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Economics in Two Lessons, Chapter 10

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  1. May 18th, 2018 at 06:59 | #1

    Fine as far at it goes. The Goldilocks footnote pursues a red herring down a rabbit hole: I suggest nipping it in the bud.

    I miss a discussion of the pervasiveness of externalities. Like asymmetric information, they are a feature of most business relationships. A typical market transaction takes place under asymmetric information, and with a cloud of positive and negative externalities, many trivial but some significant. In the standard case, there is a mismatch in JQ’s terms of opportunity costs, and a case for a welfare-improving government intervention. Since such interventions are themselves systematically prone to fail, and cannot be envisaged in every case in a free society, it’s second- and third-best all the way down.

    Punditry is a nice field of rich externalities. Suppose both dishonest ideologues and upright thinkers (h/t to John Quiggin) initially sell their skills to readers, as in the pre-Internet days of print newspapers. They can charge similar fees. But both propaganda and true arguments are repeated by readers and spread into the general culture. Speech has huge externalities, both positive and negative.

  2. May 18th, 2018 at 11:15 | #2

    I’m working my way through this with detailed comments (mainly while travelling on the tram so it’s a bit disjointed). I was finishing my thesis when you (JQ) started this, so I got a late start and am only up to chapter five yet.

    I really want to do a comprehensive critique because I’ve made some severe criticisms of economics in my thesis (particularly in the 100 word statement, where it’s hard to get qualifying statements in the word limit) and feel very obliged to engage with ‘progressive economics’, if I can call your work that? (I don’t know what you call yourself, except maybe you are now a socialist economist?). I hope I get my comments finished before the book is published!

  3. May 18th, 2018 at 11:35 | #3

    I should add that even though there’s a lot I don’t agree with (or think I don’t agree with – some things are discussed further in chapters I’m not up to yet), as a ‘non-economist’ I have found it very engaging and easy to read, to the extent that I missed my tram stop one morning because I was engrossed in reading about economics! You def deserve some kind of prize for that!

  4. Smith
    May 18th, 2018 at 11:57 | #4

    The Great London Smog 1952, which killed more than 10 000 people, was the point at which the problem became too big to ignore

    There’s an episode of The Crown, Season 1, devoted the Great London Smog of 1952. Churchill dismisses it as “weather”, with the penny not dropping (for him) until his young secretary is run over and killed by a bus.

  5. Greg Pius
    May 23rd, 2018 at 07:27 | #5

    Val in your criticisms remember that economics, as we know it, was started by Adam Smith as a branch of moral philosophy. Just like you Adam Smith was “a ‘non-economist'” who “found it vey engaging”. So much so he wrote a book of over seven hundred pages and called it WEALTH OF NATIONS. That was over two hundred years ago so economics has come a long way down the “qualify” track. The question I have proposed on more than one occasion is:
    Has economics lost its way?
    Sadly I think it has. John Quiggin is trying to put it back on that original track. For this he deserves praise.

  6. Ikonoclast
    May 23rd, 2018 at 08:39 | #6

    I agree in principle with Ha-Joon Chang, “Economics is a Political Argument.” There is a Huff Post article with this title.

    Seung-Yoon Lee: “You have said that “economics is a political argument,” that you cannot really separate economics from politics. Even the concept of “free market” is determined by politics. “What is free” is determined by society and through the political process. How do you come to this conclusion?”

    Ha-Joon Chang: “When I say this: I am seeking to debunk this widespread view, propagated by the current generation of economists, that somehow you can neatly separate economics from politics. They say, “This is the area of the market, and no political logic should intrude.” But actually, what you count as a political logic or market logic partly depends on your economic theory. …

    … more importantly, all markets are in the end politically constructed. A lot of things that we cannot buy and sell in markets used to be totally legal objects of market exchange – human beings when we had slavery, child labour, human organs, and so on. So there is no economic theory that actually says that you shouldn’t have slavery or child labour because all these are political, ethical judgments. When the market itself is constructed as a result of some political and ethical judgment, how can you say that this area can somehow be separated from the rest of society and the political system?”

    I hope J.Q.’s projected book says these kind of things. I need to go back and re-read the draft to see if and how J.Q. is saying such things. Then I will attempt a full critique of the draft. I will add that the theorizing of Jonathan Nitzan and Shimshon Bichler, “Capitalism as Power”, which I have only come across recently, seems to me to most adequately analyse capitalism out of all the recent critiques I have read.

    My ideas continue to evolve as I find inadequacies in each system of economics and political economy as I study them. Not only orthodox economics, but heterodox economics also, seem riddled with an essential problem. This essential problem begins in ontology. These fields seem not to be able to demonstrate clearly their basic existents and their quantifiable measures of these existents. Nitzan and Bichler seem to be the only modern thinkers attempting to deal with this founding problem of economics and political economy, at least so far as I have been able to find thus far, as a very amateur researcher. In the sandpit, I have linked to a paper and a presentation on Nitzan and Bichler’s ideas.

    My assessment of this arena is not nearly complete. But my concern that all economics and all political economy have no firm ontological bases remains as my most fundamental and disquieting feeling in this arena. Along with that I would place my feeling (a strong suspicion) that most humans, most of the time, are not concerned with truth. I mean even objective truths as, of course, moral truths are much more elusive. There is probably an evolutionary-psychological explanation for this. But that’s another post.

  7. May 23rd, 2018 at 13:15 | #7

    Thanks Greg, and I think the question indirectly posed by Ikon ‘did economics ever have a clear way to lose?’ is also relevant. Without getting ahead of myself too much, one of the comments I have on JQ’s draft so far, and economics in general, is that a lot of terms don’t seem to be clearly defined. Maybe I’m restating what Ikon is saying but it seems worth saying. Some particular concepts that seem vague or undefined are ‘work’, ‘production’, ‘productivity’ and ‘economics’ per se.