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It's really distresses me whenever I read economic discussions on HN because basic economics is relatively simple and objective and because most folks on HN hav

by drcode 13y ago

It's really distresses me whenever I read economic discussions on HN because basic economics is relatively simple and objective and because most folks on HN have the chops to understand this stuff, but it seems like many don't. In particular, one big facet of economics is equilibrium as it pertains to markets and most discussions here completely gloss over this (even though everyone here is completely comfortable with the concept of equilibria in other domains.) I think a lot still needs to be done, and can be done, to educate the public about basic economic principles. I hope to do my part to help by creating quality online resources for this in the near future. To give a more concrete example of what worries me: It should be obvious to everyone here that an idea like "minimum guaranteed income" is a very dangerous idea. Yes, there are credible economists that believe these things are a good idea (and it might even be a correct idea) but they believe this for very different, and much better informed reasons than the arguments being bandied about in this forum. Many of the arguments made here in favor of "minimum guaranteed income" are wrong and even the Economists who support these things would agree that your arguments are wrong. Anyway, as I said, I hope to create some online resources soon that will show more clearly what the difficulty is with these types of ideas. EDIT: For those asking me what the precise problem is with "minimum guaranteed income", I can't give you a satisfying answer, because I can only make an obvious qualitative argument right now (i.e. people will stop taking minimum wage jobs if they can get the same income without working, or by working in some less efficient fashion prescribed by a "guaranteed minimum income" scheme.) What needs to be done is to bring this discussion into the realm of mathematical "economic models" so we can quantify these things and ask questions like "How much will a guaranteed income help people?" and "How much will poor people be hurt indirectly by putting such a scheme in place?" (and of course ask additional meta questions such as "Is this model appropriate?") But these types of questions can't be addressed in an HN thread and require a more in depth treatment.

johnchristopher 13y ago
Frankly, I am still waiting for a good introduction to general economic principles. I literally feel like an idiot when following economic discussions: it seems to me like it's all a long infinite chain of valid arguments and counter-arguments that are perfectly valid, true and completely opposite. Hope you get something online soon.
- swalsh 13y ago
  There's a lot of great free lectures provided by Yale. If you have the time, I highly recommend it.
- JeffL 13y ago
  Economics in One Lesson by Henry Hazlitt is an amazing book, and there's a free PDF available: http://mises.org/books/economics_in_one_lesson_hazlitt.pdf http://mises.org/books/economics_in_one_lesson_hazlitt.pdf
- rollo_tommasi 13y ago
  A considerable amount of macroeconomics is constructing airtight justifications for what you would like to be true, without any fear that your theories will ever be subjected to rigorous testing. Hence the situation you describe.
- jwallaceparker 13y ago
  "Economics in One Lesson" by Henry Hazlitt http://mises.org/books/economics_in_one_lesson_hazlitt.pdf http://mises.org/books/economics_in_one_lesson_hazlitt.pdf This book is an outstanding place to start. It addresses a myriad of economic concepts in simple language. It's available for free through the Mises Institute. "How an Economy Grows and Why It Crashes" by Peter Schiff http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/047052670X http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/04705... This book gives a simple overview of macro issues and is an interesting and well-presented tale about how economies grow from the basic "man on an island" scenario to a complex market. It also covers Austrian business cycle theory which explains the boom-bust cycle in economies. Both of these books are from the "Austrian School" of economics, which is named for its Austrian founder, Carl Menger. I find these arguments compelling as they are firmly grounded in logic and are based on the principle that the human individual and her actions form the basis of all economic activity. The giants of the Austrian school are Ludwig von Mises and Murray Rothbard (highly readable) if you want to seek out more advanced theory.
  - cpursley 13y ago
    +1 on Mises Institute and Peter Schiff. Say what you want about Austrian / free market economic schools, but these people and groups predicted the financial crisis and housing bubble: https://www.youtube.com/watch?v=LfascZSTU4o https://www.youtube.com/watch?v=LfascZSTU4o
gyom 13y ago
Would you mind expanding what you wrote in that third paragraph ? All the better if there was a nice youtube video interview with said economist explaining him/herself.
StandardFuture 13y ago
I agree and I am looking forward to what you come up with! :) Passing around statements like 'give everyone a guaranteed basic minimum income' seems to be no better than Marie Antoinette saying "Let them eat cake" ... it's cute because it has a bit of merit(cake would feed people as a basic gauranteed income would give people some money) but it completely and naively oversimplifies everything. :P
jomtung 13y ago
Would you please describe some of the faulty arguments for the "minimum guaranteed income" and also maybe link to the credible economic arguments to contrast? Otherwise you aren't really providing any information to further the discussion. Thanks!
- StandardFuture 13y ago
  Have you provided ANY links or details to provide a counter-argument too?
cpursley 13y ago
Came here to say the exact same thing; thanks for saying it better than I ever could. I don't get the basic income thing - pay people to not work? What? Where's the money come from? How to you prevent massive inflation and a massive decrease in economic output as people quit their jobs? Who decides who gets this basic income? This all reminds me of a south park episode: https://www.youtube.com/watch?v=tO5sxLapAts https://www.youtube.com/watch?v=tO5sxLapAts
- TuringTest 13y ago
  The money come from people who works, and everybody gets the basic income - so there are no need to track how much anybody deserves it, and no incentives to stop working to receive subsidy. The idea is that some people will pay more than they receive anyway, but at any time that you can't sustain yourself, you still have the safety net and can survive until you can re-enter the productive workforce. Or if you're content with living with the bare minimum, that's OK too; you're not competing with others for scarce works, and you're not putting them at risk when you fight for your life - as it's not at risk.
lifeisstillgood 13y ago
I am beginning to turn to Praxology: economics is just psychology under conditions of scarcity. Because most discussion on economics and minimum wage is a peak behind people's own perceptions and prejudices. So peak behind my veil. It may not be a coherent argument, but it is trying to form from a different direction I usually see on here. 1. Welfare payments (paying people not to work) are about avoiding the human cost of moving from one equilibria to another. We do not have an ethicall acceptable way to judge if one person is deservedly poor and another is a scrounging parasite. So we pay everyone. 2. Welfare payments are getting really expensive. Partly because of their complexity, partly because we fiddle with it too much. 2.a. Welfare payments act as insurance for society. You have a bad year its not worth forcing you and your family onto the streets. 2.b. Forever welfare payments (benefits scroungers, 13 kids and never had a job etc) may be a reflection of a persons true economic worth. see below 3. Paying everyone a minimum guaranteed income is not so crazy - it is merely a monetary reflection of the value and utility derived from other public goods like medicine, science, roads, clean air. I get a lot of value from these things. The NHS means I don't monetarily pay a US level insurance. So I can put a pretty accurate number on a minimum payment already made to me. For me the situation now is paying people who are not currently econmically productive enough to survive, and turn into productive citizens. It is messy, it has problems, but for my ethical point of view it beats not having a welfare system and seeing people starve. Thats why we brought it in and thats why we want to keep it. However we are seeing demographic changes (which is what the article is about) that may well negate a lot of this - more and more human beings, with moral value, may find they are no longer economically in the black. So we might have a future that is golden, of robots growing food, houses built from nanostructures in days, of the human basics for 10 bn provided for tiny effort or cost. But getting there is not a clear road. And for my money holding the people who will fail to cross that bridge to the future, and giving them a decent life with the bounty of new productive technologies, is a moral duty. And also a sensible hedge for hubris. In short, we pay for welfare because it is the right thing to do, it is usually short term for each individual, we might need it personally, and as we transition into a new world, we have no idea how bumpy it will get - so safety nets are a good idea. But is the current system(s) perfect, desirable or sustainable. Almost certainly not, and we shall see wide experimentation with different variations before settling on something similar to Singapore. But that is a long way off and I am late.

by drcode 13y ago

johnchristopher 13y ago

Frankly, I am still waiting for a good introduction to general economic principles. I literally feel like an idiot when following economic discussions: it seems to me like it's all a long infinite chain of valid arguments and counter-arguments that are perfectly valid, true and completely opposite. Hope you get something online soon.

swalsh 13y ago
There's a lot of great free lectures provided by Yale. If you have the time, I highly recommend it.
JeffL 13y ago
Economics in One Lesson by Henry Hazlitt is an amazing book, and there's a free PDF available: http://mises.org/books/economics_in_one_lesson_hazlitt.pdf http://mises.org/books/economics_in_one_lesson_hazlitt.pdf
rollo_tommasi 13y ago
A considerable amount of macroeconomics is constructing airtight justifications for what you would like to be true, without any fear that your theories will ever be subjected to rigorous testing. Hence the situation you describe.
jwallaceparker 13y ago
"Economics in One Lesson" by Henry Hazlitt http://mises.org/books/economics_in_one_lesson_hazlitt.pdf http://mises.org/books/economics_in_one_lesson_hazlitt.pdf This book is an outstanding place to start. It addresses a myriad of economic concepts in simple language. It's available for free through the Mises Institute. "How an Economy Grows and Why It Crashes" by Peter Schiff http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/047052670X http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/04705... This book gives a simple overview of macro issues and is an interesting and well-presented tale about how economies grow from the basic "man on an island" scenario to a complex market. It also covers Austrian business cycle theory which explains the boom-bust cycle in economies. Both of these books are from the "Austrian School" of economics, which is named for its Austrian founder, Carl Menger. I find these arguments compelling as they are firmly grounded in logic and are based on the principle that the human individual and her actions form the basis of all economic activity. The giants of the Austrian school are Ludwig von Mises and Murray Rothbard (highly readable) if you want to seek out more advanced theory.
- cpursley 13y ago
  +1 on Mises Institute and Peter Schiff. Say what you want about Austrian / free market economic schools, but these people and groups predicted the financial crisis and housing bubble: https://www.youtube.com/watch?v=LfascZSTU4o https://www.youtube.com/watch?v=LfascZSTU4o

gyom 13y ago

Would you mind expanding what you wrote in that third paragraph ? All the better if there was a nice youtube video interview with said economist explaining him/herself.

StandardFuture 13y ago

I agree and I am looking forward to what you come up with! :) Passing around statements like 'give everyone a guaranteed basic minimum income' seems to be no better than Marie Antoinette saying "Let them eat cake" ... it's cute because it has a bit of merit(cake would feed people as a basic gauranteed income would give people some money) but it completely and naively oversimplifies everything. :P

jomtung 13y ago

Would you please describe some of the faulty arguments for the "minimum guaranteed income" and also maybe link to the credible economic arguments to contrast? Otherwise you aren't really providing any information to further the discussion. Thanks!

StandardFuture 13y ago
Have you provided ANY links or details to provide a counter-argument too?

cpursley 13y ago

Came here to say the exact same thing; thanks for saying it better than I ever could. I don't get the basic income thing - pay people to not work? What? Where's the money come from? How to you prevent massive inflation and a massive decrease in economic output as people quit their jobs? Who decides who gets this basic income? This all reminds me of a south park episode: https://www.youtube.com/watch?v=tO5sxLapAts https://www.youtube.com/watch?v=tO5sxLapAts

TuringTest 13y ago
The money come from people who works, and everybody gets the basic income - so there are no need to track how much anybody deserves it, and no incentives to stop working to receive subsidy. The idea is that some people will pay more than they receive anyway, but at any time that you can't sustain yourself, you still have the safety net and can survive until you can re-enter the productive workforce. Or if you're content with living with the bare minimum, that's OK too; you're not competing with others for scarce works, and you're not putting them at risk when you fight for your life - as it's not at risk.

lifeisstillgood 13y ago

I am beginning to turn to Praxology: economics is just psychology under conditions of scarcity. Because most discussion on economics and minimum wage is a peak behind people's own perceptions and prejudices. So peak behind my veil. It may not be a coherent argument, but it is trying to form from a different direction I usually see on here. 1. Welfare payments (paying people not to work) are about avoiding the human cost of moving from one equilibria to another. We do not have an ethicall acceptable way to judge if one person is deservedly poor and another is a scrounging parasite. So we pay everyone. 2. Welfare payments are getting really expensive. Partly because of their complexity, partly because we fiddle with it too much. 2.a. Welfare payments act as insurance for society. You have a bad year its not worth forcing you and your family onto the streets. 2.b. Forever welfare payments (benefits scroungers, 13 kids and never had a job etc) may be a reflection of a persons true economic worth. see below 3. Paying everyone a minimum guaranteed income is not so crazy - it is merely a monetary reflection of the value and utility derived from other public goods like medicine, science, roads, clean air. I get a lot of value from these things. The NHS means I don't monetarily pay a US level insurance. So I can put a pretty accurate number on a minimum payment already made to me. For me the situation now is paying people who are not currently econmically productive enough to survive, and turn into productive citizens. It is messy, it has problems, but for my ethical point of view it beats not having a welfare system and seeing people starve. Thats why we brought it in and thats why we want to keep it. However we are seeing demographic changes (which is what the article is about) that may well negate a lot of this - more and more human beings, with moral value, may find they are no longer economically in the black. So we might have a future that is golden, of robots growing food, houses built from nanostructures in days, of the human basics for 10 bn provided for tiny effort or cost. But getting there is not a clear road. And for my money holding the people who will fail to cross that bridge to the future, and giving them a decent life with the bounty of new productive technologies, is a moral duty. And also a sensible hedge for hubris. In short, we pay for welfare because it is the right thing to do, it is usually short term for each individual, we might need it personally, and as we transition into a new world, we have no idea how bumpy it will get - so safety nets are a good idea. But is the current system(s) perfect, desirable or sustainable. Almost certainly not, and we shall see wide experimentation with different variations before settling on something similar to Singapore. But that is a long way off and I am late.