I agree with commenter Petrovic that the nation should not be understood monolithically; this to me is part of IPE 101. As for the more general point about relative vs absolute income, this is a subset of an even more general point about the representation of interaction effects outside the market in economic theory -- that such interactions do not exist. I've written about this many times over the years, but it's a message no one seems to want to hear. The problem is that incorporating interactions between agents (social) and goods (environmental/technological) generates nonconvexities in choice and production sets and therefore multiple equilibria. This is now deemed OK in spacial econ (urban, econ geography) but verboten elsewhere.
Incidentally, and also relevant to the complaint about economists in the OP, welfare econ becomes incoherent in a multiple equilibrium world. (Which may explain the disciplinary resistance: without welfare inferences, how will economists tell the rest of the world what to do?)
«if you take into account relative utility, simple utility curves get all messed up and mathematical models break down completely. Instead of simple declining marginal utility of one individual regarding one good you would have to take into account relative quantities of everyone else's utility curves simultaneously.»
«The problem is that incorporating interactions between agents (social) and goods (environmental/technological) generates nonconvexities in choice and production sets and therefore multiple equilibria.»
That is one of my pet peeves: that so many of the assumptions of Economics are designed to achieve a single smooth maximum. Not even relative utilities or interactions, as Steve Keen has argued in "Debunking Economics" just aggregating smooth individual demand/supply schedules generates non-smooth market-wide demand/supply schedules and therefore multiple maximums. Therefore the assumption that all individual supply/demand schedules have identical shapes, that is the "single agent" assumption. Another crucial assumption is the "static equilibrium" approach because any introduction of time effects creates path dependency and therefore multiple maximums. Never mind more sophisticated like "Wicksell effects" and thus "reswitching".
All these assumptions are necessary to uphold the central truthiness of Economics that incomes are solely and uniquely determined by marginal productivity, and upholding that truthiness is the whole purpose of Economics at least since J. B. Clark.
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The problem for mainstream econ is that if you take into account relative utility, simple utility curves get all messed up and mathematical models break down completely. Instead of simple declining marginal utility of one individual regarding one good you would have to take into account relative quantities of everyone else's utility curves simultaneously. Utility has to be an absolute atomic unit to be modeled (as if it was itself a commodity). Much of Milton Friedman's defense of unrealistic assumptions in economics is the attempt to ward this off. If you accept Veblen's position then economics begins to look like sociology or cultural history. Thus Veblen has been drummed out of econ, and Friedman's methodological views dominate. Veblen only lives on in the diluted form of institutional economics.
Oddly, even Frank Knight, who taught Friedman and Stigler price theory, actually recognizes Veblen's point about utility (and Stigler directly rejects this idea in Knight).
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I'm not unsympathetic, but this is way more polemical than it needs to be. Surely *one* legitimate thing for economists to be doing is pointing out that the tariffs etc. are going to hurt (in absolute terms) the people whom they are claimed to help (in absolute terms). This is so even if Milanovic and others are right that these claims are really just a fig-leaf for an effort to slow China's rise.
I believe that the point is that there is a difference between the approaches of different social groups, on the one hand, and the state (government), on the other. Each group pursues its own interest, trying to convince that its interest is the interest of the whole country. But the state must approach the situation from the point of view of the nation as a whole. The state knows that maintaining a dominant position in the global economic hierarchy is an advantage for the country, and so it does so despite the disadvantages that certain groups of the population have.
I agree. It is one thing to say that Trump's administration is pursuing a lose-lose policy because they want to hurt China, another thing to say that the methods of economists are useless.
Once upon a time I took an university economy textbook for the first year. It started with the supply-demand curve and I don't remember any more what followed.
That was the only time in my life that I have actually thrown a book accross the room in utter disgust thinking "this is not science, this is bullshit."
The problem (or my problem) was that the book was presenting various models, but there was not a single sentence discussing the conditions in which the models approximate reality enough to be useful. It was like "God gave the equations and you should learn them."
I still don't know if the mainstream economy knows when its models approximate reality good enough or not. If it doesn't one could claim that it's useless.
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Concerning the notion "policy to improve the position of US consumers or workers", I appreciate the use of "or" instead of the usual "and". Every now and then, there comes an economic situation where worker and consumer must compete in a zero-sum game. The obvious problem: they live in a same body. This dilemma brought down the economies of the real socialism (leadership of the DDR assumed to lead a country of patient workers, but in reality it was already a country of consumers), and now it seems to plague western worksumers that prefer cheaper merchandise over higher wages.
If this must automatically lead to wars, as here suggested, I do not know. Berlin Wall has fallen without a shoot, after all.
Please read Mearsheimer. Defense of the collective, group of human beings, state, individual state currently being the highest form of organization of human collective, has primacy, priority over individual well being. Defense of the state leads inevitably to security competition. Badly managed security competition leads to minor wars. Great wars, world wars are the result of solidly but not exceptionally well managed security competition between strongest states in the world. Whether exceptionally well managed security competition can prevent wars is still open. It seems to work in preventing nuclear war.
There was no kinetic war. There might have been economic. Kinetic wars are extremely expensive and if a cheaper option is available it stands to reason that the cheaper option will be used.
Unfortunately, only a kinetic war makes a great television (economic war is not a war - it is competition), and people love great television - as we can observe just now. Kinetic war is always an irrational endeavour (involving national or religious metaphysics) and not an inevitable consequence of economical Thucydides-like constellations.
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«Every now and then, there comes an economic situation where worker and consumer must compete in a zero-sum game. The obvious problem: they live in a same body.»
There is a large and influential part of consumers who are not workers or are not primarily workers, and for rentiers wages are a cost and not an income.
«western worksumers that prefer cheaper merchandise over higher wages.»
As to “not primarily wokers” the property-owning middle class and the petty bourgeoisie might *also* be workers but they regard themselves primarily as rentiers because most of their income often is from residential or business ownership, plus they regard their salaries as secure. A lot of pensioners also have the same class interests. In particular older affluent workers, whether retired or not, regard themselves as primarily rentiers.
So there is a large block of people 20-40% of voters in many countries, who have been coherently and consistently voting since Reagan and Thatcher for more offshoring and more immigration to reduce the cost of their cleaners, delivery drivers, baristas, nurses, carers, gardeners, plumbers and for higher stock and property prices profits to boost their rentier incomes.
What he rightly notes is that History is much richer and more useful than Economics when it comes to explaining world affairs, and all the models, their simplified causality with their limited number of parameters don't actually explain much at all.
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Trump and Biden obviously pursued policies to compete with China, but the idea that they sought to deliberately harm americans as a part of this is ludicrous. There may be some incompatibility in trying to weaken China AND make the US wealthier in absolute terms, but ultimately I think that in both cases, there is an element of trying to have it both ways (enrich Americans AND weaken China) despite the tension. And in the case of Trump it's really not hard to argue that he does genuinely believe that tariffs will make everyone in the US better off. Tariffs are not a new position for him, he's talked about them since at least the 90s.
«Trump it's really not hard to argue that he does genuinely believe that tariffs will make everyone in the US better off. Tariffs are not a new position for him, he's talked about them since at least the 90s.»
His position seems to me to have always been for decades that reverting off-shoring and immigration was meant to make better off native workers and native businesses (at the expense of transnational ones and finance).
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«"meaningful" to say that Trump's policies will make Americans collectively poorer despite his assertions to the contrary.»
https://www.project-syndicate.org/commentary/economist-writers-last-true-believers-in-neoliberalism-by-j-bradford-delong-2023-04 «Adam Smith himself supported the Navigation Acts – which regulated trade and shipping between England, its colonies, and other countries – despite the fact that they mandated that goods be transported on British ships even if other options were cheaper. “Defense,” he wrote in The Wealth of Nations, “is of much more importance than opulence.” Denouncing desirable security policies as “protectionist” was beside the point then and now.»
Voltaire: «What has made England powerful is the fact that from the time of Elizabeth, all parties have agreed on the necessity of favoring commerce. The same parliament that had the king beheaded was busy with overseas trading posts as though nothing were happening. The blood of Charles I was still steaming when this parliament, composed almost entirely of fanatics, passed the Navigation Act of 1650»
But Smith acknowledged that the Navigation Acts would reduce "opulence." A fundamental point of WON was that restrictions on trade reduce wealth. So, he knew that there were trade-offs. I haven't heard Trump acknowledge any trade-offs. He tells me that his tariffs will make us richer and safer at the same time. Pointing out that he can't eat his cake and have it too is a starting point for serious discussion.
«Smith acknowledged that the Navigation Acts would reduce "opulence."»
The question is specifically for whom. I think it would be highly misleading to claim that since a policy would make some minority worse off then it cannot be described as making people better off. When you wrote “Trump's policies will make Americans collectively poorer” I guess you felt very clever about that “collectively” qualification. How astute to gloss over the distributional impact of free trade or of tariffs! :-)
«He tells me that his tariffs will make us richer and safer at the same time.»
[Citation needed] as usual when TDS sufferers paraphrase Trump's claims. Anyhow the political question is who is "us": whether "us" means that his target constituency will become “collectively poorer” or it means rentiers who will be made “collectively poorer” by higher average labor incomes.
“In August, as a guest on MSNBC’s Meet the Press Daily, I noted that voters take Donald Trump seriously but not literally, while journalists take him literally, but not seriously. [...] Months later and on the far side of the election, the press is still taking Trump more literally and less seriously than voters do.”
«Pointing out that he can't eat his cake and have it too»
Just like free trade in a high-wage country means that the majority of working people become worse off and rentiers in that country and workers in low-wage countries become better off, tariffs mean the reverse.
Does "America First" mean "USA workers first" or "USA rentiers and foreign workers first"?
....Tariffs will make our country much richer than it is today. Only fools would disagree. We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way......
«Trump's policies will make Americans collectively poorer»
«He tells me that his tariffs will make us richer and safer at the same time.»
“[Citation needed] as usual when TDS sufferers paraphrase Trump's claims. Anyhow the political question is who is "us"”
As quoted "Tariffs will make *our country* much richer than it is today" he said with typical political hypocrisy "our country" not «us»: a “country” can well become much richer in the aggregate, with some winner and some losers (even some big winners and many small losers), without that applying to each and everyone of «us» or just most of «us». Using generic terms like “our country” or "the national interest" usually means that someone is trying to hide the distributional impact of a policy.
Anyhow his claim in technical terms was that wealth growth in the USA would be higher than without tariffs, which could happen if more new infrastructure and factories were built again in the USA than otherwise. It surely happened in the past when tariffs were high while wealth growth in the USA fell when tariffs were low (as much investment was made abroad).
TDS infection affects the eyes and ears and makes sufferers see or hear «us» or even "each and every one of us" when “our country” was actually written or said. :-)
The most objectionable part of his claim is “if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs” because usually a bigger part of tariffs is paid by domestic buyers than by foreign sellers, but TDS infection also impairs reasoning.
It seems like someone's reasoning is impaired in this discussion. I don't know whose. I don't follow your reasoning here, but I guess you'll say that's b/c I have TDS ...
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That's exactly right. I've had a number of arguments with several respected economists and I had the same feelings. I even wrote a book that will be published soon (The Ideology of Ideologies), and among other things, it deals with the issue you raised.
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Absolutely correct. IIrc it was then Fed Head Janet Yellen who said some years ago, that it may be the way of the US to make some economic steps backward in it struggle to maintain global supremacy. We will see, how this works out. The major point speaking for the US is, that as China as such does not (yet?) offer "security partnerships", most countries are subject to US coercion.
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I would like to know what all those those dumbasses praising the lose-lose theory think about the distruction of Harvard and this would help America in its struggle with China. The lose-lose bshit is yet another attempt to sane wash Trumpism, hiding craziness, irrationality and total lack of any serious plan, let alone strategy.
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«the US leadership, under both Trump I and II and Biden, was not involved in a policy to improve the position of US consumers or workers but to slow the rise of China and to maintain American global hegemonic position.»
But in very different ways: the Biden/Democrat goal seemed to me just anti-PRC hegemony, but not the un-shoring of off-shored industries, rather the re-shoring of them to other countries with governments more compliant to USA interests, while Trump claims to want to re-shore those industries to undo a part of the large transfer of GDP (around 10-15 percent points) from workers to "investors" since Reagan.
«This inability to engage with reality springs from an extremely reductionist methodological position where one’s welfare is a function of one’s own absolute income only.»
That and also refusal to consider that many people also consider the welfare of their descendants.
But that and much else is necessary to uphold the main "parable" of JB Clark, which is the purpose of the "internal consistency" of Economics.
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I agree the focus on consumption is far too narrow, but would you say the problem is not that economists have nothing to say about inequality or is it really a lack of interest in inequality? There are economists (especially Amartya Sen) who have tried to broaden the idea of wellbeing and social goals beyond the “consumption fetish” in mainstream economics. But other economists seem to be uninterested in making this work mainstream.
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«I agree the focus on consumption is far too narrow»
There are broadly speaking two categories of agent: those that consume without working (aka "investors" aka "job creators") and those who can consume only because they work. The cost of consuming and therefore the cost of wages is of great importance to those who consume without working.
«but would you say the problem is not that economists have nothing to say about inequality or is it really a lack of interest in inequality?»
The second theorem of welfare theory (is a really thin excuse that) allows Economists to say that growth and distribution can be wholly independent, and that distribution is a purely political problem, so Economics can ignore it. Regardless the accepted aim of Economics is "internal consistency" so consistency with actually existing political economies is irrelevant to that.
In any case the purpose of Economics is to uphold JB Clark's "three parables" of which the most important one is that factor incomes are necessarily and solely dependent on their marginal productivity.
This is really strange, considered that it is equally important to a state to be the bigger one as it is for an enterprise. Both are engaged in a competition where economies of scale tell.
But, of course, mainstream economics doesn't recognize economies of scale either, I've been told.
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«mainstream economics doesn't recognize economies of scale either, I've been told.»
That is one of the "three parables" of JB Clark ("constant returns to scale, diminishing marginal productivity and competitive equilibrium"). Constant returns to scale is one of the many assumption necessary to have a single maximum in the optimization landscape (the Arrow-Debreu-Lucas style models), so that there is no path dependency and factor incomes be uniquely and solely determined by their productivity.
Yes. There are so many unreal "assumptions"; Erik Reinert made a list at https://othercanon.org/organization/. I can count 26 of them, all applied routinely. Why do we allow them to go on with this game?
Not really very complicated. In order to have capitalism there has to be competition. For economics or "free markets." Not just one big dominating victor.
On the other side, every capitalist wants to be the biggest, if possible a monopolist.
At least that used to be the case. Nowadays, capitalists don't deal in production, of course, just in "equities". So I suppose the aim to be the biggest is just the CEO's dream while the capitalist just tries to milk as much money out of the enterprise he can.
If I had something to invest.... Swedish retirement pensions are the second meanest in the EU, after the Estonian. And even if, it's useless to start invest at 75.
US has similar calculations when it considers nuclear war, so why should we be surprised.
And talking about inequality is like a tabu thing, No, retract that, talking about inequalities and inequities is allowed, measuring them and their impact is a different ball game.
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I agree with commenter Petrovic that the nation should not be understood monolithically; this to me is part of IPE 101. As for the more general point about relative vs absolute income, this is a subset of an even more general point about the representation of interaction effects outside the market in economic theory -- that such interactions do not exist. I've written about this many times over the years, but it's a message no one seems to want to hear. The problem is that incorporating interactions between agents (social) and goods (environmental/technological) generates nonconvexities in choice and production sets and therefore multiple equilibria. This is now deemed OK in spacial econ (urban, econ geography) but verboten elsewhere.
Incidentally, and also relevant to the complaint about economists in the OP, welfare econ becomes incoherent in a multiple equilibrium world. (Which may explain the disciplinary resistance: without welfare inferences, how will economists tell the rest of the world what to do?)
«if you take into account relative utility, simple utility curves get all messed up and mathematical models break down completely. Instead of simple declining marginal utility of one individual regarding one good you would have to take into account relative quantities of everyone else's utility curves simultaneously.»
«The problem is that incorporating interactions between agents (social) and goods (environmental/technological) generates nonconvexities in choice and production sets and therefore multiple equilibria.»
That is one of my pet peeves: that so many of the assumptions of Economics are designed to achieve a single smooth maximum. Not even relative utilities or interactions, as Steve Keen has argued in "Debunking Economics" just aggregating smooth individual demand/supply schedules generates non-smooth market-wide demand/supply schedules and therefore multiple maximums. Therefore the assumption that all individual supply/demand schedules have identical shapes, that is the "single agent" assumption. Another crucial assumption is the "static equilibrium" approach because any introduction of time effects creates path dependency and therefore multiple maximums. Never mind more sophisticated like "Wicksell effects" and thus "reswitching".
All these assumptions are necessary to uphold the central truthiness of Economics that incomes are solely and uniquely determined by marginal productivity, and upholding that truthiness is the whole purpose of Economics at least since J. B. Clark.
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Defense of the state is more important than economic well-being of individual consumers citizens. Yes or no?
The problem for mainstream econ is that if you take into account relative utility, simple utility curves get all messed up and mathematical models break down completely. Instead of simple declining marginal utility of one individual regarding one good you would have to take into account relative quantities of everyone else's utility curves simultaneously. Utility has to be an absolute atomic unit to be modeled (as if it was itself a commodity). Much of Milton Friedman's defense of unrealistic assumptions in economics is the attempt to ward this off. If you accept Veblen's position then economics begins to look like sociology or cultural history. Thus Veblen has been drummed out of econ, and Friedman's methodological views dominate. Veblen only lives on in the diluted form of institutional economics.
Oddly, even Frank Knight, who taught Friedman and Stigler price theory, actually recognizes Veblen's point about utility (and Stigler directly rejects this idea in Knight).
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El viejo chiste de “tengo que correr más rápido que tú, no más rápido que un león”
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I'm not unsympathetic, but this is way more polemical than it needs to be. Surely *one* legitimate thing for economists to be doing is pointing out that the tariffs etc. are going to hurt (in absolute terms) the people whom they are claimed to help (in absolute terms). This is so even if Milanovic and others are right that these claims are really just a fig-leaf for an effort to slow China's rise.
I believe that the point is that there is a difference between the approaches of different social groups, on the one hand, and the state (government), on the other. Each group pursues its own interest, trying to convince that its interest is the interest of the whole country. But the state must approach the situation from the point of view of the nation as a whole. The state knows that maintaining a dominant position in the global economic hierarchy is an advantage for the country, and so it does so despite the disadvantages that certain groups of the population have.
I agree. It is one thing to say that Trump's administration is pursuing a lose-lose policy because they want to hurt China, another thing to say that the methods of economists are useless.
They are not entirely useless. But ...
Once upon a time I took an university economy textbook for the first year. It started with the supply-demand curve and I don't remember any more what followed.
That was the only time in my life that I have actually thrown a book accross the room in utter disgust thinking "this is not science, this is bullshit."
The problem (or my problem) was that the book was presenting various models, but there was not a single sentence discussing the conditions in which the models approximate reality enough to be useful. It was like "God gave the equations and you should learn them."
I still don't know if the mainstream economy knows when its models approximate reality good enough or not. If it doesn't one could claim that it's useless.
Yet both statements can be (and in this case empirically are) independently correct.
Pointing out what is the most important principle is not polemic.
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Concerning the notion "policy to improve the position of US consumers or workers", I appreciate the use of "or" instead of the usual "and". Every now and then, there comes an economic situation where worker and consumer must compete in a zero-sum game. The obvious problem: they live in a same body. This dilemma brought down the economies of the real socialism (leadership of the DDR assumed to lead a country of patient workers, but in reality it was already a country of consumers), and now it seems to plague western worksumers that prefer cheaper merchandise over higher wages.
If this must automatically lead to wars, as here suggested, I do not know. Berlin Wall has fallen without a shoot, after all.
Please read Mearsheimer. Defense of the collective, group of human beings, state, individual state currently being the highest form of organization of human collective, has primacy, priority over individual well being. Defense of the state leads inevitably to security competition. Badly managed security competition leads to minor wars. Great wars, world wars are the result of solidly but not exceptionally well managed security competition between strongest states in the world. Whether exceptionally well managed security competition can prevent wars is still open. It seems to work in preventing nuclear war.
There was no kinetic war. There might have been economic. Kinetic wars are extremely expensive and if a cheaper option is available it stands to reason that the cheaper option will be used.
Unfortunately, only a kinetic war makes a great television (economic war is not a war - it is competition), and people love great television - as we can observe just now. Kinetic war is always an irrational endeavour (involving national or religious metaphysics) and not an inevitable consequence of economical Thucydides-like constellations.
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«Every now and then, there comes an economic situation where worker and consumer must compete in a zero-sum game. The obvious problem: they live in a same body.»
There is a large and influential part of consumers who are not workers or are not primarily workers, and for rentiers wages are a cost and not an income.
«western worksumers that prefer cheaper merchandise over higher wages.»
As to “not primarily wokers” the property-owning middle class and the petty bourgeoisie might *also* be workers but they regard themselves primarily as rentiers because most of their income often is from residential or business ownership, plus they regard their salaries as secure. A lot of pensioners also have the same class interests. In particular older affluent workers, whether retired or not, regard themselves as primarily rentiers.
So there is a large block of people 20-40% of voters in many countries, who have been coherently and consistently voting since Reagan and Thatcher for more offshoring and more immigration to reduce the cost of their cleaners, delivery drivers, baristas, nurses, carers, gardeners, plumbers and for higher stock and property prices profits to boost their rentier incomes.
What he rightly notes is that History is much richer and more useful than Economics when it comes to explaining world affairs, and all the models, their simplified causality with their limited number of parameters don't actually explain much at all.
Un
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Trump and Biden obviously pursued policies to compete with China, but the idea that they sought to deliberately harm americans as a part of this is ludicrous. There may be some incompatibility in trying to weaken China AND make the US wealthier in absolute terms, but ultimately I think that in both cases, there is an element of trying to have it both ways (enrich Americans AND weaken China) despite the tension. And in the case of Trump it's really not hard to argue that he does genuinely believe that tariffs will make everyone in the US better off. Tariffs are not a new position for him, he's talked about them since at least the 90s.
«Trump it's really not hard to argue that he does genuinely believe that tariffs will make everyone in the US better off. Tariffs are not a new position for him, he's talked about them since at least the 90s.»
His position seems to me to have always been for decades that reverting off-shoring and immigration was meant to make better off native workers and native businesses (at the expense of transnational ones and finance).
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To me, it seems "meaningful" to say that Trump's policies will make Americans collectively poorer despite his assertions to the contrary.
There are many other meaningful things that could be said that economists aren't saying, but that's not nothing ...
«"meaningful" to say that Trump's policies will make Americans collectively poorer despite his assertions to the contrary.»
https://www.project-syndicate.org/commentary/economist-writers-last-true-believers-in-neoliberalism-by-j-bradford-delong-2023-04 «Adam Smith himself supported the Navigation Acts – which regulated trade and shipping between England, its colonies, and other countries – despite the fact that they mandated that goods be transported on British ships even if other options were cheaper. “Defense,” he wrote in The Wealth of Nations, “is of much more importance than opulence.” Denouncing desirable security policies as “protectionist” was beside the point then and now.»
Voltaire: «What has made England powerful is the fact that from the time of Elizabeth, all parties have agreed on the necessity of favoring commerce. The same parliament that had the king beheaded was busy with overseas trading posts as though nothing were happening. The blood of Charles I was still steaming when this parliament, composed almost entirely of fanatics, passed the Navigation Act of 1650»
But Smith acknowledged that the Navigation Acts would reduce "opulence." A fundamental point of WON was that restrictions on trade reduce wealth. So, he knew that there were trade-offs. I haven't heard Trump acknowledge any trade-offs. He tells me that his tariffs will make us richer and safer at the same time. Pointing out that he can't eat his cake and have it too is a starting point for serious discussion.
«Smith acknowledged that the Navigation Acts would reduce "opulence."»
The question is specifically for whom. I think it would be highly misleading to claim that since a policy would make some minority worse off then it cannot be described as making people better off. When you wrote “Trump's policies will make Americans collectively poorer” I guess you felt very clever about that “collectively” qualification. How astute to gloss over the distributional impact of free trade or of tariffs! :-)
«He tells me that his tariffs will make us richer and safer at the same time.»
[Citation needed] as usual when TDS sufferers paraphrase Trump's claims. Anyhow the political question is who is "us": whether "us" means that his target constituency will become “collectively poorer” or it means rentiers who will be made “collectively poorer” by higher average labor incomes.
https://onmessageinc.com/dear-journalists-stop-taking-trump-literally/
“In August, as a guest on MSNBC’s Meet the Press Daily, I noted that voters take Donald Trump seriously but not literally, while journalists take him literally, but not seriously. [...] Months later and on the far side of the election, the press is still taking Trump more literally and less seriously than voters do.”
«Pointing out that he can't eat his cake and have it too»
Just like free trade in a high-wage country means that the majority of working people become worse off and rentiers in that country and workers in low-wage countries become better off, tariffs mean the reverse.
Does "America First" mean "USA workers first" or "USA rentiers and foreign workers first"?
Sorry, I didn't notice this reply earlier. Citation:
https://x.com/realDonaldTrump/status/1025833273191264256
Donald J. Trump
@realDonaldTrump
....Tariffs will make our country much richer than it is today. Only fools would disagree. We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way......
«Trump's policies will make Americans collectively poorer»
«He tells me that his tariffs will make us richer and safer at the same time.»
“[Citation needed] as usual when TDS sufferers paraphrase Trump's claims. Anyhow the political question is who is "us"”
As quoted "Tariffs will make *our country* much richer than it is today" he said with typical political hypocrisy "our country" not «us»: a “country” can well become much richer in the aggregate, with some winner and some losers (even some big winners and many small losers), without that applying to each and everyone of «us» or just most of «us». Using generic terms like “our country” or "the national interest" usually means that someone is trying to hide the distributional impact of a policy.
Anyhow his claim in technical terms was that wealth growth in the USA would be higher than without tariffs, which could happen if more new infrastructure and factories were built again in the USA than otherwise. It surely happened in the past when tariffs were high while wealth growth in the USA fell when tariffs were low (as much investment was made abroad).
TDS infection affects the eyes and ears and makes sufferers see or hear «us» or even "each and every one of us" when “our country” was actually written or said. :-)
The most objectionable part of his claim is “if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs” because usually a bigger part of tariffs is paid by domestic buyers than by foreign sellers, but TDS infection also impairs reasoning.
It seems like someone's reasoning is impaired in this discussion. I don't know whose. I don't follow your reasoning here, but I guess you'll say that's b/c I have TDS ...
Poorer, but more secure. Prioritizing security is logical for the leader of a tribe in a dangerous world.
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That's exactly right. I've had a number of arguments with several respected economists and I had the same feelings. I even wrote a book that will be published soon (The Ideology of Ideologies), and among other things, it deals with the issue you raised.
And you know, there is an interesting point that AI bots always side with the Democrats in a dispute. I started making posts about my experience. https://erzah.substack.com/p/productivity-globalization-and-democratic
But to be honest, I'm not sure that I was talking to a bot. I just couldn't believe that respectable, famous people could argue like that.
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Absolutely correct. IIrc it was then Fed Head Janet Yellen who said some years ago, that it may be the way of the US to make some economic steps backward in it struggle to maintain global supremacy. We will see, how this works out. The major point speaking for the US is, that as China as such does not (yet?) offer "security partnerships", most countries are subject to US coercion.
US doesn't offer seccurity, it offers to not financially sanction a country.
Or worse, offers not to regime change or bomb it …
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Outstanding contribution. Thanks.
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I would like to know what all those those dumbasses praising the lose-lose theory think about the distruction of Harvard and this would help America in its struggle with China. The lose-lose bshit is yet another attempt to sane wash Trumpism, hiding craziness, irrationality and total lack of any serious plan, let alone strategy.
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«the US leadership, under both Trump I and II and Biden, was not involved in a policy to improve the position of US consumers or workers but to slow the rise of China and to maintain American global hegemonic position.»
But in very different ways: the Biden/Democrat goal seemed to me just anti-PRC hegemony, but not the un-shoring of off-shored industries, rather the re-shoring of them to other countries with governments more compliant to USA interests, while Trump claims to want to re-shore those industries to undo a part of the large transfer of GDP (around 10-15 percent points) from workers to "investors" since Reagan.
«This inability to engage with reality springs from an extremely reductionist methodological position where one’s welfare is a function of one’s own absolute income only.»
That and also refusal to consider that many people also consider the welfare of their descendants.
But that and much else is necessary to uphold the main "parable" of JB Clark, which is the purpose of the "internal consistency" of Economics.
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I agree the focus on consumption is far too narrow, but would you say the problem is not that economists have nothing to say about inequality or is it really a lack of interest in inequality? There are economists (especially Amartya Sen) who have tried to broaden the idea of wellbeing and social goals beyond the “consumption fetish” in mainstream economics. But other economists seem to be uninterested in making this work mainstream.
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«I agree the focus on consumption is far too narrow»
There are broadly speaking two categories of agent: those that consume without working (aka "investors" aka "job creators") and those who can consume only because they work. The cost of consuming and therefore the cost of wages is of great importance to those who consume without working.
«but would you say the problem is not that economists have nothing to say about inequality or is it really a lack of interest in inequality?»
The second theorem of welfare theory (is a really thin excuse that) allows Economists to say that growth and distribution can be wholly independent, and that distribution is a purely political problem, so Economics can ignore it. Regardless the accepted aim of Economics is "internal consistency" so consistency with actually existing political economies is irrelevant to that.
In any case the purpose of Economics is to uphold JB Clark's "three parables" of which the most important one is that factor incomes are necessarily and solely dependent on their marginal productivity.
This is really strange, considered that it is equally important to a state to be the bigger one as it is for an enterprise. Both are engaged in a competition where economies of scale tell.
But, of course, mainstream economics doesn't recognize economies of scale either, I've been told.
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«mainstream economics doesn't recognize economies of scale either, I've been told.»
That is one of the "three parables" of JB Clark ("constant returns to scale, diminishing marginal productivity and competitive equilibrium"). Constant returns to scale is one of the many assumption necessary to have a single maximum in the optimization landscape (the Arrow-Debreu-Lucas style models), so that there is no path dependency and factor incomes be uniquely and solely determined by their productivity.
Yes. There are so many unreal "assumptions"; Erik Reinert made a list at https://othercanon.org/organization/. I can count 26 of them, all applied routinely. Why do we allow them to go on with this game?
Not really very complicated. In order to have capitalism there has to be competition. For economics or "free markets." Not just one big dominating victor.
On the other side, every capitalist wants to be the biggest, if possible a monopolist.
At least that used to be the case. Nowadays, capitalists don't deal in production, of course, just in "equities". So I suppose the aim to be the biggest is just the CEO's dream while the capitalist just tries to milk as much money out of the enterprise he can.
If I had something to invest.... Swedish retirement pensions are the second meanest in the EU, after the Estonian. And even if, it's useless to start invest at 75.
US has similar calculations when it considers nuclear war, so why should we be surprised.
And talking about inequality is like a tabu thing, No, retract that, talking about inequalities and inequities is allowed, measuring them and their impact is a different ball game.
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