Rethinking my economics
imf.org
imf.org
If you want to say what you think is important about an article, that's fine, but do it by adding a comment to the thread. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
The essay itself is interesting, the commentary that frames it as a break from usual economist behaviour gives a background that adds.
I've zero interest in self elevation and I heed your notes, it's always tricky when there's both an interesting source and and interesting take on that source.
The second half more or less just lists some currently popular views. There is very little argument for them. They might very well be right, but whether they are right or not isn't so interesting as why they might be right or wrong.
The most compelling part i think was the argument that power's distorting effect on markets is not well enough understood. That seems plausible to me (albeit i am definitely not an expert in this field) and also seems like a direction for future study.
I disagree with the morality point because i think that understanding how something works is entirely different than understanding what we should do about it, but we can't know what to do without understanding the how. Thus we need people to study the how separately from the moral component in order to be moral.
Maybe one day we will have the ability to properly model the incredible complexity of a macroeconomic environment, but doing so requires encapsulating thousands (if not millions) of variables and we are not there yet. You cannot simplify anything at the macroeconomic-level to an equation or theorem with a handful of variables or concepts, which macroeconomists want to do.
Said another way: macroeconomics is a social science, and like psychology or similar, most of the output of this discipline has piss-poor predictive quality and has an abysmal track record when it comes to reproducibility.
Keynes vs Hayek rap battle 1: https://www.youtube.com/watch?v=d0nERTFo-Sk
Keynes vs Hayek rap battle 2: https://www.youtube.com/watch?v=GTQnarzmTOc
They do this in a 101 class. They absolutely do not use "a handful of variables or concepts" when they're setting policy.
The context of the conversation is the use of simple models or large complex models and predictive capabilities. I know a couple folks who are policy advisors - and they don't whip out a giant model with 1000's of variables and then have someone actually setting policy look at said model and make a decision. On top of that, it's rarely a single person "setting policy". So, the idea that economists use large models to set policy is basically nonsense.
Have a good day.
There are two fairly distinct realities - economists are in fact calling the shots at central banks, usually, and the analysis is more complex. But the rest of policy setting is not, and it's the majority.
In macro, the problem is that when central banks follow some economic theory, you don't see what would have happened if they didn't. As an example, people love to criticize the bailouts of banks and ZIRP, without understanding why it was done. The reason was that economists identified that the long and destructive recession in the 1930s was largely made worse by lack of available money: banks in those days could not evaluate who to give loans to, so they were overly cautious. As a result, businesses went bankrupt and no new ones were founded.
This is what they wanted to avoid in our recent crises, and of course their actions come with other consequences. Those consequences are impossible to predict, as you say, but that's not the point. The point is to do or predict at least something, and try not to repeat past mistakes. This holds true for any study of complex systems where you cannot just make repeated experiments to obtain exact knowledge (some parts of medicine, psychology, nutrition etc.)
Isn't it more relevant to look at the individual savings vs. investment of the countries which were "damaged," and the policies which encouraged that? I also don't see how that's an argument against free trade, putting up barriers to trade wouldn't encourage saving.
How can it be that we punish other countries with embargoes if protectionism makes a country more prosperous?
A country set up for global trade is not ready to lose access to that trade. They depend on things not produced locally, and depend on the proceeds of exporting things they produce in surplus. It would take decades to adapt by returning to a self-sufficient economy. And some goods (phones, for instance) could barely exist without global trade, so an embargoed country will lose access to those things inevitably.
Giving away manufacturing is like handing over the keys to your war machine to someone else. The ONLY thing the US has going for it now is the dollar. However, given our behavior on freezing Russian funds and weaponizing it countries will look elsewhere.
There are no alternatives - yet. But when one begins to emerges it will cause the next world war. Interestingly the conservatives who complain about fiscal imbalance should embrace a neutral currency. It will force the US to balance its books.
The implications to workers over the years has been horrendous with whole industries being decommissioned across the United State, especially in poor rural areas. And you wonder why they look towards Trump. Well, it’s because the mainstream has been lying for a long time.
What doesn’t get enough attention is the impact to national security. This level of outsourcing and hollowing out of US industry is going to take a long time to rebuild. In the meantime - battle readiness suffers which in turn will bring challenges to the USD.
- most powerful war machine
- most powerful propaganda machine (international and domestic)
- genuinely powerful economy
- best geopolitical "alliances" (see above)
https://en.m.wikipedia.org/wiki/Full-spectrum_dominance
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This is clearly false given the previous presidency. Russia's ability to project chaos and authoritarianism vastly exceeds our own. Additionally our rhetoric (rules based international order) is clearly false given that our observable stance is rules for our enemies but not our "allies". We have been shown to be bad faith actors geopolitically. Xi's geopolitics is winning in many places.
Domestically we are divided and conquered. You don't have to take that from me. You can look up what Mattis and Milley have to say on the state of American "unity".
The constitution is overthrown by an openly corrupt judicial junta and the idea of things like Civil War and Texxit (the balkanization of America) are becoming less fringe every day.
We literally had an attempted coup that most of the people who the coup was against are either completely impotent against or literally in denial about. That is deep political instability and chaos for enemies to abuse.
> - genuinely powerful economy
Our economy is not powerful. Our financing is powerful. Our economy looks powerful because the US Dollar is the worlds reserve currency, something China and Russia are working very hard to chip away at. In a war, financing takes a back seat to actual ability to produce.
America's economy is built on intangibles. A powerful economy can make medical masks and bullets when they need to. That's not us.
Inflation is barely managed, and "greed"flation, which is inversely proportional to a markets competitive forces, is definitely un-managed.
> - most powerful war machine
And yet our war machines strength is being tested. Ukraine is stalling. Inability to provide bullets is a clear indicator our war machine is weak. Ironically China is showing to have the superior war machine given the success of consumer drones.
It's worth considering how much of an effect sanctions did not have.
I don't think we have any kind of reputation for efficiently and quickly building any kind of infrastructure.
60 days for an ocean based logistics port?
The Afghanistan exit wasn't exactly confidence building.
> - best geopolitical "alliances" (see above)
Half of our government is promising obstruction and isolationism. "America first" is not something countries in a functioning alliance say. The Nord Stream pipeline isn't something allies build. A president was impeached over how they interacted with an "ally" and then protected despite their abuse.
The US is a paper tiger.
America is imploding from the inside.
> This is clearly false given the previous presidency.
That doesn't follow. Just because another country has a propaganda machine that was, when fully engaged and focused on a a singular goal, able to achieve that goal in our country, doesn't mean that our propaganda machine isn't more powerful. It could just mean that ours was blindsided by this particular effort of theirs, or any of various other scenarios.
Note that I'm not saying our propaganda machine is stronger—just that this particular argument is not remotely conclusive.
Even funnier: the truth value of the American domestic propaganda theory has major bearing on the truth value of this theory (or, fact as we say here in America, at least right thinking people).
You are probably imagining things like Facebook and twitter being arms of Americas propaganda machine.
Russia's machine successfully got a powerful faction in America to turn our tools inward to be used on Americans against American interests. America is now gridlocked and unable to project power. Not to stop russia, not to stop israel, not to stop China, not to marshal our allies.
Russia has compromised our oligarchs (like Musk and Thiel), and co-opted their power to be used against Americans.
It doesn't matter if you have a slingshot or an M16. What matters is if you get to eat venison from your hunt the next day. The hunting has less to do with the weapon and more to do with the hunter.
Your model of nationality is monolithic. Oligarchs are trans-nationalits and act solely based on whats in their own self interest. Many oligarchs literally wield the resource or nations. Elon has more money than 150 different country's GDP. So if you want to analyze a nations intelligence stance you have to first look at the state of its aristocracy.
The cold war was largely about authoritarianism vs democracy. Democracy is clearly in decline. Authoritarianism is clearly on the rise. Given that these are understood to be the main geopolitical goals of the east and west, I feel very confident about saying that we are being out competed. Ukraine was invaded and China is marshaling an army while openly talking about how they are going to use it. Our main geopolitical adversaries are telling us that we are weak and vulnerable. If they are rational actors, then you shouldn't be feeling very confident about the state of America's intelligence apparatus. That's not feedback to just throw away and ignore. Throwing away that feedback is using hope as a strategy.
Our enemies are telling us they think we are weak, not that we are fundamentally sound but got surprised.
You have now given a bunch of supporting arguments, and also made a raft of assumptions about me that seem to be...well, very much assumptions, with no actual basis for them.
I don't actually have an opinion on whose propaganda machine is stronger, because I don't have enough information to form a cogent one.
How would one establish a necessarily accurate cause and effect relationship here, including some measure of magnitude (do you ever notice how we talk about such things as True/False binaries, accompanied by salicious language that implies massive quantity, without making any specific quantitative claim...and then if someone asks about the quantitative aspect, they're engaging in "semantics" or "pedantry")?
And, might the truth value of my speculative claim have bearing on your perception of things? For example: if there was no media coverage of "Russia's propaganda", would it have an effect on your perception of how much was going on? And yes, I do indeed know that the US (allegedly) caught them in the act at least once, but if you ever bothered to dig into the deeply nested "proofs" in popular news articles, you may have realized that most of those stories were based on metrics from Twitter that are easily spoofable.
> Additionally our rhetoric (rules based international order) is clearly false given that our observable stance is rules for our enemies but not our "allies".
Agree....but how many Americans believe that? And: have you ever come across any "news" from the government that may influence Americans one way or the other on the matter? Imagine how effective this could be if the US government was good at propaganda.
> Domestically we are divided and conquered.
Agree.
> We literally had an attempted coup
Despite what you may have been told, the intentions of the vast majority of the people of the people there is unknown. Thus, a simulation needs to step in, because on certain topics in the current era, it is not possible for most people to not "know", and those that discuss details with accuracy are being "pedantic".
"If thought corrupts language, language can also corrupt thought."
> Our economy is not powerful.
The US still has substantial manufacturing, but I am fairly in agreement with you here. Major incompetence, and an angry public is the consequence.
> Inflation is barely managed, and "greed"flation, which is inversely proportional to a markets competitive forces, is definitely un-managed.
100% agreement here!
> It's worth considering how much of an effect sanctions did not have.
I was surprised...but then from a geopolitical perspective, it shouldn't be surprising. Abuse other nations for decades, when the chips are down maybe they will take the opportunity for some payback. Good, I say.
> The Afghanistan exit wasn't exactly confidence building.
Agreed, and even worse was us being there in the first place.
> Half of our government is promising obstruction and isolationism.
And the other half tells better stories. They both tell wonderful, just so stories though....it's what the west runs on, we will settle for nothing less.
> The Nord Stream pipeline isn't something allies build.
Who do you think blew it up?
> America is imploding from the inside.
Good. Whenever a chance falls in my lap to give it a push to expedite the process, I will strongly consider it.
>Despite what you may have been told, the intentions of the vast majority of the people of the people there is unknown.
This doesn't matter - we're describing the actions and expected results, not the delusions of the pawns involved.
January 6 was so objectively a coup that if you described it to people in ancient Greece, they would recognize it as a coup. To quote a blog by a doctorate professor of ancient history:
>No ancient Greek would have had any trouble in understanding what happened on the 6th or that it was a serious attempt (albeit an incompetent one) to seize power. Having a leader or a political faction move with a mob (often armed, but not always so) to try to disperse the normal civic assemblies of a Greek polis and occupy their normal meeting place was a standard maneuver to try to seize power during stasis. As Dr. Roel Konijnendijk, an ancient Greek history specialist, noted in this excellent discussion on the r/AskHistorians reddit (where he posts as Iphikrates), “In the Greek world, most attempts to seize power by force tended to take the same form: the seditious party would contrive an opportunity to gather in arms while their opponents were unarmed and off-guard, and seize control of all public spaces.”
Emphasis not mine.
https://acoup.blog/2021/01/15/miscellanea-insurrections-anci...
(note: the domain name has nothing to do with coups, it's just the acronym for A Collection Of Unmitigated Pedantries)
The software companies do not mean much without the semiconductors.
The political elite will ignore it of course and will continue to push a program of platitudes and nonsense.
An excerpt: I am much more skeptical of the benefits of free trade to American workers and am even skeptical of the claim, which I and others have made in the past, that globalization was responsible for the vast reduction in global poverty over the past 30 years. I also no longer defend the idea that the harm done to working Americans by globalization was a reasonable price to pay for global poverty reduction because workers in America are so much better off than the global poor.
I find it a bit trite that economists can write these self indulgent essays and don't recognize the outsized impact they have had on society. I appreciate the change or heart. But the impacts on people have been so great it would be more of a gesture if this person took all their wealth, put it in a pile, burned it, and then walked into the ocean.
This is someone who got to have their cake, Whole career built on a fad, and eat it too, ie be fawned upon with esteem due to a regretful essay in their winter years.
We're going to see more of this stuff, and next it'll be Big Oil execs regretting their career and then doing nothing about the problem.
The perfect example is Bernie Sanders going from "immigration is obviously bad because its a tool capitalist's use to undercut American labor" to generic racial grievance "progressive" guy.
The two can have different policies applied to them. It’s a bit silly to use “globalization” to mean both.
If goods and capital are free to move across borders, it doesn’t matter whether people are coming to your country or staying where they were, because you’re competing against them either way.
And, capital can move way, way faster than populations. We are competing against the entire nation of China. There are over a billion of them. Have a billion people moved to the United States in the last 20 years?
Right wing media is counting on you to not be paying attention.
There a fewer factory jobs now than there were 30 years ago. Did Mexicans come and move into those factories? Or did the factories move to Mexico?
Pay attention.
During covid-19, when immigration was suppressed and the labor surplus was attenuated, something amazing happened -- wages rose across the board in America.
Yes, outsourcing is a huge issue. It is dealt with in various ways, and there are substantial barriers to in sourcing (my company has tried to do this, but decided to hire in America due to substantial costs).
Immigration is also a huge causative factor impacting wages and labor bargaining.
If you're a protectionist, that's good, I also support that. But you should probably apply your ideology across the board rather than selectively, which I suspect you cannot do due to your partisanship.