December 05, 2006

• Very thought-provoking article. At some point you must over simplify in order to teach the basics, but I'm surprised the students didn't catch on sooner, like when he tried to prove that raising the minimum wage was bad. As if that was the only thing causing inflation. Heh.
• Richest 2 per cent own half the world's wealth.
• Great read HW. Today's use of economics often puts me in mind of theology in the past, with the powers that be sponsoring those who make the case that suits what they were going to do anyway, like Henry VIII getting the justifications he needed to get out of an inconvenient marriage.
• Thanks, HawthorneWingo. Many proponents of "globalization", free trade and continuous economic growth not only try to side-step moral, ethical or even political concerns, but they generally fail to address the attendant ecological consequences as well. The resources that we so avidly exploit are finite but our appetite seems limitless, so the "rising tide raises all boats" argument doesn't hold much water for me.
• > the left has largely ignored the political impact of the way people learn economics Greg Palast studied finance and economics at Chicago, sponsored I think by one of the big U.S. unions. This is an interesting article HW. One think I hate about economics is the underhand muddling of the descriptive and the prescriptive while pretending that the discipline is positive rather than normative. To some extent, there's a generalized problem for the social sciences in disentangling what is self-fulfilling from what is 'real'.
• This is interesting. I'm not sure about the 'moral' point made by the student quoted at the end. The argument is about issues like whether the money supply alone determines inflation, which is in theory susceptible to proof or disproof, not about whether inflation is morally good or bad(isn't it?).
• I think that's actually the crux of the debate, and sort of what roryk is saying. I understood it in an even bigger context, which is to say that how can any discourse that exists solely within the confines of a free market economy ever truly be "positive" when socialism and communism are completely ignored? It's rather like ethnocentrism, where discussions of "good and bad" are based solely on the value system of a single culture without taking into account other sets of values that may exist outside of that culture.
• Very interesting article. However, it makes me remember why I hate money people. The whole "raising the minimum wage creates more unemployment" argument is just crap. Where is the evidence? The argument about "worldwide Wal-Mart sold $285 billion worth of goods and services, but paid manufacturers $220" so we should only pay attention to the $65 Billion also seems dishonest. A lot of those businesses are kept in buiness because of Wal-Mart. Like lots of tech companies, Wal-Mart just outsources everything. Therefore, many of these companies are little more that unofficial subsidiaries of Wal-Mart. There's a reason why temporary employment agencies like Manpower are one of the largest employers in the nation.
• > The argument is about issues like whether the money supply alone determines inflation, which is in theory susceptible to proof or disproof, not about whether inflation is morally good or bad(isn't it?). We can prove or disprove a correlation between changes in the money supply and changes in inflation (there's a very strong correlation). The question then is what we do with this information. One major argument against the Chicago school is that it promoted an obsessive attitude toward inflation (OPEC and the 1970s didn't help). This obsession with inflation supported public policy that was anti-labour (no minimum wage because it's inflationary), anti-union (no collective bargaining because it's inflationary), anti-public sector (no bureaucracy because...). These policies were not just aimed at curbing inflation, but the fear of inflation helped the policies gain traction. Ad extremum, we see cases in South America where people were made destitute because of monetary policy that was essentially enforced by the IMF/World Bank.
• It's a good piece. I thought the writer's tentativeness (oh no i'm gonna be brainwashed) was kinda humorous. I'm in the empiricist school, if you think you have a good economic idea, show me the proof. Unfortunately, economics is non-linear so there's big argument over what constitutes proof of exactly what. Having a "Chicago School" of economic thought just underlines the uncertainty. There's no "Chicago School" of math. The other sad thing about economic debate is that huge complex issues are often pole-axed with sloganeering. "Globalization is bad", "Government is evil", "Corporations are psychopaths".....
• but the fear of inflation helped the policies gain traction. Fear can be very useful in advancing a political agenda. Specifically a conservative one. Fear doesn't work as well with teh liberal policies.
• Fear doesn't work as well with teh liberal policies. You're going to lose your job to globalization if you don't vote for the Democrats.
• Globalization?! Shee-it. Glopalization was Clinton's fault! Dumbhole! *ptui!* dramatization for explanatory purposes only. Do not take comments internally.
• As taught by Sanderson, economics is a satisfyingly neat machine... Well, the Moniac is a pretty neat machine too.
• People in highly taxed countries better off 40% of world's wealth owned by 1% of population
• The question then is what we do with this information. Maybe, but is that a moral issue? Is the argment between people who think higher prices are morally good, and people who think they're wicked? Isn't it more of a technical argument about which means of controlling inflation actually work? I don't know much about economics, but I don't remember anyone advocating uncontrolled inflation on moral grounds, or indeed, at all. The whole "raising the minimum wage creates more unemployment" argument is just crap. No. I think it's a perfectly valid argument in principle: if you raise the minimum price of something, people will tend to buy less of it - including labour. That's fine if you live in a perfect Benthamite world where all workers have equal free access to all the available jobs: but in the real world some don't: the minimum is only meant to affect those people, at the bottom of the economic heap, who suffer from various disadvantages. That's why minima are always set so low. Nobody supposes we could make ourselves all rich by enforcing a minimum wage of ten thousand a week: that certainly would create unemployment.
• Globalization?! Shee-it. Glopalization was Clinton's fault! It's true. Before Clinton, I had no factories in China. Now I've got a complete set.
• Maybe, but is that a moral issue? ... Isn't it more of a technical argument about which means of controlling inflation actually work? I don't know much about economics, but I don't remember anyone advocating uncontrolled inflation on moral grounds, or indeed, at all. I think it's a technical argument that becomes a moral one when implementation details are considered. One can demonstrate a relationship between low levels of unemployment and rising prices (demand for labour pushes up wages - increased wages push up prices). There are a number of ways to stabilize prices in this context: allow immigration (if it's controlled), enforce wage agreements, reduce barriers to entry to the labour market (provide creches and daycare, for example). Each of these has a moral component insofar as it relates to an ethical decision (immigration is good/bad, unions are good/bad, stay-at-home parenting is good/bad). At a macro level, the World Bank and IMF will frequently tie economic assistance to certain "liberalization" measures such as floating the currency, reducing tariffs, cutting public debt. Each of these can be seen as a techical solution with political (and therefore moral) implications.
• It's a moral issue because we have to decide, as a society, what constitutes a good economy. As t he article says, these economists priviledge efficiency, because they can measure it. St/Sir Thomas More (and many men of his generation) priviledged social stability over making money, because that is what he valued. Until we agree on where we want our economy to go, the discussion of "good" or "bad" economies doesn't have a basis. Personally, I like economies that serve society, and provide the best life to the most people, while being sustainable. Based on our history, we haven't cracked the sustainability side at all, but as for the economy serving society, that seems to be a free market economy with healthy government regulation (including safety standards, minimum wages, protection for worker's rights, etc). Of course, then we have to decide what constitutes society - do we just look out for our own country (in which case, break out the subsidies and tariffs), or do we look out for all people (end the agricultural subsidies in the West and the agressive, thoughtless development of third world resources for the benefit of western investors)?