- As my book Has Globalization Gone Too Far? went to press nearly two decades ago, I approached a well-known economist to ask him if he would provide an endorsement for the back cover. I claimed in the book that, in the absence of a more concerted government response, too much globalization would deepen societal cleavages, exacerbate distributional problems, and undermine domestic social bargains – arguments that have become conventional wisdom since.
Helicopter money
Sky-High Monetary Policy
Economist Stefan Gerlach examines the promise and limitations of “helicopter money,” and considers arguments for and against advanced by Project Syndicate commentators.
The economist demurred. He said he didn’t really disagree with any of the analysis, but worried that my book would provide “ammunition for the barbarians.” Protectionists would latch on to the book’s arguments about the downsides of globalization to provide cover for their narrow, selfish agenda.
It’s a reaction I still get from my fellow economists. One of them will hesitantly raise his hand following a talk and ask: Don’t you worry that your arguments will be abused and serve the demagogues and populists you are decrying?
Great article. The idea of a trade commission monitoring our international trading partners for human rights abuses is a great one. Is there any federal agency or other mechanism to prevent a US company from trading with a foreign company or state that, for example, creates goods with slave labor? Or is the only thing stopping such immoral or unethical business the disincentive caused by the bad media? This all reminds me of the first two paragraphs of Economics in One Lesson: In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.Similarly, we might have had a more informed public discussion about social dumping if economists had been willing to recognize that imports from countries where labor rights are not protected do raise serious questions about distributive justice. It may have been possible then to distinguish cases where low wages in poor countries reflect low productivity from cases of genuine rights violations. And the bulk of trade that does not raise such concerns may have been better insulated from charges of “unfair trade.”
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine—the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.
A piddling point. There's no reason for the US to be against slave labor produced goods. Slave labor is perfectly tolerable to the United States, as long as it's included as part of a prison sentence. Apple phones are made with slave labor from the conflict minerals on up to final assembly, and they are making more money than ever before. Nobody is going to ditch that sweet sweet social capital to make some stand about 'ethics' in the abstract.
Kind of a smug response, and probably not true, either. Foxconn is an employer, not a slave driver, and apparently quite preferable to working as a subsistence farmer. The main product I'm aware of that actually is produced by slaves is shellfish from Southeast Asia. I think most people don't read the news, and they continue to buy Thai and Vietnamese shrimp, e.g., because they're unaware of the true cost of the product. Enough people are aware of the problem that any grocery store worth shopping at lists the country of origin for their seafood. Another slave-dependent product is the 2022 World Cup in Qatar, but you're already seeing advertisers boycott that clusterfuck. Considering we fought a war over it, I think it's pretty incorrect to say that people value social capital over human bondage. I think it's fair to say that most people are low information types, and are happy int hat state. But ignorance, while still sinful in some cases, is not the same as indifference.
I think the default state is ignorance, not malevolent indifferen e. I could be wrong. Also, I don't know anyone who has an iPhone for the social capital. Not to say that it's not the case for some glitterati, whether they be the wives Chinese central bankers (can't find the link about this group of Apple obsessive) or fifteen year old girls. But I don't know anyone who gives a shit what phone you have. But your point as to the sorry state of conscientiousness in this day age, I half agree with. I'm both affirmed and disgusted in my everyday interactions with how self-interested people are. But it doesn't matter. I don't see how, as an individual who strives to be self-aware, I have any choice but to be the difference I want to see in the world. So my hands are tied, whether or not the masses of humanity can't be bothered. Though I will say, I have a lot of sympathy for the masses, because life is hard enough without the myriad predatory schemes in place making it harder. But I see people regularly making stands about "ethics" both in the abstract and the concrete.
Sweet sweet social capital? Or regular capital? I follow your point up to there.
Agreed. So in saying... ...we are saying that Economics, although having basic laws and properties, similar to physics, math, or medicine, exists in different dynamic than those other fields of study? In economics, unlike, physics, math, and medicine, when we attempt to modify our responses to the basic laws and properties, we can clearly see the results, whereas in economics we can argue 'til the cows come home over free trade vs. protectionist trade policies. In physics, two guys in an airplane argue over air resistance and Newton's description of gravity. One argues that his parachute will counter the force of gravity enough for a safe descent, the second one argues that he can flap his arms fast enough like the birds he's seen. They both jump. Argument solved. Physics will not bend to self-interest. Does this sound correct, or am I just being hopeful out of self-interest? :)Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine—the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups.
Thomas Piketty remarked that he left the United States because Americans practice economics like it's hard science, while Europeans practice economics like it's soft science. Capital is chockablock with math but none of it goes beyond algebra; it's all fuzzy correlations and stuff. Most of the arguments against Capital that I've read tend to be of the "he approximated this one thing at 10% whereas EVERYONE KNOWS Milton Friedman approximated it at 8% THEREFORE HIS ENTIRE ARGUMENT IS FALSE." These generally are the same people that still throw Rogoff and Reinhart at you. I was reading some note or other and Knut Wicksell came up, along with his "natural rate of interest." That somehow led down the rabbit hole of Austrian school (Ludwig von Mises) vs. Chicago school (Milton Friedman) and I decided to learn what the difference was. Austrian school thinks economics is sociology. Chicago school thinks economics is math. Austrian school has been out of favor for 50 years. Welcome to our neoliberal paradise.
Governments and businesses make decisions based on economic theories, and the decisions of governments and businesses shape economies, so economic theories predict the behavior of economies and economies behave according to economic theories, at least until institutions stop buying into the theory. Some day we are going to make fun of the economists of the past the same way we make fun of alchemists.
That's a good point. But what will replace economists of the past? Better economists?
The true utility of economics is that it's a systems approach to value. The true failing of economics is you have to select boundary conditions for any system you care to model, and those boundaries are political as fuck. Arguing that mass unemployment is a logical and pure outcome of economic dislocations and efficiencies selects the masses as outside the boundary of the system; arguing that failing industries must be subsidized in order to promote full employment does not precisely model the efficiency of the industry. If you read Freakinomics and ignore/forgive their ridiculous "everyone is stupid but us" slant, you begin to appreciate that the whole of the book is an exercise in listing externalities. My guess is you're going to have giant data-inclusive models that some people will worship like gods and others will tear down like false idols. I mean, look at this shit. I only know about it because an investment pundit I follow is already front-loading it full of crap: Negative market informational surface, bitch. Are we gonna know more? Are we gonna know less? I'd argue that the numbers are going to dance to the tune of whomever policy's in vogue at the moment and, same as it ever was, they're going to have motives.
I thought that graph style looks familiar so I did some digging. Turns out Quid is essentially a layer over the Gephi open-source package. Which is free unlike the $25,000 a year Quid asks for their, uhm, added value. I mean, I made this degree centrality graph in an afternoon, what exactly does the program do that the open package can't? (Extra bonus: note all the floating dots? Those are data points that have no relation to the rest of the network. Either he didn't bother or Quid doesn't even let him remove those. )
I leave predicting the future to people who do TED talks. I'd like to think something more like designing a distributed system in computing than a science, where you start with the properties you want it to have and then figure out a protocol that has them. Then everyone knows it's all a game and they can make up a new game if the one they're playing turns out not to be very good. Something something flying cars and robot butlers.
I would definitely agree with you. There's a foundational difference between any social science and hard science because economics, for example, has no "basic laws and properties" that are truly predictive in the sense that a physical law is. That's not to say that the observations borne out again and again through observation in the realm of economics aren't useful. But there's an inherent difference of opinion that can influence an economist into one set of seemingly-valid conclusions over another that can't occur the same way in, say, physics. People can legitimately disagree over whether or not and to what extent we should subsidize economic behavior we want to see more of. You can't disagree that my airfoil design is shit if my plane doesn't lift off the ground. Your belief as to what maximizes human flourishing influences how you even frame the social universe, what sorts of assumptions you make, etc. It is self-evidently clear to some people that drugs are bad, that homosexuality is unnatural and thus intolerable, or that micropayments are the superior system for incentivizing the creation of content on the internet. It's harder to prove anyone's view of what's good for humans wrong because it's easy to find proof of that view in action, because human beings are so adaptable.