Among your many colorful examples, I'm going to call out your transistor and grain market examples, because they seem to be a misrepresentation of supply and demand. S&D doesn't say that "if we buy more transistors the price will go up", that's a misrepresentation of the theory. The whole point of S&D is that there is a relationship between the two and you can only predict price shifts (and quantities purchased) by seeing how both behave, not just one, and certainly not by just looking at quantity purchased. So demand for transistors has picked up over the decades, but the supply side has responded at an even greater magnitude, owing to improved technologies bringing the cost of supplying transistors down. This is the reason price has shifted down while quantities have risen. If anything is pretty unassailable in micro, it's S&D in a fair market with commodified goods. The numbers there actually match reality fairly well, once you have data on the shape of each curve (ah, econometrics). And it is totally legit for either curve to evolve over time; that's part of how you assess how people will react to taxes, supply shocks, etc. I would fix your examples for this point, the others seemed more legit.
Silly ASCII diagram for the transistor market:
P P
|\ /S -->+4 | \ S
| \ / | \ /
| X ==time=> | \ /
| / \ | X
|/ \D -->+2 | / \D
---------Q ---------Q
++demand, ++++supply
=> quantity purchased increases
=> price goes down
What you did was patch up such presentations. There are many ways to do that, and with enough such patches the theory can have fewer counterexamples but, then, look so narrow it looks useless.
One way to patch up the theory is to say that transistors in 1955 are NOT THE SAME good or product as transistors in 2010. Then my data is not a counterexample, but the theory looks much more narrow.
You went a little farther and tried to relate the supply and demand curves for the two different points in time. Okay.
Similarly for wheat from 1800 to 2000.
Then I will say, even at one point in time, if I buy a wheat contract on the futures market, then I pay much less per bushel than in a feed supply store. So, again, the patch up is that the two sources of wheat do not supply the same same product. Take one scoop of each wheat and try to tell the difference and don't see any, but academic econ says that they are not the same. What's not the same is that their theory is not the same as the way prices work for real wheat.
Similarly volume discounts are common all across the economy. So, we have to say that if we buy Grey Poupon mustard in the big bottle at A&P then that is not the same Grey Poupon mustard in the small bottle at A&P. Now we are getting to be absurd. It's the same GD mustard, from the same tube, from the same vat, from the same plant. No chemist can tell the difference, but academic econ can! And they do it looking only at the bottle and never the contents. SUCH a science!
And, if I operate a fleet of trucks and want to order 100 from Ford, then academic econ has to say that those are not the same trucks I get if I order just two. E.g., for 100 trucks, Ford may put on an an extra shift to supply them. Their 'marginal cost per truck' goes down, and they let me have some of the savings. Besides, if they don't want to deal, then maybe Dodge, Chevy, or Toyota will. And there's MUCH more to the price than just the 'marginal cost' -- MUCH more. Easy it's not; the academic econ supply and demand curves are easy, and that's part of why they don't work.
So, have to strain to find where supply and demand curves actually describe the real economy.
Net, supply and demand curves need so many patch ups they are basically just nonsense. That's just not how the real economy works.
For optimization, the idea is that each shopper in a grocery store solves some complicated problem in nonlinear, integer, stochastic optimization just to get the groceries. This nonsense is part of their rational assumption. Intellectual self-abuse.
They want to apply this optimization also to the micro economics of the firm assuming that, of course, with optimal material requirements planning from, say, SAP software, that of course any significant firm actually does such things. No they don't. Sorry 'bout that.
The nonsense goes on and on: They are talking about their imaginary, "sand box" economies and not any real economies.
I have an imaginary "sand box" too: I'm young, rich, athletic, handsome, and all the girls like me! That's not real, either.
Apparently by the time you got to the course, the field had been hit over the head often enough with objections such as mine that they started off the course with a defense, a long list of assumptions. Yup, if pigs could fly, then cast iron umbrellas would sell well.
Physics, chemistry, engineering, medical science, and technology actually DO work very well and do not work anything at all like academic econ, and academic econ essentially just doesn't work in any comparable sense. That dog won't hunt. It's a late parrot. They are like medicine back in the days of snake oil -- they haven't made any real progress in their subject and just don't know what they are doing. And they are killing people and don't care.
The first and last thing I saw in economics that made any sense was the Leontief input-output matrix. For a one point in time, first cut of the macro economy, it made some sense. It was used in US WWII production planning. Alas, the econ profs hated any such things, and it lost traction in academics.
One of the worst sins is that they take their simplistic assumptions and the corresponding conclusions and say that this is the way that a real economy should be FORCED to work. Now they are killing people.
As we saw in the 1930s, have seen in the US since the 1950s, and see again now with the Great Recession, academic economics doesn't have a weak little hollow hint of a tiny clue about how the US economy works. Bernanke, Geithner, etc. have been struggling and just hoping. They don't know what will happen to employment, taxes, the deficit, interest rates, house prices, the stock market, imports, exports, oil, the dollar, etc. They just don't know, even roughly. They don't know where we will be in five years, in a world war like we were in the 1930s or growing nicely. They don't know. Yup, it's an invisible hand that no one in economics can see.
In particular, academic econ and even the Federal Reserve Board staff are just not in touch with the real economy. They driving a big truck looking only at their belly buttons and never out the window. If anyone had had any reasonable empirical description of the US economy, and any credibility, then they could have given some advice to Clinton or W or even Barney Frank, and certainly to AIG, Lehman, Bear Stearns, BoA, Citi, and the FDIC, on the clear and present dangers. But, no one did. In this age of computers, data storage, and Internet communications, no one has even the first-cut, basic data, data that we now know is absolutely crucial. We don't even have a basic, competent dashboard.
When I looked at academic econ, the first thing I was looking for was the first-cut, empirical description of the US economy. So, we need to know the inventories and the flows, of money, goods, people, etc. Then for the 102 version, we need the same for the world economy. Nope: Not there. No meaningful data at all. At least Chairman Greenspan commonly was up to his neck in empirical data; he was also up to his ears in Ayn Rand, smoking funny stuff, total, dangerous nonsense.
At one point I was ready to chip in and try to make some progress. Sure, I would have started with what it is said that Bernanke did: Get a LOT of numerical data, get a description, and then try to build some decent theories. But, for what is in academic econ, dump at least 99 44/100% of it in the trash. But the field was so full of their arrogant incompetence that it was clear that there was no hope of doing anything constructive within their field.
Bernanke SHOULD be the man of the hour since he did his research on the details of the Great Depression. Still, he is clueless.
Net, for the US and the world, the situation is clear: The economy is REALLY important, and academic econ is from next to useless down to really dangerous.
So, instead of academic econ, proceed VERY carefully, almost entirely just empirically. For econometrics, be careful, be very, very careful. Yes, there may at times be some cases where someone from academic econ, in spite of their field, actually has some positive contribution to make. Maybe. But their hands are dripping with blood.
Sure, a number of economists attach undue weight to some underlying assumptions which are only partly true, such as economic actors to some degree exhibiting "economically rational" (perhaps akin to a disciple Newton fan asserting the wave nature of matter has no meaningful implications for their bodies, this kind of abstraction is harmless when applied to sufficiently large numbers). But whilst this economic model appears to break down at levels as simple as individuals being ineffective at computing stochastic optimisations in their heads, it works rather well when analysing the behaviour of crowds. It's not so good at identifying when bubbles will burst, but then meteorologists can't predict the weather next year with any reasonable degree of accuracy either, and that's arguably a simpler system to model.
Where economists overstep the mark is not so much the tendency to oversimplify as the fusion of normative arguments with their models, such as the sleight of hand that dresses Pareto "efficiency" as a static optimisation problem rather than a rights claim made on behalf of the status quo.
That's what I consider the main problem of economics. To use the gp's expression, they have physics envy when they need to be demanding statistics and psychology. The problem area is difficult and overpopulated, and what's worse, worth money. That means that the most apt people do business for themselves instead of suggesting on the business of others.
Much of economics is useful, but little is reliable. As much as it pains me to say this, I believe we could do with more (quiet) focus on economic policies - just not from the math people, but from the social studies people.
I do this, and it's a real problem. It takes me forever to buy groceries.
(1) Many if not most economists are empirical. Recent John Bates Clark medals---a good reflection of what academic economists think is the best work being done right now---have gone to economists doing empirical work. Recent examples include what works for development (evaluated with large randomized controlled trials), what are the causes of growing income inequality, how should we structure auctions etc. http://en.wikipedia.org/wiki/John_Bates_Clark_Medal . To say that most economists have no contact or interest in empiricism is incorrect.
(2) The point about simple models is not that economists fully believe them---it's that they force everyone to be explicit about assumptions. They also try to identify what are the key features of admittedly very complex phenomena. This is what models do in most scientific endeavor. That the models often perform poorly is a sign of an immature science---not fraud or dishonesty. You'd get eternal fame and become fantastically rich if you came up with a financial model with great predictive powers---do economists not create such models because they are stupid and corrupt? That seems unlikely.
(3) The transistor example completely misses the key distinction that every presentation of the simple supply and demand model always makes - i.e., there is a difference between the short term and long term. If demand doubled for transistors tomorrow, the price wouldn't rise?
(4) You confuse absolute and comparative advantage.
(5) "In the 1950s the US had a great economy. Except for some points of information, biomedical, and materials technology, it's not clear that our standard of living is as high now."
This is where I stopped reading - this is so obviously wrong http://www.wolframalpha.com/input/?i=GDP/capita+real+US that it's hard to take seriously any conclusions on the relative merits of different industrial policies the follow from this "fact."
http://www.stanford.edu/class/polisci120a/immigration/Median...
Yes. This is something else virtually every economist will agree on. ACists, neoclassical, keynesian, Chicago, Austrian, I'm sure there are other major schools I'm forgetting, but this is a very accepted measure of standard of living in the field of economics.
A statement which only help to make his point about economists being ignorant crocks. GDP is heavily doubted as a good measure of standard of living in all other social sciences.
Examples of what the GDP measure fails to take into account: ecological sustainability, wealth distribution, non-market transactions, underground economy, non-monetary economy, subsistence economy, quality improvements and inclusion of new products, what is being produced, externalities, sustainability, etc, etc...
http://en.wikipedia.org/wiki/Gross_domestic_product#Limitati...
You won't find an economist (or any other person person) in the world that thinks GDP exhaustively covers every aspect of an economy and how it provides a standard of living.
What you will find is that they all agree GDP is the best available measure to determine a standard of living that is derived from some level of economic production.
If GDP is a terrible metric for determining standard of living, I'd like to know why it is still the most often used metric (by economists and non-economists alike) and a coherent argument for some alternative standard.
Any satisfaction based metric means that the majority of the developed world is doing something wrong -- numerous happiness studies show indigenous peoples often have a higher "happiness index" than people in the developed world.
Environmental based metrics have their own problems because environmental benefits and harms are not internalized by nations.
Income distribution based metrics aren't acceptable because the harms of great income distribution disparity are not easily mapped and are rarely agreed upon.
The only thing that might make sense is a metric based on life expectancy and education (Human development index from your Wikipedia link), but even that is problematic. Research created free-riding, regardless of patents.
The second a US company makes a drug that eliminates cancer, any lab that gets their hand on the drug can reverse engineer it with ease. The however many millions of dollars that went into building it (and become a function of its cost) are undercut by countries/people that do not respect the intellectual property rights of such a patent.
The outlay of spending becomes highly concentrated while the company doesn't see the returns that it expects. The drug copier gets the benefits of the hundreds of millions in R&D expenditure while only spending a few extra days of a scientists time.
The problem with economic sciences is that the GDP measure is used without critique, without fully understanding its trade-offs or by simply ignoring it deficiencies. That I believe is very careless when you are in the end dealing with the lives of real people.
> The problem with economic sciences...
Honestly, this is hard for me to read.
Lectures on the inadequacies of the GDP are Macro 101 stuff. Throughout college in my different econ classes the shortfalls of the GDP were frequently discussed by several different teachers.
This economic sciences conspiracy to prevent indictments of the GDP you're trying to present as fact is completely fabricated and gives a bad name to economists that do discuss the shortcomings of the GDP (read: every economist ever).
Incidentally, we only know about these changes in the income distribution because empirically oriented economists have been collecting and analyzing this data for many years.
Genuine progress indicator (GPI)
Index of Sustainable Economic Welfare (ISEW)
Gross national happiness (GNH)
The Gini coefficient
Just to name a few. None of which is perfect, but at least better than the GDP when it comes to actually saying something about the quality and state of an economy.
Why do I care how much someone else has?
Rich people don't live in ghettos - that's why ghettos have a very "good" Gini coefficient. (Ghettos would be better off if they did have rich residents.)
I didn't hate rich folks when I lived in a ghetto. Was I doing something wrong?
> Then, sew buttons in China? Sure, if the Chinese women had 20 fingers on each hand. But they don't.
You're talking about _advantage_. The economists are talking about _comparative advantage_. China doesn't have to actually be better at sewing buttons. They don't have to be better at anything. They just have to suck less at sewing buttons than they do at other things. If you had two people on an island, and one of them is the best at making fires and carrying firewood, but he's 500% times better at making fires and only 50% better at carrying firewood, the other guy should carry the firewood. That's all they're saying.
The comparative advantage thing is broken for a whole different reason. It ignores the fact that sewing buttons sucks! They act like it's irrational for a country to want to protect its, say, technology industry, to coax it past its infancy. Instead they should just be button-sewers forever. Why? Because somebody else is already a bit better at technology. This is nonsense.
You patched up their argument.
Still, my explanation for why China is sewing the buttons and South Carolina is not is correct: The government in China makes their young women offers they can't refuse. The young women in South Carolina can do just as well and, with better nutrition, medical care, information systems, transportation systems, public health, public education, communications systems, connections with customers, etc., actually do better. But, still, China is CHEAPER, and they use other advantages.
Why? China wants the business, and the basic facts are not from academic econ or efficiency but from some centrally planned economy to attack a market and take it. It's not economic theory or even being more efficient; instead it's international economic strategy, and academic econ ignores it.
You asked why we shouldn't just let China have such work and have us concentrate on more advanced technology. Well, that's an excuse, and it's silly: The businesses in South Carolina are now toast, and their suffering does nothing to help US technology, net, likely hurts it a little.
So, we had an asset in South Carolina, and we just threw it away. Academic econ doesn't count that asset as a loss, but the loss is huge, and so is the resulting loss of social capital and the increases in public expenditures.
Sure, maybe slowly over time we should get out of the button sewing business, but the way we've done it is a disaster.
More generally, there's next to nothing that China can actually do more efficiently than the US can. So, they sell us stuff just because they are cheaper, not because they are more efficient.
Sure, I'm about to buy parts for a server. It will have a motherboard with 10 SATA ports and 2 GbE ports, from Taiwan. If the board were made in the US, then it would cost me more, maybe three times as much. The US contribution will be the design of the AMD processor, the Kingston memory, the design of the Seagate hard disks, maybe an SSD, and especially the Microsoft software. Then the crucial work will be mine, the software the server runs, using the Radon-Nikodym theorem (with, say, von Neumann's proof), yes, some Hilbert space results (work from von Neumann and others), and some of my original work, and be high technology.
Still, we shouldn't be killing people in South Carolina, and the academic econ profs say that doing so is optimal.
Moving production to the location with the highest comparative advantage is the most efficient things for a market to do, that doesn't imply that the final producer is the most efficient producer.
---Still, my explanation for why China is sewing the buttons and South Carolina is not is correct: The government in China makes their young women offers they can't refuse.
So what about all the young woman in Taiwan where this happened before China was the low-wages threat? What about South Korea before that or Japan before that? The "offer they can't refuse" is that if a young woman goes to a factory she makes twice as much as she did on the farm, but with better access to "nutrition, medical care, information systems, transportation systems, public health, public education" than she would have had on the farm. From a global welfare perspective its a lot better that three Chinese women go from desperate rural poverty to moderate (by global standards) urban poverty even if it means some woman in Carolina going from working in a textile factory to a lower paid job at Walmart.
No, you won't get a single econ prof to say that the Chinese are more efficient at sewing buttons. But then again:
>More generally, there's next to nothing that China can actually do more efficiently than the US can. So, they sell us stuff just because they are cheaper, not because they are more efficient.
This is exactly what comparative advantage is about. It's clear that you've simply misunderstood the material.
Are you serious? A Chinese worker will produce more sewing buttons for $1 than an American can. I'm very sure every reputable economist agrees.
He's making the common ceteris paribus assumption, taking only into account supply at demand (common in elementary economics), ie. the point is to demonstrate how mainly the price elasticity of materials and capable labor force affect the price. Obviously the model will break down if you selectively add variables to it, that's like going to an elementary school physics class and complaining about how they're not taking wind resistance into account in their calculations. There are models that give you the price of transistors as a function of time, with the improving production efficiency taken into accout. You won't find any sufficiently complex one in an elementary economics textbook, though.
>Still, the econonuts want to conclude that China is more efficient at sewing buttons. No they aren't: Instead, the Chinese government understands what the econ profs don't: China takes their young women and makes each of them "an offer they can't refuse", work for pennies a hour under whatever conditions, or else, period. It's not a matter of being efficient.
You won't find a single econ prof that will say Chinese have some inherent, more efficient way of sewing. What they're saying, is that the Chinese have comparative advantage.
How much do you think people living in South Carolina would get paid for sewing buttons? People in South Caroline have better education, health care, infastructure, communications sytems etc. Would you want to have someone like that sewing buttons, when they'd be perfectly capable of doing many jobs that deliver higher added value to the economy?
I don't agree on much of the other points either, but sorry to say, I'm pretty limited on time.
This is probably the most uninformed, illogical, and inept points I've ever read on HN. Third-world children are now texting their friends on mobile phones, instead of dying of hunger. You have no idea what it was like growing up in the 50s. Do you even know what "economic growth" even means? Do you understand how many consecutive periods of growth our economy has had?
Unbelievable.
With that said, there is no real way to do economic 'science' - you cannot stage experiments with controls, or test the vast majority of hypothesis, aside from back-fitting against existing data.
Policy makers in DC just didn't have any solid advice, from academic econ or elsewhere. So the policy makers took chances and hoped. Such things don't happen in public policy where there is solid advice: E.g., we know darned well just what the F-22 can do. Aeronautical engineering is highly competent; academic econ is not.
Academic econ needs to get real, and start like biology did -- get the data and be descriptive. Actually, physics did that, too: Get the data on the motion of the planets and eventually observe that the orbits were ellipses. Finally (1) invent calculus, (2) postulate the law of gravity, (3) postulate that force equals mass times acceleration, (4) argue about motion under a central force being in a plane, (5) finally derive that the orbits have to be ellipses as observed. Easy it's not. But have to start with observing reality, and here academic econ fails.
We will be safer if we use a lot of good empirical data and a lot of common sense and prudence and set aside bad theory.
Additionally, academic econ favors optimization and efficiency at the cost of robustness and self sufficiency. It would be in the best interest of the country to reverse that, or at least strike a more healthy balance.
http://nobelprize.org/nobel_prizes/economics/ http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economi...
Others, like the Austrian economist Ludwig von Mises predicted the death of the Soviet Union and he has dealt with Red Vienna. He also thought that soviet style economy wouldn't work.
One point that particularly saddens me is the utter misunderstanding of growth by economists, because they go with the easy assumption first (GDP growth is a representative value), then with the oversimplification about the sources of growth, particularly the salient dependency of available cheap energy to sustain growth (see for instance http://netenergy.theoildrum.com/node/7069#more ).
Then they generally proceed by forgetting that Adam Smith wrote his books in a time of immemorial non existent or extremely slow growth, which change radically the view. Market efficiency is to be considered in a radically different manner when the general environment is economically quite stable, which naturally should prevent concentration, for instance.
This is just to mention a couple of things that struck me, I generally don't pretend to know much about economy, though.
I think one of the epistemological problem with economics is that it's almost impossible to run experiments(except maybe college kids experiments), and it would probably be irresponsible to run experiments on whole nations. That why some economists approach it by using entirely deductive logic as a mean of study.
It's also true of cosmology, though cosmological errors won't ruin people lives :) If you haven't read "the shock doctrine", it states that actually there was many economic experiments, in Chile and other countries, usually for the worse... Well USSR made some large scale experiments too, from 1917 to 1921, then 1921 to 1927.
* when the udssr collapsed for real, he said there will be a new enemy: it will either be the green party or islam.
* his recent prediction: the american empire will fall before 2020. he usually continues arguing the american republic will be better.
johan galtung is doing "integrative assesment". he is taking into account the non-uniformity observed in some situations. and he considers different attitudes influencing each other.
one example: when the avantgarde left the church, they turned to science. why does science describe the world in terms of perfection? it is easy to see, he says - because "god's creation was perfect".
Many economists assume equilibrium in their models. Often, economists will invoke [Nash] equilibrium as the resting state of the economy. This simplifies their maths, but seems like a dubious assumption for most real world situations. Human activity is biological, and evolving. Economies are complex systems composed of biological entities (humans), and need not ever reach equilibrium.
Out of respect for the recently deceased economics genius, B. Mandelbrot, I urge brave souls to learn his two cents on the topic.
seriously, this was a superbly informative rant.
The fact is that more people have risen out of poverty in the last 50 years than in the entire previous history of the world, largely due to economic globalization. And the average wealth of an American has also increased greatly.
The author is full of the excrement of male cattle. I hope he is getting upvotes for the reasonable critiques he makes at the beginning of his wall of text and not the dishonest crap at the bottom.
The older stuff is pretty stellar, I wrote an post on Metafilter about it a few years ago: http://www.metafilter.com/66006/The-Unqualified-Reservations...
(1) They have physics envy. In particular, they want to sit in a small, dark, closed room and with just pure thought, with little to no contact with any real economy, come up with some economics version of Newton's second law F = ma or Einstein's result in special relativity E = mc^2. Nonsense. Incompetent, intellectually bankrupt nonsense.
(2) With their physics envy, they want mathematical economics and to build mathematical models. E.g., for some decades after Dantzig's simplex algorithm, they fell in love with optimization. As optimization moved forward with nonlinear programming, the Kuhn-Tucker conditions, nonlinear duality, deterministic optimal control and the Pontryagin maximum principle, and stochastic optimal control, the mathematical economists continued to use such applied math to build their models. A shockingly large fraction of the Nobel prizes in economics are from just such nonsense. The math is rock solid; there are occasional good applications to particular, small problems, e.g., the climb, cruise, and descent of an airplane or what mix of refined products should come today from an oil refinery; an application to a real economy is nearly always just total BS.
(3) To keep their models relatively simple, they make a lot of assumptions. E.g., in finance, they assume perfect information and f'get about the guy on a motorcycle at an airport who asked the guy on the ramp where the plane was going (as in the movie Wall Street), naked shorting, etc. E.g., they make a lot of Brownian motion assumptions that then say that the LTCM disaster was wildly improbable, which it was not. They make assumptions about which workers are more productive and feed that into their optimization looking for some case of a non-inferior solution or Pareto optimality as if Chinese women had 20 fingers on each hand so could sew buttons much faster than women in South Carolina.
Going Wrong. They take their assumptions of their simplistic models and the corresponding conclusions and say that a real economy SHOULD be like that. So, they want to bend the real economy to their Procrustean bed of simplistic assumptions and conclusions. If physical science had done such a thing, then they would still be saying that the planets should move as Ptolemy said, that falling bodies should still move like Aristotle said, and that we should still be looking for flogiston.
This economic science is intellectually both incompetent and dishonest; it's contemptible, and dangerous.
Once I went through Samuelson's college text: I found NOTHING that made any sense at all except for his chapter on the Federal Reserve; in that chapter, he just described what the laws had established and was clear. All the rest of the book was total BS disconnected from any real economy. E.g., if we buy more transistors, then the price of each transistor has to go up. Right: Transistors used to cost several dollars each, and now, after buying many billions, maybe trillions, of transistors, we can buy a few hundred million for less than $100, retail. Wheat: For years 1800, 1850, 1900, 1950, and 2000, take the quantity in bushels of wheat produced in the US and the price per bushel of wheat, corrected for inflation, see that the quantity has gone way up and the price, way down. Similarly for iron, steel, chickens, and pork. We're talking total suckage. The very first things in academic econ, the supply and demand curves, just do not work in any meaningful way in a real economy; real economies mostly just don't work that way, guys. Total BS.
E.g., the econonuts argue for free trade based on simplistic nonsense. Their idea is that, for some global benefit or some Pareto optimality for the world, it is better if the production is where it is most efficient. So, yes, grow teak wood in Thailand, grow rubber in Viet Nam, mine tin in Indonesia, and pump oil in Saudi Arabia. Fine. Then, sew buttons in China? Sure, if the Chinese women had 20 fingers on each hand. But they don't. And a sewing factory in China has to struggle with bad situations for each of suppliers, legal system, transportation system, communications infrastructure, information technology infrastructure, etc. Still, the econonuts want to conclude that China is more efficient at sewing buttons. No they aren't: Instead, the Chinese government understands what the econ profs don't: China takes their young women and makes each of them "an offer they can't refuse", work for pennies a hour under whatever conditions, or else, period. It's not a matter of being efficient. So, businesses, careers, lives, and communities in South Carolina are ruined. So, we pay the former textile workers to do nothing or just let them die. I know: A few of the textile workers get to serve BBQ. From such destructive nonsense, instead of textile workers, I have a better suggestion for who deserves to die. They are doing it, and we should say so: The academic econ profs are KILLING Americans.
Then there's US competitiveness: In the 1950s the US had a great economy. Except for some points of information, biomedical, and materials technology, it's not clear that our standard of living is as high now. Our imports were meager, maybe some tin from Indonesia, etc. We didn't buy much from outside because the other industrialized economies were devastated and, thus, had little to sell us. But we did sell some products: Telephone systems, construction machinery, airplanes, etc. Then the idea is that since we could sell at what were astoundingly high prices, especially for the buyers, that is why our economy was doing well: NONSENSE. Total 100% nonsense: So, Joe went to work at, say, Caterpillar, and made great machines which we shipped to, say, France. France paid us in silly paper which we converted to gold. So, we accumulated a lot of gold. What good did this do Joe or the US? Next to none: In particular, Joe's labor got consumed in France instead of the US. Econonuts are confused. It is easy to see why, say, Japan, Saudi Arabia, or Jamaica needs foreign trade. But the US was doing just fine, thank you, as essentially a self-sufficient economy in the 1950s and, with foreign trade, is doing worse now. We are shipping our going businesses, market position, education, technology secret sauce, and intellectual property overseas, and the econonuts conclude that this is good. Total BS.
Now, sure, we want to import some oil: Saudi Arabia has oil and needs national defense, wheat, construction expertise, water and sewer systems, information technology, cars, etc., so we can swap. Fine.
So, why did we give away major parts of the US economy? Sure: Some econonuts had excuses for why this was optimal, and the Foggy Bottom types wanted to save the world by exporting the US economy. Meanwhile, back in the US, the citizens got it in the rear. US citizens were killed, and are still dying.
So, several large US industries got shipped to Taiwan, South Korea, Pakistan, and China, and whole states in the US had their economies devastated. There is a loss the econonuts don't count: The human capital that gets written off. Or, the econonuts assume that the textile workers and metal bending manufacturing workers can, of course, just move to Redmond and write software for Microsoft, which has so far likely never happened even once, to sell to China, which, of course, steals software and doesn't buy it.
The econ profs conveniently f'get about market manipulations we learned about in the US in the 1890s -- predatory marketing practices, etc. And they f'get about the assets of a going business, technology secret sauce, market position, etc. The simplistic econ models just don't count such things, so the econonuts assume that we shouldn't think about such things in the real economy and, thus, just give them away.
In school, I knew the applied math MUCH better than the econ profs, and their nonsense and its intellectual dishonesty were infuriating. After the first lecture, I asked the econ prof, nicely, what he was assuming -- continuity, differentiability, continuous differentiability, convexity, pseudo convexity, quasi convexity, or what. Then within an hour he had called my Ph.D. advisor and got me OUT of his class. That was not my intention but was GOOD.
Academic economics has NOTHING important to do with any real economy and is from irrelevant, incompetent, dishonest, and contemptible down to seriously dangerous.
We're talking ordinary crooks way down to the lawyers way, way down to bucket shop operators and from there way, way, way down to the politicians and from there, far, far down where just can't see at all, the econ profs. I know what we should export next: If all the econ profs were lined up on a cargo ship, it would be a good thing. And still better if the ship sank far out at sea.
The real economy is IMPORTANT, way, WAY too important ever to be touched by anything like econ profs.