The Economics Thread

[Cythraul]

I'm starting an economics thread because (1) it's an extremely important subject to be knowledgeable about in these times and (2) I know that some people here have an interest in the subject. Basically, we can discuss anything from economic theory to practical matters of fiscal and monetary policy itt.

I myself am a proponent of free markets not only because I think free markets are the best way of fostering prosperity and that interventionism is responsible for a lot of really bad things (including the current crisis) but it's also consistent with my broadly libertarian outlook (which basically means that I believe I should be able to smoke black tar heroin while kicking minorities out of the brothel I run with my flag-burning business partner who also runs a sweat shop that employs children and illegal immigrants). Joking aside, I have a big interest in the Austrian school of economics which includes such luminaries as Carl Menger, Ludwig von Mises, F.A. Hayek, Murray Rothbard, and contemporary economists such as Peter Leeson, Peter Boettke, George Reisman, etc. Other well-known free marketeers can be found in the Chicago school of economics, most notably Milton Friedman.

Let me kick off discussion with some stuff concerning free banking. Check out this interview with George Selgin concerning the subject: http://www.richmondfed.org/publications/research/region_focus/2009/winter/full_interview.cfm

From my perspective, there is so much wrong with central banking, especially when enshrined in federal law. However, on the subject of banking I disagree with the Rothbardian view, popular within the Austrian school, that fractional reserve banking is inherently fraudulent. Selgin discusses that issue a bit in the interview. For a good starter on the subject of central banking and the Federal Reserve, check out Murray Rothbard's The Case Against the Fed, although as I already mentioned, I'm not in full agreement with Rothbard's views.

DISCUSS!

 

[The Ozzman]

I predict it's going to be mostly you, me, Dakryn and VG discussing this topic.

I have The Case Against The Fed in PDF and I haven't started reading it yet as I'm reading Economic Calculation in the Socialist Commonwealth (or attempting to because I don't like the way the author writes). TCATF looks pretty solid in terms of writing style and ease of reading though.

 

[Addo_Of_Nex]

Recommend a good introduction to the subject for someone who has absolutely no experience with the subject. It's one of the things that I really need to at least get an understanding of the fundamentals on, and it can only help for the economics class I'll be taking next year that everyone always bitches about.

Excuse the retarded "help a nigga out" nature of the post.

 

[Dak]

I'll admit I haven't done much book reading about economic reading, but have been reading tons of articles about the current situation and then plenty about the history of American economics.

I'll read the linked article as soon as I can.

My stance is completely anti-privatised central bank already of course.

 

[Cythraul]

My stance is completely anti-privatised central bank already of course.

If it's the Federal Reserve you're concerned about, you should be aware of the fact that the Fed is a quasi-governmental institution in the sense that it has a monopoly over the money supply and is legitimated/was brought into being by the Federal Reserve Act of 1913 even though its activities require virtually no significant oversight. Our central bank is not the result of a free market and is certainly not a private institution in the full sense of the term.

 

[Cythraul]

Recommend a good introduction to the subject for someone who has absolutely no experience with the subject. It's one of the things that I really need to at least get an understanding of the fundamentals on, and it can only help for the economics class I'll be taking next year that everyone always bitches about.

Excuse the retarded "help a nigga out" nature of the post.

I don't know how to help you. I was never an econ major so I don't know which books dealing with a general introduction to econ are good. I could only refer you to specific books by specific authors dealing with very specific economic theories. I don't know if my recommendations would give you a grip on the fundamentals. Basically what I did was I went to the used book stores in my area and looked for affordable econ textbooks, but the rest of the stuff I read goes beyond the 'fundamentals'.

 

[The Ozzman]

Recommend a good introduction to the subject for someone who has absolutely no experience with the subject. It's one of the things that I really need to at least get an understanding of the fundamentals on, and it can only help for the economics class I'll be taking next year that everyone always bitches about.

Excuse the retarded "help a nigga out" nature of the post.

It might help just finding a used textbook somewhere and just reading the stuff you're interested in.

 

[Einherjar86]

I'm far less knowledgeable about this subject than most here, but I also lean closely toward Libertarian politics and free market economy. Mostly, I feel that government competition inspires innovation. It's a given fact that not everyone can win in a competitive economic system, but it fosters creativity among its participants.

Furthermore, I believe that government regulation harms small businesses more than most of its proponents are willing to admit. Small business makes up half of the total U.S. GDP and most of the employment. While government regulation is most often targeted towards large companies, it has a larger effect on small businesses. Tax benefits may be granted to families that make under a certain amount, but this doesn't take into account the fact that family-ran small businesses frequently bring in an number greater than the cut-off point. I just don't think it's fair.

 

[Dak]

If it's the Federal Reserve you're concerned about, you should be aware of the fact that the Fed is a quasi-governmental institution in the sense that it has a monopoly over the money supply and is legitimated/was brought into being by the Federal Reserve Act of 1913 even though its activities require virtually no significant oversight. Our central bank is not the result of a free market and is certainly not a private institution in the full sense of the term.

Private profits, so it is private as far as I am concerned.

 

[Eligos]

Libertarians are the OG's when it comes to economics. They really know what they're talking about.

 

[Meh]

Because of our "smart" decision to remove our tariffs, we have now handed over $6 trillion to our "trading partners" which they have used to buy up our resources, our debt, our infrastructure, and our technology for a fraction of what it cost us to develop.

Remember the potato famine?

There's free trade at work.

Obviously, international trade is absolutely essential.

No nation contains within its boarders all the elements needed to support a modern society.

But the other extreme, trade with no control and regulation, is equally impossible.

A one world order, one size fits all nations, not free markets.

 

[Cythraul]

Because of our "smart" decision to remove our tariffs, we have now handed over $6 trillion to our "trading partners" which they have used to buy up our resources, our debt, our infrastructure, and our technology for a fraction of what it cost us to develop.

You're going to have to explain this. Exactly who is selling things to our trading partners for a fraction of what it cost to develop them and why exactly would they do this?

Remember the potato famine?

There's free trade at work.

Explain how free trade caused the potato famine.

But the other extreme, trade with no control and regulation, is equally impossible.

Is it really that it's impossible or is it just that it doesn't gratify your sense of "justice"? Oh but of course, doing what amounts to essentially taxing American consumers for purchasing foreign-made products as opposed to American-made products is such a boon to our economy.

 

[Dak]

Because of our "smart" decision to remove our tariffs, we have now handed over $6 trillion to our "trading partners" which they have used to buy up our resources, our debt, our infrastructure, and our technology for a fraction of what it cost us to develop.

Remember the potato famine?

There's free trade at work.

Obviously, international trade is absolutely essential.

No nation contains within its boarders all the elements needed to support a modern society.

But the other extreme, trade with no control and regulation, is equally impossible.

A one world order, one size fits all nations, not free markets.

That was a hodge-podge of incoherence. You are against us lifting tariffs but you are pro "one world order"?
/facepalm

 

[viewerfromnihil]

A one world order, one size fits all nations, not free markets.

To put it quite simply... no.

 

[The Ozzman]

Oh but of course, doing what amounts to essentially taxing American consumers for purchasing foreign-made products as opposed to American-made products is such a boon to our economy.

I was going to post this, but I knew you would be better at articulating it. Tariffs are a burden to any economy.

Anyone who has taken microeconomics should know this.

 

[cookiecutter]

Most of my knowledge of economics comes from history so I don't like to argue it because I don't feel like I can speak from a position of strength. My beliefs tend towards Social Democracy/Keynsian/Third Way ideas. Basically I agree with the more left leaning Democrats in American politics or a mix of NDP and Liberals in Canadian politics. Looking at things like the New Deal, the Marshall Plan and the West German Economic Miracle, these ideas seems like they work. I try to be open minded about economics though because I don't think any particular ideology will work in every situation and pragmatism is probably the best policy.

 

[Dak]

Most of my knowledge of economics comes from history so I don't like to argue it because I don't feel like I can speak from a position of strength. My beliefs tend towards Social Democracy/Keynsian/Third Way ideas. Basically I agree with the more left leaning Democrats in American politics or a mix of NDP and Liberals in Canadian politics. Looking at things like the New Deal, the Marshall Plan and the West German Economic Miracle, these ideas seems like they work. I try to be open minded about economics though because I don't think any particular ideology will work in every situation and pragmatism is probably the best policy.

One of the examples of how they don't work is looking at the mess Social Security is in now, not to mention the overall debt problem. You can't rob tomorrow to fund today forever, and government is always the most wasteful squanderer of resources because there is really no incentive on an individual level to be save. In fact, you get "punished" for being thrifty by having your budget cut, so departments always make sure they spend every dollar that gets alloted.
The current economic problem has just as much to do with the Clinton administration forcing Freddie/Fannie to make bad home loans as it does in the Bush administration repealing the Glass-Steagal act. Then the Bush/Obama administration compounded the problems by putting the fox in charge of the hen house (Henry "Let's help out my buddies at Goldman Sach's & Friends" Paulson). The fact that our national inflation and debt are at an absurd level directly due to the existence of the Federal Reserve and it's policies are equally as bad but a whole different beast of a topic.

 

[Meh]

You're going to have to explain this. Exactly who is selling things to our trading partners for a fraction of what it cost to develop them and why exactly would they do this?

The U.S. consumer was getting raped by the foreign product because they essentially enjoyed a monopoly in this market.

Britain was notorious for this. Later, Japan did it in electronics to us.

America is giving things up to Japan, China, Mexico, etc.

China owns over $680 billion U.S. securities. They have already threatened to dump them if we interfere with Taiwan. In fact, they actually said they would destroy the U.S. through warfare.

China, the most populace nation on earth, manipulates the value of her currency, hoards dollars to artificially drive up its value to drive its exports to America, and routinely has been caught subsidizing its industries who dump its products below the selling price found in China.

Does that sound like "brilliant" economics to you?

Explain how free trade caused the potato famine.

Before 1800 and the "Union" of Britain and Ireland, Ireland defended their industry and therefore grew in prosperity. After the "Union", Britain rammed "free trade" regulations down the throat of Ireland, eliminating every trade barrier so that England could buy Irish raw materials, dump English products into Ireland, they destroyed the Irish industry, wrecking the Irish economy and spreading unemployment and hunger throughout the nation.

The Irish left Ireland and its free trade catastrophe for protectionist America by the millions before they also starved to death.

England bit the free trade fruit and nearly starved itself in WW I. War leaves free trade zealots looking like lambs being led to the slaughter.

England had become so dependent on imported food (mostly from America) due to the elimination of its corn laws in the name of free trade, that by the first World War she could barely feed 1/4 of her population.

Then war with Germany broke out and U-boats started sinking her imported food supply. England faced starvation.

Even Adam Smith wasn't so dumb as to advocate a nation free trade itself into a position of starvation during war.

Japan, they always have thumbed their nose at western economics and free trade.

The result?

Japan leads the world in autos, cameras, semiconductors, optics, and are aiming for passenger jets. They now make 35% of the Boeing Dreamliner and have extorted Boeing's wing technology. One of many examples.

Another interesting fact is that Japan has one of the highest suicide rates in the world. That's due to their asinine indoctrinated culture. They are taught from school age up they must survive on 5 hours sleep a night if they are going to be successful and are handed strict discipline.

Is it really that it's impossible or is it just that it doesn't gratify your sense of "justice"? Oh but of course, doing what amounts to essentially taxing American consumers for purchasing foreign-made products as opposed to American-made products is such a boon to our economy.

Our dollar is going in the tank because we do have "free trade".

Since we no longer are "stupid" and removed all taxes off of imports, guess what percent of our GNP imports now represent?

About 20%. 20% of our imported economy generates essentially zero tax revenue. We used to average about 4% imports as percent of our GNP back when we were "stupid" and taxed those imports.

We are soooo much better off now that we have become "smart" and subsidize exports to us and tax our own industry into oblivion.

More than one economist with a PhD behind his name has noted that the down fall of American manufacturing has more to do with the destruction of its protective system than it becoming "fat and lazy", and I can name historians from other nations that made the exact same observation.

America tried free trade from 1783-1789 and Britain dumped their crap on our shores below production costs, sucked the states dry of its gold and silver money through the trade deficit, and brought economic ruin and hunger throughout the nation.

What Britain couldn't do through war, she almost did through the economic war called free trade.

That free trade experience taught our nation to change its Constitution so that Congress had power to regulate commerce.

The first act of our Congress under the Constitution was the Protective Tariff Act of 1789 and shut the door on British dumping on our shores.

What has free trade had done for the U.S......

U.S. BALANCE OF TRADE WITH MEXICO

YEAR……….TRADE BALANCE (millions of dollars)
1985…………-5,497
1986…………-4,910
1987…………-5,688
1988…………-2,631
1989…………-2,180
1990…………-1,877
1991…………+2,147
1992…………+5,381
1993…………+1,663
NAFTA VOTED INTO LAW NOVEMBER 1993
1994…………+1,349
1995…………-15,808
1996…………-17,505
1997…………-14,549
1998…………-15,856
1999…………-22,811
2000…………-24,577
2001…………-30,041
2002…………-37,145
2003…………-40,648
2004…………-45,066
2005…………-49,743


U.S. BALANCE OF TRADE WITH CANADA

YEAR……….TRADE BALANCE (millions of dollars)
1985…………-22,755
1986…………-22,920
1987…………-11,270
1988…………-9,776
1989…………-9,144
1990…………-7,706
1991…………-5,914
1992…………-8,035
1993…………-10,772
NAFTA VOTED INTO LAW NOVEMBER 1993
1994…………-13,967
1995…………-17,143
1996…………-21,682
1997…………-15,467
1998…………-16,652
1999…………-32,111
2000…………-51,897
2001…………-52,843
2002…………-48,165
2003…………-51,671
2004…………-66,480
2005…………-78,485

Over 500,000 Americans were documented as having lost their jobs as a direct consequence of NAFTA. It is estimated that at least twice as many workers lost their jobs from indirect consequences.

That was a hodge-podge of incoherence. You are against us lifting tariffs but you are pro "one world order"?
/facepalm

Hmm, I didn't make that point properly - was in a bit of a hurry. I'm entirely opposed to single world orders, but that's what the globalist morons wish to achieve.

Historically speaking, when a tariff was passed on a product coming into the U.S., the foreign producer decreased the price of his product.

Any economist from Von Mises to Marx will admit, the producer is the consumer.

People talk about consumers paying taxes to support producers boils down to the producer is paying a tax to support himself.

I'll take that before I'll take the destruction of our manufacturing due to imports that pay essentially zero taxes while getting a free ride on our infrastructure.

"Modern radical economists have constructed a model of American capitalism which is essentially an extension and updating of Marxian thought."

Campbell R. McConnell
Professor of Economics, University of Nebraska
Economics, Principles, Problems, and Policies

How many people missed the connection between Ayn Rand and Alan Greenspan?

 

[Dak]

Gotcha. I am all about a free market in a national sense, but I am against free trade.

 

[Meh]

Gotcha. I am all about a free market in a national sense, but I am against free trade.

People forget there's a difference.