Why do most people have no clue about economics?

None of that follows, and you are making radical, unjustified philosophical leaps (you have just implied that free will does not exist, for example - and skated right past the question of to what extent people are rational actors. Not to mention the basic questions of purely physical determinism, chaos, etc.).

Then you evidently don't know the first thing about economics. It is unequivocably, squarely a social science. It is the study of how people go about getting the things that they want. You will not find a single serious economist who will deny that economics is a social science - but you will find many serious economists who complain that many of their colleagues spend way too much time and effort trying to turn it into physics because it is easy to publish papers (and win Nobel Prizes) that way, and end up producing meaningless, inaccessible navel-gazing in the process.

It really is not. Econometricians are given to using way too much over-fancy mathematics (which seems useful mainly for convincing blithe finance types to bet huge sums of other people's money on thin air) but the actual useful math parts of economics barely use anything fancier than high school math. The stream of arcane academic publications are a sideshow.

You don't "factor in" social elements - social elements are the basic, fundamental object of study in economics. Demand is a "social element." You can't even draw the first graph on the first page of an Econ 101 textbook without directly dealing in "social elements." If, at any point in one's studies of economics, one finds one's self thinking that "social elements" are some afterthought to be "factored in" as, apparently, a minor correction or something, that is a clear sign that one has totally lost sight of any meaningful relationship with genuine economics.

 

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One main reason is because knowledge is power, so the top cats generally want the people to stay pretty clueless.

 

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Uh, what rightwing blog did you get this nonsense from?

The interesting, and accurate, comparisons of relative capital generation between the USA and USSR are driven by geography, not state ideology. The USA has a big ass food-growing region that is all connected together by waterways, which also connect to the sea (plus, there are sheltered coastal routes from there most of the way around the eastern coast). So the USA doesn't require much infrastructure or central planning in order to generate a huge surplus - we just sit back and watch it happen, and maybe invest some in highways and stuff to generate even more surplus. The USSR has a lot of tundra, and their navigable waterways all feed into the Arctic - to link that together into a unified economy requires massive centralized infrastructure (railroads, etc.) and so a lot of the surplus goes into that. Unsurprisingly, both states have developed politico-economic ideologies that map onto (and justify and claim credit for) these natural states of affairs. But it's a mistake to think that capitalism caused the surplus in the USA, or that Communism drained it in the USSR. Russia hardly does any better than the Soviets did, and to the extent they do it's just high prices for fossile fuels (which are owned, extracted and sold by centralized, politically-connected players).

More than a mistake: it's a canard employed by the right wing in the West to argue that we should gut the social safety net and generally pursue ideological capitalism. But the reality is that the big contours of these questions are fixed by geography, and are not subject to our particular choice of ideology.

That is silly an ahistorical. The USSR's economy did rather well for multiple generations, up until about 1970. That's why they were such a credible political threat to the Western order up until that time. It was only once they'd built up the modern consumer economy that they still enjoy to this day that the situation got to be too complex for central management to work, and stagnation (not regression) occurred. The setbacks that followed were created by political events, not any kind of absolute economic decline.

That's also riddled with fundamental errors. The generation of surplus in the USA does not require outsourcing, and even if the US consumer market collapses (which it isn't) the scheme you describe would still have access to myriad other markets. So even taken at face value it doesn't add up.

That much I can agree with, certainly.

 

Alternative explanation of how capital dissipates: Every innovation adds a new level of complexity to the system, which then requires a response from government in the form of regulation and/or safeguard and/or amelioration (eg. cigarettes: very popular, big earner, had to be licensed and taxed, but toxic, which required a response from the medical community, which opened new revenues for drug companies, which were toxic and needed restriction; regulation, restriction and taxation inspires the next innovation: smuggling and black market, which then requires more layers of law-enforcement...) so the levels of complexity increase, until it costs more to maintain the system than the system generates, but there is too much invested in both public and private spheres to stop the cycle. Don't worry; it crashes by itself.

 

A digression, but that's going to remain bs no matter how many times you repeat it. SS was originally and largely remains a transfer, welfare payment. Your lifetime SS contributions mostly went into the pockets of old folks, and when you are an old folk other people's will go into yours. That was the setup, and it has worked just fine for several generations now.

The Reagan bump to cover the baby boomers - a "fiscally conservative" innovation - was the only money available to klept for wars, and by design that all comes back by taxing the rich people who made money off of it. So all we need do is take that step.

The low population density was an effect of plague - Europe has had similar advantages at times. So has China.And our forefathers for some reason spent two hundred years camping in poverty on the Atlantic coast, before these huge advantages and riches for the taking turned out to be inevitable. Something was screwing them up.

Meanwhile, the same advantageous situation was found in Mexico, Central, and South America - without the concomitant economic explosion. Of course the politics were different - more fiscally conservative, in general.

 

You have virtually zero knowledge of economics and little knowledge of history and many other subjects for that matter fraggle. The GDP numbers don't lie. They support what Quad has previously explained to you.

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http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union#1930.E2.80.931970

I am always amazed that libertarians don't view themselves as "right wingers" while mimicking the right wing agenda. I find it also telling that most libertarian arguments are heavily dependent on anecdotal evidence and rather fuzzy reasoning.

 

And all of which have exhibited a higher standard of living and greater economic activity than Russia, from the time of the Czars right up until today. So I'm unsure what you mean to imply, there.

So you agree that they were substantially better off, throughout - by an entire generation's worth of development.

The Warsaw Pact was always the putative showcase of Communism, as it was better developed and more prosperous. Indeed, the collapse of the USSR was not so much do to internal economic failure of the USSR, but with the fact that the less-propserous USSR could no longer afford to keep eastern Europe under credible threat of military intervention (and so, sustain the client states there).

So does nationalism, or for that matter capitalism. Is it your contention that those systems are likewise fundamentally unworkable?

My whole point was that Russian geography guarantees that such a political structure is going to thrive there - it's that, or no functional state at all. It's not a matter of them just collectively deciding "hey, capitalism and democracy are great ideas!" They tried that, and the structural forces in play resulted in a mafia state.

The Baltic states should be analyzed more like the Warsaw Pact (or Scandanavia), and less like Russia, even though they were part of the USSR proper.

You may not be a movement conservative, but "fiscally conservative libertarian" might as well be the (sensible) definition of "right-wing."

Yeah, it's clear that you have a strong, ideological distaste for Communism.

Also you seem to be reacting more to the totalitarian aspect of Soviet Communism, than to the actual socialism part of it, there.

Okay - but you do go around promoting exactly the rhetoric of those who do.

Didn't you just finish lecturing us on how severing the link between "taking" and "giving" leads irrevocably to society-wide ruin? Because, that seems like a pretty strong argument that social safety net systems need heavy administration and regulation to prevent them from undercutting the incentive to prosper.

And that state of affairs represented a vast improvement over where Russian hospitals a generation or two before that were at.

And I can tell that you went out of your way to miss what I said about them - which was exactly that such was the point at which central planning could no longer cope effectively with the economy, and growth and development ground to a halt. I did not contend that they did well at that stage - I contended that they did reasonably well in building from, basically, a feudal agricultural country up to that point in rapid order.

So you are now arguing against libertarianism, and in favor of European style socialism and state capitalism?

This assertion seems to get it exactly backwards. The fact that we bailed out a few key sectors once during a really bad downturn still leaves us much closer to the libertarian ideal than anything I've seen in Europe. In Europe, the telecom companies are arms of the state, it is vastly more difficult to fire and hire employees, etc.

That's more socialism that depends on solidarity. Which you said above was unworkable.

Yeah, but they can easily make it up on volume. The USA is like 5% of the population, after all.

I tend to agree - but I also note that your libertarian ideology argues exactly the opposite, and sanctifies the current practice as the rightful outcome of individuals working to maximize their profits as best they see how.

Actually the main thing that tells me is that your ideology is in disarray.

 

Nah, those areas had highly populated, metal-age civilizations with full-blown empires to loot. Which has been suggested by some anthropologists as an explanation for the divergent politics: the colonists in central and south America were essentially looters, and never had to invent a productive society from the ground up - and once the indigenous civilizations had been looted dry, they were left with stagnant systems. Meanwhile in North America, you have small religious communities starting from scratch and developing a self-sustaining ethos and systemof politics and economy. Not sure I totally buy that, but it's an interesting theory...

 

Stone age , they were, and empires only in pockets - most of Central and South America remained to follow the US/Canada path, even had the prairie mollosoil without the desert or arctic temperatures.

That explanation appeals to me in explanation of Mexico, but I don't see how geography or looting explains the difference between Alabama's fate and Venezuela's, Wisconsin's and Argentina's, California's and Chile's. It looks like incoming politics, to me, rather than generated on site.

 

No, bronze age:

http://en.wikipedia.org/wiki/Metallurgy_in_pre-Columbian_America

Maybe the Aztecs didn't do smelting, but the Incas sure did.

Well, empire or otherwise, we're still talking substantial populations with functional political organizations and economies.

Uh, you seem to be ignoring vast swaths of tropical jungle, there.

Argentina and the like are surely interesting comparison cases, though.

Well, at least in the modern era, they explain the political fate of Venezuela - and just about every petrostate - quite satisfactorily :]

Seriously though - what do you consider the salient difference between the fates of Alabama and Venezuela, Wisconsin and Agentina, and California and Chile? I'm unclear on what needs accounting for here.

I think the mechanism is supposed to be more that the "looter" cultures found their niches, and likewise with the "builder" cultures, in the New World. This theory is also supposed to explain why Spain and Portugal ended up falling behind, while the UK, Holland, etc. remain prosperous - the indulgence of those trends in the colonial enterprizes is supposed to have fed back into the metropolitan polities and so been expressed there as well.

Again, I don't entirely go in for this theory, but it's an interesting and new one so...

 

Obviously social factors are huge influences on economies. And we can lump a lot into that- personal spending and investing, self-development and career choices, ideals, beliefs and politics and so on.

I think in general these are covered in the schools in a survey course in social studies. Confronted by the question "why don't people understand economics" I was left with the more obvious distinction that people in general don't do well in technical details, like understanding what drives inflation, or growth, or unemployment. This is why we often get from the Right answers like "Because we're printing worthless money" or "We're exporting all the jobs and hiring illegals" or "We're subsidizing people to stay idle."

I didn't mean to imply that all of economists are completely resigned to doing exclusively math. I probably should have simply said that the math involved in an first year economics course is beyond the grasp of the average American. Since the sociological factors are usually covered in a survey course in civics/social studies, most folks should be able to speak to certain issues of the day in purely sociological terms. But ask the average guy on the street how economists decide economic policy, and you will mostly draw blanks.

This, I believe is a serious deterrent to having the public trust the policies economists are advocating. I don't think of economists as incompetent, or deceptive, or political mouthpieces, but as creatures cut from the same cloth as system engineers. I think they are motivated by the desire to be accurate, and to influence good policy that will someday reboot the economy. Regardless of what they say, they will (and do) influence monetary policies that influence the arrival date of our next growth period.

By "economics" (as a field) I'm including the critical function of policy-making. I do think that economics has absorbed operations research and exploits its optimization algorithms. Risk analysis, the cost function, and linear programming all tie together in choosing the best policy. Of course here I'm jumping from the survey course to the practicing example of a chief economist, or some advisor, who is involved in, say modeling. That kind of math is beyond average people.

I think of global economics as mega-system that is influenced by social systems but not completely defined by them. I would also expect to find a lot of "call" statements to a random number generator in a weather model, as well as in economic models.

I was referring to the art of forecasting and how or why people trust it. There seems to be a general dislike of economists by the Right ever since the crash of '08, for their connection to the call for bail-outs and stimulus, and for considerable public perception that those policies didn't work. My point about trusting the weatherman was to say that the modeling of a complex system, whether it's the global air mass with all of its deviations from perfectly predictable outcomes, to the global flow of goods and electronic funds, for example, would rely on very similar underlying principles of math -- if not only (at some microfine level of detail) assigning (or learning) an appropriate mean and variance to a PDF, or figuring out the shape of the density function from empirical data. Obviously they are not the same thing, but to the extent that they are both huge unwieldy systems they would necessarily share similar underlying principles in their models. This was in reply to Carcano's remark that economists are (paraphrasing) false prophets.

My remarks were in support of the economists who have been influencing policy since the crash of '08. My observation, after a few spot checks, was that the trends they predicted, according to whether a particular policy was implemented or not, tended to come to pass more or less as predicted. In this regard they seemed to me about as reliable as the weatherman in predicting good or bad weather, and about as unreliable in the way that people ought to think about predictions, such as: "What does this mean to me and why do I care?" If you're a farmer, you're going to stay tuned to the weather. But all of us are affected by the economy, so we should care and we should stay apprised of its developments. That would include trying understand what they are saying. I admit it's not that easy, but the data is out there, so anyone with the gumption to do so can at least look it up.

If there is anger against economic policies, as the Right would hope, we are left with the fairly technical challenge of evaluating whether it's justified. People tend to forget that whatever the measure of a "good" economy, our present status is relative. As bad as it may actually be, it's so much better than where it was, and especially where it was headed, that the public perception can be stilted. On the other hand, if the graphs are correct (like the ones Obama recently used), there is good cause to believe that the economists got it right.

 

No weapons or tools to speak of - the incoming Europeans faced nothing significantly more resistant in Central and South America than they faced in North America. There was no more barrier to the colonizing and exploitation of Chile or Argentina than California or Illinois, say - and about the same potential for looting in either.

The difference in economic boom subsequent to European arrival. It doesn't seem to be predicted by the circumstances found by the incoming, but rather by the circumstances brought.

 

No: economies consist primarily of "social factors." That is what an economy is. "Social factors" are not some second-order correction that you need to include to get accurate results: they are the whole enchilada. Economics is a social science - it is the study of social factors, directly.

No, the issue is much deeper: there is no basic consensus amongst economists over what exactly drives all of those things in any given situation.

No it isn't. Have you ever taken an economics course? The math content is a joke. We're talking about grade school stuff here - literally, "apples and oranges."

The math in graduate-level econometrics courses is beyond the grasp of the average American. But that stuff has about as much to do with general issues of economic policy as string theory does with making your car run.

True enough, but the basic issue is much lower down: the economists themselves cannot actually reach consensus on how to quantify risk, what is a meaningful cost function, etc. The fact that any one of them can spout out as much arcane math as they want on top of their underlying assumptions is just that. The assumptions themselves are perfectly explicable - there just isn't a scientific consensus on what the "right" ones are.

That's silly - economies are subsets of "social systems." Take away the social systems, and you don't just cease to "influence" economics - you eliminate it entirely.

That just means that they're both dealing in large systems that merit statistical analysis.

But people have little trouble trusting the weatherman, generally, and that's exactly because everyone understands the weather to be an actual physical system subject to deterministic laws. So even if that system is very complex and chaotic, we still have no trouble trusting the specialists and computers to do a decent job.

The trouble with economics remains even in very simple situations, wherein the math is not at all complicated. It is a more fundamental difficulty: economics is not physics, it is a social science, and so there is no corresponding understanding that we're addressing a system that everyone agrees operates according to specific, known laws. The erection of complex computer models on top of that compounds that problem, of course, but is not crucial (as we see with the weatherman example).

I don't think that is quite true. But more to the point, the issue isn't so much their predictions of what the economy is going to do, but their theories on how a policy will influence such. Weathermen aren't in the business of telling some central weather factory to print wind and rain so that the weather achieves a certain state. They just describe and predict flows in the underlying physical system. Economic policy-makers have a much harder job, of figuring out how to influence the economy. That's where muchof the sticking point - and the ideology - lies. There's no moral dimension to describing the weather - but there is a moral dimension to trading off inflation and unemployment, for example.

The right-wing anger is not really over technical issues, it is over moral questions having to do with merit, reward, justice, greed, etc. They dress that up with insistence that the policy-makers are also going to bring about a catastrophe, but that doesn't actually mean that they think the economics is wrong. It's more of a theological or ideological insistence: right-wing values insist that rewarding failure is immoral, and will bring about punishment by a strict father figure. So if you bail out tanking businesses or print money to keep unemployment down, then cosmic justice demands that you suffer a crushing blow in response to your immoral behavior. This is not a technical disagreement over economic theories, it's a question of moralist ideology that has been rephrased in economic terms.

That stuff has nothing to do with the right-wing politics involved. The point is that Obama deserves to be punished for the sins of empathy and charity, and so the cosmos therefor must bring about such punishments. This is not a statement about economic theory. It is an affirmation of an ideological worldview.

 

There were tools, although largely small-scale stuff (needles, tweezers, that kind of thing).

But the point is more the looting potential: all that refined, precious metal was exactly the object of all the looting in question. There were no ships packed full of gold sailing back to Europe, from the colonies north of the Rio Grande.

The comparison is supposed to be between colonized areas that hosted large, organized polities with riches to steal, vs. those that did not - and the systems of colonialism those different areas likewise incentivized. It's basically a comparison of Spanish and British colonialism, so Latin America vs. English-speaking North America. Point is that Mexico is emphatically in the former camp (so "North America" misses the point), and Chile/Argentina are an exception that forms a test case (they didn't have much to loot, but still ended up under the Spaniards).

Or, anyway, you can just read the paper for yourself, probably I'm mis-stating parts of it:

http://www.brown.edu/Departments/So...documents/AJS-Colonialism_and_Development.pdf

Right, Chile and Argentina are corner cases - ostensibly suited to "builder" colonization, but under the Spanish due to circumstance. So the fact that they did not do as well as California or Illinois goes exactly to the theory.

And as to barriers, I don't think that's true. The tropical areas were far, far more adverse to European colonization from a disease perspective, and the temperate areas like much more hospitable. And while there was indeed considerable resistance north of the Rio Grande in the later stages, that occurred after the natives had things like guns and horses. The initial stages of colonization there were fought by religious outcasts and criminals who'd been dropped off on the coast to keep them out of Europeans' hair - as opposed to the initial Spanish incursions into the more developed areas, which were full-blown campaign warfare with armored, mounted divisions, etc.

? I'm pretty sure I just pointed out that there ends up being a strong correspondence between the two. The looters generally end up going where the looting is good (the big, wealthy polities) and the builders generally end up going where the building is good (the sparsely-populated, poor ones). You are insisting on a false dilemma that is not asserted by the theory in question (nor by myself, here).

 

Marxian economics have accurately predicted the current crises of capitalism and explain production, and nobody has been listening. Capitalism is a self-destructive system by nature. You can't patch it or stop it.

The problem is capitalism.

 

For the OP:

Would you mind describing a truly capitalist country, not the USA? The US is a corporate plutocratism, not capitalism. In a true capitalist country GM would have gone bankrupt, AIG and the banks wouldn't have been saved and the country would be in a complete disarray with 30% unemployment. Now of course who would want that? But let's not talk about capitalism where profits are privatized but losses are socialized and the government jumps in and saves everyone "too big to fail."

When we have true capitalism (and its consequences) you can come and post about the pleasures of capitalism. Until that, study history...

And if you want to go back a 100 years, until the Feds came there was a banking panic in every decade in the 1800s, fucking up the working people...

P.S.: Don't even get me started on the welfare queen farmers, who are only in business because of large government subsidies. Do they exists under harsh but real market enviroment??

 

Plenty of people listened. It's just that the Marxists failed to accurately predict how their preferred alternative system would fall into crisis and collapse even faster than capitalism.

You could say the same thing about the human race, as far as that goes.

The premise that there exists some "The Problem," which can be somehow "fixed" to result in some kind of, what? Utopia? Needs some serious support.