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BadEconomics Discussion Thread, 04 September 2015 (self.badeconomics)

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Welcome to the automated Discussion Thread for the End-o-week.

Chat about any bad (or good) economic events. Remember to use the NP posts and whatnot.

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[–]messenakAcademic Imperator 7ポイント8ポイント  (2子コメント)

Remember to support either TheFederalReserve or PraxAcceptance in my contest to determine the dankest Econ subreddit. Literally multiple page views hang in the balance.

[–]___OccamsChainsaw___I love endogenous expectations. They're so bad. 6ポイント7ポイント  (1子コメント)

Based on exactly four seconds of reflection I declare this to be the best thing that ever was or will be. Hell of a good job /u/usrname42.

[–]usrname42There is no God but Keynes, and Krugman is his prophet 3ポイント4ポイント  (0子コメント)

I only made the image. I saw the words in a tweet or something.

[–]When_Doves_Cry 6ポイント7ポイント  (2子コメント)

Why do wealthy countries produce most of the world's capital goods, while less wealthy countries produce consumer goods? Why do industrialising countries move from producing consumer goods to capital goods as they develop?

[–]CutlasssI am the Lord your Gold 4ポイント5ポイント  (0子コメント)

Capital goods are a more specialized form of manufacture which takes special expertise to develop. You have to know the industry(s) which you are designing capital goods for. And you need a market which includes a lot of users. Machine tools grew up in concert with the gun industry. Which is why they were once concentrated in southern New England. With the rise of the auto industry, the center moved towards Detroit. Industries tend to cluster together, because there are feedbacks from having other firms in your industry nearby. That's probably less relevant now, because communication and transportation are so easy. But you'll notice how many tech companies are located someplace like the Bay area or Seattle.So clustering is still a thing. For a less developed nation to break into those capital goods market it would have to know the industry it is creating machines for. How could it if those industries don't exist where they come from? And are developed enough to need advanced equipment? The higher wages in developed countries means that firms using capital equipment there want more advanced machines than places with lower wages need. So the firm that would want to build capital equipment in the LDC has less opportunity to develop the expertise needed to do so and compete internationally.

[–]shunt31 1ポイント2ポイント  (0子コメント)

Because consumer goods are more labour intensive, and capital goods are more capital intensive? That sounds a bit silly to write out, but I think that is the reason. Less developed countries have lower wages than more developed ones, and so are better suited to producing goods that need more labour input then capital input. As the country develops, their productivity increases, so their wage increases (don't shoot me, everyone else!), so they produce less labour intensive goods.

This is a good article about it. It's not entirely relevant, but it should make the same points I hope.

[–]FatBabyGiraffeWhat do you want it to be? 6ポイント7ポイント  (0子コメント)

I convinced my girlfriend to be an Econ major. I asked her if she thought eventually jobs would be automated away. She said yes but she was taught no. I asked how long she has been a horse. It did not end well.

There is hope for her.

[–]usrname42There is no God but Keynes, and Krugman is his prophet 5ポイント6ポイント  (0子コメント)

HealthcareEconomist3 irl

(NSFW language)

[–]HealthcareEconomist3Krugman Triggers Me 3ポイント4ポイント  (1子コメント)

Friday things;

  • Music
  • Paper - I reviewed another a few days ago which should be dropping by the end of the year which found similar effects, some really interesting work happening with excess coverage right now.
  • Video
  • Book

[–]Homeboy_JesusCogito ergo sum equus 0ポイント1ポイント  (0子コメント)

Wow that book was a great read

[–]TychoTiberiusKeynes never died, he just changed his name to Satoshi. 2ポイント3ポイント  (0子コメント)

So I ran across this dude who claims to have a grad degree in econ but also claims that economists don't care about the effects of economic policy on wages and the environment. I don't think he actually has a degree in econ.

http://www.reddit.com/r/SubredditDrama/comments/3ji492/moderator_of_kia_states_that_gender_isnt_the_same/cuptyb5

[–]prillin101Fiat currency has a 27 year lifespan 1ポイント2ポイント  (1子コメント)

I have a question.

So, I've noticed that part of the reason manufacturing jobs dissapear is because it simply makes more money to move them to cheaper countries with cheaper labour.

What if a country were to purposely artificially pull down the cost of living by keeping housing/rent supply way higher than demand and same for food costs, which would cause the cost of living to be incredibly lower and therefore wages lower. This would obviously be a nation starting out as low-skill labour, but what if they worked to over time to bring the work force to high-skill levels with an enormous academic and technical education. Wouldn't this make them a prime location for manufacturing because they have a cheap high-skill labour force?

What problems would arise?

[–]EveRommelDAY TUK UR JOBZ, didn't want it anyways, already replaced 0ポイント1ポイント  (0子コメント)

If a country has the capital to artificially pull down living costs why wouldn't they be doing the most to educate thier work force to become a higher tech workforce that would demand higher wages?

Also if they had this massive glut of housing and cheap food wouldn't people do thier utmost to move there? There by cancelling out the housing glut

[–]IntegraldsI am the rep agent AMA 1ポイント2ポイント  (2子コメント)

Friday things:

  • Music: Life is Life.

  • Paper: Coibion's latest AER, which makes two (!) this year alone. I'll be reading it this afternoon.

  • Drink: it's 9am, people, c'mon.

  • Website: FRED has a blog!

Fact of the week: Most separations come from workers quitting their jobs than from bosses firing their workers.

[–]EveRommelDAY TUK UR JOBZ, didn't want it anyways, already replaced 0ポイント1ポイント  (0子コメント)

Its 5 o'clock somewhere

[–]besttrousers"Then again, I have pegged you for a Neoclassical/Austrian." 0ポイント1ポイント  (0子コメント)

Fact of the week: Most separations come from workers quitting their jobs than from bosses firing their workers.

COuld you explain why this is particularly interesting or surprising? I found that both Alex and Bryan had fairly weak responses. I don't think Scott was denying this existence of supply and demand forces - he's saying those operate in addition to bargaining power.

I don't want to discuss the relationship between W and MPL for nth time, but Scott's basic argument seemed to roughly jive with a Shapiro-Stiglitz world, in which unemployment is non-zero, workers are penalized when fired, and firms are not penalized when workers quit (they are able to hire from a pool of available workers). Nothing Alex or Bryan presented was inconsistent with that world.

edit: Unrelatedly, I wish Bryan spent more time writing papers and less time blogging. He's an interesting thinker, and I want him to develop his ideas more. I was really disappointed that his link to firing aversion only went to his own blog posts, and there doesn't seem to be any academic literature!

[–]timpattinson 0ポイント1ポイント  (2子コメント)

What evidence is there that QE actually changed the structure of the US economy (or in other places QE has been used)?

It's a statement i keep seeing in different places, but is there any credibility to it?

[–]CutlasssI am the Lord your Gold 0ポイント1ポイント  (1子コメント)

Changed the structure? How so?

[–]timpattinson 0ポイント1ポイント  (0子コメント)

Can't really pin down any comments like I remember.

http://www.paecon.net/PAEReview/issue55/Hudson55.pdf is one examples

[–]timpattinson 0ポイント1ポイント  (1子コメント)

Also submitting this CMV thread. What do people think?

https://www.reddit.com/r/changemyview/comments/3jkgk8/cmv_if_bernie_sanders_or_another_presidential/

[–]grevemoeskrHumans are horses! 3ポイント4ポイント  (0子コメント)

True, unless you make enrollment merit based. Considering Bernie like Scandinavia, he'd probably look here for the solution. We basically sort the applicants after their high school grades, and enroll them in the education they most want to study. Then you send those not enrolled to their 2nd priority, see if they can get in there, and repeat. Then, of course, there happens something I'm not aware of that puts downward pressure on the number of enrolled. Otherwise, there would 10000 new vets each year

[–]grevemoeskrHumans are horses! 0ポイント1ポイント  (0子コメント)

14 comments in 5 hours? I'm disappointed, /r/badeconomics

[–]wheresurgodnow 0ポイント1ポイント  (0子コメント)

Had the local PC repair guy tell me that he subscribed to the Austrian School after researching the GFC as I was telling him that I was an econ/finance undergrad. Had to bite my tongue on that one.

[–]inquisitive872 0ポイント1ポイント  (0子コメント)

Oh lord, employment truthers always show up at this time of the month. Both, the left and the right.

[–]shunt31 0ポイント1ポイント  (1子コメント)

I know lots of people here say that much of what Naomi Klein and friends think about the economy is wrong, and rightly so, but there is a reason why they think what they do. I wrote a post about it recently (in the FTWD subreddit, strangely). Take a look.

Climate change is going to be really bad, and the only plausible way to stop it is to degrow, pretty much.
I think I saw a climate economist about here somewhere, so they'll probably jump in and destroy what I wrote.

[–]EveRommelDAY TUK UR JOBZ, didn't want it anyways, already replaced 0ポイント1ポイント  (0子コメント)

Well I'm not a climate economist but I was trained in the green energy fields. I don't see any reason we would have to "degrow" renewables are becoming cheaper, people are learning about thier effect on the environment and changing thier actions, and technology is starting to make things more efficiently and with less energy input that will help us combat emession rise.

From an economic point of view simply put a carbon tax in and we should be pretty good if its administered correctly.