Preempting the storm: RIP Margaret Thatcher

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I wouldn't say the theories are debunked as such. Economic theory is always unrealistic because of it limits itself to few variables in a world of endless complexity and expects everything else to stay the same. It's not that economic theory is completely useless though it can help understand the past and understand certain phenomenon but you all too often see people using economic theory for ideological and more or less propaganda purposes. It's quite understandable since politics is about economics and economics is about politics but people using economics for political purposes usually forget about the general assumptions associated with economics and try presenting a theory as economic law. There are no laws or absolute truths in economics. It's not a natural science.

 

I too took a bachelors in economics and left it there. Instead I did my masters in accounting. A lot more practical and in touch with the real world.

 

That pretty much sums it up.

 

Lol, the US has just gone through whats classed as a great recession that saw a loss of 8.7 million jobs in 2008 alone gdp contracted by more than 5% seeing it as the worst recession since the great depression, unemployment rose to 10% by 2009, with 16% of the population classed as in severe poverty, up from 12% in 2007.

In the uk, minimum wage increased in small increments between 2007 to 2012 from £5.52 an hour to £6.19, in 2007 unemployment stood at 5.5% and has risen steadily to 7.9%.

All evidence supports economic theory.

edit to add:

Aldeth, I was describing what would happen if companies passed the cost on to their customers instead of cutting jobs.

 

You do realize that there was a major financial meltdown (which more or less still continues) between that time? You are making exactly the sort of false causal assumption that I pointed out earlier.
You state that X ----> Y ,
but in reality X, Y, Z, A, B, C.......-----> Y.

 

Really? Are you sure? When we experienced a period where lending and spending were at their highest, jobs were still lost, but hey, that's the banks fault right? Someone hand me the sacrificial knife cos we've got a lamb.

 

Not from a Catholic university, I hope. I met an American biologist during my study, and they hadn't taught her anything about Evolution at all. Talk about wasted money!
I was aware when I started the study, that the job market for biologists wasn't exactly a huge opportunity. I did the study out of interest, and the fact that I completed it is proof that I'm of academic level. To be truthful, I doubt I could ever have graduated in anything as boring as economics, law, or any other soft science. Mathematics is also quite tough, and without the biological aspect, it's also uninteresting. I live in China now, where my qualification allows me to work here as a teacher easily. I have my pick of relatively high-paying jobs because of my degree, and I have interesting knowledge to boot. But you're right, that in my home country the Netherlands, the abundance of job-seeking biologists just devalues jobs in the entire field. I preferred to work in security for a while, because it payed better.

Economy is a form of religion, based on faith/trust in the system. Economists are the high priests of the faith, and tell the worshippers where they should direct their worship. The economic results are exactly that of a faith-based movement.

 

Does not change the fact that you are confusing correlation with causality.

 

no I haven't.

Cause: minimum wage increased
effect: jobs lost

exactly what we said would happen.
And lets bear in mind with the UK the unemployment figures don't accurately reflect the actual cost to the work force because Gordon Brown cheated the figures by creating recruitment places and training schemes, people who earned maybe £2 an hour if they were lucky, didn't actually have a job but showed them as being employed.

As for what you others are saying here, I think you've been playing too much bioshock, because you have very weird opinions on economics.

 

Scenario A: In 1 year's time, where did all this extra money come from? 1 million 10 thousand dollars... loaned from the Federal Reserve?

Scenario B: 504.000 dollars missing here. Did the Fed call in their loan?

The amount of money in the economy is what determines its value. You know this, right? You can't exchange it for gold anymore [the last person to suggest returning to the Gold Standard was Kaddafi, in the African Union. He was executed a few months later]. The comparisons you are making are simplistic at the least. If a guy goes from making 1 million to 2 million, then, if Fed loans aren't involved, it roughly means that other people have lost a million in income.

What left-wingers object to, is not that there are rich people who don't want to pay taxes. Its:
a) Income inequality not based on any realistic contribution. Scientists, emergency service workers, and other important and difficult jobs get paid far less than cushy jobs in easy positions.
b) Lack of social mobility. If you're poor and work hard, you'll probably stay poor anyway. If you're rich and make bad decisions, you're still likely to stay rich. The USA is the worst in this regard.
c) Snooty brats with inherited wealth feeling inherently better than those without, claiming intellectual, psychological, physical, even genetic superiority as the reason for their financial status.
d) The strong picking on the weak as distraction, for fun, out of malice. Maggie was one of them.
e) Interfering in political affairs, abusing power in order to further disadvantage those less well off than themselves, claiming it's necessary (because poor people are useless moochers), and destroying the social capital (trust, safety, prosperity) in the process.

 

LOL a typical leftist response. Instead of answering a very simple question which would easily show the lunacy of a position you spend a paragraph trying to confuse the issue.

However, I'll play along and answer you.

In scenario A- The federal reserve has nothing to do with it. The extra money came from a booming economy because of lower tax rates.

In scenario B- The loss of all of the money is due to a special tax assessed by the socialist government on people for having the hubris of being successful.

Please note, the value of currency and the gold standard have nothing to do with this scenario.

a- Hopefully we never have government officials whose job it is to figure out people' pay based on their "realistic contribution" . I am more than comfortable with peoples worth being equal to what someone is willing to pay them.
b- I kind of agree with you on this one, but for different reasons. With an entire political party that bases its strategy on keeping the poor dependent on the government this isn't that surprising.
c. Ah Jealousy, another one of the deadly sins. Same as in B when a strategy is based on "class warfare" no good can come from it. The only remedy is that we should steal from those snooty brats all of their money. I use the word steal as you can only tax income and if we are going to take the principal also that is the only way to do it.
d. Hey its not my fault that dropping $100 bills from my helicopter into the slums and watching them fight over the bills is so entertaining. /end sarcasm
e. Preach on brother- Those unions should not be allowed to use all of their money and influence to secure higher salaries and benefits than ordinary taxpayers

 

Well if you believe that minimum wage is the only major cause for unemployment then I suppose you are correctly identifying a cause and effect otherwise you are merely showing correlation. I don't think that sits very well with any mainstream economic theory though. You are free to believe what you want though. It's your prerogative.

 

As far as I know, and my knowledge is somewhat limited the only economic theory that has shown to work *somewhat* is Keynesian theory. Not perfectly or not even very well but Keynesian politics has shown to produce results reasonably close to what was predicted. Not an answer to all problems by a long shot but a theory that has shown to have some merit. All other theories seems to have been thoroughly debunked from Soviet style long term plans to Milton Friedman's deregulation frenzy and Reagan's trickle down theories.

Everything I have seen and read has shown that deregulation, less and less governmental involvement, more and more economic freedom leads without a doubt to those who have acquiring more and more at first cheered on by middle classes but sooner or later their wealth start trickling up as well until we are back with a very small elite owning a vast majority of all wealth. All those people without will then sooner or later start asking questions for when even the intelligent hard-working people can't get by real resentment will start to kick in and we will have more and more social unrest. The pattern has repeated itself throughout history and is at the core of socialism. What the west did so successfully and which led us to avoid the fate of the Soviet Union was to more or less voluntarily distribute the wealth, give everyone a fighting chance and kept the predatory elites in check through democracy and thus avoid the "revolution". As I see it we are yet again on that same worn path humanity has trod many times before. Wealth is starting to concentrate among fewer and fewer individuals and the situation for those at the bottom is getting worse and worse. How will it end this time? Complete collapse under outside pressure as in the case of Rome? Bloody revolution like in Russia, France and the US or will the powerful wake up in time like they did last time and understand that for their own survival they better start sharing.

 

Keynisianism is about as debunked as any other economic theory. Its flaws became quite obvious in the 70ies stagflation especially in Britiain. Which is actually a bit on-topic actually. Of course a Keynsian economist could probably argue that the problem was not the policy itself but its administration and timing.

I suppose the main problem is that because most economic models deal with a perfect world where everyone is rational and has the proper information to make rational decisions. In Keynsian theory it's expected that decisions are made at the right time and in the right form. I think it was Alain Greenspan who said that "what is politically possible is economically too late and what is economically necessary is politically impossible" or something along the line, which more or less an apt description of the problems of Keynsianism.

 

I thought I had put in enough disclaimers around my claim but apparently not. I am well aware of the limitations and failures of Keynisianism but as you yourself said it still has some merit. As for Greenspan, I do not put much stock in radical Ayn Rand followers.

 

He's about as credible and trustworthy as the next economist.

 

I've heard economist majors talk about what they learned in university, and it was just a rehash of stuff I'd already heard in middle school economy class, except voiced with more passion, determination, and less room for questions. Anyone who studies economics at university is simply exposed to rote-learning: Copy, repeat, remember. No thinking or understanding, just parrot the philosophy. That's why I think it's a religion.

Most economic theories rely on a stable, unchanging world where stuff like supply and demand are the only variable factors. It appears to be a philosophy developed by rigid, unadaptive people trying to make sense of a disorderly world. The predictions they make are usually only useful for comforting others, and only coincide with reality during quiet times and with a lot of luck/coincidence.

When you add Adam Smith's Invisible Hand theory into the picture, it becomes quite clear that some economists believe in a divine influence in the market. It's religion.
It's very real to those who believe in it, and there is no realisation that it's just a story like any other religion.

 

What the flying f**k are you talking about? You claim to know economics but show a total lack of understanding.
Economics is a science, if you will, I like to relate it to psychology. Its a constant experiment, the economy is the subject, we study it and record its behaviour, we can't force it ti do what we want it to do, instead we attempt to use small suggestive methods to manipulate the subject into changing its behaviour to suit our goal.