Take a gander at this great little video, which shows a very strong correlation between wealth and life expectancy. The technology to pull off this eye-dazzling stunt is rather amazing, and is simply another example of the power of free enterprise, individual liberty, and creative entrepreneurialism. Okay, nuff said. Just watch the video. (Thanks to Russ Roberts over at Café Hayek)
Hey
ReplyDeleteNoticed you are exploring Austrian theory.
Look at this piece by Steve Waldmann
http://www.interfluidity.com/v2/1004.html
Heres an excerpt;
"We measure prosperity by production, not by work, and we measure production by value, by what people are willing to pay for what is produced.
Austrian-ish “hangover theory” claims, plausibly, that if for some reason the economy has been geared to production that was feasible and highly valued in previous periods, but which now is no longer feasible or highly valued, there will be a slump in production. It wisely asks us to consider not only the prosperity we measure today, but the sustainability of that prosperity going forward. I am not “Austrian”, and have no interest in defending specific claims regarding the roundaboutness of activity or the role of central banks in causing bursts of quasiprosperity. But as Brad DeLong wisely reminds us, it is good to be somewhat catholic in our evaluation of macroeconomic schools, and to take what is useful from each. I consider myself Keynesian at least as much as I am Austrian, but I recognize good and not-so-good offshoots of both schools. (Austrian and Keynesian ideas are more complementary than most people acknowledge. The Austrians focus on unsustainable arrangements of real capital, while the Keynesians focus on unsustainable arrangements with respect to money, debt, savings, and income. I think both approaches are fruitful.)"
I think you'll like
Thanks for the link!
ReplyDeleteI'll be posting on Ch. 1 of MES pretty soon, and also I want to work in a bit of Austrian political economy re: QE2.
Glad you are still coming 'round here and David's blog, btw.
Hey, why wouldnt I come around?
ReplyDeleteI havent been banned and you explore topics Im interested in. I have my thoughts on different economic theory but I certainly havent read everything, nor will I. I rely on people like Steve Waldman above or Bill Mitchell, Mark Thoma or Yves Smith whom I find well read and intellectually honest to explore the issues from many angles. Steve actually made me realize there are more things that I agree with Austrians about than I thought.
I have explored, not extremely deeply mind you, Austrian thought and have generally found it great in explaining barter economies, or economies that are small and closed but when it comes to actually explaining the modern world I find it lacking. Its sole focus on micro, as if macro is unnecessary is very strange. Its focus on process only and not macro outcomes seems quasireligious to me. Ive heard Austrian acolytes say aggregates dont matter. My response was "Really? So you ignore the Dow (an aggregate of bids on stocks in the index) or NASDAQ. Then you must be against Corporations since they are simply an aggregate as well. Why not just insist that everyone be an independent contractor? Certainly there is nothing worthwhile gained by incorporation?"
When it comes down to it, as I see it, Austrians dont like aggregates like unemployment measurements or social spending which involves taxation. That is the efforts of their arguments. Which is fine but we dont need to attack aggregation in that effort. Much is learned form aggregating data just like the video you posted shows. One cannot cherry pick aggregates that support your view and ignore ones that paint a picture you are uncomfortable with. Austrians claim to be less mathematical and more logical often trying to describe the economy as an organic process with more inputs than we could possibly measure (which I agree with) and thus all top down efforts will be incomplete (I agree) and ultimately harmful (I disagree, harm is a value judgment).
What we can say is that all economics is about tradeoffs. No system of politics or economic thought will guarantee perfect health, free access to all we need, no hardship and ultimate happiness for all. Anyone trying to achieve that is foolish, but we can achieve no starvation, no homelessness, access to good healthcare and an income for all. We can do this because we KNOW there is plenty of land to grow the necessary food, there are materials to build the necessary houses and there are people to provide the necessary health care. This is not even debateable. But we also know that there is a real cost to this and we must decide if it is worth it or not.
I'm hoping your series on MES will explore some of what I find weak about Austrian theory as I know it. I also hope to find common ground and take what is good with Austrian theory and what is good with my, shall I say Minskian/Keynesian/Lernerian theory and find a way forward.
I certainly dont think any one has all the answers and I dont think we always understand exactly what the other is arguing. Words like value, demand, real ......even debt are often viewed from a little different angle and if we move a little in another direction we might see what someone else sees.