Mon Feb 19, 2007 at 05:26:35 AM EST
We have two, mutually incompatible beliefs: I that free trade leads to employment growth, you that protectionism leads to employment growth.

Let's replace those with two less emotive theories. I say that the world is shaped like a cube, you say that the world is shaped like a banana.

Now I say that because of two things, my theoretical model, and my empirical evidence, the world is shaped like a cube.

You they argue that the assumptions of my theory are wrong, and therefore the world is shaped like a banana.

See the fallacy?

Even if my cube-reasoning is wrong, that doesn't give the banana theory any more credence. It could be that my reasoning is wrong, but the world happens to be cube-shaped anyway.

Without some positive support of your own for the banana theory, there is no reason to believe it.

[ Parent ]
no I wasn't by martingale (3.00 / 1) #9 Mon Feb 19, 2007 at 02:32:29 PM EST
Throughout that thread you were making grandiose statements pronouncing which economic policies are best: namely protectionism over trade.
You'll recall that the thread started by me introducing two extremes, represented by the ideal free trade and ideal closed economy, and asserting different properties for each. You, as you always do when we go around that topic, came blindly in to defend the free trade ideal (that's ok, I do the same with atheism :) and pretended I was advocating the closed ideal economy, rather than introducing an infinite family of mixtures with parameter "I".

I certainly don't believe in the truth of _any_ economic models, neither free trade nor closed trade. The only thing I actually ever believe are mathematical models whose proofs I have checked, and I stop believing when it gets applied to reality.

It's interesting you should bring up religion, given that you're the one making statements based on faith without evidence.
My position on religion is actually substantially the same. I reject all the popular gods out there, and when I attack other people's religion, it is usually by claiming that their conceptions are inconsistent. In other words, I am not saying "your god doesn't exist because he could exist but just happens not to" which seems to be what people think I say disconcertingly often, I am saying "your god doesn't exist because that which is called god is an internally inconsistent collection of requirements and therefore has no basis as a true conception".

Regarding experiment, it is perfectly possible to have science without experiment. Consider astrophysics for example: you cannot make practical experiments on a star, but you can observe stars and compare them against your models. Or evolutionary biology: one cannot force a species to evolve, but you can observe the fossil record, and even model the frequency of genes in a population.
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. Then there's astrophysics the speculative veneer, which talks about big large balls of flame and neutron stars and redshifts and whatnot. There's no doubt that those interpretations are motivational, but they're not real. What's real are the sky snapshots.

Your other example has a similar difficulty. Yes, gene evolution can be modeled theoretically, and the fossil record is real. The former lends itself to some controlled experiments, the latter doesn't. While the former can be considered the science of genes, the latter must strictly speaking be called the science of bone fragments found in dirt, not the science of dinosaurs.

I say that the world is shaped like a cube, you say that the world is shaped like a banana.
No I'm not, I say that here's a corner with a banana shape, so the world is not like a cube.

Without some positive support of your own for the banana theory, there is no reason to believe it.
As I said before, I don't believe any of the theories like, "for real".
Now I say that because of two things, my theoretical model, and my empirical evidence, the world is shaped like a cube.
If that was the case, you would not be vulnerable to my kind of criticism. Take your model as a black box, with inputs and outputs.

When the inputs are well chosen, the outputs make a certain kind of sense. When your inputs are "let's consider a company which produces widgets and there's one factor of production and blah blah blah," then your output is "overall prices are lower for everybody."

That's perfectly fine. What is not so fine is to take that black box and say "here, the black box works with those inputs, so it's valuable as a general rule". It's not fine because someone else like me can come and say "look, put garbage input in, you get garbage output back".

You might say "hey, the black box is simply not intended for that" which is correct, but then you have no basis for using it for a generalization yourself.

You might say hey, you're "wrong to believe in that garbage output", which is fine too, but you can't argue against it by saying "the garbage output has no evidence, whereas my black box is at least proven to work", because again your black box is limited to some well chosen range of input only.

Even if my cube-reasoning is wrong, that doesn't give the banana theory any more credence. It could be that my reasoning is wrong, but the world happens to be cube-shaped anyway.
Correct. We might find out someday if we can do enough controlled experiments so that world wide concensus emerges, but I'm not holding my breath.
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$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
You're not being consistent by R Mutt (2.00 / 0) #13 Tue Feb 20, 2007 at 03:49:22 AM EST
On the one hand, you are quite clearly making pronouncements on economic policy:
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".

Or later, you say:

You can have lower prices or lower unemployment, you choose.
Or metaphorically:
I say that here's a corner with a banana shape, so the world is not like a cube.
In all these cases, you're implying that you have some form of evidence, either theoretical or empirical. Yet when I make any claim, you reject it on the basis that both these things are impossible to derive.

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 ]
reeelly? by martingale (4.00 / 1) #14 Wed Feb 21, 2007 at 12:33:11 AM EST
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".
How so? The first statement is by definition. When the economy is closed, there's no good exchange, no people exchange. The second sentence is true as well, for the country being closed, it must develop itself anything it needs to survive. The third sentence is the contentious one. You interpret it as maximizing "needs", which seems to suggest you don't like the meaning it has in the sentence: the need for that labour which is required by the second sentence. I can't help you there, if you interpret "needs" in terms of market opportunities, that's you.

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!
Oh I see, you're allowed to generalize from toy models but not I? The reason we're even having an argument is that both of us are arguing about a general case which isn't strictly covered by the theory.

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.
Yes, I'm claiming that economics is too immature to be useful for policy. As an analogy, think of medicine before the science of anatomy. Perhaps there will be a breakthrough sometime in the future, but not yet. Which is not to say it shouldn't be studied, it's just not scientifically useful for policy.

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.
Fair enough, so let me be clear: I think that your conclusion is utterly preposterous, and that your faith in the generalization power of simple models is misplaced.

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.
Are you confusing me with somebody on some other forum? I reject them all to various degrees as speculative. I expect controlled experiments if a claim is to be lifted to inarguable status.
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$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
The thing is by TheophileEscargot (2.00 / 1) #15 Wed Feb 21, 2007 at 10:35:20 AM EST
You are, of course, entitled to create your own models and argue from them. However, what I expect is a degree of consistency. You can't argue from your models, then turn around and argue that all models are flawed.

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.
--
It is unlikely that the good of a snail should reside in its shell: so is it likely that the good of a man should?

[ Parent ]
flawed for what? by martingale (2.00 / 0) #16 Thu Feb 22, 2007 at 01:49:53 AM EST
Let's cut down to the core first.
You're creating a double standard of science here: demanding a level of accuracy for economics that could not even be achieved in physics.
That would be true if I claimed that physics (say) explained the world. I don't. It has the same problems I identified with economics, namely the theories are not universally applicable enough to explain the world globally. Gravity is incompatible with quantum physics, Grand Unified Theories are bullshit. 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.

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.
I was making claims about employment, which isn't an output of the model (and I did realize that). You're right that everyone is better off, in the sense that prices are lower. But I wasn't talking about prices or even preferences, I was talking about employment numbers. Wealth != employment. You may well feel that overall wealth is more important than overall employment, which is something I would agree with, but that's not what I was interested in.

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.
Why? You're equating employment with a factor proportional to output quantity. I had a reason for making this case in the I=1 example, because the missing industries had to be (re)created. But you're blatantly ignoring the industrial revolution.

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.
No, again you're imputing benefits which do not reflect the issue. The monetary benefits of trade were not the question I was concerned with, the question was can you increase employment numbers (at all other costs)? To spell it out, in advocating free trade you'd have to show that employment numbers are a monotonically increasing function of wealth, which seems rather unlikely.

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 ]
Yet more inconsistency by R Mutt (1.00 / 1) #17 Thu Feb 22, 2007 at 02:47:44 AM EST
Earlier you said:
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, there is a vast body of economic data on pricing, employment, currency values, inflation and so on. Economics can test models against this data, in the same way that astronomers can test against their star data.

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 ]
oh please by martingale (2.00 / 0) #18 Thu Feb 22, 2007 at 03:19:39 AM EST
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.
This may be news to you, but these statements aren't mutually incompatible.

You've already rejected the "repeatable controlled experiments are the only foundations of science" argument. You're directly contradicting yourself by resurrecting it now.
Please show me where I rejected the "repeatable controlled experiments are the only foundations of science" argument. I claim I did no such thing.

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.
Not at all. Surely you're not suggesting that published economic data on inflation, currency values etc constitutes data from controlled experiments? They certainly do constitute historical data, but historical data is a far cry from experimental data. Surely you understand the difference?

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 .
We've talked about this before. You're adding new assumptions ("more people can be employed") and claiming that those extra assumptions are part of the conclusions of the model.

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.
Excellent, something new. "When he spends it, he creates employment for the producer or provider of the good or service." Not quite: you're asserting that the good or service generates extra employment instead of most likely making no difference in the employment numbers. An extra haircut daily makes no difference to a hairdresser's employment status. Your customer isn't creating or destroying a job. Similarly, if the good is bread, a customer buying a loaf or not isn't creating or destroying a job.

If you're saying wealth creation does not create jobs, where do you think the money goes?
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.
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$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
Reading comprehension by R Mutt (2.00 / 0) #19 Thu Feb 22, 2007 at 03:49:08 AM EST
I said in the earlier comment:
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.
Now you saying
You're adding new assumptions ("more people can be employed")
That's a reading comprehension failure on your part, not a new assumption on mine.

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.
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.

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
This is the same category of error that you made earlier: you're confusing "some" with "all". To create some employment, all that's necessary is that some of the money is spent or saved. For no employment to be created, it's necessary that no money is spent or invested. For your argument to work, to have to demonstrate that all the extra money goes to these places where you say some might go.

[ Parent ]
is it? by martingale (2.00 / 0) #20 Fri Feb 23, 2007 at 12:00:33 AM EST
That's a reading comprehension failure on your part, not a new assumption on mine.
Fair enough, I thought you meant that when demand rises, it means ipso facto that employment goes up.

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.
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.

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.
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.

This is the same category of error that you made earlier: you're confusing "some" with "all".
As I said, it's a complex accounting problem.
--
$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
You're not making sense by R Mutt (2.00 / 0) #21 Sat Feb 24, 2007 at 12:18:10 AM EST
Let's go back and look at just one of the cases I'm talking about. Globalization means lower prices. The money saved from those lower prices is either saved or invested, going back into the economy where it can create jobs.

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.

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. 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.

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.

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.

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 ]
ye gawds by martingale (2.00 / 0) #22 Sun Feb 25, 2007 at 11:48:23 PM EST
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.
Huh? I realize you're looking for straws, but where do I say that? I don't:
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.
So in trying to catch me being inconsistent, you're now saying that I think all money ends up in inflation or real estate. There's no other options? Remember, you were asking me why I think your simple wealth => jobs implication is false.
If you're saying wealth creation does not create jobs, where do you think the money goes?
I've given you some cases when it's false, what more do you need? You're the one who's insisting they aren't right because neither one alone explains everything. That's good debating tactic, but meaningless as I'm not the one claiming great things from wealth, you are.

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.
Again you're claiming things I did not say. Where did I say there's no benefit to lowering prices? You still seem to misunderstand the exceedingly simple tactic I'm using: pointing out counterexamples. Obviously, I'm going to be choosing examples which go against your claims. There would be no point in picking an example which supports your claims. Yet that doesn't mean those counterexamples exhaust the possibilities. The world is complex, you're shooting yourself in the foot by simplifying too much.

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.
See above.

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.
Either that, or somebody isn't clear on the rules of logic.

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.
Why don't you then. Tomorrow I'm off to have my hair cut. Show that leads to an extra hairdressing job.

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.
No, I'm coming up with reasons why your claim that the supply and and demand curve argument increases jobs. Sometimes it does, sometimes it doesn't. The world is not that simple.

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.
Jumping to a simple but wrong conclusion yet again. Where am I claiming that friction absolutely cancels out job creation? I am certainly claiming that it happens. Do you understand that my counterexample is about the short term, and that longterm equilibria are mostly meaningless when a system is prone to radical political changes and other unmodeled forces? Are you even aware of the difference between the timescale of equilibrium (=long) and friction (=short), and that this kind of analysis can't allow external factors to stirr things up in between? Oops, that's another classical, and oh so unrealistic (says I), economic assumption: equilibrium analysis yields correct conclusions.

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.
Heh, if I chain you in front of a television that plays MTV all day every day, you'll be exposed to a lot of data too. So what? It's of no value if you want to watch the history channel.

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.

Furthermore, governments are constantly making economic decisions, based on economics. These consist of experiments: changing the economy according to theories.
Great! Do you truly believe that, say, New Labour has made any decision at all in the last ten years that would qualify as disinterested peer reviewed economic experimentation? Heh, I agree that they've changed the economy according to theories all right, I just wouldn't call them scientific 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.
I suspect that you don't understand what devising an experiment (step 1) and collecting data (step 2) means.
--
$E(X_t|F_s) = X_s,\quad t > s$
[ Parent ]
You're still ducking the some/all issue by R Mutt (2.00 / 0) #23 Wed Feb 28, 2007 at 10:45:36 AM EST
You seem to be trying to attack a statement I'm not making: that every single penny of wealth created in an economy must go to increasing employment.

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.
Now, long back in the depths of time, I did do a Physics degree, and while I specialized elsewhere in my final year, I did do a fair bit of astrophysics. And absolutely: I don't understand what your conception of a "controlled experiment" is in relation to it. Astronomers and astrophysicists do an awful lot of modelling, and an awful lot of observation... but virtually no experimentation.

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 ]
Funny old world | 23 comments (23 topical, 0 hidden)