By Roger Diamond
There are many problems with economics, but how can I take economists or economics seriously when they never look back? There is something really flawed about a field of endeavour where 10 years is considered infinity.
Look at almost any economic report and it will compare things with the previous year or even the previous quarter within the same year. Occasionally you will see a trend over the last few years, or a projection for five years hence, but this is rare. What about looking over the lifetime of a person, which is really not such a long time anyway? Or that of a nation, since independence or some major re-configuration of the borders, a war or similar event — why do we not get a long-term look at economic facts?
Here are a few possible reasons. Perhaps economists have produced such garbage projections that when viewed with hindsight, they are laughable. Or maybe there is so much published that it’s impossible to sift through and find something meaningless, which doesn’t sound reasonable and sounds more like laziness to me. Or things are not published at all and there are no records of economic projections and outlooks to compare with what actually happened. Or, possibly economists are so busy dreaming up the next scenario that they never bother to look at those from the past, or even to use past data to help extrapolate their projection. All of this smacks of very poor quality science, or no science at all.
For economics to be of any use to us, it needs to show us long-term trends, such as the amount of money in circulation, the prices of goods, the level of debt, consumer spending and so on, over periods of decades. And to compare these various indicators to each other, to come up with correlations. But even more importantly, these economic indicators should be compared to environmental ones, such as deforestation, damming of rivers and mining. Then maybe we will learn something.
For the first time, economists may actually understand that as you cut your forests, your forestry industry grows, but soon enough (over decades perhaps), as your forests run out, your forestry industry will die. It’s a simple enough fact to grasp. The same thing applies to oil. The oil industry is huge currently, but sure enough, as oil supplies dwindle, as they will, as any finite resource will, the oil industry and everything dependent upon it will die. The global economy comes to mind.
Entertaining us with figures that show “up” this month and “down” from last quarter, is like talking interior design, when the foundations of your house are slipping away. Economics as a discipline is failing to be useful to our society and our survival by being so short-sighted. Is economics here simply to serve the traders on the stock market to make a quick buck buying and selling, or is there any chance that it may serve a greater purpose and help us out of the environmental and economic mess we find ourselves in?
“Come now, a dicipline would not be critized as heavily as yours are at present if it were as innocent (on the whole) as you profess it to be.”
Unfortunately the level of ignorance demonstrated on this thread is fairly representative: a lot of the criticism that is directed at ‘economists’ is really because people tend to call anyone who is even remotely involved in commerce (particularly finance) ‘economists’. I assume the fact that you are participating in this discussion is indicative that you have at least some interest in the matter, and you clearly haven’t got a clue. I can only imagine what people who have no interest /less understanding accuse ‘economists’ of. But again the issue here is one of definitions. The ills that have been listed throughout this thread are the fault of economic agents. It just so happens that people, you included, can’t distinguish certain economic agents (business practitioners/consultants/financial advisors) for economists.
“When a biologist studies a system, yes, he is not responsible for that system but …”
A few things.
1) As in any profession there are economists who are profoundly wrong. The thing about economic advise is that economic agents (from governments right down to ordinary people) can decide whose advice they accept. If I go to a homeopath, I’m not entitled to decry the failure of modern health care. As Simon pointed out several prominent economists (Roubini for example) were screaming from the hilltops about the financial sh**storm that was about to unfold. And no one listened.
2) As with any science getting it wrong is a) unfortunately part of the process of getting it right, and b) probably destroys the careers of individual economists, but shouldn’t be enough to bring the whole field into question. While people are rightly pissed about the Thalidomide case, it hasn’t seriously caused people to lose faith in the entire edifice of modern medicine. The same would be true of your biologist who gets it wrong about the dangerous new species: people would demand answers from him/her, but no-one would declare biology or all biologists to be of no value. I don’t see why economics should be any different.
3) As far as predictions go, no other science is held to your standard regarding the future. Did a single geologist correctly predict the Asian tsunami? Not that I’m aware of. We know that earthquakes happen but we’re pretty crappy at knowing when. The same is true of economic crises. Is anyone asking “what use is geology?” Why are economists predictions expected to be more accurate than other sciences?
4) As to the question of whether individual economists are held accountable: I think this guy would disagree with you: http://www.guardian.co.uk/world/2010/mar/18/north-korean-executed-currency-reform
More generally though, the sort of economist that wields any power i.e. those who advise governments, come and go with those governments. So when their recommendations fail and those they advise are kicked out of power their advisors lose their jobs along with them. What more accountability are you after?
(Incidentally show me one economist (not economic agent) who has gotten it wrong with regards to the existence of externalities? Sure there is disagreement about how to deal with them, but the same is generally true of most problems in science. Economics has the added disadvantage, of not being able to be tested in a lab. When a new disease pops up, treatments are carefully tested before being unleashed on the public. There’s no test for economic prescriptions other than theorising the impact and then ‘try it and see’)
@ Xcepting
I’m not claiming its perfectly innocent. (But the fact that its criticised is not proof; thats an appeal to popularity and its a fallacy) No profession is innocent. What I’m saying is your examples of decisions (which we agree are damaging) are not made by economists
“The problem is not with what economists singly do at elementary level but their net benefit when seen in one equation”
You’re setting up a ridiculous burden, that no profession could possibly meet. More importantly though, the evidence you’re piling up ‘against’ economists has been shown to lie with various others. You’re yet to demonstrate a case where an economist really is responsible.
Yes, theories are often wrong. Market predictions are also often wrong, as any claim about the future in any field would be (thats why they come with disclaimers. If you’re relying on soundbites for investment decisions, Dr Rath has some vitamins to sell you).
Re: thalidomide. That’s fine. That’s the standard I’d like you to judge economics on. I notice you’re not tossing out the entire field of pharmacology. Why should economics be subject to a higher standard?
You argue economists should do more to educate people. I’ve shown that they do. You say they should consult other specialities – its very easily demonstrable that they do (as a trivial example, academic papers are frequently co-authored with outside specialists). Short of economists going door to door, what would you like?
@ X Cepting
And that is precisely your problem. you have reduced economists to a “people who believe in unlimited growth in a limited matter pool.”
Please provide a source. Even better, I will provide some.
This from Herman Daly
http://www.thesocialcontract.com/artman2/publish/tsc1303/article_1143.shtml
” “the world can, in effect, get along without natural resources.” Solow elaborates that this is so if we have a “backstop technology,” such as breeder reactors, which will mean that “at some finite cost, production can be freed of dependence on exhaustible resources altogether” (1974, p. 11). ”
Others have picked it up:
These two from Jay Hanson
http://dieoff.org/page236.htm
http://dieoff.org/page141.htm
” “Nobel Laureate Robert Solow:”… the world can, in effect, get along without natural resources … at some finite cost, production can be freed of dependence on exhaustible resources altogether… [ 1974 lecture to the American Economic Association cited in p. 117, STEADY-STATE ECONOMICS, Herman E. Daly; ”
This quoting Jay Hanson
http://www.mountainskygroup2008.org/reflections/daly-economics-blind-spot-2008Oct.php
tbc
@ X Cepting
What was actually said by Solow:
““As you would expect, the degree of substitutability is also a key factor. If it is very easy to substitute other factors for natural resources, then there is in principle no “problem.”
The world can, in effect, get along without atural resources, so exhaustion is just an event, not a catastrophe. Nordhaus’s notion of a “back- stop technology” is just a dramatic way of putting this case; at some finite cost, production can be freed of dependence on exhaustible resources altogether.
If, on the other hand, real output per unit of resources is effectively bounded—cannot
exceed some upper limit of productivity which is in turn not too far from where we are now—then catastrophe is unavoidable. In-between there is a wide range of cases in which the problem is real, interesting, and not foreclosed. Fortunately, what little evidence there is suggests that there is quite a lot of substitutability between exhaustible resources and renewable or reproducible resources, though this is an empirical question that could absorb a lot more work than it has had so far.”
Im sure you can see the gross misrepresentation there. I have seen other examples of this type of quoting and, unfortuantely, they have become staples of the criticism against Economics and economists. I’ll be happy to provide more if and when i see them again.
tbc
@ X Cepting
As for the rest of your argument, once again, your criticism (the relocating) is a political issue (it may have an economic effect – any production does). It is not the Economist who forces people off their land but a collusion between governement and corporate. My point two in response and wrt you thalidomide example is relevant. The likelihood of any legal action is low and in many instances the likelihood of getting a guilty verdict is close to imossible. The Economist describes what others have already done.
As for the “holistic environmental global viewpoint”, you may not recognise this but it has economic consequences. The economic system (which despite your assertions, Economists do realise are part of a greater ecology) is what I described as “entrenched” in point 3. It is very easy to scream buzzwords like “holistic” It is not so easy to walk away from entrenched systems, you (Johan anf you) place the blame for this “entrenchment” on Economists. As has been pointed out on numerous occasions, you do this by inventing meanings of what an economist does.
Also wrt that, I notice that once again you ignore the point about the interaction between small picture and the big picure. Why is that? It seems to me that it completely contradicts what you say about micro ecomists after that. Elinor Ostrom might interest yuo with regards to that.
tbc
@ X Cepting
Elinor Ostrom won the Nobel Memorial Prize for her work regarding the management of common pool resources. One point that she makes is that there must be recognition of clearly defined boundaries and that self determination must be recognised by authorities.ie no relocations. She also says that conflict resolution must be cheap and easy to access which in your relocations example (or examples of relocation) it isnt. It is close to impossible.
And more, as well as being a “simplistic argument of the one economist in a textbook rural set-up doing textbook economics for a local government.” it is also part of the body of knowledge of Economics. All of those “one economist” s add up.
Ah Orson, well done! You have told me, as has mallencolly and simon, what I already know. I have said that I find economic principles quite logical and do indeed employ them on a minutely basis, so we agree, economics is, just like the laws of physics exist, no doubt about it , they work. I don’t employ the services of an economist though, and as you say, the person in government that my tax money buys will hopefully be voted out with the current politicians next time around. You do realise that what you have actually admitted through all these lengthy lessons to us uninitiated is simply what I have said in the beginning: economists are extremely adept at getting out of tight corners, since they are not responsible for anyone taking their advise, are not actually able to say anything with any certainty and should merely be taken as a rough indication of the state of affairs, and are only interested in the current game being played by those who can afford them, who happen, quite by chance, to affect the lives of “the masses”. I think the debate did serve the purpose of correcting misconceptions about them.
@mallencolly – I suppose your lessons serve the purpose of edifying those totally unitiated, in my case, I finished Environmental Economics (a 2nd year subject) and found that once was quite enough. May I suggested some bedtime reading into culpability?
@Johan Meyer
“It is plainly efficient for me to dump my waste on someone … and this efficiency is generally a thermodynamical efficiency.”
As said (and explained) before ‘economic efficiency’ is a very specific concept. But if you want to discuss economics while ignoring economic concepts I’ll try explain this without using the word ‘efficiency’:
Producing any good has costs (both monetary and otherwise). Some of those costs are borne by producers (the cost of labour/capital/raw materials etc). Other costs can be shifted onto someone else (i.e. dumping toxic sludge). In both cases the total costs are the same (labour+capital+raw materials+pollution), but because the producer doesn’t face the full cost of producing (i.e. the producers share of costs is lower than the true total cost), he will produce more than the socially optimal level (i.e. the level that would be produced if all costs were incorporated in deciding whether to produce). Since that decision is made by the producer alone, he only takes into account the costs that he will face, and not the costs that others will face as a result of his decision to produce. That is a bad outcome, and is what economists call an ‘inefficient’ allocation of resources.
So when I say “economists are interested in efficiency” (how this whole little side track about efficiency started) I mean “economists are interested in a socially optimal allocation of resources”.
(tbc)
It is a nonsensical question to then say “whose efficiency?” and point to cost savings (and benefits) on the part of particular economic agents, because a socially optimal allocation of resources is SOCIALLY (i.e. pertaining to everyone) optimal.
Whether it requires less/more energy or results in an overall increase/decrease in entropy (I assume that’s what ‘thermodynamical efficiency’ means) might speak to why it is done by particular agents, but it is entirely irrelevant to the discussion of a) whether it is socially optimal and therefore desirable, or b) whether economists are responsible or fail to see the problem.
“You are effectively still pretending that the ‘producers’ are in the same market as their victims …”
I’m not sure what you mean by ‘market’, but it’s irrelevant because that is fundamentally NOT what I /economists are doing. The problem with externalities is that no market for them exists. The other costs of production are settled by the producer in their respective markets. The necessary labour is bought in the labour market; raw materials are bought in their various markets, etc. But when it comes to pollution no market exists, because there is no well defined owner of something like clean air (the tragedy of the commons) and so the alternative (to paying for proper clean-up/ someone else to handle the problem) i.e. dumping, costs nothing.
(tbc)
“Show me an economist (outside the radical fringe) who discusses these matters.”
Arthur Pigou, (Died before Nobel Prize for economics was awarded, but widely regarded as the best economist of his time) ‘Wealth and Welfare’
Ronald Coase (Nobel Prize winner), “The Problem of Social Cost”
Kenneth Arrow (Nobel Prize winner), “The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Non-Market Allocation”
Joseph Stiglitz (Nobel Prize winner) ‘Externalities in economies with imperfect information and incomplete markets’
Gary S. Becker (Nobel Prize winner) ‘”Consumption Externalities and Pigouvian Ranking’
Solow (Nobel Prize winner) ‘Intergenerational equity’
W. Baumol (Nobel Prize nominee, widely expected to win it in the future) ‘The Theory of Environmental Policy’
Hell, the winner of the 2009 Nobel prize (Elinor Ostrom) won it for her contribution to “analysis of economic governance, especially the commons” (which is the externality problem)
Unless you care to define some of the world’s foremost economists as the ‘radical fringe’…
“Would we blame zoologists (the profession) when there is silence about the danger of the behaviour of a given animal, or physicists if they were silent on the dangers of ionizing radiation?”
1) The list above took me a few minutes and a google search to compile. It is far from exhaustive. Your accusation that economists are ‘silent’ on these matters is patently false. And
2) See my most recent response to X Cepting
@ Johan
I am not an expert on the mercantalist period. I am, however, fairly confident that the mandates of the companies were sanctioned and granted by the respective states. In most instances they were granted specific monopolies for geographical areas. These were all sanctioned by the states.
It is also no coincidence that mercantilist period developed as Europe was moving from the feudal medieval economy to modern nation states (and the accompanying technological advances).
Trade was very much seen as a zero sum game between nation states. The period was marked by protectionism and also state monopolies. It is no wonder that imperialism was the next logical step…(creating markets by force)
So I think the crucial factors here are state granted monopolies (economic / violence). The corporations on their own would have struggled. They historically relied on merchant law generated independently of state edicts.
True. The Wild West in terms of the extermination of the native population is not a great example (although you could argue about the drivers/causes).
However in the absence of strong (any) state control many frontier towns/societies managed to maintain law/order. That is usually the purpose of the example.
I think ancaps are very aware of the “golden opportunity” urge but isn’t it the syndicalist that rely on internal cohesion/moral solidarity? (no freeriders, quasi-bosses etc.)
Caplan by “jointly destructive” means those things I listed (don’t read it only in terms of warfare/violence). Think negative consequences of Iraq for US
@mallencolly
Wow, that links contains more than 5 major errors of its own – including a completely incorrect understanding of rational theory.
It is unfortunately very representative of the general “activist” view (and lefty – basically your average M&G readership) of things. Emotional language, economic illiteracy, full of internal logical inconsistencies and a heavy dose of misinterpretation of the opposing views. Just by any book by Naomi Klein to see great examples
More than a few studies in the US has for instance shown that the left’s/progressive’s understanding of basic economic issues are significantly lower than that of those in the centre, right or those that define themselves as conservatives and libertarians.
@ X Cepting
How on Earth did you manage to pass Environmental Economics without knowing what an Economist does? You said it yourself.
As for your reverting to what you said from the beginning
“are not actually able to say anything with any certainty and should merely be taken as a rough indication of the state of affairs”
Certainty, huh? Some things can be said with certainty and they are, thus, laws. As sure as an object will fall when dropped, profits per unit will decrease when costs per unit increase if price stays the same. Please show me one field that can predict random events with certainty. Even Entropy.
” and are only interested in the current game being played ”
Think about some of the things you know of Economics (specifically wrt to production), take money and profit out of the equation (you do not get a better example of changing the game) and see if they hold. Sometimes it doesnt matter which game is being played, the rules stay the same.
” who happen, quite by chance, to affect the lives of “the masses” ”
Yes they do, and since you are offering bed time reading in Ethics, perhaps you would like to point out how when Economists are advising, the ethical principles they should use. The standard in policy implementation is Utilitarianism. In welfare Economics General Equilibrium is used. What would you propose? I am *really* interested to hear.
@XCepting
“I don’t employ…”
I don’t employ any physicists/zoologists/etc, and I could easily go about my life without any of them impacting me, but it doesn’t lead me to conclude that those fields are useless. It is entirely possible for someone to exist in society, to participate in the economy, without needing to question the processes by which that society/economy operates. But that doesn’t mean that it’s a waste of time to ask those questions.
“…since they are not responsible for anyone taking their advise…”
Incidentally this is not what you ‘said in the beginning’: At first you were angry at ‘economists’ for the way the system works, and now you deride them for not actually being responsible. But at least we agree that economists aren’t to blame for how the economy works.
“…with any certainty”
As Simon asked, show me a scientific field that has been settled for all time.
“… only interested in the game being played by those who can afford them”
1) As opposed to other fields where people work for free?
2)I think you’re still confusing us with financial analysts/consultants. One of the largest areas is development economics, which deals with questions of poverty reduction, income distribution, etc the beneficiaries of which work are not paying (not to mention environmental economics etc)
3)A great deal of economic research is conducted in universities, where people are generally free to pursue areas that interest them.
@mallencolly
Some problems with breeders:
1. Again, most reactors aren’t too happy with mixed fuels. Look up MOX (and with regular heavy water reactors, tritium dumping) some time.
2. The wastes from a breeder (including reprocessing waste streams) are chemically much nastier than the wastes from a regular reactor, and we’ve found no good way of dealing with them, other than dumping them off the coasts of regions that cannot prevent it.
3. Do we really want to prepare huge amounts of plutonium?
4. If we prepare huge amounts of plutonium, do we really slow down, or do we destroy our stocks with increased production of trans Pu-239 species?
5. Breeders tend to have fires, both from the (chemical) ignition of plutonium, and from the ignition of the (coolant) liquid sodium. A breeder was recently shut down in Japan. Pu tends to ignite in air at close to room temperature.
I’ll close my participation in this thread, unless there is a substantial contribution by the economists, by repeating my previous observation – claims of subfields are made, but not a single review article, much less a paper, is presented on examples that are pertinent, e.g. CK and Somalia as waste dumps, yet we are told that we can ‘solve our own problems’ (implicitly, by dumping further on them). Mallencolly et al., where are those economic papers on dumping in Somalia and Congo-Kinshasa? Citations?
And seeing as I’m a ‘bitch,’ woof woof.
@Orson
Stiglitz is by now considered to be radical in many circles. The latest winner is certainly widely considered to be fringe.
Yes, your definition of economic efficiency is as you’ve said, and it has little explanatory power for how people behave, as compared to the thermodynamic definition, which Summers (and other mainstream economists) clearly understand.
Arthur Pigou says little about pollution and nothing about dumping (the only dumping he discusses is a monopoly practice). Coase speaks to pollution in a limited fashion, but cannot begin to address the thermodynamical requirements of your society. Soot falling on a laundry is one thing, and the society doesn’t rise or fall based on the outcome. People in Bokmakierie, Langa and Bothasig can move out to a less polluted area, until someone else pollutes in their new area, which they cannot fight either because they bought more expensive property and now have less money for lawyers, or because they moved to a more depressed area and now don’t have the income for lawyers.
@mallencolly
What portion of relevant economists predicted a failure, and what portion predicted steady growth or continuation?
@HD
Iraq would also have been negative for US had they not invaded – less control over the resources. As for prevention of thuggery, any meaningful arrangement will take into consideration local areas of strategic importance, training etc. In the market, what is the consequence? Outside the market, what is the consequence? Depends on real institutions in both cases.
@HD That their states granted these monopolies is historically interesting, but not significant to my argument. Company towns (internally feudal) arose without monopolies being granted, in USA. The mercantile monopolies had the capital concentration to set up such systems, and potential competition did not care to put its capital at risk in the likely ensuing wars should they attempt to compete. And this illustrates another aspect – where a region is a significant resource base, mercantilism readily survives at least until a friendly ‘independent’ state can be set up. Singapore can have free trade, but not the Hudson Bay area.
(Western) Europe was already imperial prior to the 1500s was primarily eastern Europe, and in Britain’s case, the surrounding islands.
@Orson
Another thing – those economists won nice little prizes. They had zero influence, perhaps precisely because their suggestions would have meant the impoverishment of their societies. And they avoided an important aspect of the economic description, namely that the dumping in question is a technological necessity, to which varying prices get attached. So yes, they are dishonest in this matter as well. Your comment at 3:05pm claims that economists aren’t interested in motivation – perhaps your list isn’t, but Summers and others certainly are. And again, clean air in Pinelands, or in Langa and Bokmakierie?
@ Johan Meyer
I didn’t want to get into long posts, but there’s really no way to respond without doing so. Apologies.
First some general comments
The biggest problem here is your debating economic issues using economic terminology, but using it incorrectly. If you want to use words like ‘economist’, ‘efficient’ and ‘market’ in their colloquial sense that’s your prerogative. Where you go wrong is to assume economists mean the same thing and then to berate their understanding of the real world.
E.g “still pretending that the ‘producers’ are in the same market” in multiple significant cases, they are not”. The only way this can make sense is if you’re talking about the market geographically or ito legal jurisdiction. To an economist, “in the same market” means trading (either buying or selling) the same good. Since we’ve flat out denied the existence of a market, we can’t possibly be pretending they’re in “the same market”.
The second issue is that you seem to want economists to follow your terminology (entropy, thermodynamic etc). The problem is that you’ve yet to demonstrate that it adds anything meaningful. All the concepts you’ve punting ARE present in standard economic theory. All of the work listed by Orson is directly relevant, and while you might not find the exact case study you’re looking for (e.g CK), the principle is well established.
The second reason you’re not finding what you’re looking for is most of it is so elementary its considered foundational. You’ll need to go back to an undergrad text book, not academic journals. Anyone who publishes anything about pollution externalities assumes you already understand that analysis is necessarily at a global level, not within a particular locality\market.
And now the specifics:
“The entrepreneur who successfully shifts his costs onto people who are in no position to resist is a success, and successfully used his scientific (economical) understanding.”
So then, on YOUR definition, the firewood entrepreneur is an economist. So everyone is an economist. Which basically means you’re saying “everyone is responsible for the world’s ills”. You see how that’s trivial?
“I’m certainly yet to see any economical tract that makes the argument you are, and for obvious reasons”
The only argument I’ve made is that you are profoundly wrong in your definition of the word economist (as Orson adequately illustrates with his economic agent/economist split). You’re unlikely to find it in any economic tract, because I very much doubt anyone would take the time to publish it. Unless you’re reading something else into my point?
“That you define efficiency in that arbitrary way is vaguely interesting, but it has little real-world consequences that could be used to predict behaviour.”
tbc
Its not arbitrary. As per the common usage, it just means to get the best\most out of the system (similar to how an “efficient machine” gets the most work out of its inputs). However, an academic field cannot be satisfied with something as vague as “the best”. Economists just take the further step of defining that, so that it can be empirically useful.
Also, its not intended to be “predict behavior”. Its used as a yardstick. The real-world question economists would ask in this case is “how do we alter incentives to get closer to an efficient solution?” If you want economists to predict behavior, ask about incentives, not efficiency.
“Yunus is not well-regarded in Bangladesh – the grameen bank relies on the general lack of education (and very short compounding periods) to make a killing”
Again, an appeal to popularity. I’ve no doubt there have been implementation issues, but as yet no one else has presented a solution to the problem of credit extension for entrepreneurs with no collateral.
“what is the recovery rate of e.g. FNB within a comparable period, taking only loans that were issued in that period”
tbc
Probably higher, but I’m not sure why you’d want to compare – the issue is that fnb ISNT (wasn’t?) providing unsecured \ uncollateralized loans. Not sure of the current status but when I worked with the savings institute nobody was. Which is precisely the problem. The poor have no access to finance, because they had no formal employment and no collateral. Yunus found a solution based on social cohesion. Despite your general distaste for capitalism, the reality is that profitability is key to Grameen’s sustainability.
“Funny how my argument sounds so much more reasonable when accurately quoted, no?”
No. It looks even more pathetic. Your original claim that Caplan’s education argument doesn’t “work for the majority of graduates.” You then back this up with an argument from a tiny subset (resource extraction) based on entry level wage. Notice that you didn’t say “his argument doesn’t work for the majority of graduates who work in resource extraction.” You simply said “the majority” and that’s where I took issue. Although Caplans fault for not being explicit, the second point is that its lifetime wages that economists accept as the incentive for higher education, not starting wage. And if you have data on lifetime earnings, please share.
@ X cepting
“economists are extremely adept at getting out of tight corners”.
Except that you haven’t put economists in any corners. Until you give us scenario were an economist is actually involved , you’re still blaming the wrong group
@ Simon And Orson
I think the embodiment of ‘Bad Economist’ that Johan and X Cepting are looking for is someone like Lawrence Summers, in his capacities as advisor, business person and economist. Maybe if I give them a hint we can actually get them to be specific about their crticisms.
He was involved in the repeal of laws regulating the financial industry in America AND was involved in setting up the stimulus package (with a number of lovely ‘speakers fees’ coming from wall street), his involvement in the Summers-Memo incident (if you havent read it, you really should), and many other controversies. At best, his behaviour is ,um, questionable.
@Johan Meyer
In addition to my list of prominent economists who have discussed these matters (which i could easily extend if you’re interested…)I just conducted a snap poll among some of my colleagues:
(the economists polled having studied at Rhodes, UCT, Wits, Stellenbosch, Edinburgh, Oxford, LSE, NYU, Columbia and Delhi respectively) all of them were a) familar with ALL the economists I listed above and b)had during their studies explicitly been taught about externalities.
So I was wondering, if concepts being dealt with by the winners of the highest honour in the field, and being universally taught to students across the world, constitutes the ‘radical fringe’ what to your mind would constitute mainstream economics?
(As an aside, when I explained that I was interested because someone had accused economics as a field of being ‘silent’ on the issue of externalities, I received several raised eyebrows, a couple of exasperated chuckles, three disbelieving “what?”s, and one “Why are people so stupid?” )
@Johan Meyer
“where are those economic papers on dumping in Somalia and Congo-Kinshasa?”
I’m not entirely sure what you think this would add. Why is there no medical paper dealing with diabetes in Simon? Because the question is answered in countless other papers which deal with diabetes, and the lack of a specific case study means nothing. Unless your claim is that there is something unique about the examples you give?
“it has little explanatory power for how people behave” see my earlier post. It’s not meant to. And how exactly is it clear that Summers understands?
“Arthur Pigou says little about pollution and nothing about dumping”
Oh. I see – you want every implication and application spelled out for you. Lazy, no?. That would also explain why you’re harping on about not being able to find the examples you want. That’s the thing though – they’re just 2 examples of general principles. The list Orson provided deals in the principles. If you can’t apply the principle, the fault lies with you.
“dumping in question is a technological necessity”
I don’t know enough about the technical processes to comment except to say that the dumping is still just a contingent necessity. And economists are interested in teasing out the factors it relies on. Raise the costs, change the incentives and the situation can be changed.
@JohanMeyer
“Mallencolly et al., where are those economic papers on dumping in Somalia and Congo-Kinshasa? ”
These are two specific examples of a common occurrence (which has been demonstrated to have been extensively covered by the field). Are you equally aggrieved that zoologists haven’t written a significant number of papers about the behavior of YOUR dog specifically? Or that there isn’t a peer reviewed paper in any medical journal entitled “Johan Meyer’s susceptibility to Influenza”? Papers in any field very rarely deal with such specific cases unless they are somehow new or unique (which these two examples are not) or are simply being used as illustrative of a wider phenomenon (in this case one which has already been extensively explored). What do you expect? A paper to be published for every single occurrence of an externality? Almost all markets generate externalities, would you like a paper on each of them, even though the analysis in each paper would be identical? I could find thousands of isolated examples in any field that aren’t directly discussed in any papers.
“has little explanatory power for how people behave”,
I refer you to Simon’s post. It’s not meant to explain how people behave. But it’s disingenuous (which seems to be a running theme in your comments) of you to act as if ‘efficiency’ is the only analytical tool used by economists.
“Stiglitz is by now considered to be radical in many circles….”
Insofar as Stiglitz is considered to be radical, it’s because he calls for drastic solutions to universally accepted problems of trade /globalisation. He is certainly not the ‘radical fringe’ in the sense that your claim (that these issues are only dealt with by the radical fringe) requires (i.e. that he’s doing work that is somehow ignored by mainstream economists: he is front and center of many of the current debates within economics).
But even if I concede Stiglitz (and I don’t) it leaves the rest of the list (which took a few minutes to compile. I would wager that at least 80% of all Nobel prize winners have written papers that deal with some form of externality) plus thousands of other economists.
“Pigou says little about pollution …” and “Coase speaks to pollution in a limited fashion…”
You really have difficulty applying theory/ analytical tools to particular cases don’t you? You’re right that Pigou doesn’t explicitly name pollution, but why should he? What he does is provide the basis for analyzing ALL externalities. Pollution is one form of an occurrence that is conceptually no different from other forms. Since he was among the first to identify the problem it would be bizarre for him to focus on a single example of it.
“Soot falling on a laundry is one thing, and the society doesn’t rise or fall based on the outcome…”
Ok. So what? All you’re disputing now is the size of the ‘cost’? One is significantly larger and nastier, but how is it conceptually any different from any other externality? Why should it be analysed differently?
“People in Bokmakierie, Langa and Bothasig … now don’t have the income for lawyers”
Another comment from you that is totally irrelevant. No-one is disputing, or defending, the fact that costs that can be shifted, are generally shifted onto marginalized communities (or the fact that they often have no recourse). What we are disputing, is whether economists are a) responsible or b) silent on the matter as you’ve asserted.
@Johan Meyer
“They had zero influence….”
It’s definitely too strong to say ‘zero influence’, but certainly the impact of the analysis of externalities has not had the influence it should have. But that’s not evidence that economists have been silent on the matter as you have claimed. It’s largely a political question decided by those who implement political policy. As I’ve been saying all along economists have been giving advice, it’s up to economic agents to decide to use it.
“And they avoided an important aspect …, namely that the dumping in question is a technological necessity…”
Your accusation is once again patently false. All of the analysis of externalities must proceed from the basis that, given the state of technology, the generation of certain costs is unavoidable. All those costs must be borne by somebody. If polluting were not a “technological necessity” the question of who bears that cost, would not even arise.
“Your comment at 3:05pm claims that economists aren’t interested in motivation”
No, that’s not what I claimed. What I said is that the question of motivation is irrelevant to THIS discussion, which is not the same as ‘economists are not interested in motivation’. Economists are fundamentally interested in motivation. i.e. incentives.
And again, clean air in Pinelands, or in Langa and Bokmakierie?
You can re-phrase this as much as you like, its still the question of ‘incidence’, and its still irrelevant to the discussion we’re having
@Simon and Johan Meyer
I know I’ve come late to this conversation and most of what i wanted to add has been said along the way but this actually made me laugh:
“Why is there no medical paper dealing with diabetes in Simon? Because the question is answered in countless other papers which deal with diabetes”
Thank God Johan didn’t become a doctor. I have an image of him in my head frantically flipping through medical journals screaming, (as Simon slips into a hypoglycaemic coma), “Why the hell aren’t there any papers on diabetes in Simon? Where are all the papers on this issue? Why has medicine been silent on this important issue? All I can find are these stupid papers on diabetes, nothing that tells me how to deal with diabetes in Simon”
@ Johan Meyer,
my apologies, I see you had already mentioned Summers. Missed it somehow.
Talking of missing things, If you go to the very end of that post to X cepting (part two) you will see that the point was one of integrity in quoting, not one of whether breeders are in any way a solution. Breeders are an example used in reference in a speech quoted and then misquoted and misquoted again. Oddly, everyone that quotes the misquote of the misquote does so impecabbly. ie If People like Jay Hanson are informing your opinions, you should probably be very careful.
As far as Congo and Somalia are concerned, your best bet, given that they are both post conflict ‘failed states’, is the UN and NGOs like Oxfam for research into their many asorted problems. Why dumping from mining should be more important than say blood diamonds, rape, deforestation, bush meat,etc. is beyond me. I know that the UN has a report on “Biosafety” in Congo that, amongst other things, deals with mining. I suspect that there will be a similar thing in Somalia. Hope you find the information you are looking for.
@ Johan Meyer
I’m genuinely sorry to see you pull out. A lot of the questions I’ve asked are not merely rhetorical. I honestly want to know what you think thermodynamics\entropy would add to economics. If you find the time, please explain as simply as you can.
On the other hand, I can’t say I’m really surprised that you’re withdrawing. It must be quite disheartening for someone who takes such obvious pleasure in being contrary to discover that their ideas are actually quite common place.
Great article on the Coase vs Pigou view on externalities and how economic principles can even be applied to law.
http://www.daviddfriedman.com/Academic/Coase_World.html
@Simon, Orson etc.
Does the Coasian view receive attention in economic textbooks?
here’s an excellent and accesible article by Paul Krugman (another Nobel Prize winner) that deals with the issue of environmental externalities.It also speaks to some of the side issues (such as economists incorporating the work of other fields) that have been raised in this discussion:
http://www.nytimes.com/2010/04/11/magazine/11Economy-t.html?pagewanted=1&_r=1
@Harry Stotle
Thanks for joining in. I was beginning to wonder if i was expressing my points clearly. You can only shout into the void for so long before you start to question your own sanity.
@HD
“Does the Coasian view receive attention in economic textbooks?”
Just speaking from my personal experience, and having asked one or two colleagues, it is generally dealt with at an intermediate level (the Coase view that is, the notion of externalities is pretty foundational), but I’ll need to go check my university textbooks to see if it was taught out of the book or through assigned readings.
From this though:
http://docs.google.com/viewer?a=v&q=cache:KW7i4RU9K0MJ:hes2010.syr.edu/websub/webtree/review/download.php%3FsubId%3D353+coase+in+textbook&hl=en&pid=bl&srcid=ADGEESiD2SUylcB1jBNAyBqUCpDnGkB3tUlbIxvJeMs1OJsL9Gu9sfB7N_UNngJ-19B6iwQ7Z_GXu0U3WodC1gXSXgQU-YjyR-O5qZFlEyPXFLUgx1hjG2rr5rf6-n2H-NRK8lKuTcAZ&sig=AHIEtbSun0o21PWgXsmoW_y17E6oUGFP4w
I gather that it is pretty extensively covered in textbooks.
I didn’t pull out – I’ve just been busy at work. As my latest reply is long, I’ve put it on my blog – see http://nokarma.blogspot.com/2010/07/very-long-reply-to-peak-oil-blog.html
Ah. Right. I mistakenly took “I’ll close my participation in this thread” to mean that you were off. Anyhoo, I haven’t checked the forum for a day or two as a result of my mistake, so my response will only be forthcoming tomorrow. I’ll post it on your blog, unless it also has word limits?
@John Meyer
I will respond to your blog post as soon as I can, but as you say its long. Its also largely incoherent. I’m glad to see you’ve spent some time on wikipaedia looking up some economic terminology, but its goin to take me (and no doubt mellancolly and simon, if they intend to respond) some to time to decipher what it is you’re trying to say. Littering your response with concepts/terminology you still clearly don’t understand only confuses things. But I will respond as best I can, when time permits.
@ Johan Meyer
Colton Mining in Congo (Central Africa in general) and who the UN considers culpable:
http://www.undemocracy.com/S-2002-1146.pdf:
Please forgive the source, it is the one of the few links to the document I could find. In the Annexes there is a list of people and companies that the UN considers to be culpable. There are also references to other UN documents.
And another one:
http://www.oecd.org/document/6/0,3343,en_2649_34889_27217798_1_1_1_1,00&&en-USS_01DBC.html
What analysts fromt the electronics industry have to say:
http://www.vodafone.com/etc/medialib/attachments/cr_downloads.Par.74638.File.dat/FFI_Coltan_report.pdf
There are also numerous references to other documents.
Economists on Conflict:
(The trick is to use the word “conflict” in your search)
Excerpt from a Primer:
http://assets.cambridge.org/97805218/75578/excerpt/9780521875578_excerpt.pdf
Excerpt with some economists to look at:
http://www.jstor.org/pss/174586
Some economists that I recommend:
Paul Collier (some articles with citations, just search for Paul Collier)
http://oep.oxfordjournals.org/content/50/4/563.abstract
http://scholar.google.com/scholar?hl=en&q=Paul+Collier+Conflict+economics&btnG=Search&as_sdt=2000&as_ylo=&as_vis=1
Kenneth Boulding
http://www.personal.psu.edu/faculty/d/x/dxl31/research/otherstuff/boulding.html
Are youtaking responses to your blog on the blog or here?
@JohanMeyer:
From your blog: “A better analogy would be, why is there no discussion in the literature about over-feeding and leptin suppression leading to diabetes?”
Do you know what an analogy is? It relies on some resemblance/correspondence in characteristics e.g. A is to B, as C is to D.
Somalia/CK are just examples of externalities.
‘Over-feeding/Leptin suppression’ is not AN EXAMPLE OF ‘diabetes’, its A CAUSE.
‘Diabetes in Simon’ is just an example of ‘diabetes’, so ‘diabetes in Simon’ has the same relation to ‘diabetes’ as ‘somalia/ck’ does to ‘externalities’ (i.e. one is an example of the other: A is an example of B, as C is an example of D).
Your “analogy” looks like: A is a cause of B, as C is an example of D. The relation is not the same: its not even analogous, much less a “better analogy”.
Unless you want to claim that CK/Somalia are the CAUSE of externalities? (In which case I can only say that, despite pretty clear explanations from mellancoly et al, you still don’t have a clue what an externality is)
@mallencolly
Responses wherever you prefer… Still reading at this point.
Wow, I dont not think that this post would still be active.
I think this touches on some of X-Ceting’s points about Economist:
http://www.msnbc.msn.com/id/30266582/
and here for deeper comments:
http://mises.org/daily/3436
Robert James Duigen: you only know Marxism and Communism from books. Those who lived under Soviet rule have had daily experiences of their individuality being stifled.