ian welch and firedoglake,

this is really excellent political education.

thank you so much for making the effort and, implicitly, for expressing optimism that folks want to learn.

better political education is vital to the likelihood of the american gov’t that evolved from the late 1700’s surviving into the 21st century.

one criticism,

do NOT,

ever,

apologize for being a “geek” or a “wonK’.

for a citizen to be competent to decide and to vote requires understanding – and not just intuitive understanding.

american politics is serious business, for americans, and for the rest of the world. and americans as a society are seriously ignorant of the problems they face and of the implications of gov’t policy to “solve” those problems.

“geek” and “wonk” are customarily used either

pejoratively or apologetically,

as if to meliorate the effect on the “audience” of any effort at serious discussion or education.

that is really wrong, really foolish, and a completely inappropriate obeisance to television.

the use of these two words is a function of the fact that news, education, information is, these days, entirely viewer-centered entertainment.

public discourse is implicitly nielsen-rated, even if it is not teevee.

“geeks” and “wonks” are, in fact, people who have experience and knowledge others do not have – like experienced farmers, blacksmiths, home cooks and canners, midwives, and mechanics.

passing on that knowledge and those skills are at the heart of human progress.

no apology necessary for having or for sharing special insight.

keep on educatin’.

Just to add that knowledge of economic facts is of the utmost importance in facing the political crisis being presented. e.g. knowing the difference between rich and wealth and how they differ from, say, the plutocracy of those controlling the sources of economic production, and why it is so.

Such a discussion is difficult enough between educated people but must be extended to a much wider audience who, like the jerks hyjacking the post for their sports trivia shite (there are times and places such shite is appropriate), haven’t the educational background enough to figure their way out of a wet paper bag. Too often, the public’s premium is shown to ignorance and the lowest common denominator possible.

Thanks Ian again for a sterling display of knowledge and for the intellegent questions raised in the comments. All the best…….

“Das Kapital” or “Wealth of Nations”. Which is right?

*Idea* Get them, Read them, Find Out, Report Back

Thanks for the clear explanation, Ian, I do see what you mean . But I have a big But.

But what about us in the Third World?Some people in this thread talk as if exporting US jobs, capital & production to other countries with Comparative Advantage was a Bad Thing.But isn’t the export of capital to other countries one of the few things that can make global capitalism acceptable to us? How else will we raise production, wages, taxes, GDP? I mean, maybe US workers will suffer but SAfrican workers will benefit. So,why should this SAfrican condemn Free Trade?

The only place where it really hurts us is when Firstworlders like the US talk Free Trade but in reality impose such tariffs and subsidise their domestic producers to such an extent that we cannot enter the markets.

I don’t know much about economics, so I should be delighted if someone would explain this to me.

Economics as I understand it assumes rational actors, which is what we seem to be lacking these days, at least in any moral or ethical sense when you look at the effects of globalization and “free trade.”

“Das Kapital” or “Wealth of Nations”. Which is right?

Both – in their own way.

Oldman had called it strip mining the US economy

I miss Oldman, bless his soul.

Nice post, and you have guts to start one with a quote from Ricardo!
I don’t know if Ian Welsh is still here, but want to make two comments, which are techie, but if you start a post with Ricardo, I guess that means it is OK.

There are theorems that state that if two countries are “similar enough” free trade will work as if labor and capital were perfectly mobile within one country. I think Stolper Samuelson is the first modern version. But even Paul Samuelson himself admitted that no one ever figured out what “similar” meant in a multi-factor multi-good context, even if we knew what “similar” meant, what was “enough” similarity to make it work is also unknown. So to that extent, a lot of free trade hysteria among economists is little more than religious faith.

Another thing that has always puzzled me about the free trade public policy religion is that it generalizes wildly from very simple and very special models -namely two country models, each with two goods and two factors of production. So, there, free trade makes each country just as best as it can be and the winners in each country can compenstate the losers. That does not hold in more complicated models. In more complicated models the overall world pie gets larger with free trade, but one or moer countries may lose absolutely in that they are poorer with free trade int the sense that the relative winners cannot compensate the losers, and the whole country will need a subsidy to share in the improvement in posterity.

Anyway, the dishonesty of some market oriented free trade type economists in selling their free trade policies has harmed the cause of improved, more efficient and more equitable free markets. Some of these goofs have admitted that they are selling snake oil to the public but wrt the worthy cause of “free trade”, the ends justify the means. So these tough guys have failed on their own terms -see Doha round stalemate. All they get is funky bilateral trade agreements from the Bush administration, that I do not think will last and are mostly not about free trade at all but rather a kind of international crony capitalism. Maybe that last is what they really want. Anyway, it has become a mess.

Yeah. This article is one that was a bit scary to write, but necessary, I think.

One that discusses how aggregate pies can go up because of decreased consumer prices while tons of people are underemployed, or unemployed would also be worth doing. Stirling did one once, but it got lost with BOP going down.

Economists alwyas talk about compensating the losers, but somehow it never really happens.

I’d also love to discuss pareto optimality sometime, but I’m not sure how to show people why it matters. Still, the line that a sadistic torturer and his victim is a closed but pareto optimal system is one that I’ve been looking for an opportunity to use for a long time (not original to me, but brilliant.)

There are theorems that state that if two countries are “similar enough” free trade will work as if labor and capital were perfectly mobile within one country. I think Stolper Samuelson is the first modern version. But even Paul Samuelson himself admitted that no one ever figured out what “similar” meant in a multi-factor multi-good context, even if we knew what “similar” meant, what was “enough” similarity to make it work is also unknown. So to that extent, a lot of free trade hysteria among economists is little more than religious faith.

Another thing that has always puzzled me about the free trade public policy religion is that it generalizes wildly from very simple and very special models -namely two country models, each with two goods and two factors of production. So, there, free trade makes each country just as best as it can be and the winners in each country can compenstate the losers. That does not hold in more complicated models. In more complicated models the overall world pie gets larger with free trade, but one or moer countries may lose absolutely in that they are poorer with free trade int the sense that the relative winners cannot compensate the losers, and the whole country will need a subsidy to share in the improvement in posterity.

Anyway, the dishonesty of some market oriented free trade type economists in selling their free trade policies has harmed the cause of improved, more efficient and more equitable free markets. Some of these goofs have admitted that they are selling snake oil to the public but wrt the worthy cause of “free trade”, the ends justify the means. So these tough guys have failed on their own terms -see Doha round stalemate. All they get is funky bilateral trade agreements from the Bush administration, that I do not think will last and are mostly not about free trade at all but rather a kind of international crony capitalism. Maybe that last is what they really want. Anyway, it has become a mess.

Ohh right, Bretton Woods, 1945-1973.

QuakerGirl @ 182

Ian – my brain is reeling between your thread and dmac’s keyboard. Well written but I had to stay focused or reread parts of the thread. Not because you weren’t clear but because economics is so unclear. I feel like all economics has huge holes not addressed because the assumptions would dead-end if taken through the black hole.

As for dmac’s keyboard, it is much like hearing Greenspan – full of cryptic spaces and symbols:-)

This may be the most econo-geeky post I’ve ever written, actually. I don’t expect to write anything more so. Free trade orthodoxy is a huge problem in economics and it’s something that needs to be dealt with, and this is my small effort towards it. But it’s not an easy post.

Ian, this post and many of your other writings are very concise and break economic issues down nicely.

I remember when I first started looking at economics from a radical perspective. Reading Marx and listening to guys like David M. Gordon at the New School talking about the social structures of accumulation just made everything so clear taht I’ve found it hard to look at economics reports or listen to financial radio without running everything through the filters I’ve learned to use to digest it.

Too bad more people believe an a**hole like Neil Cavuto than take the time to read about what is being done to this country and its people and institutions in the name of profit.