Weekend reflections

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

33 thoughts on “Weekend reflections

  1. Greetings

    This is a courtesy note to advise that the LiberalVoter blog has:

    1) Liked one of the comments on your blog so much, we re-published it.
    2) Linked to your blog in acknowledgement of the use of the comment.

    Sorry we didn’t contact you prior to republishing the comment. Since LiberalVoter is an attempt to inject some much-needed humour into the Australian political blogosphere, we hope you’ll forgive our impudence.

    Sincerely

    LiberalVoter.net

  2. Ah, Boxing Day and the 15th anniversary of the dissolution of the USSR : what a long & wild trip it’s been. For all the other Kold War Kids out there, I’ve only one question, okay, two: A) Is the world better off without the USSR and B) Are the Russian people & the people of the former Republics better off?

    The last 15 years, of course, has seen many distinct ‘phases’, but better or worse? What might have happened if Gorbachev had been more dictatorial?

  3. Will

    How can you even ask if the world is better off without the USSR ?

    Is the world better off without smallpox or (almopst) polio ?

  4. Child Slavery Threat To Justice

    This was a very interesting article I found on The Conservative Voice. Do you think slave labor should be a moral issue in trade deals?

    TCV-In the US, slavery was outlawed at the national level in 1865. “Oppressive child labor� was outlawed at the US national level in 1938. Yet child labor persists around the world as national and multinational companies seek lower labor costs and greater profits. Adult consumers around the world benefit with cheap goods made with child labor.

    Will worldwide morality over this issue become so great that all countries will banish child labor forever as they did the once prevalent black slavery? Or will the benefits that accrue to consumers and corporations by child labor prevail? Will economics trump morality or not? Stanly asked

  5. I have a beef with respect to comparative advantage. I read the account of Ricardo and he sets up an imaginary example which has England producing a measure of cloth at 100 labour X and the Portugese doing it at 90 labour X. No way. We all read about how the development of machinery sharply reduced the labour time in England and they went out offering deals on reduced tariffs for raw materials, including agricultural goods which were the main thing in those days, provided they could get access to markets to move their manufactured products. For Portugal they had a treaty about 1703 which allowed the Portugese wine to come into England at a big reduction on the tariff, in trade for English cloth coming in at a big reduction on the Portugese tariff. The result was a shower of English manufactures, that surpressed development in Portugal, and cheap wine for England. That is what happened. That is consistent with the economic history we know. That is not consistent with this comparative advantage thing.
    Then there is Ricardo who believed that capital is only happy at home and it did not readily move to foreign parts, which was necessary if the advantage he spoke of would work since he believed that value was the total of labour hours put into a product, while if capital was mobile any big profit in one area wojud lead to capital pouring into that branch of an economy till it leveled out to whatever was the national governing rate of return. But the fact is that English (or, really, Scottish) money did move into Portugal in wines, first to set up docks, wharehouses, and transport then to buy vineyards and wine making facilities, so that by about 1700 English money had control of 70% of wine coming out of Oporto (port) to England.

    So the imaginary example could not have worked as stated, it is based on a false idea of relative labour times (contrary to the history of the two nations); and it is based on a wrong idea about capital mobility. And I wonder how he could write it since he certainly read Adam Smith and there is plenty in Smith about the relative histories of these countries, the foolishness of the Portugese in what they did with the commodities (gold, silver) they robbed from Brazil, and the resulting economic disaster to both Spain and Portugal.

    And this idea , comparative advantage,does not seem to have ever been tested from 1815 to 1954 when McDougal tried it on USA and Britian and found it did not work. This is mentioned in Krugman and somedody…a new text on International Economics. Later I think it was Leontieff who studied it and found it did not work and his effort has since been called “the Leontieff paradox”, so I guess the economists have just walked around it. But I mean what kind of science, what kind of scientists do we have here.

    I think any layman dipping into an economic question and seeking understanding by reading histroy can come away not thinking very much of these guys who have the gall to present ideology as science when the last thing they want to do is to make the slightest effort to falsify their notions. I mean what would Popper say?

  6. Good for Garhane! The real reason for universal respect for comparative advantage among professional economists has more to do with memories (or nowadays more likely textbook accounts) of the collapse of world trade at the time of the Great Depression than with any real theoretical commitment. Economists fear the unknown consequences of a revulsion against the “race to the bottom” of wages and conditions caused by the advent of mechanised production in previously colonial States, combined with revulsion against the low labour standards existing there. Nobody knows the consequences of a higher tariff regime between developed States (say, the OECD) and these new States which might reduce OECD imports from them. What is presented by economists as a theoretically-based argument for free trade is in most cases little more than old-fashioned fear of the unknown.

  7. It is good to see a well-known US economics blog like Brad deLong’s devoting some time to the Stern review and the rate of discount we should adopt towards the future. Prof. Nordhaus has been at it again, and deLong has some interesting critique.

  8. Observa,
    I’d like to hold the magnanimous and Christian hope that you will concede complete victory to Nabakov. However, I am resigned to being pessimistic and sanguine towards that likelyhood instead.

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