Thursday, November 12, 2015

Unpopular economic opinions

1. School is mostly about indoctrination into the national identity. It is also about child care, and for older children, about keeping them out of the labour force. If we were honest we could talk about education policy with this in mind, though no one does (okay, there are some exceptions).

2. Gossip is a fantastic coordination device, allowing us to find like-minded others by bitching about particular issues or other people. The underlying idea here is that “my enemy’s enemy is my friend”, so if someone wants to have a good bitch, they are likely to be similar to you. Could be one factor in homophily observed in social networks. Again, rarely discussed.

3. The tax debate is 99% about distribution, 1% about growth. Don’t let economists fool you with their models that they don’t even pretend capture real phenomena. When they say lower corporate taxes increase growth they are modelling a world without assets where all profits are devoted to new investments in capital equipment.

4. Microeconomics is no more scientific than macroeconomics, particularly when it comes to theory. When people say there is progress in micro they mean in applied psychology, where experiments are widely used, and in empirical work where new data is helping to answer localised questions.

Most microeconomics though is still about markets, where aggregation of individuals is still a huge problem - it’s just a different level of macro.

5. Farmers are one of the wealthiest groups in the country and we shouldn’t prop up their businesses or lifestyles (see chart below). They are not charities and will jack up prices when they can. We can protect food production as an industry by protecting the degradation of the land from incompatible and irreversible uses like mining, housing developments and so forth. But some farm businesses will go broke from time to time and that is not a problem. We also are a massive food exporter, so there is really no “Australian food security” argument. 

6. Speaking of food security, we really overlook the main cause of malnourishment is poverty, not a lack of food production in the aggregate. Making poor people richer by taking from the top few percent of wealthiest and giving to the bottom 20% of the world would solve food security, amongst many other social ills.

7. Redistribution of global wealth is clearly the most obvious policy for a utilitarian. Bloody obvious.

8. Open borders to me seems like a way to pretend to be serious about global poverty and inequality. It allows supporters to pretend that the borders of private property within a nation are moral, yet the borders between nations are not. Somehow if I am denied, through accident of birth, to make a living from my share of the land in my own country, this is a radically different thing to Alex Tabarrok’s view, where he asks “How can it be moral that through the mere accident of birth some people are imprisoned in countries where their political or geographic institutions prevent them from making a living?”

As I have said before, even the wildest proponents of open borders agree that

“…open borders could not on its own eliminate poverty and that international migration could only help the relatively better off among the global poor”

Then what is it really for?


  1. "Today, almost all economists agree that the simple models of yesterday ... were far from adequate as theoretical models, or as a guide to policy." This one is from 2006 on an age when they said the same about an age when they said the same. You might get the impression that the models of tomorrow will make theoretical physics look like kindergarten-toys, but they will be far from adequate as theoretical models, or as a guide to policy; the simple one's. As on the complex models of yesterday, today, or tomorrow: each complex has a real part and an imaginary part. When you think about it, and I mean really think about it, the greatest part is on what you read, no in what I wrote, for one loves one's own children best. And you know: you read to learn what you think, not what I think. It may be a bit disobliging for a writer, not a very popular notion among them.

  2. How about the fact that we could increase employment and output in these recessionary times by having governments run budget deficits financed by direct transfers of newly-created money by their central banks. There is no downside to this whatsoever, as long as everyone keeps an eye out for serious inflation and reduces the deficits as employment is restored. But this idea is almost completely "taboo" as the proponent Adair Turner says. We cut back deficits in 2010 because of popular & political fears of rising national debts, yet we could have run deficits for stimulus without increasing our national debts at all. But no one every raised this option.

    1. I did! (I mostly haunt Economist's View).

    2. Adair Turner's ideas are of a very soft formulation. You can do some of this or some of that, but watch out for the other. In actuality, MMT (which Adair fails to credit) has had these ideas on the table in a far more exacting nature for two decades.

      MMT will tell you how much money, where and how to spend it, and when to stop. Very exacting stuff, that closely checks inflation, probably in a more exacting way than orthodox macro does. All to provide full employment (2% friction, no more) without inflation. Tight.

      But like Adair (only for far longer), MMT's ideas are kept off the table, and when let on, only to mischaracterize. The reason is obvious: full employment is an anathema to the elites; something they give lip service to, but no more want than they would a quadruple amputation. Full employment changes the balance of power between capital and labor, goving labor a far greater seat at the table.

  3. The real question is why these opinions are taboo and/or unpopular, huh? and what is not being addressed is why they are taboo... hmmmm! Could it have anything to do with the fact that special interests control the type and form of propaganda to insure it supports their own interests?

    1. You don't have to be shy about it. The mainstream media are powerful entities pushing the neoliberal ideology and forming a consensus view there is no alternative to capitalism TINA.

      It's not tin foil hat stuff either to realise on matters of National warmaking the mainstream media always presents the establishment and CIA viewpoint.