Posts with Comments by Joe6Pak
Economic history is so clean
to mike from nc:
I agree that when you look at short points in economic time--like the recovery during JFK's brief Presidency--it is impossible to identify what caused what to happen. There are too many variables to account for. The free market somehow prevails and balances the conflicting pulls and pushes of millions of actors--but no one can track the process--if they could comprehend and duplicate the process, a command economy under, say, Hillary Clinton, could attain the same efficiencies as under the past few centuries of relatively free markets. But, fortunately, there are only 2 people in the world who would argue for that possibility! Consequently, instead of trying to manipulate the economy, or micro-manage it, it might be better to remove impediments to the free market so it can function better. Mercantilism failed because it was just such an attempt at micro-management, based on the mistaken idea that a nation could maximize its gains by such controls. It may have seemed to work well for a while--as compared to nations that permitted zero economic freedom to its people--but eventually it collapsed because smugglers and illegals proved to offer more variety at lower prices than the government monopolies could offer. For a detailed review of how the law breakers were smarter than the law makers and toppled 18th C mercantilism read "Common Genius" chapter 9. The example of Mercantilism and its rise and fall provides a revealing case study on why the realities of economic activity must be examined over a long period of time to determine what worked and what didn't. This is because abstract theoretical analyses have always totally failed to explain short-term fluctuations.
I agree that when you look at short points in economic time--like the recovery during JFK's brief Presidency--it is impossible to identify what caused what to happen. There are too many variables to account for. The free market somehow prevails and balances the conflicting pulls and pushes of millions of actors--but no one can track the process--if they could comprehend and duplicate the process, a command economy under, say, Hillary Clinton, could attain the same efficiencies as under the past few centuries of relatively free markets. But, fortunately, there are only 2 people in the world who would argue for that possibility! Consequently, instead of trying to manipulate the economy, or micro-manage it, it might be better to remove impediments to the free market so it can function better. Mercantilism failed because it was just such an attempt at micro-management, based on the mistaken idea that a nation could maximize its gains by such controls. It may have seemed to work well for a while--as compared to nations that permitted zero economic freedom to its people--but eventually it collapsed because smugglers and illegals proved to offer more variety at lower prices than the government monopolies could offer. For a detailed review of how the law breakers were smarter than the law makers and toppled 18th C mercantilism read "Common Genius" chapter 9. The example of Mercantilism and its rise and fall provides a revealing case study on why the realities of economic activity must be examined over a long period of time to determine what worked and what didn't. This is because abstract theoretical analyses have always totally failed to explain short-term fluctuations.
reply to pekker -- You should not equate hard physical science with soft social science- the former deals with mathematical absolutes of the physical world and I admit the value of Einstein's abstract musings--but in social,sciences, dealing with totally variable human nature, it is harmful to start with abstractions--better to observe reality and draw hypotheses and see if they can be proven as useful generalities. Even Newton presumably noted the apple landing on his head, measured the rate of fall and developed therefrom his mathematical models. Certainly in economics it is better to look at what worked over and over again as compared to what failed over and over again--the difference between free markets and planned central economies has in preactyice obliterated any need for theories--Communism and socialism FAILED the test! And still you--and no one else--has addressed the overwhelming fact regarding globalization that over the last sixty years unemployment has remained virtually a constant at 3-7% inspite of a doubling of the workforce and a constant shippment of jobs oversea. That inescapable fact should lead one to question any theory that says shipping jobs overseas creates unemployment. Available jobs have grown to make up for the loss of foreign operations and a huge increase in population--The actual case study of American employment over this period trumps any theory.
The problem with economic theory is that it is based on abstract reasoning instead of the case metho--Business and law students look at actual reality--case studies--and avoid abstract unproven assumptions--until proven worthy. A new book "Common Genius" (at Amazon.com) takes this approach with economic history and develops a whole new theory for the rise and fall of nations--and refutes Pomerantz and Diamond's theories that it was caused by climate, luck or geography. Re globalization, the same actual "observable
results" approach would dictate as follows: Since WWII, for two generations of American workers, we have seen millions of jobs shipped oversea while the workforce and population here grew substabtially--AND YET -- unemployment in America has ranged closely between 3-7% throughout the period. Must be all those new jobs in new industries. A 1960's job seeker would not comprehend the help wanted ads in today's newspapers, but his kids would = such changes occur gradually and that reduces the impact on individuals-- Newspapers haven't died suddenly, it is gradual, as they downsize, people retire, employment declines, workers get displaced and move on. There are still a few people somewhere making buggywhips! Some individuals get hurt, sure, life isn't perfect, but unemployment has stayed constant! And the alternative--of subsidizing their job-- only delays the inevitable and burdens all of the taxpayer-consumers who must do the subsidizing!
results" approach would dictate as follows: Since WWII, for two generations of American workers, we have seen millions of jobs shipped oversea while the workforce and population here grew substabtially--AND YET -- unemployment in America has ranged closely between 3-7% throughout the period. Must be all those new jobs in new industries. A 1960's job seeker would not comprehend the help wanted ads in today's newspapers, but his kids would = such changes occur gradually and that reduces the impact on individuals-- Newspapers haven't died suddenly, it is gradual, as they downsize, people retire, employment declines, workers get displaced and move on. There are still a few people somewhere making buggywhips! Some individuals get hurt, sure, life isn't perfect, but unemployment has stayed constant! And the alternative--of subsidizing their job-- only delays the inevitable and burdens all of the taxpayer-consumers who must do the subsidizing!
Recent Comments